Thomas Mutuku Kasue v Housing Finance Company Ltd (HFC) & Legacy Auctioneers [2021] KEELC 4524 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT

AT MACHAKOS

ELC. CASE NO. 40 OF 2020

THOMAS MUTUKU KASUE................................................................................PLAINTIFF

VERSUS

HOUSING FINANCE COMPANY LTD (HFC)........................................1ST DEFENDANT

LEGACY AUCTIONEERS.........................................................................2ND DEFENDANT

RULING

1. In the Notice of Preliminary Objection dated 18th day of August, 2020, the 1st and 2nd Defendants have averred that the suit should be dismissed in limine on the ground that this court has no jurisdiction to handle the matter.

2. The Notice of Preliminary Objection proceeded by way of written submissions. The Defendants’ advocate submitted that as security for a loan facility, the Plaintiff executed a Charge dated 26th February, 1998 and later a Further Charge dated 22nd April, 1999 over Land Reference Number 337/2057(Original Number 337/2019/38).

3. It was submitted that the 1st Defendant is seeking to exercise its statutory power of sale while the Plaintiff has contended that it did not receive the requisite statutory notices; that the substratum of the suit relates to the legal charges and subsequent statutory power of sale and that this is purely a commercial dispute within the jurisdiction of the High Court and is in fact the dominate dispute for determination under the predominant purpose test.

4. It was submitted that jurisdiction is everything as stated by the Court of Appeal in the celebrated case of Owners of the Motor Vessel “Lillian S” vs. Caltex Oil (Kenya) Ltd [1989] eKLR; that where a court has no jurisdiction, there would be no basis for a continuation of proceedings and that the preamble to the Environment and Land Court Act makes it clear that the court was created to give effect to Article 162(2) (b) of the Constitution to establish a superior court to hear and determine disputes relating to the environment and the use and occupation of, and title to, land, and to make provision for its jurisdiction functions and powers for connected purposes.

5. The Defendants’ advocate submitted that the Jurisdiction of this court is set out in Section 13 of the Environment and Land Court Act and that on the face of it, the Environment and Land Court Act, as read together with the Constitutional provisions of Article 162(2) (b), does not confer jurisdiction to this court (the Environment and Land Court) to deal with matters relating to legal charges.

6. It was submitted that as was held in Kisimani Holdings Limited & Another vs. Fidelity Bank Limited [2013] eKLR, in matters involving a charged property, the proper forum for filing the suit is the High Court and that the jurisdictional dichotomy of which court should hear disputes where charged properties were concerned was laid to rest by the Court of Appeal in the case of Co-operative Bank of Kenya Limited vs. Patrick Kangethe Njuguna & 5 others [2017] eKLR.

7. On the question of whether this court has the jurisdiction to transfer the suit to the High Court if it finds that it has no jurisdiction to hear and determine the dispute, counsel relied on the decision by the Supreme Court in the case of Albert Chaurembo Mumba & 7 others vs. Maurice Munyao & 148 others[2019] eKLR where the court held that a suit filed before a court without jurisdiction could not be transferred to another court.

8. It was submitted that the claim by the Respondent was filed before a court devoid of jurisdiction; that this suit is a nullity ab initio and was not transferable to another court and that jurisdiction cannot be conferred by consent and ultimately, all orders emanating from such a suit are null and void. Counsel also relied on the case of Phoenix East AfricaAssurance Co. Ltd vs. S.M. Thiga t/a Newspaper Services Civil Appeal No. 6 of 2018.

9. It was submitted that based on the above authorities, this court has no jurisdiction to deal with the dispute and ought to strike out the suit with costs. The Plaintiff’s advocate did not file submissions.

10. This suit was commenced by way of a Plaint dated 15th June, 2020. In the Plaint, the Plaintiff averred that he is the owner of land known as L.R. No. 337/20257 (Original number 337/2019/38);that by way of a letter dated 24th February, 2020, he was served with a letter informing him that his land was scheduled for sale by way of public auction on 17th June, 2020 and that prior to the said letter, he had not been served with the requisite 90 and 94 days’ statutory notices in compliance with Sections 90 and 94 0f the Land Act.

11. It is the Plaintiff’s case that the failure by the Defendants to issue to him the required statutory notices is a fundamental breach of the provisions of Article 40 of the Constitution, Sections 90 and 94 0f the Land Act as read together with Section 15(d) of the Auctioneers Rules.

12. In the Plaint, the Plaintiff has prayed for a declaration that any purported sale of the suit property by public auction is in contravention of the government’s directive and a ban of all public gatherings and events due to Covid 19; a declaration that a 90 and 94 days’ statutory notices as well as a 45 days Redemption Notice were not properly issued upon him and that consequently, a permanent injunction should issue.

13. The Defendants have raised a Preliminary Objection on the issue of the jurisdiction of this court to hear and determine the dispute. The requirement that a Court or Tribunal can only deal with a dispute in respect of which it has the requisite jurisdiction cannot be overemphasized.  In the case of Lillian “S” vs. Caltex Kenya Limited [1989] eKLR, the Court of Appeal held as follows:

“By jurisdiction is meant the authority which a court has to decide matters that are before it or take cognizance of matters presented in a formal way for its decision.  The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted and may be extended or restricted by the like means.  If no restriction or limit is imposed the jurisdiction is said to be unlimited.  A limitation may be either as to the kind and nature of the actions and matters of which the particular court has cognizance, or as to the area over which the jurisdiction shall extend, or it may partake both of these characteristics.  If the jurisdiction of an inferior court or tribunal (including an arbitrator) depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it has jurisdiction; but, except where the court or tribunal has been given power to determine conclusively whether the facts exist.  Where the court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing.  Jurisdiction must be acquired before judgement is given…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. InRepublic vs. Karisa Chengo & 2 Others [2017] eKLR,the Supreme Court held as follows:

“By jurisdiction is meant the authority which a Court has to decide matters that are litigated before it or take cognizance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter or commission under which the Court is constituted, and may be extended or restricted by like means. If no restriction or limit is imposed, the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the actions and matters of which the particular Court has cognizance or as to the area over which the jurisdiction shall extend, or it may partake both these characteristics…where a Court takes upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgment is given.”

15. This court’s jurisdiction emanates from the provisions of Article 162(2) (b) of the Constitution and Section 13 of the Environment and Land Court Act (the ELC Act).  Article 162(2)(b) of the Constitution provides as follows:

“Parliament shall establish courts with the status of the High Court to hear and determine disputes relating to–

(b) the environment and the use and occupation of, and title to, land.”

16. Parliament enacted the Environment and Land Court Act in compliance with the provisions of Article 162(3). Section 13 of the Environment and Land Court Act provides as follows:

“(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.

(3) Nothing in this Act shall preclude the Court from hearing and determining applications for redress of a denial, violation or infringement of, or threat to, rights or fundamental freedom relating to a clean and healthy environment under Articles 42, 69 and 70 of the Constitution.”

17. Article 165(5) of the Constitution divests the High Court the jurisdiction in respect of matters falling within the jurisdiction of the courts contemplated under Article 162(2) of the Constitution. The Supreme Court delved into the issue of the jurisdiction of this court vis-a-vis the jurisdiction of High Court in great detail in the case of Republic vs. Karisa Chengo & 2 Others [2017] eKLR in which it held as follows:

“[52] In addition to the above, we note that pursuant to Article 162(3) of the Constitution, Parliament enacted the Environment and Land Court Act… From a reading of the Constitution and these Acts of Parliament, it is clear that a special cadre of Courts, with sui generis jurisdiction, is provided for.  We therefore entirely concur with the Court of Appeal’s decision that such parity of hierarchical stature does not imply that either ELC or ELRC is the High Court or vice versa...”

18. The Plaintiff has not denied that as security for a loan facility, he executed a Charge dated 26th February, 1998 and later a Further Charge dated 22nd April, 1999 over Land Reference Number 337/2057 (Original Number 337/2019/38). The Plaintiff has confirmed in the Plaint that the 1st Defendant  is seeking to exercise its statutory power of sale of the charged property. On his part, the Plaintiff has contended that he did not receive the requisite statutory notices.

19. The substratum of the suit therefore relates to the legal charges and the subsequent statutory power of sale. The court that has jurisdiction to deal with a dispute in which the predominant issue is the exercise of the statutory power of sale by the chargee has since been settle by the Court of Appeal in the case of Co-operative Bank of Kenya Limited vs. Patrick Kangethe Njuguna & 5 others [2017] eKLRwhere the court held as follows:

“35. Accordingly, for land use to occur, the land had to be utilized for the purpose for which the surface of the land, air above it or ground below it was adapted. Therefore, to the law, land use entailed the application or employment of the surface of the land and/or the air above it and/or ground below it according to the purpose for which that land was adapted. Neither the cujus doctrine nor Article 260 of the Constitution whether expressly or by implication recognized charging land as connoting land use.

36. By definition, a charge was an interest in land securing the payment of money or money’s worth or the fulfillment of any condition. As such, it gave rise to a relationship where one person acquired rights over the land of another as security in exchange for money or money’s worth. The rights so acquired were limited to the realization of the security so advanced. Therefore, the creation of that relationship had nothing to do with use of the land as defined. That relationship was simply limited to ensuring that the chargee was assured of the repayment of the money he had advanced the chargor.

37. Further, Section 2 of the Land Act recognized a charge as a disposition in land. A disposition was distinguishable from land use. While the former created the relationship, the latter was the utilization of the natural resources found on, above or below the land. Land use connoted the alteration of the environmental conditions prevailing on the land and had nothing to do with dispositions of land. Saying that creation of an interest or disposition amounted to use of the land, was akin to saying that writing a will bequeathing land or the act of signing a tenancy agreement constituted land use. The mere acquisition or conferment of an interest in land did not amount to use of that land. If that were the case, there would neither be absentee landlords nor would principles like adverse possession ever arise. If a disposition were held to constitute land use, an absentee landlord with a subsisting legal charge over his land would never have to contend with the consequences of adverse possession, for he would always be said to be ‘using’ his land simply by virtue of having a floating charge/disposition over the property.

38. Consequently, the assertion that a charge constituted use of land within the meaning of Article 162 of the Constitution had to fail. In addition, the cause of action before the Court was not the validity of the charge, but a question of accounts…

40. To the Appellant, the charge was an instrument granting an interest in the land, hence jurisdiction in the matter lay with the Environment and Land Court. However, under Section 2 of the Environment and Land Court Act, an instrument was a writing or enactment which created or affected legal or equitable rights and liabilities. For the purposes of the instant suit, that instrument was the charge. The cause of action was never the charge (instrument) but the amounts due and owing thereunder. Neither the charge instrument nor the creation of an enforceable interest thereunder, were disputed. The main questions to be determined were the tabulation of the sums owing and whether statutory notices had issued prior to the attempted statutory sale.

41. Furthermore, the jurisdiction of the Environment and Land Court to deal with disputes relating to contracts under Section 13 of the Environment and Land Court Act ought to be understood within the context of the Court’s jurisdiction to deal with disputes connected to ‘use’ of land. Such contracts, ought to be incidental to the ‘use’ of land; they did not include mortgages, charges, collection of dues and rents which fell within the civil jurisdiction of the High Court. By parity of reasoning, the dominant issue in the instant case was the settlement of amounts owing from the Respondents to the Appellant on account of a contractual relationship of a banker and lender.

42. While exclusive, the jurisdiction of the Environment and Land Court was limited to the areas specified under Article 162 of the Constitution, Section 13 of the Environment and Land Court Act and Section 150 of the Land Act; none of which concerned the determination of accounting questions. Consequently, the dispute did not fall within any of the areas envisioned by those provisions. On the other hand, the jurisdiction of the High Court over accounting matters was without doubt, as evidenced by article 165(3) of the Constitution. The Appellant’s objection on jurisdiction was rightly dismissed.”

20. The Court of Appeal, whose decision is binding on this court, has held that where the predominant issue in a suit involves mortgages, charges, collection of dues and rents, it is the High Court, and not the Environment and Land Court, that has jurisdiction to deal with the dispute. That being so, and the predominant issue in this matter being the issuance of the statutory notices by the chargee, it is my finding that this court does not have jurisdiction to hear and determine this suit.

21. Although it has been the practice of this court, and the High Court, to transfer suits to the High Court and vice versa in instances where the court finds that it has no jurisdiction, the said practice has since been held to be illegal. In the case of Albert Chaurembo Mumba & 7 others vs. Maurice Munyao & 148 others[2019] eKLR the Supreme Court held that a suit filed before a court without jurisdiction could not be transferred to another court. The court held as follows:

“[153] In that context, the purposive reading and interpretation of Article 162 together with Article 165(5) of the Constitution leaves no doubt that the original and appellate jurisdiction over disputes related to Employment and Labour relations was transferred from the High Court to the Employment and Labour Relations Court. Prima facie, that meant that, any dispute subject to any other statutory or constitutional limitations emanating from the disputes contemplated under Article 162(2) supra, must be determined by the Employment and Labour Relations Court. This is what may have informed the consent by parties through respective counsel to transfer the matter from the High Court to the Employment and Labour Relations Court.

[154] However, as it was well elucidated in the case of Kagenyi v Musiramo & Another (1968) EALR 43, an order for transfer of a suit from one court to another cannot be made unless the suit has been brought, in the first instance, to a court which has jurisdiction to try it. It is therefore irrelevant as parties cannot consent to confer jurisdiction to a Court/tribunal where it is not provided by law.” [emphasis mine]

22. The above position has been followed by the Court of Appeal in the case of Phoenix of E.A. Assurance Company Limited vs. M. Thiga t/a Newspaper Service [2019] eKLR where it was held as follows:

“We are not persuaded that that proposition by the respondent is correct in law. Jurisdiction is primordial in every suit. It has to be there when the suit is filed in the first place. If a suit is filed without jurisdiction, the only remedy is to withdraw it and file a complaint one in the court seized of jurisdiction. A suit filed devoid of jurisdiction is dead on arrival and cannot be remedied. Without jurisdiction, the Court cannot confer jurisdiction to itself. The subordinate court could not therefore entertain the suit and allow only that part of the claim that was within its pecuniary jurisdiction…These words were echoed by this Court in Equity Bank Limited v Bruce Mutie Mutuku t/a Diani Tour Travel (2016) eKLRin the following words:-

“In numerous decided cases, courts, including this Court have held that it would be illegal for the High Court in exercise of its powers under S.18 of the Civil Procedure Act to transfer a suit filed in a court lacking jurisdiction to a court with jurisdiction and therefore sanctify an incompetent suit. This is because no competent suit exists that is capable of being transferred. Jurisdiction is a weighty fundamental matter and to allow a court to transfer an incompetent suit for want of jurisdiction to a competent court would be to muddle up the waters and allow confusion to reign, It is settled that parties cannot, even by their consent confer jurisdiction on a court where no such jurisdiction exists. It is so fundamental that where it lacks parties cannot even seek refuge under the O2 principle or the overriding objective under the Civil Procedure Act, the Appellate Jurisdiction Act or even Article 159 of the Constitution to remedy the same.

…In the same way, a court of law should not through what can be termed as judicial craftsmanship sanctify an otherwise incompetent suit through transfer.” (Emphasis ours)

Decided cases on this issue are legion and we cannot cite all of them. The case of Joseph Muthee Kamau & Another v. David Mwangi Gichure & Another (2013) eKLRis however on all fours and addresses the issue raised by Ms. Wambua as to whether the subordinate court could still hear the suit but only allow the maximum damages allowable within its pecuniary jurisdiction. The Court succinctly settled this point in the following words:-

“When a suit has been filed in a court without jurisdiction, it is a nullity. Many cases have established that; the most famous being Kagenyi v. Musirambo (1968) EA 43. The same would apply to pecuniary jurisdiction in a claim for special damages where the liquidated sum claimed exceeds the court’s pecuniary jurisdiction.”

We hold that jurisdiction cannot be conferred at the time of delivery of judgment. Jurisdiction does not operate retroactively. Jurisdiction must exist at the time of filing suit or latest at the commencement of hearing.

It is clear from the foregoing that the claim by the respondent was filed before a court devoid of jurisdiction. The suit was a nullity ab initio and was not transferable to another court; jurisdiction cannot be conferred by consent and ultimately, all orders emanating from that suit are null and void. CIVIL APPEAL NO. 6 OF 2018 PHOENIX EAST AFRICA ASSURANCE CO.LTD vs. S.M. THIGA T/A NEWSPAPER SERVICESis therefore a nullity as it was based on a nullity.”

23. From the above decisions of the Supreme Court and the Court of Appeal, it follows that this suit having been filed in a court without the requisite jurisdiction is not transferrable to the High Court.

24. The suit is therefore struck out with costs to the Defendants.

DATED, DELIVERED AND SIGNED IN MACHAKOS THIS 29TH DAY OF JANUARY, 2021.

O.A. ANGOTE

JUDGE