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ELCPartially AllowedNot stated in the judgment· [2026] KEELC 3597 (KLR)

Kariuki & another v Osotua Villas Ltd & another (Environment and Land Case E053 of 2025) (Environment and Land) [2026] KEELC 3597 (KLR)

Environment and Land Court
11 June 2026
6,798 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan court allowed a resort owner's case against a developer and hotel manager to proceed, but cut claims filed too late under limitation rules.

What this practically means

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Executive summary

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The Plaintiffs, purchasers of Studio Apartment No. 16 (116) in the Osotua Luxury Resort development on L.R No. 9134, sued the developer (1st Defendant) and its hotel manager (2nd Defendant) seeking a declaration that the conversion of the housing development into a hotel without their consent violated their Article 40 property rights, termination of the management contract, vacant possession of their unit, mesne profits of Kshs. 150,000 per month from 30th June 2013, interest and costs. The 1st Defendant raised a preliminary objection that the suit was caught by an arbitration clause in the 7th November 2012 sale agreement and offended the exhaustion doctrine; the 2nd Defendant sought to strike out the Plaint under Order 2 Rule 15 as an agent of a disclosed principal with no proprietary interest. The court framed three issues. First, it rejected the preliminary objection as procedurally flawed: Section 6 of the Arbitration Act requires a stay application, not dismissal by preliminary objection, and assessing whether the clause is inoperative or a genuine dispute exists requires evidence, so the objection was not a pure point of law; contractual clauses cannot divest the court of jurisdiction. Second, exercising its jurisdiction suo moto on limitation, the court held the claim for vacant possession was statute-barred (the 12-year period expired on 30th June 2025, four months before filing, extinguishing title under Section 17), and mesne profits before 4th November 2019 were barred by the six-year limit; however, the declaratory and contract-termination prayers concerning the 2020 conversion were within time, and mesne profits survive as a continuing tort from November 2019. Third, the 2nd Defendant's striking-out application was dismissed entirely: affidavit evidence had to be disregarded on the Order 2 Rule 15(1)(a) ground, the Plaint disclosed a cause of action in continuing tort against the manager, and the 2nd Defendant is a necessary party to the termination claim. Prayers (a), (b) and part of (d) proceed to full trial; costs were reserved in the cause. Judgment delivered virtually at Naivasha by M.C. Oundo, Judge of the Environment and Land Court, on 11th June 2026.

Key legal issues

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01

Whether the preliminary objection based on the arbitration clause was a proper procedure

Holding

The objection was procedurally flawed and rejected; Section 6 of the Arbitration Act mandates a stay application, and the inquiries it requires (whether the clause is null, void, inoperative or whether a genuine dispute exists) require evidence, barring a pure point of law.

Reasoning

Section 6(1) of the Arbitration Act requires a party to apply for a stay not later than appearance, and the court must stay proceedings unless the agreement is null and void, inoperative or incapable of being performed, or there is no genuine dispute. Those findings require examination of affidavits, contracts and party conduct, which a preliminary objection cannot accommodate. The statute provides for a stay, not dismissal. Relying on Mukisa Biscuit and Niazsons, the court held the objection was not a pure point of law and the proper route was a Notice of Motion for stay.

p. 9
02

Whether the suit was statute-barred

Holding

Partially: prayer (c) for vacant possession was barred by the 12-year limit in Section 7 (title extinguished under Section 17); mesne profits before 4th November 2019 were barred by the 6-year limits in Sections 4(1) and 8; but the declaratory and contract-termination prayers relating to the 2020 conversion were within the 6-year limit, and mesne profits from 4th November 2019 survive as a continuing tort.

Reasoning

The right of action for possession accrued on the contractual completion date, 30th June 2013, so the 12-year period lapsed on 30th June 2025, four months before filing on 4th November 2025; under Section 17 the Plaintiffs' title was extinguished. The conversion to a hotel occurred in or about 2020, so the 6-year period for tort/contract claims had not run for prayers (a) and (b). The mesne profits claim was confined to the six years preceding filing because the unauthorised operation constitutes a continuing injury.

p. 11
03

Whether the 2nd Defendant should be struck out of the suit

Holding

The application was dismissed in its entirety; the 2nd Defendant is a proper and necessary party because the Plaint seeks termination of the management contract to which it is a party and alleges continuous tortious interference.

Reasoning

Although the application combined grounds under Order 2 Rule 15(1)(a), (b) and (d), the court was bound to disregard the supporting affidavit on the (1)(a) ground and look only at the Plaint. On its face, the Plaint alleges the 2nd Defendant operates the unit as a hotel room and collects income without authority. Agency protection applies only where the principal has lawful authority, which the Plaintiffs dispute. Striking out is a draconian measure reserved for hopeless suits, and the Plaint shows a semblance of cause of action; the 2nd Defendant's presence is needed to adjudicate the validity and termination of the management contract.

p. 13

Legal principles established

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  • An arbitration clause does not divest a court of jurisdiction; the statutory route under Section 6 of the Arbitration Act is an application for a stay of proceedings, not dismissal by preliminary objection.
  • Private contracts cannot divest a court of its jurisdiction; only an Act of Parliament can grant or take away a court's jurisdiction.
  • A question of limitation goes to jurisdiction and may be determined by the court suo moto even if not raised in a preliminary objection.
  • On an Order 2 Rule 15(1)(a) application, the court must look only at the plaint and disregard affidavit evidence when assessing whether a cause of action is disclosed.
  • An agent of a principal who lacks lawful authority over property cannot hide behind agency to escape personal liability in tort for exploiting the property.
  • Continuing torts allow recovery of day-by-day damages within the limitation window preceding filing.

Court orders

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  1. 1.The 1st Defendant's Preliminary Objection dated 2nd December 2025 partly upheld solely on the question of statutory limitation
  2. 2.Prayer (c) of the Plaint seeking vacant possession of Studio Apartment No. 16 (116) found statute-barred under Section 7 of the Limitation of Actions Act
  3. 3.The Plaintiffs' monetary claim under Prayer (d) for mesne profits between 30th June 2013 and 3rd November 2019 found statute-barred under Section 8 of the Limitation of Actions Act
  4. 4.The 1st Defendant's objection seeking dismissal of the suit based on the arbitration clause dismissed for procedural impropriety
  5. 5.The 2nd Defendant's Notice of Motion Application dated 23rd January 2026 seeking to strike out the Plaint or its name from the suit dismissed in its entirety
  6. 6.Prayers (a) and (b) of the Plaint regarding the legality and termination of the 2020 hotel conversion contract declared within time and to proceed to full trial alongside the surviving portions of Prayer (d)
  7. 7.Costs shall be in cause
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court under Article 162(2) of the Constitution (dispute relating to land/property on L.R No. 9134); the court exercised jurisdiction to determine preliminary objection and application notwithstanding the arbitration clause.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kariuki & another v Osotua Villas Ltd & another (Environment and Land Case E053 of 2025)  (Environment and Land) [2026] KEELC 3597 (KLR)", Case Analysis (2026). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3597/eng@2026-06-11

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.