[2019] KEELC 4474 (KLR)
The court held that section 3(1) of the Companies Act defines 'Court' as the High Court unless the Act specifically provides otherwise. Section 239, which governs applications for permission to continue derivative actions, refers only to 'Court' and does not specifically include the Environment and Land Court. The...
Source-derived case information.
- Citation
- [2019] KEELC 4474 (KLR)
- Parties
- Plaintiff: Pangaea Development Holdings Limited (for and on behalf of Hacienda Development Holdings Limited); Defendant: Hacienda Development Limited; Defendant: Adam Tuller; Respondent: Registrar of Titles, Mombasa Central Registry
- Court
- Environment and Land Court
- Court Station
- Environment and Land Court at Mombasa
- Jurisdiction
- Kenya
- Case Number
- Environment & Land Case 105 of 2018
- Procedural Posture
- Preliminary Objection / Ruling on Preliminary Objection to Jurisdiction
- Outcome
- preliminary objection upheld; application struck out for want of jurisdiction
- Judges
- AA Omollo
- Legal Topics
- Derivative Actions, Jurisdiction of Court, Companies Act Interpretation
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Pangaea Development Holdings Limited (for and on behalf of Hacienda Development Holdings Limited)
Plaintiff
Hacienda Development Limited
Defendant
Adam Tuller
Defendant
Registrar of Titles, Mombasa Central Registry
Respondent
Procedural Posture
Preliminary Objection / Ruling on Preliminary Objection to Jurisdiction
Legal Issues
- 1 Whether the Environment and Land Court has jurisdiction to determine an application for permission to continue a derivative action under section 239 of the Companies Act, 2015.
- 2 Whether the application for leave to continue a derivative action should have been filed in the High Court.
Ratio Decidendi
The court held that section 3(1) of the Companies Act defines 'Court' as the High Court unless the Act specifically provides otherwise. Section 239, which governs applications for permission to continue derivative actions, refers only to 'Court' and does not specifically include the Environment and Land Court. The authorities cited by the applicant were distinguished as relating to situations where the court is determining jurisdiction in multi-faceted claims, not at the stage of seeking permission to bring a derivative action. The court concluded that the application for leave to continue a derivative action ought to have been filed in the High Court, not the Environment and Land Court....
Court Disposition
preliminary objection upheld; application struck out for want of jurisdiction
Orders
- The application is struck out with costs to the defendants and the Interested Party.
Full Case Text
Judgment text and source record
25 paragraphs
REPUBLIC OF KENYA
IN THE ENVIRONMENT AND LAND COURT
AT MOMBASA
ELC CASE NO. 105 OF 2018
PANGAEA DEVELOPMENT HOLDINGS LIMITED(FOR AND ON BEHALF OF
HACIENDADEVELOPMENT HOLDINGS LIMITED....................................PLAINTIFF
-VERSUS-
HACIENDA DEVELOPMENT LIMITED..................................................1ST DEFENDANT
ADAM TULLER............................................................................................2ND DEFENDANT
AND
REGISTRAR OF TITLES, MOMBASA CENTRAL REGISTRY....INTERESTED PARTY
RULING
1. The plaintiff herein filed the application dated 3rd May 2018 under the provisions of section 3A of the Civil Procedure Act and section 239 of the Companies Act 2015 for orders that:
i. The Court be pleased to grant leave allowing for the continuation of the plaintiff’s derivative action herein.
2. Before the application could be heard on its merit, the 1st and 2nd defendant raised a preliminary objection that the Environment and Land Court lacks jurisdiction to determine an application for permission to file or continue a derivative action under section 239 of the Companies Ac, 2015.
3. The preliminary objection was argued by way of oral submissions. Mr Kinyua advocate for the defendants submitted that the parties in this suit are similar to the parities in HCC 800 of 2009. Secondly that the Judge in the High Court case referred that case for arbitration which arbitral award is annexed to the present application. That at page 24 is also annexed a voluntary winding up which is a preserve of the High Court. That the applicant has other choses in action that are existing from which he can get a remedy i.e. winding cause No 23 of 2011, HCC 800 OF 2009 and Miscellaneous application No 230 of 2017. He urged the Court to allow the preliminary objection. Mr Makuto for the Interested Party associated himself with Mr Kinyua’s submissions.
4. Mr Kubo for the applicant submitted that section 238 defines what a derivated action is. That paragraph 5 of the plaint sets out what reliefs the applicant is seeking. He relied on the decisions of inter alia Republic vs Karisa Chengo & 2 others (2017) eKLR and Susan Achieng & 4 others vs Redhill Heights Investments Ltd & Another (2016) eKLR. That section 239 (1) provides what the Court should do at this stage. Counsel further cited the case law of Lydia Nyambura vs DTB Ltd & Another (2018) eKLR andLuo Council of Elders & Others vs County Government of Bomet (2018) eKLR. That he did not know whether HCC 800 of 2009 was still active. He urged the Court to disallow the preliminary objection as the pre dominant issue before the Court is land. In response, Mr Makuto stated that the issue of predominant test does not apply in an application for leave to file a derivative action. That as per section 3 (1) of the Companies Act, the power is given to the High Court to deal with applications such as this.
5. I have read the provisions of section 3 (1) of the Companies Act which defines Court to mean High Court unless the Act specifically provides otherwise. Section 239 deals with application for permission to continue a derivative suit/claim. 239 (1) provides thus; “in order to continue a derivative claim brought under this part by a member, the member has to apply to the Court for permission to continue” 239 (2), “if satisfied that the application does not disclose a case for giving permission, the Court:-
a. Shall dismiss the application and
b. May make any consequential order it considers appropriate.
Section 239 (3) & (4) also refers to orders the Court can give.
6. Section 239 makes reference only to the word “Court”. Therefore the Court under this part can only be inferred to mean High Court. I have also considered the case law cited by the plaintiff. They all refer to instances where there is already an existing suit and the Court in determining whether it has jurisdiction while dealing with a multi-facet claim would consider what is the predominant purpose and or subject matter. However what is currently before me is request for permission to bring a claim. I therefore find the case laws cited are not applicable to the present application. I am satisfied the preliminary objection is merited and hereby held that this application ought to have been filed in the High Court and not before this Court. Accordingly I order it struck out with costs to the defendants and the Interested Party.
Dated, signed & delivered at Mombasa this 28th February 2019
A. OMOLLO
JUDGE