GEORGE MUSAMALI AND MOSES EPOLOTO AND 2 Others VS RUARAKA HOUSING ESTATE LTD AND UTUMISHI INVESTMENT LTD AND 1 Others

Introduction and Background:-

1. The 3^rd Defendant (“the Sacco”) is a Savings and Credit Co-operative Society and at all material times, the Plaintiffs were its members. Sometime in 1982, the Sacco, through its management decided to start a development project for its members and it identified a piece of land in Nairobi Kasarani area, LR. 8393 and decided to start a housing project, where interested members of the Sacco would buy shares in 1980. In total, 31 housing units were constructed according to the agreed specifications and plans which costed Kshs.20.5 million on a 20-acre piece of land then.
2. The 20-acre piece of land was purchased in full through a check off system with the deductions from the salaries of 8,009 members who were supposed to own 75% of the property and the other 25% was to belong to the Sacco and Share Certificates issued to the members. By a plaint dated 26^th February 2024, the Plaintiff filed the present suit claiming that the Sacco incorporated the 1^st and 2^nd Defendant companies and that all the properties; that is the 20-acre piece of land and a building known as UTUMISHI HOUSE were transferred to the two companies respectively without the knowledge or consent of the members even though they are shareholders.  That the self-declared officials of the 1^st and 2^nd Defendant directors and officials of the Sacco illegally transferred the properties to the 1^st and 2^nd Defendants respectively.
3. The Plaintiffs further claim that payments of dividends stopped 30 years ago after the properties exchanged hands and all the activities thereafter became secretive. They therefore accuse the Defendants of breach, fraud and misrepresentation and they further claim damages and loss as a result. As such, the Plaintiffs seek cancelation or revocation of all the emanating subdivisions from parcel numbers LR. 8393, an order that the Land Registrar Nairobi Land Registry reinstates LR. 8393 and cancels, withdraws and remove forthwith all entries entered and registered against the title, an order reinstating the Sacco in the title in respect of that property and thereby confirm the Plaintiffs as the legitimate proprietors of the same and an injunction restraining the Defendants from interfering with the Plaintiffs’ ownership and peaceful occupation of the properties LR No. 8393 and LR. No. 209/8592/4, Nairobi.
4. Together with the plaint, the Plaintiffs have also filed the Notice of Motion dated 26^th February 2024 made under sections 1A, 1B and 3A of the Civil Procedure Act (Chapter 21 of the Laws of Kenya), Order 39 Rule 1, 5, Order 1 Rule 9 and 10(2) and (4) Order 40(1)(2)(3)(10) (11) and Order 51 of the Civil Procedure Rules,2010 seeking the following orders:-
5. Spent*
6. Spent*
7. THAT the 1^st & 2^nd Defendants/Respondents, Directors do temporarily step aside for investigation and forensic audit to be performed pending the hearing and determination of this suit.
8. pending the hearing of this Application and suit temporary injunction restraining the 1^st Defendants Directors whether by their servants, or agents or employees or advocates or otherwise howsoever from removing, transferring, disposing or charging or in any manner interfering with any of 1^st Defendants’ assets whatsoever, including land, shares and monies deposited in their accounts and held in all and any banks operating in Kenya and or from the jurisdiction of this court.
9. Spent*
10. THAT the 1^st & 2^nd Defendants/Respondents Directors, their agents, servants and/or any other persons acting on their behalf be and are hereby restrained from calling, organizing, coordinating, chairing, convening and/or holding any meeting for the interested party pending the hearing and determination of this suit.
11. THAT pending the hearing of this Application and suit herein summons do issue to the 1^st and 2^nd Defendants/Respondents, Directors to appear before the Honourable Court and show cause why they should not furnish security for the decree that may be passed against the them herein.
12. THAT pending the hearing of this Application and suit a warrant of arrest do issue against the 1^st Defendants Director’s to show cause why they should not furnish security.
13. THAT the Directors of the 1^st Defendant/Respondent be ordered to account for all funds and or proceeds they have collected and or received on behalf of the 1^st & 2^nd Defendants/Respondents since the illegal transfer of the properties belonging to the Plaintiffs/Applicants and how they have been utilized, spent and preserved.
14. THAT the court be pleased to order the KENYA NATIONAL POLICE DT SACCO to deposit in court a list of the contributors towards the purchase and construction of the Ruaraka Housing Project (title No. LR 8393) and Utumishi House (Title No. LR 209/8592/4) being original shareholders.
15. THAT the court be pleased to order that the titles No. LR 8393 and No. LR 209/8592/4 being Ruaraka housing Project and Utumishi House transferred illegally to the 1^st & 2^nd Defendant/Respondents, be deposited in court subject to the further direction of the court.
16. Spent*
17. THAT this Court be pleased to order an investigation into the affairs of 1^st & 2^nd Defendant/Respondents and to appoint two (2) competent inspectors to do the investigations and report to court within a period to be specified.
18. THAT the Court be further pleased to make any other orders that it will deem fit to grant including but not limited to ordering that the company be forthwith placed under the management of an appointed Asset manager.
19. THAT the Costs of this Application be provided for.
20. The application is supported by grounds set out on its face and the affidavits of the 4^th Plaintiff sworn on 26^th February 2024, 21^st July 2024 and 22^nd July 2024. The application is also supported by the Sacco through the replying affidavit of its Chief Executive Officer, SOLOMON ATSIAYA, sworn on 30^th April 2024. It is opposed by the 1^st Defendant through the replying affidavit of its director, ALBERT WAWERU MIARE sworn on 21^st June 2024 and by the 2^nd Defendant through the Preliminary Objection dated 8^th March 2024 and the replying affidavit of its director, ALOICE MBINJIWE, sworn on 20^th June 2024(erroneously dated 2023).
21. The application and the Objection were disposed by way of written submissions and together with the pleadings, I will make relevant references to them in my analysis and determination below.   

Analysis and Determination:-

1. From the application, Objection, responses thereto and submissions, I find that the following are the issues for the court’s determination:-
2. Whether this court has jurisdiction to hear and determine this matter.
3. If a) is answered in the affirmative, Whether the 1^st & 2^nd Defendants’

Directors should temporarily step aside for investigation and forensic audit to be performed pending the hearing and determination of this suit.

1. Whether an injunction order should issue restraining the 1^st Defendant’s Directors from dealing with any of 1^st defendants’ assets whatsoever, including land, shares and monies deposited in their accounts and held in all and any banks operating in Kenya and or from the jurisdiction of this court.
2. Whether the 1^st & 2^nd Defendants’ Directors should be restrained from calling, organizing, coordinating, chairing, convening and/or holding any meeting for the Defendants.
3. Whether the 1^st & 2^nd Defendants’ Directors should be summoned to show cause why they should not furnish security.
4. Whether the Directors of the 1^st Defendant should be ordered to account for all funds and or proceeds they have collected and or received on behalf of the 1^st & 2^nd Defendants since the alleged illegal transfer of the properties belonging to the Plaintiffs and how they have been utilized, spent and preserved.
5. Whether the Sacco should be ordered to deposit in court a list of the contributors towards the purchase and construction of the Ruaraka Housing Project (title No. LR 8393) and Utumishi House (Title No.LR 209/8592/4) being original shareholders.
6. Whether the titles for LR 8393 and LR 209/8592/4 being Ruaraka Housing Project and UTUMISHI HOUSE transferred to the 1^st & 2^nd Defendants should be deposited in court.
7. Whether the court should order an investigation into the affairs of 1^st & 2^nd Defendants whether two (2) competent inspectors should be appointed to carry out the investigations and report to court.
8. Whether the court should order that the 1^st and 2^nd Defendants be placed under the management of an appointed Asset manager.
9. Who should bear the costs of the application?

Whether this court has jurisdiction to hear and determine this matter

1. The 2^nd Defendant’s Objection is premised on the grounds that this court lacks jurisdiction to hear this matter as the suit deals with the disposition of land which falls under the jurisdiction of the Environment and Land Court (ELC). It further states that this matter is dispute between a co-operative society and its members which is a preserve of the Co-operative Tribunal. In response, the Plaintiffs admit and submit that their suit is a hybrid of both commercial and land matters but that the orders sought in the interim are commercial in nature and can be resolved by this court. On whether this matter ought to be determined by the Co-operative Tribunal, the Plaintiffs submit that this matter seized being a tribunal matter when the 1^st and 2^nd Defendants were sued for non-accountability on matters pertaining to property belonging to the Plaintiffs who may belong to the Sacco who ought to give account on how they are running themselves through directors answerable to the Plaintiffs.
2. It is not lost to the court 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 tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.’ (See Nyarangi JA., in The Owners of

Motor vessel Lillian ‘S’ v Caltex Kenya Limited [1989] KECA 48 (KLR)].

1. For this matter to fall within the jurisdiction of the ELC, which is a specialized court established under Article 162(3) of the Constitution and the Environment and Land Court Act (Chapter 8D of the Laws of Kenya) to hear and determine disputes relating to the environment and the use and occupation of and title to land, it must fall within section 13 of the Environment and Land Court Act which sets out the jurisdiction of the ELC 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.

1. The Supreme Court in Republic v Chengo & 2 others [2017] KESC 15 (KLR)

emphasized the High Court, the 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. The answer to the Objection raised by the 2^nd Defendant on jurisdiction depends the nature of the cause of action as set out in the Plaintiffs’ Plaint dated 26^th February 2024. They seek the following final orders:-

1. Cancelation or revocation of all the emanating subdivisions from parcel numbers LR. 8393 which are LR. 8393/2, 8393/3, 8393/4, 8393/5, 8393/6, 8393/7, 8393/8, 8393/9, 8393/10, 8393/11, 8393/12, 8393/13, 8393/14, 8393/1 5, 8393/16, 8393/17, 8393/18, 8393/19, 8393/20, 8393/21, 8393/22, 8393/23, 8393/24, 8393/25, 8393/26, 8393/27, 8393/28, 8393/29, 8393/30, 8393/31, 8393/32 and 8393/33, as appearing in the survey plan.
2. An Order that the Land Registrar Nairobi Land Registry do reinstate LR. 8393 being the title of the suit property and do cancel, withdraw and remove forthwith all entries entered and registered against the title.
3. An order of reinstatement and/or restoration of Kenya Police staff saving and credit Co- operative society limited in the title and in respect to the suit property and thereby confirm the Plaintiffs as the legitimate proprietor of the same.
4. A permanent injunction be issued restraining the Defendants herein by themselves, servants, agents and/ or whomsoever claiming through them from alienating, offering for sale, selling, charging, transferring and/ or in any manner whatsoever interfering with the Plaintiffs ownership and peaceful and quiet occupation of land parcel Number LR: NO. 8393 and LR. NO.209/8592/4 Nairobi.
5. Any other relief that this Honourable court may deem fit to grant.
6. Costs of the suit.
7. As the Plaintiffs have admitted that this suit is a hybrid of both a commercial and land dispute, I will borrow the dicta of Prof Ngugi J. (as he was then) in Suzanne Achieng Butler, Martin Njema Mutura, Margaret C. Muringa Ireri, Wilson Kimutai Mugungei & Constance Anjiri Anyika v Redhill Heights Investments Limited & Imperial Concepts Limited [2016] KEHC 1313 (KLR) and apply the “pre-dominant purpose test” as whether this matter is predominantly a commercial or a land matter.  Going through the above orders, it is clear that the Plaintiffs seek a determination on the ownership of parcel Numbers LR. NO. 8393 and LR. NO. 209/8592/4 Nairobi. Whereas the Plaintiffs have stated that their suit is about the accountability of the 1^st and 2^nd Defendants’ directors, the body of their suit and the aforementioned final orders state otherwise as the court is being ultimately called to determine the issue of ownership of those parcels of land which is a preserve of the ELC. The issue of accountability of the Defendants and their directors is ancillary and peripheral to the issue of ownership of the subject parcels of land, which is mainly what the Plaintiffs are laying claim to. In Mulemi v Angweye & another (Civil Appeal 170 of 2016) [2021] KECA 214 (KLR), the Court of Appeal held that a matter in which the 1^st Respondent therein sought a cancellation, reinstatement and/or restoration of a title and further sought an injunction against the use of the said land on account of fraud, was a matter to be determined by the ELC and not this court. The Plaintiffs herein are seeking similar orders as those in the aforementioned case and as such, I cannot see how this matter can be determined by this court when the Court of Appeal held that a similar matter ought to be determined by the ELC.
8. It is for the above reasons that I find merit in the 2^nd Defendant’s Objection that this matter is predominantly a land dispute that ought to be determined by the ELC. The Objection has merit and it is hereby allowed and this finding is sufficient to halt any further proceedings in this court. As to what follows, I stand guided and bound by the decision of the Supreme Court in Mumba & 7 others (Sued on their own behalf and on behalf of predecessors and or successors in title in their capacities as the Registered Trustees of Kenya Ports Authority Pensions Scheme) v Munyao & 148 others (Suing on their own behalf and on behalf of the Plaintiffs and other Members/Beneficiaries of the Kenya Ports Authority Pensions Scheme) [2019] KESC 83 (KLR) that 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. This means that this court has no power to transfer the suit to the ELC as this court lacks jurisdiction in the first instance. The same can only be struck out and the Plaintiffs are at liberty to file a fresh and competent suit with the ELC.

Conclusion and Disposition:-

1. In the upshot, the 2^nd Defendant’s Preliminary Objection dated 8^th March 2024 has merit and the same is allowed with the consequence that this suit is struck out with costs to the Defendants. Any interim orders in place in this matter are hereby discharged. It is so ordered.

DATED, SIGNED AND DELIVERED VIRTUALLY at NAIROBI this 5^TH DAY OF FEBRUARY 2025

………………………………..

J.W.W. MONG’ARE

JUDGE

In the Presence of:-

1. Mr. Ogunde for the Plaintiffs/Applicants. 
2. Mr. Duncan Muge for the 1^st Defendant/Respondent.
3. Ms. Sakini holding brief for Mr. Odhiambo and Mr. Teddy Ochieng for the 2^nd Defendant.
4. Ms. Kigera holding brief for Mr. Miller for the 3^rd Defendant.
5. Amos - Court Assistant