Paragons Electronics Limited v Gachoka; Ngum & another (Interested Parties) [2022] KEHC 14420 (KLR)

Paragons Electronics Limited v Gachoka; Ngum & another (Interested Parties) (Miscellaneous Application E569 of 2021) [2022] KEHC 14420 (KLR) (Civ) (6 October 2022) (Ruling)

Neutral citation: [2022] KEHC 14420 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Miscellaneous Application E569 of 2021

JN Mulwa, J

October 6, 2022

IN THE MATTER OF THE ARBITRATION ACT NO. 4 OF 1995 AND THE ARBITRATION RULES -AND- IN THE MATTER OF AN ARBITRATION -BETWEEN-

Between

Paragons Electronics Limited

Applicant

and

Mwaniki Gachoka

Respondent

and

Ousainou Ngum

Interested Party

Khadijatou Ngum

Interested Party

Ruling

1. The Applicant approached this court vide a Notice of Motion dated 19th November 2021 brought pursuant to the provisions of Article 50(1) of the Constitution, Section 17(6) & (7) of the Arbitration Act and Order 51 Rule 1 of the Civil Procedure Rules. The applicant challenges the jurisdiction of the Arbitrator, the Respondent herein, to determine a dispute between the Applicant and the 1st and 2nd Interested Parties, arising from a Lease dated April 4, 2016.

2. The 1st and 2nd Interested Parties opposed the application vide a Notice of Preliminary Objection dated January 17, 2022 in which they sought to have the application struck out/dismissed in limine on the following grounds:1. Thatthe Honourable Court lacks the requisite jurisdiction to take cognizance of, and to hear and determine the application by virtue of the provisions of Section 101 of the Land Registration Act, 2012 and section 13(1), (2) & (3) of the Environment and Land Court Act, 2011. 2.Thatthe application is statute barred by virtue of the provisions of Section 17(2) & (3) as read together with section 5 of the Arbitration Act No. 4 of 1995 (as Amended).3. Thatthe application is statute barred by virtue of the provisions of Section 10 of the Arbitration Act No. 4 of 1995 (as Amended).

3. This Ruling is therefore in respect to the preliminary objection. It is important to point out that the court will begin by determining whether or not it has jurisdiction to entertain the Applicant’s application. The answer to that issue is what will determine whether it is necessary to consider the other grounds in the preliminary objection.

4. The preliminary objection was canvassed by way of written submissions.The 1st and 2nd Interested Parties submitted that the Applicant’s application emanates from an ongoing arbitration over an Agreement for lease in respect of an apartment. They contended that the arbitration concerns title to land and thus the proper court to deal with the Applicant’s application is the Environment and Land Court and not the High Court. Further, they noted that the Applicant is well aware of the proper forum for its application since it has already filed six suits in the Environment and Land Court emanating from the subject arbitration namely ELCMisc. Suit No. 234 of 2017; ELCSuit No. 215 of 2017; ELC Misc. Suit No. 59 of 2019; ELC Petition No. 1 of 2021; ELC Misc. No. E048 of 2020; andELC No. 37 of 2020.

5. On the other hand, the Applicant submitted that the Preliminary Objection is defective since it is not based on a pure point of law as per the requirement in Mukisa Biscuits Manufacturing Co. Ltd v West End Distributors [1969] EA 696 and Oraro v Mbaja [2005] eKLR. It contended that the instant Preliminary Objection requires the court to interrogate inter alia the nature of the dispute between the parties and is also based on controverted facts as evidenced by the Respondent’s lengthy Replying Affidavit filed on April 17, 2022.

6. Secondly, the Applicant submitted that this court indeed has jurisdiction to consider its application since Section 17(6) of the Arbitration Act, 1995 expressly states that such applications should be lodged in the High Court. It stated that there is no basis as to why the reference to “High Court” in the said provision should be read to include “the Environment and Land Court” when the Legislature did not deem it fit to amend the Arbitration Act accordingly upon the creation of the court. Further, it was the Applicant’s submission that reliance on Section 13 of the Environment and Land Act in arbitration matters is expressly precluded by Section 10 of the Arbitration Act which requires that arbitration matters be dealt with as per the provisions of the Act. Additionally, the Appellant asserted that the dispute in these proceedings is strictly between the Applicant and the Arbitrator and only relate to the scope of his jurisdiction as opposed to use of land.

7. What constitutes a Preliminary Objection was set out in the case of Mukisa Biscuit Manufacturing Co. Ltd v West End Distributors Ltd (1969) EA 696, where the court stated as follows:-“A Preliminary Objection consists of a point of law which has been pleaded or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the jurisdiction of the Court or a plea of limitation or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration… a Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is argued on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact had to be ascertained or if what is sought is the exercise of judicial discretion.”

8. It is well settled that jurisdiction is everything and without it, a court must down its tools. Since a Court’s jurisdiction flows from either the Constitution or Legislation or both, it goes without saying that jurisdiction is a pure point of law and thus, the instant preliminary objection falls within the rubrics of Mukisa Biscuits case (Supra).

9. Does this court have jurisdiction to determine the Appellant’s application? In my considered view, the answer to this issue lies in the substratum of the dispute that was referred to arbitration by the Interested Parties and Applicant herein. A perusal of the annexed Statement of Claim lodged with the Arbitrator reveals that the dispute concerns a lease agreement between the Applicant and the Interest Parties in respect to Apartment No. 11, 5th Floor/Penthouse, Block A1 in an executive residential apartment development known as Remax Terrace Apartments on LR. No. 330/335, Nairobi County. The orders sought in both the Statement of Claim and Statement of Response and Counterclaim filed before the Arbitral Tribunal also clearly show that the use and occupation of the apartment in question was largely in issue.

10. Article 162 (2) as read with Article 165 (5) (b) of the Constitution and Section 13 of the Environment and Land Court Act, 2011 reserves the jurisdiction to determine disputes relating to the environment and use and occupation of land exclusively in the Environment and Land Court. The said Section 13 provides that:-“(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 interests in land; and,e.any other dispute relating to environment and land.”

11. As regards the issue of jurisdiction of the ELC Court in relation to applications under Section 17 of the Arbitration Act, I hold the view that the fact that the said provision specifies the High Court as the court to which parties can make applications challenging the jurisdiction of an arbitrator does not exclude the courts with the status of the High Court. I find guidance in the pronouncement by Ochieng J. in Misc Application No 559 of 2016, CMC Aviation Limited, Trident Enterprises Limited v Anastacio D Thomas that: -‘There is no doubt that the Employment and Labour Relations Court was established by Parliament, pursuant to the Constitutional imperative that a court, with the status of the High Court be established to hear and determine disputes relating to employment and labour relations…..I am also alive to the fact that the Arbitration Act in Kenya was enacted in 1995. At that time, the Courts with the status of the High Court did not exist. Therefore, it cannot be argued that by specifying the High Court as the court to which parties could have recourse against arbitral awards, the Arbitration Act intended to, inter alia, exclude the courts with the status of the High Court.’ In my considered view, the fact that the dispute was first registered at the Industrial Court, as a claim by an employee who believed that his employers had dismissed him unfairly or had unfairly terminated his services, is significant. …

12. Further, in United States International University (USIU) v Attorney General [2012] eKLR, Majanja J. also observed as follows:-“The Industrial Court contemplated under Article 162(2) was intended to be independent of the High Court. It is for this reason that it was bestowed the status of the High Court. Indeed, the Final Report of the COE affirms that giving Parliament power to establish the Industrial Court with the status of the High Court was aimed at addressing the competing jurisdictional issues that have historically existed between the High Court and the Industrial Court. It was the intention of the drafters of the Constitution to give the Industrial Court, though a specialized court in nature, full independence from the High Court…. The Constitution does not define what “status” means but in my view it implies that the court so created must have the same juridical incidents as the High Court. The jurisdiction bestowed upon the High Court under Article 165(3) is not absolute but ‘subject to clause (5)’ whose provisions forbid the High Court from exercising jurisdiction over matters falling within the province of the Supreme Court and the specialized court established under Article 162(2). This status is to be determined from a textual consideration of the provisions governing the judicature. First, under Article 162, the courts of status of the High Court are considered superior courts save that their functions are to be defined by Parliament rather than the Constitution itself. Second, Part 2 of Chapter Ten titled “Superior Courts” sets out the jurisdiction of the Superior courts, that is, the Supreme Court, the Court of Appeal and the High Court. Though the Courts of status of the High Court are not defined their jurisdiction is dealt with in negative terms under Article 165. The High Court shall not exercise jurisdiction in matters reserved for status courts contemplated under Article 162(2). This implies that the High Court cannot deal with matters set out in section 12 of the Industrial Court Act, 2011. Third, the High Court does not have supervisory jurisdiction of superior courts, which includes courts with the status of the High Court.”

13. From the foregoing, it is evident that this court lacks jurisdiction to entertain the Applicant’s Notice of Motion dated November 19, 2021. In the premises, I decline to take any action in respect of the application and down my tools in line with the celebrated case of Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR where the court rendered that:“Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs its tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.”

14. For the foregoing, and having made a determination that this court lacks jurisdiction to determine the application,I find it prudent not to dismiss the application, but instead to transfer the matter to the court with the requisite jurisdiction, The Environment and Land Court for hearing and determination. It is so transferred.Orders accordingly.

DELIVERED DATED AND SIGNED AT NAIROBI THIS 6TH DAY OF OCTOBER, 2022J.MULWAJUDGE