Local Authorities Provident Fund Board (LAPFUND) v Nairobi City County Government [2023] KEHC 25106 (KLR)

Local Authorities Provident Fund Board (LAPFUND) v Nairobi City County Government (Civil Case E212 of 2022) [2023] KEHC 25106 (KLR) (Civ) (10 November 2023) (Ruling)

Neutral citation: [2023] KEHC 25106 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Case E212 of 2022

DAS Majanja, J

November 10, 2023

Between

Local Authorities Provident Fund Board (Lapfund)

Plaintiff

and

Nairobi City County Government

Defendant

Ruling

1. The issue for resolution in this ruling is whether this court has jurisdiction to entertain this suit. This question has been raised by the defendant in the Notice of Preliminary Objection dated February 6, 2023. The defendant contends that the suit ought to have been filed in the Environment and Land Court (“the ELC”) by dint of section 13(2)(a) of the Environment and Land Court Act, 2011 as read with article 162(2)(b) of the Constitution. The plaintiff opposes the application and takes the view that the suit falls within the jurisdiction of the High Court.

2. The answer to the question raised by the defendant depends the nature of the cause of action as set out in the Plaint dated October 13, 2022. According to the plaintiff, the defendant had an obligation to forward to it, its employees retirement benefits comprising the employer and employee contributions at a rate of 12% and 15% respectively of the employees’ basic salary and house allowance. When the defendant failed to remit the contributions, the parties agreed that the defendant would transfer to the plaintiff a property; Mariakani Estate No 209/6612 comprising 240 three bedroomed houses (“the suit property”). Despite the transfer, the defendant continued to receive rents which amount to Kshs. 164,800,199. 00 for the period January 2015 to December 2021. The plaintiff claims this amount together with interest thereon.

3. The defendant submits that the case concerns whether the suit property was transferred to the plaintiff and whether the plaintiff has been collecting rents from the tenants and how much, which is a matter within the remit of the ELC.

4. Jurisdiction is the very foundation of judicial work hence the formulation by Nyarangi JA., in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Limited [1989] KLR 1 that jurisdiction is everything. Jurisdiction is conferred by the Constitution and or statute and it is within those confines that a court should operate (see also Samuel Kamau Macharia v Kenya Commercial Bank and others SCK Application No 2 of 2011 [2012] eKLR). If this is a land matter then this court, the High Court, lacks jurisdiction to entertain the matter. The ELC is established pursuant to article 162(3) of the Constitution which provides that parliament shall establish Court with the status of the High Court to hear and determine disputes relating to the environment and the use and occupation of and title to land. Consequently, Parliament enacted the Environment and Land Court Act, Act establishing the ELC whose jurisdiction is set out in section 13 as follows:13. Jurisdiction of the Court(1)The court shall have original and appellate jurisdiction to hear and determine all disputes in accordance with article 162(2)(b) of the Constitution and with the provisions of this Act or any other law applicable in Kenya relating to environment and land.(2)In exercise of its jurisdiction under article 162(2)(b) of the Constitution, the Court shall have power to hear and determine disputes-(a)relating to environmental planning and protection, climate issues, land use planning, title, tenure, boundaries, rates, rents, valuations, mining, minerals and other natural resources.(b)relating to compulsory acquisition of land;(c)relating to land administration and management;(d)relating to public, private and community land and contracts, choses in action or other instruments granting any enforceable interest in land; and(e)any other dispute relating to environment and land.

5. The Supreme Court in Republic v Karisa Chengo and 2 others SCK Petition No 5 of 2015 [2017] eKLR emphasized the High Court, ELC and Employment and Labour Relations Court are three different and autonomous courts which exercise different and distinct jurisdictions. Further, that article 165(5) of the Constitution precludes the High Court from entertaining any matters that fall within the jurisdiction of the other two equal status courts.

6. I have considered the parties’ Written Submissions and I take the following view of the matter. From the Plaint, the dispute arises from the failure of the defendant to remit employees’ statutory deductions. The parties thereafter resolved the dispute by way of a debt swap where the debt would be paid by transfer of the suit property. The issue in my view is not about collection of rent as the plaintiff is not a landlord and the defendant a tenant. What is in issue are the parties’ obligation under the debt swap and whether in fact, the defendant would cease to collect rent and if not, whether it should account for the rent collected after the suit property was transferred after the debt swap agreement. This scenario is so far from what is contemplated under section 13 of the Environment and Land Court Act.

7. Even if the I were to accept that there was an aspect of rent collection in the relationship, I would still hold that the substantial issue for determination concerns the parties’ obligations under the debt swap agreement. I would adopt the dicta of Ngugi J., (as he was then) in Suzanne Achieng Butler and others v Redhill Heights Limited andanother KBU HCCC No. 2 of 2016 [2016] eKLR, where he explained that while the provisions on jurisdiction of the ELC in land related matters is clear, what is not clear is the what, “land related’’ means and this would require case by case determination. The learned judge then explained that:(23)When faced with a controversy whether a particular case is a dispute about land (which should be litigated at the ELC) or not, the Courts utilize the Pre-dominant Purpose Test: In a transaction involving both a sale of land and other services or goods, jurisdiction lies at the ELC if the transaction is predominantly for land, but the High Court has jurisdiction if the transaction is predominantly for the provision of goods, construction, or works.(24)The court must first determine whether the pre-dominant purpose of the transaction is the sale of land or construction. Whether the High Court or the ELC has jurisdiction hinges on the predominant purpose of the transaction, that is, whether the contract primarily concerns the sale of land or, in this case, the construction of a townhouse.

8. In applying the pre-dominant purpose test to this matter, I would hold that the issue of rent is peripheral since the relationship between the parties is the debt swap agreement and the obligations thereunder. As I stated earlier, there was no landlord-tenant relation where the payment of rent was under consideration.

9. I do not wish to belabour the matter any further and I hold that the High Court has jurisdiction to adjudicate this matter. The preliminary objection lacks merit and is dismissed with costs to the Plaintiff.

DATED AND DELIVERED AT NAIROBI THIS 10TH DAY OF NOVEMBER 2023. D. S. MAJANJAJUDGE