https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/10380

Ndung'u & 3 others v Ncba Investment Bank Limited (Civil Suit E009 of 2024) [2026] KEHC 10380 (KLR) (9 July 2026) (Ruling) Neutral citation: [2026] KEHC 10380 (KLR) Republic of Kenya In the High Court at Eldoret Civil Suit E009 of 2024 E Ominde, J July 9, 2026 Between Cyrus Njuguna Ndung'u 1st Respondent Daniel Karanja Ndung'u 2nd Respondent Stephen Muiruri Ndung'u 3rd Respondent Esther Wamboi Ndung'u 4th Respondent and Ncba Investment Bank Limited Applicant Ruling 1.By way of Notice of Motion dated 1st August 2024, the Applicant seeks the following orders;1.The suit dated 16th May, 2024 be and is hereby struck out for having been instituted in the wrong forum;2.Costs be borne by the Respondents. 2.The Application is expressed to be brought under Sections 1A and 3A of the Civil Procedure Act, Article 159 of the Constitution and all other enabling provisions of the law. 3.The Application is supported by an Affidavit sworn by Kenneth Mawira who describes himself as the Applicant's Senior Legal Counsel- Corporate Banking, Global Markets & General Operations. He pleaded that he is aware that the Respondents jointly hold account number 4651120028 which is linked to portfolio no 16072, annexing and marking as KM 1 a true copy of the unit trust account opening forms. 4.Further, that the operations and relationship between the Applicant and the Respondent is governed by the provisions of the Trust Deed for NCBA Unit Trust Scheme “the Trust Deed " which he annexed and marked as KM 2. That the Respondents have instituted a suit against the Applicants alleging illegal and unlawful freezing of their account and that they seek a declaration that the freezing of their account is unlawful and an order compelling the Applicants to lift the freeze. He annexed and marked as KM 3 a copy of the Plaint. 5.The deponent averred that the Trust Deed contains a provision for dispute resolution under Clause 63 which provides that "any dispute or difference which may arise between the unit holders, fund managers, trustees, custodians and the other or others shall be referred to the Capital Markets Tribunal established under the Act." 6.That the text of the aforementioned clause has been couched in mandatory terms by use of the word “shall" hence the present suit has been filed without complying with the mandatory dispute resolution cause under the Trust Deed and in the circumstances, this Court has no jurisdiction to determine this matter. Further, that the dispute involves the fund manager, being the Applicant and the unit holders, the Respondent and therefore falls within the purview of the dispute resolution clause as contemplated in the Trust Deed. 7.The deponent averred that the relationship between the Applicant and the Respondent is contractual in nature and they are bound by the terms of the trust deed including the forums for dispute resolution. He reiterated that the Respondents have instituted this cause in the wrong forum and accordingly, it should be struck out to allow the dispute be canvassed at the Capital Markets Tribunal as per the Trust Deed. He urged that it is in the interest of justice that the application be allowed as parties had intended that any disputes be referred to the Capital Markets Tribunal. 8.The Plaintiffs filed a Replying Affidavit dated 3rd October 2025 in opposition to the application, sworn by the 1st Plaintiff, Daniel Karanja Ndungu. He pleaded that the application is bad in law, fatally defective, does not raise any triable issues, an abuse of the court process hence the same should be dismissed in limine. Further, that the High Court has original unlimited jurisdiction hence has capacity to entertain the instant suit. He stated that the instant suit is a breach of duty of care which is an action in tort hence the tribunal lacks capacity to award the prayers that are sought thereof. That the withholding and freezing of account is an action outside the trust deed but a breach of duty of care. Applicant’s submissions 9.Learned counsel for the applicant submitted that the Plaintiffs’ suit is premature in substance and offends the doctrine of ripeness since the claim emanates from a Trust Deed executed between the parties in September, 2022 which Deed contains a dispute resolution clause as has already been herein summarised from the pleadings. In the circumstances, Counsel urged, that this Court lacks proper jurisdiction to entertain the suit in the first instance in view of the said dispute resolution clause. Further, Counsel submitted that the Applicant is ready and willing to comply with the subject clause by submitting to the jurisdiction of the Capital Market Authority and later, it’s appellate Tribunal in accordance with the Trust Deed and the law. 10.On whether the dispute between the parties arises from the Trust Deed; Counsel urged that it is not in dispute that the relationship between the parties herein emanates from the terms agreed upon in the Trust Deed duly executed by the parties in accordance with the law. That Clause 63 of the Trust Deed provides that:“Any dispute or difference which may arise between the unit holders, fund managers, trustees, custodians and the other or others shall be referred to the Capital Markets Tribunal established under the Act.” 11.That the upshot of the above clause which is coached in mandatory terms is that, the parties mutually agreed to resolve any dispute or differences between them under the framework set out in the Capital Markets Act and its relevant regulations. That the dispute has arisen from their relationship which is that of unit holder and fund manager, which perfectly falls under the scope of the dispute resolution clause reproduced above. 12.He urged that the dispute resolution clause uses the word” any” to mean that all disputes arising from the said relationship are subject to the Capital Markets Tribunal. Counsel urged the court to find that, the dispute between the parties arises from, or relates to the Trust Deed duly executed by the parties. 13.On Whether, in view of the dispute resolution clause contained in the Trust Deed dated September, 2022, this Honourable Court has jurisdiction to entertain the suit, Counsel urged that a perusal of the Plaint reveals that the grievances alleged by the Plaintiffs whether for breach of trust, mismanagement, or improper exercise of fiduciary powers are all founded on the rights and obligations created under the Trust Deed. 14.That the Plaintiffs have not pointed to any act or omission independent of that Deed. It is therefore safe to argue that, their entire claim emanates from and is exclusively governed by the Trust Deed. That it therefore follows that the present dispute falls squarely within the contractual dispute resolution mechanism contained in the Trust Deed in the absence of any reasonable limitation or qualification to exclude the present controversy from being resolved through the contracted choice of forum. 15.Counsel urged the Court to take notice that the Applicant has applied at the earliest opportunity before taking any step in the proceedings and has unequivocally expressed its willingness to submit to the jurisdiction of the Capital Markets Authority. The principle of party autonomy that parties are bound by their chosen forum of dispute resolution is firmly entrenched in Kenyan jurisprudence. He cited Nacmac Crest Limited v Ng’ang’a & Another (Environment and Land Miscellaneous Application E010 of 2025) eKLR, (Ruling) in this regard. 16.He additionally stated that it is trite law that jurisdiction is everything and without it, the court must “down its tools” citing Owners of the Motor Vessel “Lillian S” v. Caltex Oil (Kenya) Ltd [1989] KLR 1 and urged that since the parties freely and voluntarily agreed to submit disputes arising from the Trust Deed to the Capital Markets Authority and its Tribunal, this Court’s jurisdiction is ousted except for the limited supervisory roles as envisaged in law. 17.He submitted that to allow the Plaintiffs to prosecute their claim before this court despite the existence of an operative dispute resolution clause would not only defeat the express contractual provision but would also undermine the public policy objective of promoting alternative dispute resolution as enshrined under Article 159(2)(c) of the Constitution of Kenya, 2010. He urged the court to hold and find that the Plaintiffs’ claim is premature and proceed to strike it out with costs. Respondents’ submissions 18.Learned counsel submitted that the main issued for determination is whether this Honourable Court has jurisdiction to entertain this suit. He cited the holding in Owners of the Motor Vessel "Lillian’s" V Caltex of Kenya Ltd (1989) and the decision of the Supreme Court of Kenya in Samwel Kamau Macharia & Another vs Kenya Commercial Bank and 2 Others Supreme Court of Kenya Civil Application No. 2 of 2011 on jurisdiction. 19.He urged that Article 163 of the Constitution provides for the jurisdiction of the High Court and urged that this Court has original and unlimited jurisdiction when it comes civil matters and therefore this being a civil claim on tort on the breach of duty of care this court is vested with jurisdiction to entertain it. 20.He cited the case of Kenya power and Lighting Company Limited V Collins Agumba Aboae (2016) eKLR on the issue of whether the dispute arose from a tort and submitted that the freezing of the Account was a breach of statutory duty of care of the bank to its client, and the same was not envisaged under the contract of the trust deed since this breach entitles the Plaintiffs to damages due to the breach of this fiduciary duty of care. 21.Counsel further cited Equity Bank of Kenya & Another V Robert Chesang (2016) eKLR and urged that the Defendant never communicated to the Plaintiffs the reason for freezing their Account and even after the Plaintiffs sought to know the same. Therefore, the Defendant having breached the fiduciary duty it cannot hide behind the curtains of the trust deed. He cited Cooperative Bank of Kenya Ltd V Biwott (Civil Appeal 18 of 2019) (2022) KEHC 9946 eKLR) in this regard. 22.Counsel submitted that Section 35 of the Capital Markets Act Cap 485A provides for the jurisdiction of the Capital markers tribunal and the same does not deal with the breach of the fiduciary duty of care and hence the said tribunal is bereft of jurisdiction to entertain this suit. Further the trust deed is void and invalid since the same was never registered and there is no evidence that the trust deed was registered to make it operative as between the parties. He submitted that registration of trust deed is mandatory and failure to register it, it becomes inoperative and hence invalid. 23.Lastly, Counsel submitted that Section 4 of Registration of documents Act clearly gives a guideline on documents to be registered. He urged the court to dismiss the application for lack of merit. Analysis & Determination 24.Having addressed my mind to the submissions herein made, it is my considered opinion that the issues for determination is whether the court has jurisdiction to determine the suit 25.In Owners of Motor Vessel “Lilian S” v Caltex Oil (Kenya) Limited (1989) 1 KLR the Court dealt with the issue of a courts’ jurisdiction thus: -“Jurisdiction is everything. Without it, a court has no powers to make one more step. Where a court has no jurisdiction there would be no basis for a continuation of the proceedings pending other evidence. A court of law downs its tools in respect of the matter before it the moment it holds the opinion it is without jurisdiction…………where a court takes it upon itself to exercise jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before Judgement is given”. 26.In the case of Samuel Kamau Macharia & Another vs Kenya Commercial Bank Limited & Others (2012) eKLR the court held as follows on where this jurisdiction emanates from:“A court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a court of law can only exercise jurisdiction as conferred by the Constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. ….. the court must operate within the constitutional limits. It cannot expand jurisdiction craft or innovation." 27.Whereas under the provisions of Article 165(3)(a) of the Constitution of Kenya it is not in doubt that the High Court has unlimited original jurisdiction in criminal and civil matters, the Court of Appeal in Geoffrey Muthinja & another v Samuel Muguna Henry & 1756 others [2015] eKLR, held as follows on the exercise by the courts of their various jurisdictions“It is imperative that where a dispute resolution mechanism exists outside courts, the same be exhausted before the jurisdiction of the courts is invoked. Courts ought to be fora of last resort and not the first port of call… The exhaustion doctrine is a sound one and serves the purpose of postponing judicial consideration of matters until a party has first been diligent in pursuing the mechanisms provided.” 28.Still on this very same matter of jurisdiction, in International Centre for Policy and Conflict and 5 Others vs The Hon. Attorney-General & 4 Others [2013] eKLR the Court observed as follows;“An important tenet of the concept of the rule of law is that this Court before exercising its jurisdiction under Article 165 of the Constitution in general, must exercise restraint. It must first give an opportunity to the relevant constitutional bodies or State organs to deal with the dispute under the relevant provision of the parent statute. If the court were to act in haste, it would be presuming bad faith or inability by that body to act.” 29.Lastly, in Yes Housing Co-operative Society Ltd v Kenneth Onsare Maina [2020] eKLR, the Court held that:“The Court is not just under a duty to enforce a contractual clause binding the parties to arbitration but is under a constitutional obligation to promote that mode of dispute resolution.” 30.In the instant case, according to the Plaint, the Cause of action is the freezing of the Plaintiffs ‘account which the plaintiff contends is a breach of the fiduciary duty owed by the Defendant. In a nutshell, all considered, in light of the fact that the dispute arises from the Unit Trust Scheme Trust Deed, the same is subject to the provisions therein, and more particularly Clause 63 which provides that disputes arising are to be determined by the Capital Markets Tribunal. 31.Further, a reading of the pleadings reveal that the dispute is as a result of funds that were mistakenly deposited in the Plaintiffs’ account and when the error was detected it was found that the Plaintiff had already withdrawn some of the funds resulting in the freezing of the accounts that led to the institution of this case. In my opinion, the first port of call was to have the dispute determined by the Capital Markets Tribunal. 32.For these reasons, I find merit in the applicant’s objection that the matter as filed before this court is premature. The same is accordingly upheld and as a consequence the plaintiff’s suit is now hereby struck out in its entirety with each party bearing their own costs. READ DATED AND SIGNED VIRTUALLY AT BUNGOMA ON 9TH JULY 2026.E. OMINDEJUDGE