Kapa Oil Refineries Limited & 7 others v Export Processing Zones Authority & 2 others [2019] KEELC 1395 (KLR)
The bottom line
#Kenya's Machakos court ruled EPZA owns the Athi River trunk sewer, and three companies must pay Kshs 11.66 million in unpaid connection charges.
What this practically means
#Executive summary
#Key legal issues
#Ownership and management of the EPZA Main Trunk Sewer line and Kinanie Treatment Plant
The Trunk sewer line and Treatment Plant belong to the 1st Defendant; no lawful transfer to the 3rd Defendant occurred because the transfer contemplated by the Water Act, 2002 and the 2005 Rules required a negotiated, legally binding transfer agreement which was never executed
The 1st Defendant was appointed a water undertaker by Legal Notice No. 57 of 1997 and the infrastructure was built by the Government for it, with the Treatment Plant located on L.R. No. 23961 registered in the 1st Defendant's name. Under Rules 7 and 8 of the 2005 Rules and Section 113(2)(b), transfer of parastatal assets required negotiation and binding transfer agreements approved by the Permanent Secretary, Treasury. No such agreement was signed with Athi Water Services Board or the 3rd Defendant, so the 3rd Defendant could not claim takeover nor validly delegate the line's management to the 2nd Defendant.
Whether the 1st Defendant required a licence to provide water and sewerage services under the Water Act, 2002
The licensing requirement of Section 56 did not apply to the 1st Defendant, which could continue as a water undertaker by virtue of Section 114(c) until rules to the contrary came into force
Having been appointed a water undertaker under the repealed Cap 372 regime through Legal Notice No. 57 of 1997, the 1st Defendant's existing rights were preserved by the transitional provisions of the Water Act, 2002. Unlike local authorities whose mandates were automatically curtailed by the 2005 Rules, the 1st Defendant could continue supplying water and sewerage services, including to entities outside the EPZ, without a WASREB licence.
Liability of the 1st, 7th and 8th Plaintiffs under the sewer connection agreements
The agreements were valid and enforceable; the three Plaintiffs breached them by failing to pay the agreed monthly charges of Kshs. 60,000, 24,000 and 24,000 for over nine years, and were ordered to pay Kshs. 11,664,000 plus continuing monthly payments
The court found the sewer connection agreements were entered into freely on application by the Plaintiffs and produced in evidence. The 1st Defendant's witness proved on a balance of probability the non-payment from March 2010 to March 2019. The court held the Plaintiffs' right to affordable sewerage services does not exempt them from contractual obligations.
General damages for discharge of unauthorized industrial effluent
The claim failed for want of proof of causation between the Plaintiffs' effluent and the damage to the Treatment Plant
Although the 1st Defendant alleged huge unauthorized discharges, many other industries and households were connected to the main sewer line, and others were depositing effluent illegally through dismantled man holes. Without measures to isolate the source, the court could not attribute the damage to the Plaintiffs, so the claim for general damages failed.
Applicable statute law
The Water Act, 2002 (repealed), not the Water Act, 2016, governed the dispute, since proceedings were filed in 2010 and Section 23(3)(e) of the Interpretation and General Provisions Act preserves proceedings under repealed law
The court declined counsel's invitation to apply the Water Act, 2016. Because the suit was instituted in 2010 while the Water Act, 2002 was in force, and the repealed law's savings provision preserves investigations, legal proceedings and remedies in respect of accrued rights, the 2002 Act applied to determine the parties' rights and obligations.
Legal principles established
#- A water undertaker appointed under the repealed Water Act, Cap 372 could continue offering water and sewerage services under Sections 112 and 114 of the Water Act, 2002 until rules to the contrary came into force, and its assets could only pass to a Water Services Board through a negotiated, legally binding transfer agreement
- Where a written law repeals another written law, an existing legal proceeding or remedy in respect of accrued rights may be continued under the repealed law (Section 23(3)(e), Interpretation and General Provisions Act)
- A party seeking general damages for unauthorized effluent discharge must prove direct causation between the discharge and the specific defendants
- A contracting party remains bound to perform its contractual payment obligations notwithstanding its broader right to affordable water and sanitation services
Court orders
#- 1.The Plaintiffs' Plaint is dismissed
- 2.The 1st, 7th and 8th Plaintiffs to pay to the 1st Defendant a sum of Kshs. 11,664,000 (being Kshs. 6,480,000, Kshs. 2,592,000 and Kshs. 2,592,000 respectively) as unpaid sewer connection charges from March, 2010 until March, 2019
- 3.The 1st, 7th and 8th Plaintiffs to pay to the 1st Defendant Kshs. 60,000, Kshs. 24,000 and Kshs. 24,000 respectively every month with effect from April, 2019 until payment in full
- 4.The 1st Defendant to enter into negotiations and agreements with the 2nd, 3rd, 4th, 5th and 6th Plaintiffs on the discharge of their effluent in the EPZA Main Sewer line and Treatment Plant
- 5.Each party to bear its own costs
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over the sewer infrastructure dispute (the 1st Defendant challenged the court's jurisdiction, which the court did not uphold)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kapa Oil Refineries Limited & 7 others v Export Processing Zones Authority & 2 others [2019] KEELC 1395 (KLR)", Case Analysis (2019). Machakos ELC Civil Suit (Plaint dated 16th February, 2010). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/1395/eng@2019-10-04
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.