1. The application that is before this court for determination is the one dated 27th February 2024 wherein the Applicant is seeking the following orders that;
1) …Spent…
2) Leave be granted to the Applicant to apply for an order of Prohibition to prohibit the Respondent, their agents, employees, servants, or whosoever from investigating and adjudicating the dispute arising from the loan agreement dated 26thOctober,2023 between the Applicant and the Respondent\'s Complainant.
3) The leave so granted do operate as a stay of enforcement of the Respondent to adjudicate the dispute arising from the Loan Agreement.
4) The Costs of this application be in the cause.
2. The application is vehemently opposed by the Respondent.
The Applicant’s case:
3. Thatcher Ndanu Lazarus entered into a loan agreement dated 26th October, 2023 with the Applicant. The Agreement was that the loan was to be repaid within a period of 4 weeks by weekly installments.
4. The borrower defaulted the loan and the Applicant engaged the services of Superstyle City Auctioneers in a bid to recover the defaulted loan amount by attaching the goods through MCCCMISC/E227/2024 - Superstyle City Auctioneers Vs Thatcher Ndanu Lazarus.
5. A complaint was filed with the Respondent who then started investigations against the Applicant. The Respondent sprang into action by sending the Applicant various letters demanding explanations regarding the matter. It is its case that the Applicant responded and went to the extent of attaching a copy of the Loan agreement for ease of reference. It is its case that if the investigations are left to continue despite the Respondent\'s clear abuse of their authority, the Applicant stands to suffer irreparable harm and prejudice.
6. The Applicant believes that MCCCMISC/E227/2024-Superstyle City Auctioneers Vs Thatcher Ndanu Lazarus has a hearing date and it is imperative that the orders herein are granted.
7. It believes that this Honorable Court has powers to prohibit the Respondent from investigating and adjudicating the dispute relating to the loan agreement dated 26th October, 2023 as contract disputes are the sole preserve of the Courts of law.
8. Article 165(6) of the Constitution of Kenya, 2010 provides that:
“The High Court has supervisory jurisdiction over the subordinate courts and over any Person, body or authority exercising a judicial or quasi-judicial function, but not over a Superior court.”
9. Article 165 (7) of the Constitution of Kenya, 2010 provides that:
“The High Court may call for the record of any proceedings before any subordinate court or Person, body or authority and may make any order or give any direction it considers Appropriate to ensure the fair administration of justice.”
10. It relies on the Ugandan case of Pastoli vs Kabale District Local Government Council & Others, (2008) 2 EA 300, the court held that:
“In order to succeed in an application for Judicial Review, the Applicant has to show that the Decision or act complained of is tainted with illegality, irrationality and procedural Impropriety…”
11. In the case of T. J. Kajwang v Independent Electoral and Boundaries Commission [20171 eKLR on Judicial Review held that:
“…At this interlocutory stage of the proceeding, the court must satisfy itself of three principal Factors. One that the Applicant has a prima facie case with arguable grounds and that theApplication meets the technical form prescribed in law; two that the Applicant has the locus Standi to institutes and maintain the application; and three, that the application is not time Barred.”
12. The Applicant argues that it has made out a prima facie case with a probability of success, the Applicant submits that it has an arguable case against the Respondent. It is undisputed that the Respondent has been sending the Applicant various letters demanding for Explanations regarding the loan agreement dated 26 October,2023. In one of the letters, the Respondent demanded explanations as to why their Complainant was not given a copy of the Agreement, why some of the clauses were verbally introduced to their Complainant after she had Signed the agreement and why the Applicant’s directors and staff have been harassing their Complainant through abusive phone calls and intimidating text messages and sending Auctioneers to visit her shop to intimidate her.
13. The Respondent further stated that it was to investigate whether the Complainant was required to comply with the conditions that were not Reasonably necessary for the protection of the legitimate interests of the Respondent, whether the Complainant was able to understand any document relating to the supply of the services and whether any undue influence or pressure was exerted on or any unfair tactics were used against the consumer.
14. The Applicant argues that it has demonstrated that the Respondent is Entertaining complaints outside its mandate and powers and therefore its actions are ultra vires.
15. Order 53 Rule 1(4) of the Civil Procedure Rules provides that Stay is only appropriate to restrain A public body or administrator from acting and to prohibit further decision-making process if it has not yet been completed.
16. Reliance is placed in the case of R.H. V Ashworth Hospital Authority (20031 WLR 127 at 138 Lord Dyson LJ Held that:
“…. The purpose of a stay in a Judicial Review proceeding is clear. It is to suspend the Proceedings that are under challenge pending the determination of the challenge. i.e Preserves the status quo. This will aid the Judicial Review process and make it more Effective. It will ensure that so far as possible, if a party is ultimately successful in business challenge, he will not be denied the full benefit of his success…”
17. The Applicant believes that the Respondent should bear the costs.
The Respondent’s Case;
18. The Respondent is a body established under the Competition Act, No. 12 of 2010. It is its case that the Applicant is a lending company whose sole primary business is lending money to borrowers. The lending is supposed to be under agreements with an understanding to repay the loan within a specified period of time together with the calculated interest.
19. On 10th January, 2024 the Respondent received a complaint from Thatcher Ndanu against the Applicant alleging that she took a loan totaling to KES 7,187,280 from Supreme Credit and the interest rate as per the Loan Agreement was 20% per month. She alleges that although she was not given a copy of the Agreement. The repayment of the principal and interest was due after one month. She alleges that The Applicant has been demanding and collecting weekly repayments from her, which were introduced verbally after she had signed the Agreement and the Applicant introduced a daily interest.
20. She further alleged that she has already paid cumulatively paid a total of KES10,000,169 via M-PESA and bank transfers to Supreme Credit and despite the KES 10,000,169 that she has already paid, the Applicant is still demanding a further KES 3,212,419 which if paid, will bring the total repayment to KES 13,212,585, translating to an interest rate of 83%.
21. She sought the intervention of the Respondent so that the Applicant could cease demanding any further payments from her and to refund her the excess money that she has paid to them, amounting to KES 1,375,433.
22. It is its case that after preliminary analysis of the complaint by the Respondent, it was evident that the nature of the complaint fell squarely within the mandate and the purview of the Respondent under Part VI of the Competition Act, Cap 504 on Consumer Welfare.
23. The Respondent sent a Notice of Investigation to the Applicant on 26th January, 2024 which the Applicant stamped and acknowledged receipt of the Notice on the same date and in line with the Fair Administrative Action Act, 2015, the Respondent wrote a reminder letter to the Applicant in regards to the Notice of Investigation.
24. On 9th February,2024 the Applicant through their lawyers replied to the Notice of Investigation refuting the allegations in the notice by the Respondent and further stating that the complainant had voluntarily entered into a binding agreement with the Applicant and breached the contract.
25. The Respondent invited the Applicant to appear before it on 28th February, 2024 to provide the clarifications and additional documents that it deemed necessary for the fair and expeditious determination of the complaint. The Applicant instead proceeded to file this application before this Honourable Court on 26th February 2024.
26. It is its case that the suit that this court lacks Jurisdiction by dint of Section 40 of the Competition Act which provides as follows with respect to the right of appeal:
“(1) A person aggrieved by a determination of the Authority made under this Part shall appeal in writing to the Tribunal within thirty days of receiving the Authority\'s decision.
(2) A party to an appeal under subsection (1) who is dissatisfied with the decision of the Tribunal may appeal to the High Court against that decision within thirty days after the date on which a notice of that decision has been served on him and the decision of the High Court shall be final.”
Analysis And Determination;
26. Upon perusing the application this court finds the following to be the issues for determination:
1) Whether or not this court has Jurisdiction to hear and determine this suit.
2) Whether the Applicant is entitled to the orders sought.
The first issue
Whether or not this court has Jurisdiction to hear and determine this suit.
27. The Supreme Court in the case of Dickson Ngigi Ngugi v Commissioner of Lands S.C Petition No. 9 of 2019 [2019] eKLR, [36] observed that;
“Jurisdiction goes to the root of any cause or dispute before a court of law. A court must exercise restraint to avoid overstepping its constitutional role in order to maintain its legitimacy. If a court has no jurisdiction, a judgment rendered therein does not adjudicate the dispute. It does not bind the parties, nor can it be made the foundation of any right. It is a nullity without life or authority. In short, it is coram non judice and amounts to a nullity because, as Nyarangi, JA famously said in the locus classicus, Owners of the Motor Vessel “Lillian S” v Caltex Oil, (Kenya) Ltd [1989] KLR 1, “jurisdiction is everything. Without it, a court has no power to make one more step”.
It is a settled legal proposition that conferment of jurisdiction is a legislative function and it can only be conferred by the Constitution or statute. It cannot be conferred by judicial craft. See Samuel Kamau Macharia & Another v Kenya commercial Bank & 2 Others, SC Application No. 2 of 2011; [2012] eKLR. Nor can parties, by consent confer on a court power it does not have.”
28. Section 9(2) and (4) of Fair Administrative Actions Act stipulates that:
“(2) The High Court or a subordinate court under Sub section (I) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.
(4) notwithstanding sub section (3), the High Court or a subordinate court may, in exceptional circumstances and on application by the Applicant, exempt such person from obligation to exhaust any remedy if the court considers such exemption to being the interest of justice.”
29. In the case of Clifford Keya v Jackline Inguitiah & 5 others; Atieno Aoko & 3 others (Interested Party) [2022] eKLR;
“The doctrine of exhaustion is applicable to constitutional Petitions. If successfully raised, it is a complete bar and a Court will not move an inch ahead. There are, however, instances where the doctrine will be inapplicable.
The doctrine of exhaustion traces its origin in Article 159(2)(c) of the Constitution which recognizes and entrenches the use of alternative mechanisms of dispute resolution.
The doctrine is further entrenched in Section 9 of the Fair Administrative Action Act, 2015 which provision forbids the High Court from assuming jurisdiction in matters where a party does not exhaust internal remedies except where exceptional circumstances for exemption are proved to exist.”
27. The Supreme Court in Communications Commission of Kenya & 5 Others v Royal Media Services Ltd & 5 Others Pet. 14A, 14B & 14C of 2014 of [2014] eKLR held:
“The principle of avoidance entails that a Court will not determine a constitutional issue, when a matter may properly be decided on another basis.”
28. Article 159(2)(c) of the Constitution which recognizes and entrenches the use of alternative mechanisms of dispute resolution in the following terms: - In exercising judicial authority, the Courts and tribunals shall be guided by the following principles-
(c) Alternative forms of dispute resolution including resolution, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted, subject to clause 3.
29. It is this court finding, and I so hold that the Applicant did not exhaust Section 40 of the Competition Act which provides as follows with respect to the right of appeal:
(1) “A person aggrieved by a determination of the Authority made under this Part shall appeal in writing to the Tribunal within thirty days of receiving the Authority\'s decision.
(2) A party to an appeal under subsection (1) who is dissatisfied with the decision of the Tribunal may appeal to the High Court against that decision within thirty days after the date on which a notice of that decision has been served on him and the decision of the High Court shall be final.”
30. The Applicant has not filed any application nor has it secured an order exempting it from the application of the section 9 of the administrative action act. As such Applicant is caught up by the doctrine of exhaustion that takes away the jurisdiction of the court. It is this courts’ finding that it lacks jurisdiction.
The second issue:
31. Owners of the Motor Vessel “Lillian S” v Caltex Oil, (Kenya) Ltd [1989] KLR 1,
“Jurisdiction is everything. Without it, a court has no power to make one more step”. The court cannot address its mind to the second issue.
Disposition:
32. Having failed the jurisdiction test, the application collapses by the wayside.
Order:
The application dated 27th February 2024 is struck out with costs.
1) …Spent…
2) Leave be granted to the Applicant to apply for an order of Prohibition to prohibit the Respondent, their agents, employees, servants, or whosoever from investigating and adjudicating the dispute arising from the loan agreement dated 26thOctober,2023 between the Applicant and the Respondent\'s Complainant.
3) The leave so granted do operate as a stay of enforcement of the Respondent to adjudicate the dispute arising from the Loan Agreement.
4) The Costs of this application be in the cause.
2. The application is vehemently opposed by the Respondent.
The Applicant’s case:
3. Thatcher Ndanu Lazarus entered into a loan agreement dated 26th October, 2023 with the Applicant. The Agreement was that the loan was to be repaid within a period of 4 weeks by weekly installments.
4. The borrower defaulted the loan and the Applicant engaged the services of Superstyle City Auctioneers in a bid to recover the defaulted loan amount by attaching the goods through MCCCMISC/E227/2024 - Superstyle City Auctioneers Vs Thatcher Ndanu Lazarus.
5. A complaint was filed with the Respondent who then started investigations against the Applicant. The Respondent sprang into action by sending the Applicant various letters demanding explanations regarding the matter. It is its case that the Applicant responded and went to the extent of attaching a copy of the Loan agreement for ease of reference. It is its case that if the investigations are left to continue despite the Respondent\'s clear abuse of their authority, the Applicant stands to suffer irreparable harm and prejudice.
6. The Applicant believes that MCCCMISC/E227/2024-Superstyle City Auctioneers Vs Thatcher Ndanu Lazarus has a hearing date and it is imperative that the orders herein are granted.
7. It believes that this Honorable Court has powers to prohibit the Respondent from investigating and adjudicating the dispute relating to the loan agreement dated 26th October, 2023 as contract disputes are the sole preserve of the Courts of law.
8. Article 165(6) of the Constitution of Kenya, 2010 provides that:
“The High Court has supervisory jurisdiction over the subordinate courts and over any Person, body or authority exercising a judicial or quasi-judicial function, but not over a Superior court.”
9. Article 165 (7) of the Constitution of Kenya, 2010 provides that:
“The High Court may call for the record of any proceedings before any subordinate court or Person, body or authority and may make any order or give any direction it considers Appropriate to ensure the fair administration of justice.”
10. It relies on the Ugandan case of Pastoli vs Kabale District Local Government Council & Others, (2008) 2 EA 300, the court held that:
“In order to succeed in an application for Judicial Review, the Applicant has to show that the Decision or act complained of is tainted with illegality, irrationality and procedural Impropriety…”
11. In the case of T. J. Kajwang v Independent Electoral and Boundaries Commission [20171 eKLR on Judicial Review held that:
“…At this interlocutory stage of the proceeding, the court must satisfy itself of three principal Factors. One that the Applicant has a prima facie case with arguable grounds and that theApplication meets the technical form prescribed in law; two that the Applicant has the locus Standi to institutes and maintain the application; and three, that the application is not time Barred.”
12. The Applicant argues that it has made out a prima facie case with a probability of success, the Applicant submits that it has an arguable case against the Respondent. It is undisputed that the Respondent has been sending the Applicant various letters demanding for Explanations regarding the loan agreement dated 26 October,2023. In one of the letters, the Respondent demanded explanations as to why their Complainant was not given a copy of the Agreement, why some of the clauses were verbally introduced to their Complainant after she had Signed the agreement and why the Applicant’s directors and staff have been harassing their Complainant through abusive phone calls and intimidating text messages and sending Auctioneers to visit her shop to intimidate her.
13. The Respondent further stated that it was to investigate whether the Complainant was required to comply with the conditions that were not Reasonably necessary for the protection of the legitimate interests of the Respondent, whether the Complainant was able to understand any document relating to the supply of the services and whether any undue influence or pressure was exerted on or any unfair tactics were used against the consumer.
14. The Applicant argues that it has demonstrated that the Respondent is Entertaining complaints outside its mandate and powers and therefore its actions are ultra vires.
15. Order 53 Rule 1(4) of the Civil Procedure Rules provides that Stay is only appropriate to restrain A public body or administrator from acting and to prohibit further decision-making process if it has not yet been completed.
16. Reliance is placed in the case of R.H. V Ashworth Hospital Authority (20031 WLR 127 at 138 Lord Dyson LJ Held that:
“…. The purpose of a stay in a Judicial Review proceeding is clear. It is to suspend the Proceedings that are under challenge pending the determination of the challenge. i.e Preserves the status quo. This will aid the Judicial Review process and make it more Effective. It will ensure that so far as possible, if a party is ultimately successful in business challenge, he will not be denied the full benefit of his success…”
17. The Applicant believes that the Respondent should bear the costs.
The Respondent’s Case;
18. The Respondent is a body established under the Competition Act, No. 12 of 2010. It is its case that the Applicant is a lending company whose sole primary business is lending money to borrowers. The lending is supposed to be under agreements with an understanding to repay the loan within a specified period of time together with the calculated interest.
19. On 10th January, 2024 the Respondent received a complaint from Thatcher Ndanu against the Applicant alleging that she took a loan totaling to KES 7,187,280 from Supreme Credit and the interest rate as per the Loan Agreement was 20% per month. She alleges that although she was not given a copy of the Agreement. The repayment of the principal and interest was due after one month. She alleges that The Applicant has been demanding and collecting weekly repayments from her, which were introduced verbally after she had signed the Agreement and the Applicant introduced a daily interest.
20. She further alleged that she has already paid cumulatively paid a total of KES10,000,169 via M-PESA and bank transfers to Supreme Credit and despite the KES 10,000,169 that she has already paid, the Applicant is still demanding a further KES 3,212,419 which if paid, will bring the total repayment to KES 13,212,585, translating to an interest rate of 83%.
21. She sought the intervention of the Respondent so that the Applicant could cease demanding any further payments from her and to refund her the excess money that she has paid to them, amounting to KES 1,375,433.
22. It is its case that after preliminary analysis of the complaint by the Respondent, it was evident that the nature of the complaint fell squarely within the mandate and the purview of the Respondent under Part VI of the Competition Act, Cap 504 on Consumer Welfare.
23. The Respondent sent a Notice of Investigation to the Applicant on 26th January, 2024 which the Applicant stamped and acknowledged receipt of the Notice on the same date and in line with the Fair Administrative Action Act, 2015, the Respondent wrote a reminder letter to the Applicant in regards to the Notice of Investigation.
24. On 9th February,2024 the Applicant through their lawyers replied to the Notice of Investigation refuting the allegations in the notice by the Respondent and further stating that the complainant had voluntarily entered into a binding agreement with the Applicant and breached the contract.
25. The Respondent invited the Applicant to appear before it on 28th February, 2024 to provide the clarifications and additional documents that it deemed necessary for the fair and expeditious determination of the complaint. The Applicant instead proceeded to file this application before this Honourable Court on 26th February 2024.
26. It is its case that the suit that this court lacks Jurisdiction by dint of Section 40 of the Competition Act which provides as follows with respect to the right of appeal:
“(1) A person aggrieved by a determination of the Authority made under this Part shall appeal in writing to the Tribunal within thirty days of receiving the Authority\'s decision.
(2) A party to an appeal under subsection (1) who is dissatisfied with the decision of the Tribunal may appeal to the High Court against that decision within thirty days after the date on which a notice of that decision has been served on him and the decision of the High Court shall be final.”
Analysis And Determination;
26. Upon perusing the application this court finds the following to be the issues for determination:
1) Whether or not this court has Jurisdiction to hear and determine this suit.
2) Whether the Applicant is entitled to the orders sought.
The first issue
Whether or not this court has Jurisdiction to hear and determine this suit.
27. The Supreme Court in the case of Dickson Ngigi Ngugi v Commissioner of Lands S.C Petition No. 9 of 2019 [2019] eKLR, [36] observed that;
“Jurisdiction goes to the root of any cause or dispute before a court of law. A court must exercise restraint to avoid overstepping its constitutional role in order to maintain its legitimacy. If a court has no jurisdiction, a judgment rendered therein does not adjudicate the dispute. It does not bind the parties, nor can it be made the foundation of any right. It is a nullity without life or authority. In short, it is coram non judice and amounts to a nullity because, as Nyarangi, JA famously said in the locus classicus, Owners of the Motor Vessel “Lillian S” v Caltex Oil, (Kenya) Ltd [1989] KLR 1, “jurisdiction is everything. Without it, a court has no power to make one more step”.
It is a settled legal proposition that conferment of jurisdiction is a legislative function and it can only be conferred by the Constitution or statute. It cannot be conferred by judicial craft. See Samuel Kamau Macharia & Another v Kenya commercial Bank & 2 Others, SC Application No. 2 of 2011; [2012] eKLR. Nor can parties, by consent confer on a court power it does not have.”
28. Section 9(2) and (4) of Fair Administrative Actions Act stipulates that:
“(2) The High Court or a subordinate court under Sub section (I) shall not review an administrative action or decision under this Act unless the mechanisms including internal mechanisms for appeal or review and all remedies available under any other written law are first exhausted.
(4) notwithstanding sub section (3), the High Court or a subordinate court may, in exceptional circumstances and on application by the Applicant, exempt such person from obligation to exhaust any remedy if the court considers such exemption to being the interest of justice.”
29. In the case of Clifford Keya v Jackline Inguitiah & 5 others; Atieno Aoko & 3 others (Interested Party) [2022] eKLR;
“The doctrine of exhaustion is applicable to constitutional Petitions. If successfully raised, it is a complete bar and a Court will not move an inch ahead. There are, however, instances where the doctrine will be inapplicable.
The doctrine of exhaustion traces its origin in Article 159(2)(c) of the Constitution which recognizes and entrenches the use of alternative mechanisms of dispute resolution.
The doctrine is further entrenched in Section 9 of the Fair Administrative Action Act, 2015 which provision forbids the High Court from assuming jurisdiction in matters where a party does not exhaust internal remedies except where exceptional circumstances for exemption are proved to exist.”
27. The Supreme Court in Communications Commission of Kenya & 5 Others v Royal Media Services Ltd & 5 Others Pet. 14A, 14B & 14C of 2014 of [2014] eKLR held:
“The principle of avoidance entails that a Court will not determine a constitutional issue, when a matter may properly be decided on another basis.”
28. Article 159(2)(c) of the Constitution which recognizes and entrenches the use of alternative mechanisms of dispute resolution in the following terms: - In exercising judicial authority, the Courts and tribunals shall be guided by the following principles-
(c) Alternative forms of dispute resolution including resolution, mediation, arbitration and traditional dispute resolution mechanisms shall be promoted, subject to clause 3.
29. It is this court finding, and I so hold that the Applicant did not exhaust Section 40 of the Competition Act which provides as follows with respect to the right of appeal:
(1) “A person aggrieved by a determination of the Authority made under this Part shall appeal in writing to the Tribunal within thirty days of receiving the Authority\'s decision.
(2) A party to an appeal under subsection (1) who is dissatisfied with the decision of the Tribunal may appeal to the High Court against that decision within thirty days after the date on which a notice of that decision has been served on him and the decision of the High Court shall be final.”
30. The Applicant has not filed any application nor has it secured an order exempting it from the application of the section 9 of the administrative action act. As such Applicant is caught up by the doctrine of exhaustion that takes away the jurisdiction of the court. It is this courts’ finding that it lacks jurisdiction.
The second issue:
31. Owners of the Motor Vessel “Lillian S” v Caltex Oil, (Kenya) Ltd [1989] KLR 1,
“Jurisdiction is everything. Without it, a court has no power to make one more step”. The court cannot address its mind to the second issue.
Disposition:
32. Having failed the jurisdiction test, the application collapses by the wayside.
Order:
The application dated 27th February 2024 is struck out with costs.