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ELCPartially AllowedOriginating Summons dated 17th September, 2018· [2019] KEELC 3537 (KLR)

In re Social Service League [2019] KEELC 3537 (KLR)

Environment and Land Court of Kenya
20 March 2019
CYC.K. YANO
1,648 words in judgment
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The bottom line

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What this practically means

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Executive summary

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The Social Service League, through its current trustees Bihari Parekh, Mahesh Dhuntia and Mohamed Kassim Haji Ebrahim, brought an Originating Summons dated 17th September 2018 seeking dissolution of a Trust Deed created on 22nd January 1932 over TITLE NO. MOMBASA/BLOCK XL/27 (Plot No. 606 of Section V, measuring 0.043 of an acre in Mombasa) and authority to sell the property. The trust property had been transferred freely by Sir Ali Bin Salim Bin Khalfan to three trustees of the League to be let out and the rents applied to the repair, upkeep and alteration of the building on PLOT NO. 52 OF SECTION IV (MOMBASA/BLOCK XXXII/18), including maintenance of a reserve fund. The petitioner contended that the plot no longer generated sufficient income from the rents of the shops thereon to benefit the League, that the Trust was running at a loss as it was paying rates and security charges, and that the trustees wished to sell the property and use the proceeds to build two apartments on MOMBASA/BLOCK XXXII/18, itself trust property, so as to generate income more befitting the Trust Fund. The court, C.K. Yano J, relied on Section 56 of the Trustee Act Cap 167, which empowers the court to authorize transactions in respect of trust property where trustees lack an express power. Satisfied that the application had merit, the court dissolved the 1932 Trust Deed, authorized the sale of MOMBASA/BLOCK XL/27, directed that the proceeds be used to build or develop MOMBASA/BLOCK XXXII/18 for the benefit of the Trust Fund, and made no order as to costs.

Key legal issues

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Whether the trust property still serves the intention of the donor

Holding

The court found the plot no longer generates sufficient income to serve the trust's purpose and that dissolving the trust and developing another trust property would better serve the donor's intention.

Reasoning

The trustees demonstrated that rent from the shops on MOMBASA/BLOCK XL/27 was insufficient, while the League was paying rates and security charges, placing the Trust in loss. Proceeds of sale would be reinvested in another trust property (MOMBASA/BLOCK XXXII/18) to build apartments generating greater income, consistent with the donor's purposes. The court was satisfied the application had merit and exercised its Section 56 jurisdiction to dissolve the trust and authorize the sale.

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Legal principles established

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  • Section 56 of the Trustee Act confers jurisdiction on the court to authorize transactions in respect of trust property where trustees lack an express power, and such application may be made by the trustees or any person beneficially interested.

Court orders

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  1. 1.The Trust Deed created on 22nd day of January 1932 over TITLE NO. MOMBASA/BLOCK XL/27 is dissolved
  2. 2.The Applicants are authorized to sell the property known as TITLE NO. MOMBASA/BLOCK XL/27
  3. 3.The proceeds from the sale to be used to build or develop PLOT NO. MOMBASA/BLOCK XXXII/18 to generate income for the Trust Fund
  4. 4.No order as to costs

Authorities

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Legislation

  • Trustee ActSection 56(1), (2), (3)
Jurisdiction invoked
Section 56 of the Trustee Act Cap 167 Laws of Kenya

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, "In re Social Service League [2019] KEELC 3537 (KLR)", Case Analysis (2019). Originating Summons dated 17th September, 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3537/eng@2019-03-20

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