[2022] KEHC 14132 (KLR)

Kassam & another v Pearl Beach Hotels t/a English Point Marina (Commercial Case E565 of 2021) [2022] KEHC 14132 (KLR) (Commercial and Tax) (7 October 2022) (Ruling)

Neutral citation: [2022] KEHC 14132 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Commercial Case E565 of 2021

A Mshila, J

October 7, 2022

Between

Ashif Kassam

1st Plaintiff

Lina Ratansi

2nd Plaintiff

and

Pearl Beach Hotels t/a English Point Marina

Defendant

Ruling

1. The plaintiff filed the instant suit in nairobi seeking the recovery of a deposit reservation fee from the defendant in the sum of Kshs.30,000,000/- for a Mombasa property on account of an aborted sale.

2. The defendant in response to the suit raised a preliminary objection dated the 3/11/2021 on the issue of whether this court is seized of territorial jurisdiction to hear the suit and to proceed to make a determination in the matter.

3. The parties were directed to canvass the preliminary objection by way of filing and exchanging written submissions; hereunder is a summary of the parties’ respective submissions;

Defendants’ Submissions 4. The plaint and the bundle of documents disclose that the cause of action arose in Mombasa and the defendants place of residence is identified as Mombasa, therefore the issue of jurisdiction has to be considered in consonance withsection 15 of the Civil Procedure Act (‘Áct’).

5. Jurisdiction in our court system is a combined effect over the parties territorial jurisdiction, the nature of the claim and its relationship to pecuniary measure; the Act gives no room for a plaintiff or a suit to be filed against a defendant by any original process in any county, sub-county other than that whereof he or she is a resident or carries on business at the time of service of summons for the claim.

6. The Act provides that every suit shall be instituted in a court within the local limits of whose jurisdiction the defendant or each of the defendants at the time of commencement of the suit actually and voluntarily reside or carry on business or personally works for gain.

7. The combined reading of sections 11,12,13,14 and 15 of the Act clearly gives effect to the competence of personum and subject jurisdiction and are cumulative components of reasonable access to justice as enshrined in articles 48 and 50 of the Constitution. The civil court is primarily and expressly required under the cited provisions of the Act to protect the defendant from the burdens of being sued and litigating in distant or inconvenient forums, and also to minimize costs, thus giving credence to the provision of territorial jurisdiction.

8. The letter of offer was signed in Mombasa therefore the cause of action arose within the territorial jurisdiction of Mombasa High Court. The defendant is situated and carries on business thereat; also the witness the Defendant wishes to rely on during the hearing is sickly, weary and of poor health.

9. The overriding objective of the Act and the Rules is to facilitate the just, expeditious, proportionate and or affordable resolution of civil disputes governed by the Act. In furtherance of this objective the courts are mandated to ensure the just determination of proceedings, efficient disposal of the business of the court, the efficient use of available judicial and administrative resources and timely disposal of proceedings at a cost affordable to the respective parties.

10. Therefore, the defendant submitted that it had aptly demonstrated why the suit in the first instance ought to have been filed at the Mombasa High Court which has the territorial jurisdiction to handle the matter and notin Nairobi.

11. Thedefendant/objector prayed that the suit be transferred and determined by the court with territorial jurisdiction.

Plaintiffs’ Submissions 12. In response the plaintiff submitted that the sum of Kshs.30,000,000/- was paid to the defendant as a commitment fee to secure an apartment in anticipation of entering into a sale agreement. The parties never entered into a sale agreement for the purchase of the property as anticipated and in lieu thereof it was agreed that the defendants Nairobi based lawyer would refund the monies to theplaintiff on behalf of the defendant.

13. The subject matter of the suit is the refund of monies pledged by the defendants duly authorized agent based in Nairobi and theplaintiffs humbly submitted that the filing of the suit in Nairobi is not in violation of section 15 of the Act.

14. It was further submitted that section 15 of the Act in purporting to limit the territorial jurisdiction of the High court is in conflict with the Constitution of Kenya which clothes the High Court with unlimited territorial jurisdiction.

15. The plaintiff made reference to the Rules under cap.21 which allows for the filing of a civil matter in the Central Registry in Nairobi or in the District/County Registries and the court before the matter is placed will either on its own motion or on application by a party will then fix the place of trial based on the factors alluded to in the said rule; taking the full purport of the rule into consideration it affirms the non-territorial nature of the High Court’s unlimited jurisdiction.

16. What is material to the High Court is not the place of filing of the suit but the place of trial and in determining the place of trial the court will take into account the convenience of the parties, their witnesses, date of trial and all the other circumstances of the case. At the moment this court is confronted with an application for summary judgment and/or judgment on admission and the Plaintiffs contend that they are no where near the trial stage of the case for the considerations to come into play; that there is nothing before the court for it to be called upon to determine the place of trial.

17. Theplaintiffs state that they have not filed any physical file in Nairobi but have filed the case on the e-filing portal in which all the High Court files within the Republic are filed sits in Nairobi. In any case in the virtual era where matters are filed electronically and dispensed with virtually including trials and by reason thereof the place of filing and the physical place of trial have been rendered academic and otiose; there is therefore no physical file to transfer.

18. The plaintiffs contention was that the preliminary objection raised does not meet the legal threshold to have the matter transferred as the defendant has not placed any material before the court to show circumstances which would make it geographically inconvenient or an impediment to the defendant toaccessing justice; to the contrary it is geographically convenient for both parties to litigate in Nairobi given that the parties respective advocates law firms are situated in Nairobi.

19. Accordingly, the plaintiffs prayed that the preliminary objection be disallowed with costs to the plaintiffs.

Issues for Determination 20. After reading the submissions filed herein this court finds only one issue for determination which is; whether the court lacks territorial jurisdiction to entertain this suit and whether the preliminary objection is with merit?

Analysis 21. The plaintiffs suit emanates from an aborted transaction in which they had paid a sum of Kshs.30,000,000/- as deposit towards reservation fee for a unit being developed on a Mombasa property; the sale did not materialize and the defendant acknowledged its indebtedness and agreed to refund the monies through its Nairobi based advocates. Despite the promises to pay the payment was not forthcoming leading to the institution of the suit and an accompanying application for summary judgment or a judgment on admissions.

22. The defendant in response and opposition to the application filed a preliminary objection dated November 3, 2021 disputing the territorial jurisdiction of this Court to hear and determine this suit. The defendant made reference to section 15 of the Civil Procedure Act and prayed that its objection be upheld and the suit be transferred to the territorial jurisdiction of the Mombasa High Court for hearing and determination.

23. It is not in dispute that the suit seeks recovery of the sum of Kshs.30,000,000/- paid as a commitment fee to secure an apartment in anticipation of a Sale Agreement being entered into; it is also not disputed that the parties never entered into any Sale Agreement for the purchase of the unit. What was not clear to this court is where this sum of money was paid whether in Mombasa or Nairobi; be that as it may, the defendant through its advocates agreed to refund the deposit.

24. The applicable law on this courts’ jurisdiction is found at article 165 (3)(a) of the Constitution which creates a High Court with unlimited jurisdiction in both criminal and civil matters with the obvious exception to hearing disputes set apart for the courts with the status of the High Court in matters dealing with land, environment and labour relations.

25. The applicable law on territorial jurisdiction is found at section 15 of the Civil Procedure Act which reads as follows;15. Other suits to be instituted where defendant resides or cause of action arises Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction—(a)the defendant or each of the defendants (where there are more than one) at the time of the commencement of the suit, actually and voluntarily resides or carries on business, or personally works for gain; or(b)any of the defendants (where there are more than one) at the time of the commencement of the suit, actually and voluntarily resides or carries on business, or personally works for gain, provided either the leave of the court is given, or the defendants who do not reside or carry on business, or personally work for gain, as aforesaid acquiesce in such institution; or(c)the cause of action, wholly or in part, arises.Explanation.(1)—Where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence.Explanation.(2)—A corporation shall be deemed to carry on business at its sole or principal office in Kenya, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.Explanation.(3)—In suits arising out of contract, the cause of action arises within the meaning of this section at any of the following places, namely—

26. The above section notwithstanding the fact is that in purporting to limit the High Court the provisions may be in direct conflict with the Constitution of Kenya; nevertheless the important factor to be taken into consideration is that as aptly submitted by the Plaintiff that we are in a virtual era whereby matters can be filed electronically and dispensed with virtually as provided by the gazette practice rules.

27. Upon perusal of the file it is indeed noted by this court that there was no physical filing of the suit in Nairobi and that the Plaintiffs only filed the suit on the e-filing portal.

28. Indeed, as submitted by the objector in its written submissions that the purpose of section 15 of the Act was to protect defendants against the burdens of being sued and litigating in distant and inconvenient forums and also to facilitate just, expeditious, proportionate and affordable resolution of civil matters. These being the pillars of convenience as set down in the aforementioned section it would therefore be incumbent upon the defendant/objector to place before this court any material to show ill-motive by the plaintiff in using geographical inconvenience to defeat the substantive ends of justice and/or by demonstrating to the court how the current location acts as an impediment to its right to accessing justice; and finds that the defendant/objector has failed to provide any such material.

29. This court has noted that the matter is not ripe for trial and what is currently pending is an application for summary judgment and/or judgment on admissions; and is therefore satisfied that this court is seized of territorial jurisdiction to hear and determine the pending application.

Findings and Determination 30. In the light of the foregoing this court makes the following findings and determinations;i.The preliminary objection is found to be devoid of merit and it is hereby overruled;ii.This court is found to be seized of territorial jurisdiction to hear and determine the pending application;iii.The plaintiff is at liberty to set down the application for summary judgment and/or judgment on admission for hearing and determination;iv.Costs shall abide the outcome of the application;v.Mention on November 29, 2022 for compliance.Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 7TH DAY OF OCTOBER, 2022. HON. A. MSHILAJUDGEthe presence of;Karani for the plaintiffsNo appearance for the defendantsLucy----------------------Court Assistant