https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/8078

Lavington Shopping Complex Limited v Axis Real Estate Limited (Civil Case E710 of 2025) [2026] KEHC 8078 (KLR) (Commercial and Tax) (9 June 2026) (Ruling) Neutral citation: [2026] KEHC 8078 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Case E710 of 2025 BK Njoroge, J June 9, 2026 Between Lavington Shopping Complex Limited Applicant and Axis Real Estate Limited Respondent Ruling 1.This is an application by the Applicant by way of an Originating Summons dated 29th October, 2025. It primarily seeks to set aside the Ruling made by the Arbitrator in the Arbitral proceedings. Background Facts 2.The Applicant filed the Originating Summons dated 29th October, 2025 seeking the following orders;1.Spent.2.Spent.3.That this Honourable Court be pleased to find that the Arbitration proceedings between the parties herein, and specifically the Counterclaim dated before the Hon. Arbitrator, C.J Mwaura, is not time barred by dint of Section 4 (1) (a) of the Limitation of Actions Act.4.That following paragraph 3 above, this Honourable Court be pleased to find that the arbitrator, C.J Mwaura has jurisdiction to hear and determine the disputes between the parties relating to the agreement dated 16th April, 2012, including the Counterclaim dated.5.That this Honourable Court be pleased to set aside the Ruling of the Honorable Arbitrator, C.J Mwaura, dated 30th September, 2025.6.That the Honorable Court be pleased to make such further or other orders as it may deem just and expedient in the circumstances of this case.7.That costs of this application be provided for. 3.The Application was supported by the Affidavit of Inviolate Achola. She stated that the Hon. Arbitrator, C.J. Mwaura, in a Ruling dated 30th September, 2025, declined jurisdiction over the Applicant’s Counterclaim. He struck it out for being time-barred, despite the claim exceeding Kshs. 63 million. The matter was thereafter set for hearing on 25th and 26th November, 2025. The Applicant contended that the Arbitrator failed to address critical issues, including the applicability of Sections 34 and 35 of the Limitation of Actions Act. The fact that the cause of action was actively pursued in 2021 (thus falling within the six-year limitation period), and that both the Claim and Counterclaim arise from the same set of facts. 4.The Applicant further argued that the Arbitrator improperly upheld the Preliminary Objection despite contested facts, the Applicant’s filed responses, documents, submissions, and an existing Court Ruling. It maintains that less than six years had lapsed and that striking out the Counterclaim exposes it to significant financial loss of Kshs. 63,266,850/=. Given the substantial sum involved and the risk of irreparable harm, the Applicant seeks an urgent determination on limitation and jurisdiction, and a stay of the ongoing arbitration proceedings to prevent prejudice. 5.In response, the Respondent filed the Replying Affidavit of V. Gikonyo Gitonga, sworn on 17th November, 2025. It was the Respondent’s position that the Respondent filed a Statement of Claim before the Learned Arbitrator, C.J. Mwaura, on 4th July 2024. Subsequent thereto, the Applicant raised a Preliminary Objection on 31st July, 2024 contending that the claim was time-barred. 6.The cause of action in respect of the Applicant’s Counterclaim arose on 31st December, 2017, being the date when the contract was terminated. Thus, making 31st December, 2023 the statutory deadline for issuing a Notice of Counterclaim or otherwise commencing the claim. However, the Applicant failed to issue any such notice prior to filing the Counterclaim on 3rd June, 2025, rendering the same time-barred. 7.It was further contended that the failure to issue a Notice of Counterclaim is not a mere procedural irregularity but a jurisdictional defect. That Section 35 of the Limitation of Actions Act presupposes the existence of a validly instituted counterclaim. That accordingly, in the absence of such notice, the provision is inapplicable. This is a position supported by judicial pronouncements across various jurisdictions. Issues for determination 8.The Court has carefully considered the Application, response and the written submissions as well as the oral highlights by Counsel for the parties. The issue for determination is;a.Whether the Court should set aside the Ruling of the Honourable Arbitrator, C.J Mwaura, dated 30th September, 2025 declining jurisdiction on the basis of limitation and time bar. Analysis 9.The Applicant contended that both the Claim and the Counterclaim arise from the exact same facts and circumstances, and the Counterclaim was prompted by the Arbitration proceedings. The law cannot be interpreted to produce two contradictory outcomes from a single set of events. 10.The Applicant argued that the Respondent’s cause of action was expressly held by the High Court (Ruling of 27th March, 2025 by Ado J) to have arisen on 31st December, 2017. The same Court held the arbitral proceedings to be deemed to have commenced on 9th October, 2018. The Court further found that the claim was well within the statutory limitation period under Section 4(1)(a) of the Limitations of Actions Act. 11.Therefore, according to the Applicant since the Counterclaim arises out of the same contract dated 16th April, 2012 and the same factual matrix, Section 35of the Limitation of Actions Act operates to align its commencement date with that of the Respondent’s action. Thus, for all purposes of limitation, the Counterclaim must be taken to have been filed on 9th October, 2018. Thus, aligning with the exact date, the arbitral proceedings were deemed to have commenced. 12.The Respondent supported this position by stating that the validity of this arbitration and the limitation period applicable thereto were conclusively determined in Lavington Shopping Complex Ltd v Axis Real Estate Ltd, Misc. Civil Application No. E871 of 2024. In the High Court (Hon. Justice Moses Ado, 27th March 2025) upheld the Arbitrator’s ruling of 27th September, 2024 that the proceedings were commenced within time. 13.However, the issue in contention is that the Applicant later filed a Counterclaim dated 3rd June, 2025 on 3rd July, 2025—over seven years after the cause of action arose. 14.Section 35 of the Limitation of Actions Act provides that:“For the purposes of this Act and any other written law relating to the limitation of actions, any claim by way of set-off or counterclaim is taken to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded...” 15.It is the Court’s understanding that the above provision clearly indicates that a Counterclaim is a separate entity from a suit. A Counterclaim is treated as a separate suit under Section 35 of the Limitation of Actions Act. Hence, its survival cannot be pegged on the pendency of the primary suit as argued by the Applicant. To this Court’s understanding, were the original action or the claim to be struck out for whatever reason, the Counterclaim would survive on its own. Thus, a Counterclaim initiates and commences an independent and severable action. 16.In the present case, it is undisputed that the Respondent’s cause of action was expressly held by the High Court (Ruling of 27th March, 2025 by Ado J.) to have arisen on 31st December, 2017. Therefore, the Court reiterates that –“any claim by way of set-off or counterclaim is taken to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded...” 17.In the case of Muna & 5 others v Boscardin & 5 others [2022] KEELC 3133 (KLR) the Court stated;“Thus, if the law treats a suit and counterclaim as separate for purposes of delineating the genesis of a cause of action, so it should for purposes of continuance and determination of that those causes of action. It goes without saying then that a counterclaim is a separate entity from a suit. It resides in independence but when tried together fate calls on them to merge as one judgment. Section 35 of the Act provides:For the purposes of this Act and any other written law relating to the limitation of actions, any claim by way of set-off or counterclaim is taken to be a separate action and to have been commenced on the same date as the action in which the set-off or counterclaim is pleaded.”35.It is correct to argue that a counterclaim can be treated as a cross suit, as was held by the Supreme Court of India in Sh. Jag Mohan Chawla & another v Dera Radha Swami Satsang & Ors (Supra). If it is a cross suit, as long as it was instituted within time, its existence should not necessarily depend on that of the suit. It breathes its own life and can bring forth the life of a judgment or decision of a court, independent of the suit. Thus, in Beatrice Mumbi Wamahiu v Mobil Oil Kenya Ltd [2011] eKLR it was held that,…the withdrawal of the main suit did not affect the counter-claim. A counterclaim is treated as a separate suit under Section 35 of the Limitation of Actions Act hence, its survival cannot be pegged on the pendency of the primary suit.” 18.As the Court concludes, it takes note that the Applicant had raised a Preliminary Objection that the Arbitral Proceedings were statute barred. If that be the case, then it would follow that the Applicant could not raise a Counterclaim for the very same reasons of the statute bar. It would appear that the Counterclaim was a reaction to the claim initiated by the Respondent in the Arbitral proceedings. This begs the question whether the Applicant would have made or raised a claim if no arbitration had been commenced against it. It matters not that the Counterclaim is for a huge sum of monies. Limitation is not pegged on the amounts of money claimed, rather than on time. The Court is hence not in doubt that the Applicant was aware that it had fallen foul out of time in presenting any claims before the Learned Arbitrator. It sought to use the same argument of time to defeat the Respondent’s claim but failed. This is an issue that goes to jurisdiction and cannot be said to be technical or curable by Article 159 of the Constitution. 19.The Court therefore does not find fault with the Learned Arbitrator’s finding that the Counterclaim is statute-barred under Section 4 and 34 of the Limitation of Actions Act, and no valid cause of action can stand. The Learned Arbitrator correctly pronounced himself on the Preliminary Ruling Award dated 30th September, 2025. 20.In the circumstances the order of stay of the Arbitral proceedings earlier granted herein is discharged. 21.As to costs the same lie at the discretion of this Court and ordinarily follow the event. The event is that the Originating Summons fails. The costs thereof are awarded to the Respondent. Determination 22.The Applicant’s Originating Summons dated 29th October, 2025 is hereby dismissed for lack of merits. 23.The costs of the application are awarded to the Respondent. 24.It is so ordered. DATED, SIGNED AND DELIVERED AT MILIMANI THIS 09TH DAY OF JUNE, 2026.NJOROGE BENJAMIN K.JUDGEIn the presence of:Miss Wambui for the Applicant.Mr. Kabaiku for the Respondent.Mr. John Paul - Court Assistant.