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ELCPartially Allowed· [2015] KEELC 520 (KLR)

Toyobo Investments Ltd v Rift Valley Water Services Board & 2 others [2015] KEELC 520 (KLR)

Environment and Land Court
23 April 2015
2,806 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A landowner who waited 24 years for compulsory acquisition compensation won 9% interest and costs, but lost claims for a fresh valuation and punitive damages.

What this practically means

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Executive summary

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The plaintiff sued over the compulsory acquisition in 1990-1991 of a portion of his land, L.R No. 11964/8 in Nakuru Municipality, for the National Water Conservation and Pipeline Corporation under the Land Acquisition Act, CAP 295 (repealed). The land, valued at Kshs. 677,875/=, was excised and a title for 0.9613 hectares issued to the defendants, but compensation was never paid despite demands. By consent, the 1st defendant agreed to pay the principal of Kshs. 677,875/=, leaving the court to determine the interest payable. The defendants argued for a fixed 6% under Section 16 of the Land Acquisition Act; the plaintiff sought interest reflecting the time value of money, a fresh valuation at current market value (alleging Kshs. 70 million), and punitive damages of Kshs. 5,000,000/= citing Rookes v Barnard. The court held that Section 16 prescribes a floor, not a fixed rate: 'not less than 6%' vests a discretion in the court to exceed 6%, though not to stray too far. Where a statute explicitly provides an interest rate, the discretion under Section 26(1) of the Civil Procedure Act is displaced. Taking into account land value appreciation, the delay in payment, and the plaintiff's own indolence in claiming late, the court awarded 9% per annum from 30 January 1991 until payment in full, defendants jointly and/or severally liable. Fresh valuation was refused as the principal was agreed. Punitive damages were refused because the statute's interest remedy sufficed and the plaintiff slept on his rights. On the excess acreage, the 1st defendant must either pay current market rates for the extra 0.1473 hectares or have it excised and reverted to the plaintiff. The plaintiff was awarded costs.

Key legal issues

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01

Applicable rate of interest on unpaid compensation for compulsorily acquired land

Holding

Section 16 of the Land Acquisition Act sets a floor of 6%; the court, in its discretion, awards 9% per annum from 30 January 1991 until payment in full, defendants jointly and/or severally liable

Reasoning

Section 16 provides interest 'not less than 6%' rather than a fixed 6%, conferring discretion to exceed the floor. The court considered judicial notice of land value appreciation, the long delay in payment, the parties' conduct, and the plaintiff's indolence in claiming late, and fixed interest at 9%, a 50% uplift on the 6% floor, running from the date the money became payable.

p. 4
02

Whether Section 26 of the Civil Procedure Act applies to pre-judgment interest

Holding

No; where a statute explicitly provides the rate of interest, the court's discretion under Section 26(1) is removed

Reasoning

The court held that where there is an explicit statutory rate, the court has no choice but to follow it; the Land Acquisition Act prescribed the applicable interest rate, so the Civil Procedure Act discretion and pre-judgment interest concepts did not arise.

p. 3
03

Entitlement to punitive damages for delayed compensation

Holding

Refused; the statutory remedy of interest suffices and the plaintiff's delay disentitled him

Reasoning

Although the defendants' conduct in not paying was improper, the statute already provides a remedy for delayed payment through interest; punitive damages could not override the written law, and the plaintiff, having slept on his rights, could not benefit under the maxim vigilantibus et non dormientibus jura subveniunt.

p. 4
04

Excess acreage excised beyond the 0.814 hectares compensated

Holding

The 1st defendant is entitled only to 0.814 hectares; it must pay current market rates for the extra acreage or the excess reverts to the plaintiff

Reasoning

The title issued covered 0.9613 hectares while compensation was based on 0.814 hectares. The court invoked the principle underlying Section 18 of the Land Acquisition Act that compensation must be paid for excess area, offering the defendants a choice between paying for the extra acreage at current market rates or having it excised and reverted to the plaintiff.

p. 4

Legal principles established

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  • Where an explicit statutory provision prescribes a rate of interest, the court's discretion under Section 26(1) of the Civil Procedure Act is ousted and the statutory rate applies
  • A statutory provision that interest 'shall not be less than 6%' is not a fixed 6% rate; it gives courts discretion to exceed 6%, though not to stray too far from it

Court orders

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  1. 1.Judgment entered for the plaintiff against the 1st defendant for the principal sum of Kshs. 677,875/= in accordance with the consent entered on 19 February 2015
  2. 2.Interest awarded on the principal sum at 9% per annum from 31st January 1991 till payment in full, defendants jointly and/or severally liable
  3. 3.The 1st defendant is only entitled to 0.814 Hectares; if it wishes to retain the extra acreage it must pay for it at current market rates, failing which the extra acreage be excised and revert back to the plaintiff
  4. 4.Plaintiff awarded costs of the suit jointly and/or severally against the defendants

Authorities

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Legislation

  • Land Acquisition Act, CAP 295 (Laws of Kenya) (repealed)Sections 16(1), 16(2), 17, 18
  • Civil Procedure Act, CAP 21 (Laws of Kenya)Section 26(1)
  • Land Act, Act No. 3 of 2012Repeal of Land Acquisition Act (in effect 2 May 2012)

Cases cited (7)

  • John Kariuki Macharia v Commissioner of Lands
    (2014) eKLR
  • Shanzu Investments Ltd vs Commissioner of Lands
    Civil Appeal No. 100 of 1993
  • Ferro Alloys Corporation vs A.P State Electricity Board
    1993 AIR 2005
  • Secretary Irrigation Department, Government of Orrisa v G.C Roy
    1992 AIR 732
  • Kanini Farm Ltd vs Commissioner of Lands
    1 KLR (E&L) 120
  • Velco v Barclays Ltd
    (2013) eKLR
  • Rookes v Barnard
    (1964) AC 1129
Jurisdiction invoked
Original civil suit; Land Acquisition Act CAP 295 (repealed) and Civil Procedure Act CAP 21

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Toyobo Investments Ltd v Rift Valley Water Services Board & 2 others [2015] KEELC 520 (KLR)", Case Analysis (2015). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2015/520/eng@2015-04-23

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