Kombo & 3 others v Siro & 3 others; Joxxela Limited (Interested Party) (Civil Case 2 of 2021) [2024] KEHC 439 (KLR) (17 January 2024) (Ruling)
Neutral citation:
[2024] KEHC 439 (KLR)
Republic of Kenya
Civil Case 2 of 2021
SN Mutuku, J
January 17, 2024
Between
Steve Kombo
1st Plaintiff
Francis Karingi
2nd Plaintiff
Wilfred Kimani (Suing on Behalf of Unionsquare Ventures)
3rd Plaintiff
Andrew Mude
4th Plaintiff
and
Leonard Siro
1st Defendant
Paul Kinuthia
2nd Defendant
Bernard Muya Matipo
3rd Defendant
Scholastica Nabututu Wabende
4th Defendant
and
Joxxela Limited
Interested Party
Ruling
1.This Ruling relates to a Notice of Motion dated 24th October 2022. It is brought by the defendants who are the applicants in this matter and is anchored under Section 1A, 1B, 3 and 3A of the Civil Procedure Act, Order 45 & 51 Rule 1 of the Civil Procedure Rules & Article 159 of the Constitution of Kenya. It seeks the following orders:i.Spent.ii.That the ex-parte orders of the court issued on the 22nd September 2022 be set aside and or varied accordingly and pending the hearing of this application the said orders be stayed.iii.That costs be provided for.
2.The Application is supported by grounds on the face of it and in the supporting affidavit sworn on 21st October 2022 by Paul Kinuthia, the 2nd Defendant on behalf of the other applicants.
3.In summary, the applicants are saying that this court lacks jurisdiction to hear and determine this matter as it relates to land ownership, land use and or cancellation or revocation of titles to land and that the orders dated 22nd September 2022 were issued ex parte.
4.The applicants are raising issue with the mode of service which they term was done in bad faith by the Respondents misleading the court in an attempt to secure the orders ex parte without according the applicants an opportunity to be heard; that the ex parte orders are prejudicial to the applicants and that this matter touches on land use, land ownership and land titles and therefore this court lacks jurisdiction to determine this matter.
5.The deponent states that he, together with the 1st defendant, purchased and paid fully parcels of land Nos. Kajiado/Ildamat/5556,5557, 5558,5559, 5560, and 5561 and requested the same to be registered in the name of their company Joxxela Ltd, the Interested Party herein and the Respondents have no claim on the said properties; that the Respondents were dealing with an entity called Diamond Property Merchant Ltd (DPML) and not the applicants or the Interested Party and that what existed between the Respondents and the Applicants is a farming venture which has since terminated and that it would be uncalled for and outright theft for the Respondents to lay claim on the land which initially belonged to the Interested Party and which has since been liquidated and sold to various persons some of who are not parties to these proceedings.
Replying Affidavit
6.The Application is opposed through a Replying Affidavit by Francis Karingi, the 2nd Plaintiff/Respondent. It is shown to have been sworn on 4th January 2022 on behalf of the other Respondents and was filed on 5th January 2023. The date of swearing that affidavit may be an error given that it was responding to the Application dated 24th October 2022.
7.The Respondents have touched on many issues in that affidavit. It is deposed that that application is frivolous, vexatious, has no cause of action, an abuse of court process and is in bad faith, only meant to derail and delay the hearing and determination of this matter.
8.It was deposed that the Applicants have admitted interfering with the assets of the Interested Party by selling them and alienating them from the jurisdiction of this court and therefore the interim orders stand to protect this mischief.
9.It was deposed that proper service was effected after obtaining court order for substituted service; that it is only upon being served on 27th October 2022 that the Respondents’ counsel became aware of the advocates for the Applicants on record; that to date, the 3rd and 4th Defendants and their whereabouts remain unknown to the Respondents and therefore the best mode of service remain substituted service.
10.On the issue of jurisdiction of this court to determine this matter, the Respondents have deposed that the issue in dispute is the directorship and shareholding of the Interested Party and that should this court find that the Applicants defrauded the Plaintiffs and the Interested Party, then the revocation of the titles would be a natural and collateral consequence of the fraud.
11.It was deposed that the properties mentioned by the Applicants are assets of the Interested Party which assets were misappropriated to the exclusion of all the genuine shareholders of the Interested Party; that the Respondents seek a reversion of the properties to the Interested Party and compensation of the Interested Party and the Respondents for the losses caused by the Applicants; that the use of land is collateral to the major claim of directorship and shareholding; that the land belonging to the Interested Party was a misappropriated assets which are sought to revert to the Interested Party; that the Interested Party is a private limited company as defined under section 3(1) of the Companies Act and that the “court” as defined in the same section is the High Court and therefore it is this court that has jurisdiction to determine this matter.
12.The Respondents cited Republic v. Resident Magistrate’s Court at Kiambu, Ex parte Geoffrey Kariuki Njuguna & 19 others [2017] eKLR to emphasize the point that only the High Court has jurisdiction to hear and determine any dispute touching on company law by virtue of section 3 of the Companies Act.
13.There is also the Replying Affidavit of Steve Kombo, the 1st Plaintiff/Respondent sworn on 27th January 2023. Steve Kombo associated himself with the Replying Affidavit of the 2nd Plaintiff who has stated that he had authority to swear that affidavit on behalf of the other Plaintiffs. I have read the affidavit and I need not replicate it in this ruling.
Submissions
14.I directed parties to file written submission to enable this court to determine the issue of jurisdiction raised in the Notice of Motion dated 24th October 2022. Both parties have filed their submissions. The Applicants’ submissions are dated 16th February 2023. The Applicants have explained the constitutional provisions granting jurisdiction to this court and the Environment and Land Court (ELC) being articles 165 (3) for the High Court and 162 (2) (b) for the ELC as well as section 13 of the ELC Act.
15.They have submitted that as stated by the court in Owners of the Motor Vessel “Lillian S” vs. Caltex Oil (Kenya) Ltd (1989) KLR 1, jurisdiction is everything and without it, a court has no power to make one more step. They submitted that this court lacks jurisdiction and should down its tools and strike out the entire suit. They submitted that this court cannot transfer this matter to the ELC because both courts are of equal status exercising different jurisdictions and that section 18 of the Civil Procedure Act empowers the High Court to transfer a suit for hearing and disposal to any subordinate court and not the ELC.
16.It was submitted that the order to transfer the suit from one court to another cannot be made unless the suit has in the first instance been brought to a court with jurisdiction to try it.
17.The Applicants, submitted on the issue of setting aside the orders issued on 22nd September 2022. They submitted that if this court were to find that it lacks jurisdiction in this matter, then this issue would be mute.
18.The Respondents’ submissions are dated 27th February 2023 and filed on 2nd March 2023. The submissions are detailed, covering the summary of the case, the legal analysis on the issue of review of the courts orders and the correct provisions of the law to base an application seeking review of the orders on, the issue of service of the suit on the Applicants, to which they submitted that the Applicants were properly served and the issue of jurisdiction of this court.
19.The Respondents submitted on the issue of jurisdiction of this court on a “without prejudice basis” because of the reasons advanced in the submissions. It is the case for the Respondents that this suit is about directorship and shareholding of the Interested Party and investment in agribusiness and that the issue of the assets (land) is ancillary to the main issue. They submitted that when the court lacks jurisdiction, it does not stay or set aside interim orders but is asked to dismiss and/or transfer the suit for lack of jurisdiction and that a court of law can only grant orders prayed for.
20.The Respondents invoked “the Dominant Test”/“Predominant Purpose Test” and submitted that the dominant issue in this matter is shareholding and directorship of the Interested Party. They cited Co-operative Bank of Kenya Limited v. Patrick Kangethe Njuguna & 5 others [2017] eKLR where the Court of Appeal had this to say:
21.It was submitted, further, that the jurisdiction of the ELC under Article 162 of the Constitution, Section 13 of the ELC Act and Section 150 of the Land Act do not concern the shareholding and directorship of a company. The Respondent made detailed submissions to emphasize their point that the dominant issue in this matter is not land and therefore this court is the correct forum for this matter to be heard and determined.
Determination
22.I have considered this matter. It is prudent, where the issue of jurisdiction of the court is raised, to resolve that issue first to pave the way for determination of other issues were the court to find that it is clothed with requisite jurisdiction to handle the matter.
23.Under paragraph 68, Supreme Court of Kenya in Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR had this to say on the issue of jurisdiction:
24.Resolving the issue of jurisdiction first saves judicial time and saves parties costly litigation and time spent in a matter before a court that is not seized with the requisite jurisdiction. the Constitution of Kenya has created two courts of equal status: the High Court and the ELC. However, these courts exercise distinct jurisdiction from each other. The High court is a creature of Article 165 of the Constitution. Its jurisdiction is specified under Article 165 (3). The High Court is prohibited by Article 165 (5) (b) of the Constitution of Kenya from exercising jurisdiction falling within the jurisdiction of the courts contemplated in Article 162 (2).
25.The ELC is one of the courts contemplated in Article 162 (2) (b) of the Constitution. Article 162 (2) (b) provides that:
26.The jurisdiction of the ELC is specified further under Section 13 of the ELC Act 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.
27.With that clarity on the issue of jurisdiction, it is upon this court to determine whether the claim by the Plaintiffs/Respondents falls under the jurisdiction of this court of that of the ELC. I have read the pleadings in this matter. I have noted that in paragraph 10 of the Plaint, a company by the name of Diamond Properties Merchants Limited (DPML) advertised for a hybrid agribusiness and land investment in which investors would contribute money which would entitle them to parcels of land and greenhouses. The said land would be utilized by DPML for agribusiness purposes for the benefit of the investors.
28.In paragraph 11 of the Plaint, it is stated that the said transaction described in paragraph 10 was of a sale and leaseback nature whereby each investor would be buying land and the said land would be leased back by the company for agribusiness purposes.
29.It is clear to me that things did not run smoothly. Paragraph 16 of the Plaint shows that there was a compensation scheme where DPML offered to the 4 Plaintiffs and the 1st and 2nd Defendants through the 1st Plaintiff 45 acres of land being title numbers Kajiado/Ildamat/5556, 5557, 5558, 5558. 5560 and 5561, among other assets to be shared as per each party’s contribution.
30.I also note that among the reliefs sought under paragraph 59(l) is cancellation of titles issued on the strength of Gazette Nos. 1167 and 1168 issued on 12th February 2021 in respect of Kajiado/Ildamat/5558, 5560 and 5556 in the names of the people named in that paragraph.
31.My understanding of this matter as narrated in paragraphs 27, 28, 29 and 30 above is that the issues central to this matter is ownership of land and land use. The two issues cannot be isolated from the central dispute herein. The other issues of directorship and shareholding as pleaded by the Respondents, affecting land and land use in the titles mentioned in this matter are ancillary to that central issue. Even if this court were to consider the “dominant test” or “predominant test”, it is my considered view that this test would be a land and land use related matter as those are the issues popping out as the main issues for consideration.
32.It is common knowledge that proof of ownership of land is possession of a title deed. Where that title is questioned, for example due to fraud or other illegal dealing, the ownership of that land by anyone so claiming comes to question. That person must be given a chance to argue his case in the right forum. In our case that right forum is the ELC as the law provides. That court is clothed with the requisite jurisdiction to handle such a matter and the inherent discretion to handle and resolve any other issue incidental of ownership of the land un question.
33.It is my view that after giving this matter careful consideration the conclusion I arrive at is that this is a dispute that falls squarely under the jurisdiction of the ELC and not the High Court and I so find. Consequently, this court lacks jurisdiction to continue handling this matter.
34.I have considered the arguments of the parties that this court cannot transfer this matter to the ELC for lack of jurisdiction to do so. I am however of a different view. It is my view and so believe that the Constitution of Kenya 2010 enjoins this court to consider the principles of right to access to justice, expediency in delivery of justice and substantive justice and transfer this matter to the ELC for determination. I have also considered the Court of Appeal pronouncements in Daniel N. Mugendi v. Kenyatta University & 3 others (2013) where it stated that:
35.In conclusion, I hereby order that this matter be transferred to the ELC Kajiado for hearing and determination. The Deputy Registrar of this court is hereby directed to place this file before the Presiding Judge of the ELC for directions on a date to be communicated to the parties.
36.Orders shall issue accordingly.
DATED, SIGNED AND DELIVERED THIS 17TH JANUARY 2024S. N. MUTUKUJUDGE