Automated Summary
Transaction Type
Loan secured by property charge
Key Facts
Maxwell Kahuho Marite (Applicant) sought an injunction to prevent Equity Bank Limited and Phillips International Auctioneers from disposing of land parcel Title No Naivasha/Mwichiringiri Block 5/160 Karagita shopping Centre in Nakuru County. The Applicant alleged the 2021 valuation of Kshs 38,000,000 used by the 1st Respondent (Equity Bank) for a 45-day redemption notice and subsequent auction was outdated and inaccurate, as a 2024 valuation by Accurate Valuers placed the value at Kshs 25,000,000. The Applicant claimed the bank's use of the older valuation would result in a prejudicially low auction price, while the Respondents argued a recent 2024 valuation had already been conducted and the application was frivolous. The court determined the dispute centered on a commercial loan agreement and mortgage enforcement, not environmental or land use issues, and ruled the Environment and Land Court lacked jurisdiction, striking out the application and directing it to the High Court's Commercial Division.
Issues
- A secondary issue concerned the validity of the valuation process for the charged property, with the Applicant arguing that the 2021 valuation used by the Respondents was outdated and inaccurate compared to a 2024 valuation and a subsequent 2025 independent valuation. The court did not resolve this issue due to striking the case out on jurisdictional grounds.
- The primary issue was whether the Environment and Land Court (ELC) had jurisdiction over a dispute involving a property charge and loan default, or if the matter fell under the High Court's Commercial Division. The court determined that the dispute was a commercial matter, not related to land use or environment, and thus outside its jurisdiction.
Holdings
The court determined that it lacks jurisdiction over the matter, as the predominant issue involves a commercial dispute regarding a loan facility and charges. The Environment and Land Court (ELC) is not the appropriate forum for such disputes, which fall under the Commercial Division of the High Court. The application and suit were struck out with costs.
Contract Value
13100000.00
Remedies
The court determined it lacked jurisdiction to hear the dispute, which primarily involved a contractual relationship between a bank and borrower. Consequently, the application and the entire suit were struck out with costs, directing the matter to the Commercial Division of the High Court.
Legal Principles
The court applied the Purposive Approach in interpreting the Environment and Land Court Act to determine its jurisdiction. It concluded that disputes involving mortgages, charges, and loan facilities (such as the Applicant's request to restrain property disposal and challenge valuation methods) fall outside the ELC's jurisdiction, as they are commercial matters governed by the High Court's Commercial Division. This aligns with precedents like Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna [2017] eKLR and Smith & another v Kenya Deposit Insurance Corporation [2025] KECA 294 (KLR), which clarified that the ELC does not handle disputes primarily concerning financial contracts or loan defaults.
Key Disputed Contract Clauses
- The Applicant disputed the valuation methodology used by the Respondents, arguing that the 2021 valuation (Kshs 38,000,000) was outdated and violated auctioneers' rules, necessitating an independent 2024 valuation (Kshs 25,000,000) and a subsequent 2025 valuation (Kshs 42,000,000). The Respondents countered that a 2024 valuation had already been conducted, rendering the Applicant's request moot.
- The Applicant denied consistent defaulting on the loan facility and claimed unauthorized withdrawals from his account (Kshs 303,000) by the bank's credit officer crippled his ability to repay. The Respondents asserted the Applicant repeatedly breached the 2021 Loan Restructuring Agreement, necessitating the 45-day redemption notice and auction process.
Precedent Name
- Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
- Smith & another v Kenya Deposit Insurance Corporation (As receiver of Chase Bank Limited) & another
Cited Statute
- Land Act (Sections 2 and 80)
- Environment and Land Court Act (Section 13 (1) & (2))
- Civil Procedure Act (Sections 1A, 1B and 3A)
- Civil Procedure Rules (Order 40 Rule 1 and Rule 4(1))
Judge Name
MC Oundo
Damages / Relief Type
- Injunction restraining disposal of property Title No Naivasha/Mwichiringiri Block 5/160 Karagita shopping Centre
- Order for valuation of the property on or before 24th July 2024
Passage Text
- 26. ... these issues are a clear pointer that none would amount to a determination of the 'use' and 'occupation' of, the charged property. ... To our minds, it matters not whether at the time when the charged property was being offered as security was developed or not, but that the parties to the loan agreement fulfilled their respective obligations.
- 25. ... The creation of that relationship therefore, has nothing to do with use of the land (as defined above). Indeed, that relationship is simply limited to ensuring that the chargee is assured of the repayment of the money he has advanced the chargor.
- 27. ... I find that the Court of Appeal, whose decision is binding on this court, having 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, I find that this court is bereft of the jurisdiction over the matter which can only lie with the Commercial Division of the High Court.