INSIGHTS

The Case of Bank Of Africa Kenya Limited & Garam Investments Auctioneers -Vs- Tss Investments Limited, Changawa Kazungu & Almady Mdzomba

The Court of Appeal recently rehashed the position that the position that the jurisdiction of the Environment and Land Court was strictly limited to disputes arising from the use of land and land titles.

Introduction

Background

The Court of Appeal recently rehashed the position that the position that the jurisdiction of the Environment and Land Court was strictly limited to disputes arising from the use and ownership of land. The three judge bench comprising of Justices A.K Murgor, D.K Laibuta, and G.V Odunga, emphatically pronounced that disputes arising from charges were financial in nature and thus fall under the hospice of the High Court.

The matter arose from a dispute regarding two prime parcels of land within Mombasa. The registered owner of the Land Almady Mdzomba (3rd Defendant) had used his land to secure a loan from the Bank of Africa. Some time later he leased the land to several tenants including TSS Investments( 1st Respondent) and Changawa Kazungu (2nd Respondent) who operated separate car dealerships on the property.

When the owner of the land defaulted, he was issued with a notice of statutory sale by the Bank who then instructed Garam Investments Auctioneers to auction the suit property. Perturbed by these developments, the 1st and 2nd Respondents moved to the Environment and Land Court successfully seeking an injunction to prevent the Bank from exercising its statutory power of sale. In response to this, the Bank and the Auctioneers moved to the court of appeal, resulting in the present case.

The Case

The issues canvased by the Court of Appeal were inter-alia:

  1. Whether the Environment and Land Court had the jurisdiction to entertain the Appeal.
  2. Whether, as leasers of the suit property, the 1st and 2nd Respondent had locus standi to interfere in the bank’s execution of its statutory power of sale.

The Appellants appealed the decision of the Environment and Land Court arguing that both Respondents lacked the standing to initiate the court case in the first place because they were not the registered owners of the impugned properties. They further argued that since the dispute was of a commercial nature, the Environment and Land Court lacked jurisdiction to hear it.

The Respondents on the other hand maintained that they had standing to initiate the case as tenants of the property. They also argued that since the bank’s decision to exercise their statutory power of sale would affect their tenancies on the land, the dispute was best heard by the Environment and Land Court.

The Court’s Holding

The Court held that the Environment and Land Court was envisioned under the law to have a jurisdiction limited to handling questions related to the environment, use of and occupation of land, and the tile of land. Since the crux of the dispute was whether a Chargo could exercise its statutory power of sale, the matter became a commercial dispute and was hence no longer within the ambit of the Environment and Land Court.

The Court of Appeal also held that only people who had a legal interest in land or contractual claim to land had the standing to initiate a court case regarding that land. It added that one did not gain interest in land by virtue of being tenants. This meant that charges and other transactions involving the interest of land, are not affected by tenancies and leases. Consequently, tenants are not owed any duties by Chargos because the loan agreement is between the lender and the owner of the land.

The Court of Appeal allowed the appeal, emphasizing that the Environment and Land Court had no jurisdiction over financial disputes including charges and other securities.

Key Insights at a Glance

The Environment and Land Court’s Jurisdiction is limited to hearing matters concerning the environment, and occupation and use of land, as well as ownership. Charges and other securities are commercial in nature and fall within the jurisdiction of the high court.
Being a tenant does not give one the rights against the Chargor if the land is charged. For instance, a lender is not obligated to notify them of intention to exercise a statutory power of sale.

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