[2019] KEELC 136 (KLR)
The court determined that although the dispute involves land, the core issues pertain to the internal management of a company and the institution of a derivative suit, which fall within the exclusive jurisdiction of the High Court under the Companies Act. The Environment and Land Court, therefore, lacks jurisdiction...
Source-derived case information.
- Citation
- [2019] KEELC 136 (KLR)
- Parties
- Plaintiff: David Njihia Mbugua; Plaintiff: Paul Kiania Mbugua; Defendant: Monicah Wanjiru Mbugua; Defendant: Jane Wambui Mbugua
- Court
- Environment and Land Court
- Court Station
- Environment and Land Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Environment & Land Case 1132 of 2015
- Procedural Posture
- Miscellaneous Application / Ruling on Application to Strike Out Suit and Transfer of Proceedings
- Outcome
- suit and related application transferred to the High Court, Commercial and Tax Division; costs in the cause
- Legal Topics
- Jurisdiction of Courts, Derivative Suits, Company Management Disputes, Fraudulent Land Transfer
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
David Njihia Mbugua
Plaintiff
Paul Kiania Mbugua
Plaintiff
Monicah Wanjiru Mbugua
Defendant
Jane Wambui Mbugua
Defendant
Procedural Posture
Miscellaneous Application / Ruling on Application to Strike Out Suit and Transfer of Proceedings
Legal Issues
- 1 Whether the Environment and Land Court has jurisdiction to determine disputes involving internal company management and derivative suits.
- 2 Whether the Plaintiffs have standing to prosecute the suit regarding the transfer of company land.
- 3 Whether the suit should be struck out or transferred to the appropriate court.
Ratio Decidendi
The court determined that although the dispute involves land, the core issues pertain to the internal management of a company and the institution of a derivative suit, which fall within the exclusive jurisdiction of the High Court under the Companies Act. The Environment and Land Court, therefore, lacks jurisdiction to hear and determine the matter. Rather than striking out the suit, the court found it appropriate to transfer both ELC No. 1132 of 2015 and ELC Misc. Application No. 290 of 2015 to the High Court, Commercial and Tax Division, which is the proper forum for such disputes. The court exercised its discretion to avoid multiplicity of proceedings and to ensure that the substantive...
Court Disposition
suit and related application transferred to the High Court, Commercial and Tax Division; costs in the cause
Orders
- ELC No. 1132 of 2015 and ELC Misc. Application No. 290 of 2015 are transferred to the High Court, Commercial and Tax Division for hearing and disposal.
- The costs of the application shall be in the cause.
Full Case Text
Judgment text and source record
19 paragraphs
REPUBLIC OF KENYA
IN THE ENVIRONMENT AND LAND COURT AT NAIROBI
E.L.C CASE NO. 1132 OF 2015
DAVID NJIHIA MBUGUA....................................................1ST PLAINTIFF
PAUL KIANIA MBUGUA....................................................2ND PLAINTIFF
VERSUS
MONICAH WANJIRU MBUGUA..................................1ST DEFENDANT
JANE WAMBUI MBUGUA............................................2ND DEFENDANT
RULING
Through the application dated 18/4/2019, the 2nd Defendant seeks to have the suit struck out together with ELC Miscellaneous Application No. 290 of 2015 – David Njihia Mbugua and another v Monica Wanjiru Mbugua and another. The application is made on the ground that this court lacks jurisdiction to determine this suit and that the Plaintiffs lack standing to prosecute this suit. ELC Misc. App. No. 290 of 2015 was an application filed seeking leave to institute a derivative suit. Jane Wambui Mbugua swore the supporting affidavit and deponed that this dispute relates to the internal affairs or management of the company; the directorship and shareholding in the company and conduct of the company’s directors which are matters that fall within the jurisdiction of the High Court and not the Environment and Land Court.
The 1st Plaintiff swore the replying affidavit in opposition to the application to strike out the suit. He averred that the suit revolved around ownership of L.R. No. 1/543 Nairobi and that it raises issues of fraud in the transfer of this land. He deponed that the parties to the suit are family members and that they are also the directors and shareholders of J. M. Mugo Investment Company Limited. He maintained that the directors and shareholders of J. M. Mugo Investment Company Limited did not pass a resolution for the suit land to be transferred to the Defendants. He urged that the land transaction was executed fraudulently by the Defendants who are the majority shareholders in a manner that offends the company’s assets and the minority shareholders.
The court has looked at ELC Misc. No. 290 of 2015 vide which the Plaintiffs sought leave to institute a derivative suit. It will serve no useful purpose to strike out the suit as the Defendants seek. Since it is the High court which has jurisdiction to deal with derivative suits under the Companies Act and disputes over the management of a company, ELC No. 1132 of 2015 and ELC Misc. Appl. No. 290 of 2015 are transferred to the High Court, Commercial and Tax Division for hearing and disposal. The costs of the application shall be in the cause.
Dated and delivered at Nairobi this 13th day of December 2019
K.BOR
JUDGE
In the presence of:-
Mr. J. Chigiti for the Plaintiff
Mr. W. Kabugu holding brief for Mr. G. Miyare for the Defendant
Mr.V. Owuor- Court Assistant