https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1381

Consolidated Bank of Kenya Ltd v Mukindia & another (Civil Appeal E105 of 2026) [2026] KECA 1381 (KLR) (10 July 2026) (Judgment) Neutral citation: [2026] KECA 1381 (KLR) Republic of Kenya In the Court of Appeal at Meru Civil Appeal E105 of 2026 GV Odunga, HI Ong'udi & LM Njuguna, JJA July 10, 2026 Between Consolidated Bank of Kenya Limited Appellant and Gacheri David Mukindia 1st Respondent Charles Murugu Mukindia 2nd Respondent (Being an appeal from the ruling of the High Court of Kenya at Meru (C. K. Nzili J.) delivered on 26th January, 2022 in Meru ELC Case No. 1 of 2022 as consolidated with Meru ELC Case No. E001 of 2022 Environment & Land Case E001 of 2022 ) Judgment 1.This judgment arises is in respect of Meru Civil Appeal No. E105 of 2026 (formerly Nyeri Civil Appeal No. E029 of 2022). However, the title of the appeal, as it appears from the Memorandum of Appeal and the Record of Appeal creates the wrong impression that there are two consolidated appeals. This misconception, we deduce, arises from the fact that the ruling from which this appeal emanates was in respect of two consolidated suits being ELC No. E001 of 2022 filed by Charles Murugu Mukindia and Rise Up Company Limited as plaintiffs against Consolidated Bank of Kenya and ELC No. 1 of 2022 filed by Gacheri David Mukindia as plaintiff against Consolidated Bank of Kenya. 2.In consolidated proceedings, as opposed to test suit proceedings, only one decision arises therefrom and the resultant appeal is not a consolidated appeal but one appeal unless the parties choose to file separate appeals. That said the law is that misjoinder of parties is not fatal to legal proceedings. We have, however, seen a subsequent decision made on 30th November 2022, in which the learned Judge (Nzili, J) ruled that:“The upshot is that the suit brought against the defendants by the plaintiffs in E001 of 2022 is hereby marked withdrawn with no order as to costs.” 3.Whereas technically the appellant before us is Consolidated Bank of Kenya while the 1st and 2nd respondents are Gacheri David Mukinda and Charles Murugu Mukindia, the substratum of the suit by the 2nd respondent seems to have been swept under the carpet by the said subsequent ruling. That however does not concern us in this ruling. 4.This appeal arose from the decision of the learned Judge (Nzili, J.) made on 26th January 2022. The decision was a ruling delivered by the learned Judge (Nzili, J.) on a preliminary objection taken by the appellant partly on the ground that:“The court lacks jurisdiction as the subject matter is charged property as such a commodity for sale and thus the jurisdiction of the court stand (sic) ousted.” 5.A brief history of the matter will place the dispute in perspective. The case, as presented by the 1st respondent was that he offered the suit properties as collateral to secure a loan facility in favour of the 2nd respondent from the appellant in the years 2015 to 2017. It was his case that he had been servicing the loan diligently until the outbreak of Covid 2019 when his businesses were adversely affected. Consequently, he approached the appellant to restructure the loan and the respondents were allowed to be making monthly repayments of Kshs. 400,000/=. However, he was served with a redemption notice on 2nd December 2021 by the 2nd defendant in the suit for a public auction of the charged properties. Efforts to seek audience with the appellant became futile hence the suit. There were other issues which, according to the respondents, rendered the intended redemption irregular. In his impugned ruling, the learned Judge, citing the cases of Lydia Nyambura Mbugua v Diamond Trust Bank Kenya Ltd & Another [2018] eKLR and Alphose Yankulije v One Twiga Road Limited & 2 others [2019] eKLR, held that:“In my considered view there has been a misconception that the Environment and Land Court lacks jurisdiction over commercial lending. The legislature in his wisdom has set out the law as it is and hence there can be no doubt that anything touching on Environment and land falls squarely under the jurisdiction of the Environment and Land Court.” 6.There is now a litany of decisions from this Court to the effect that the Environment and Land Court is not the right forum to deal with disputes revolving around charges and mortgages. Some of these decisions are: Diamond Trust Bank Kenya Limited v FHH (2022) KECA 769 (KLR); Co-operative Bank of Kenya Ltd v Patrick Kangethe Njuguna & 5 Others Civil Appeal No. 83 of 2016; and Bank of Africa Kenya Limited & another v TSS Investment Limited & 2 others [2024] KECA 410. In the latter case, the Court emphasized that:“…the ELC only has jurisdiction to deal with disputes connected to “use” of land and contracts incidental to the “use” of land, which do not include mortgages, charges, collection of dues and rents which fall within the civil jurisdiction of the High Court. Moreover, a charge is a disposition that has no direct contractual relation to “use” (by a tenant or licensee) as in this case, of a chargor’s land. In view of the foregoing, we agree with learned counsel for the appellants that the learned Judge had no jurisdiction to entertain the respondents’ suit as pleaded”. 7.When the appeal was called out before us for plenary hearing on 16th June 2026, learned counsel, Ms Catherine Muthoni Maina, appeared for the appellant while learned counsel, Ms Barabara Kwanga, appeared for the 1st respondent. There was no appearance for the 2nd respondent despite due service of the hearing notice. Apart from the appellant, none of the other parties had filed submissions. While the non-appearance of the 2nd respondent could be explained by what we have stated above regarding the withdrawal of its suit, Ms Kwanga informed us that on behalf of the 1st respondent, and rightly so in our respectful view, she was conceding the appeal in light of the jurisprudence from this Court. Ms Maina, while not contesting that position insisted on payment of costs. 8.In light of the foregoing, we find merit in this appeal which we hereby allow. We set aside the ruling by the trial court dismissing the preliminary objection and substitute therefor an order allowing the preliminary objection and striking out the suit with costs to the appellant. 9.With respect to the costs of the appeal, we are guided by section 27 of the Civil Procedure Act which provides as follows:Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers:Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order. 10.However, as appreciated by this Court in Vinod Seth v Davinder Bajaj Civil Appeal No. 4891 of 2010:“We must remember that whatever the origin of costs might have been, they are now awarded, not as a punishment of the defeated party but as a recompense to the successful party for the expenses to which he has been subjected, or, as Lord Coke puts it, for whatever appears to the Court to be the legal expenses incurred by the party in prosecuting his suit or his defence…The theory on which the costs are now awarded to a plaintiff is that default of the defendant made it necessary to sue him, and to a defendant is that the plaintiff sued him without cause; costs are thus in the nature of incidental damages allowed to indemnify a party against the expense of successfully vindicating his rights in court and consequently the party to blame pays costs to the party without fault. These principles apply, not merely in the award of costs, but also in the award of extra allowance or special costs. Courts are authorised to allow such special allowances, not to inflict penalty on the unsuccessful party, but to indemnify the successful litigant for actual expenses necessarily or reasonably incurred in what are designated as important cases or difficult and extraordinary cases.” 11.That position was restated by the Supreme Court in Jasbir Singh Rai & 3 others v Tarlochan Singh Rai & 4 others [2014] eKLR where it was held that:“So the basic rule on attribution of costs is: costs follow the event. But it is well recognized that this principle is not to be used to penalize the losing party; rather, it is for compensating the successful party for the trouble taken in prosecuting or defending the suit. In Justice Kuloba’s words [Judicial Hints on Civil Procedure, at p.94]:‘[T]he object of ordering a party to pay costs is to reimburse the successful party for amounts expended on the case. It must not be made merely as a penal measure…Costs are a means by which a successful litigant is recouped for expenses to which he has been put in fighting an action.’“It is clear that there is no prescribed definition of any set of “good reasons” that will justify a Court’s departure, in awarding costs, from the general rule, costs-follow-the-event. In the classic common law style, the Courts have proceeded on a case-by-case basis, to identify “good reasons” for such a departure…It emerges that the award of costs would normally be guided by the principle that “costs follow the event”: the effect being that the party who calls forth the event by instituting suit, will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or respondent will bear the costs. However, the vital factor in setting the preference, is the judiciously- exercised discretion of the Court, accommodating the special circumstances of the case, while being guided by ends of justice… The claims of the public interest will be a relevant factor, in the exercise of such discretion, as will also be the motivations and conduct of the parties, prior-to, during, and subsequent-to the actual process of litigation…Although there is eminent good sense in the basic rule of costs – that costs follow the event – it is not an invariable rule and, indeed, the ultimate factor on award or non-award of costs is the judicial discretion. It follows, therefore, that costs do not, in law, constitute an unchanging consequence of legal proceedings – a position well illustrated by the considered opinions of this Court in other cases. The relevant question in this particular matter must be, whether or not the circumstances merit an award of costs to the applicant.” 12.In Devram Manji Daltani v Danda [1949] 16 EACA 35 it was held that a successful litigant can only be deprived of his costs where his conduct has led to litigation, which might have been averted. Therefore, in determining the issue of costs, the Court is entitled to consider the conduct of the parties, the subject of litigation, the circumstances which led to the institution of the legal proceedings, the events which eventually led to their termination, the stage at which the proceedings were terminated, the manner in which they were terminated, whether a party has succeeded on part of his case, even if he has not been wholly successful, the extent of such success, the subject of litigation and the relationship between the parties and the need to promote reconciliation amongst the disputing parties pursuant to Article 159(2)(c) of the Constitution. In other words, the court may not only consider the conduct of the party in the actual litigation, but the matters which led up to litigation, the eventual termination thereof and the likely consequences of the order for costs. With respect to the conduct of the parties this includes the conduct before as well as during the proceedings and in particular the extent to which the parties followed any relevant pre-action protocol and directions issued by the Court; whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; the manner in which a party has pursued or defended his case or a particular allegation or issue; and whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim. See Halsbury’s Laws of England vol. 10 4th Edition of the re-issue at para 22, Hussein Janmohamed & Sons v Twentsche Overseas Trading Co. Ltd [1967] EA 287 and Mulla (12th Edn) P. 150. 13.Going by the letter dated 29th January 2026, from the 1st respondent’s counsel to the Deputy Registrar of this Court, it transpires that the 1st respondent’s counsel intimated to the appellant’s counsel their decision not to challenge the appeal as way back as 14th July 2025. Parties ought to have pursued that line with a view to compromising this appeal. Had that been done, this appeal would not have been listed for hearing. Instead a deserving appeal would have taken the slot of this appeal. By not pursuing that line, a deserving appeal did not make it to the hearing list for 16th June 2026 yet it was clear that this appeal had been rendered moot. 14.In the premises, we award the appellant half the costs of the appeal which costs are to be taxed by the Registrar of the Court, unless the parties agree. 15.Those shall be the orders of the Court. DATED AND DELIVERED AT MERU THIS 10TH DAY OF JULY, 2026.G. V. ODUNGA.............................JUDGE OF APPEALG. I. ONG’UDI.............................JUDGE OF APPEALL. NJUGUNA.............................JUDGE OF APPEALI certify that this is the true copy of the originalSignedDEPUTY REGISTRAR