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ELCDismissedPetition (Nairobi, Environment and Land Court)· [2020] KEELC 396 (KLR)

Designs Unlimited Limited & another v Kenya Railways Corporation [2020] KEELC 396 (KLR)

Environment and Land Court
5 November 2020
EOE. O. Obaga
1,709 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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The Environment and Land Court dismissed a bid to freeze lease renewal offers, ruling the tenant companies should have negotiated terms before rushing to court.

What this practically means

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Executive summary

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The two Petitioners, sister companies with common directors and shareholders, held leases over LR No.209/3558 and LR No.209/3559 granted in 1983 and assigned in part in 1998 with the Respondent's consent. On 24th August 2020 the Respondent, Kenya Railways Corporation, offered to extend both leases for 45 years on stated terms, requiring acceptance within 30 days. The Applicants accepted the renewal in principle but through their advocates sought negotiation of the terms, citing special conditions in the grants providing that renewal was subject to rent and conditions as may be agreed upon. They objected to a purported rent increment of over 5000%, the short compliance period during Covid-19, and a termination clause they contended would unjustly enrich the Respondent. Their letters were emailed after a messenger was turned away; the Respondent did not respond, prompting this petition and notice of motion seeking suspension or stay of the offers or, in the alternative, an injunction restraining imposition of the terms, on grounds of violation of Articles 40 (property) and 47 (fair administrative action). The Respondent filed grounds of opposition contending the application was misconceived and an abuse of process. The court framed a single issue: whether a case was made for suspension of the offers or conservatory orders. It held the Applicants had accepted the renewal in principle, the disputed terms were open to negotiation, no counter offer was made, and the Respondent indicated no intention to evict. Relying on Geothermal Development Company Limited v Attorney General & 3 Others (2012) eKLR, the court found no prima facie case or uncompensable loss demonstrated. The application was dismissed with costs to the Respondent.

Key legal issues

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01

Whether the Applicants were entitled to suspension of the letters of offer renewing their leases

Holding

Suspended offers refused; the Applicants had accepted the renewal in principle and their complaint was only about terms that were open to negotiation

Reasoning

The court found the Applicants had accepted the Respondent's offer to extend the leases for 45 years, disputing only the terms. The Respondent indicated willingness to negotiate and no intention to evict. Since the Applicants had not made a counter offer and had gone to court merely because their letters went unanswered, there was no basis to suspend the offers.

p. 3
02

Whether conservatory orders ought to issue to protect the Applicants' rights under Articles 40 and 47 of the Constitution

Holding

Conservatory orders declined; no prima facie case or irreparable loss demonstrated and balance of convenience did not arise

Reasoning

Relying on Geothermal Development Company Limited v Attorney General & 3 Others, the court held conservatory orders depend on the circumstances. The Applicants prematurely moved to court without making a counter offer, failed to demonstrate a prima facie case or uncompensable loss, and having accepted the renewal, only the terms remained open to negotiation.

p. 3

Legal principles established

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  • Conservatory orders in constitutional petitions are granted only where the applicant demonstrates they deserve them, including a prima facie case and loss not compensable in damages
  • Where the relationship between parties is contractual and terms are open to negotiation, a party who moves to court without making a counter offer moves prematurely

Court orders

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  1. 1.Dismissal of the Applicants' notice of motion seeking suspension/stay of the offers dated 24th August 2020 and, in the alternative, an injunction restraining the Respondent from imposing the terms of the offers
  2. 2.Costs of the application to the Respondent

Authorities

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Legislation

  • Constitution of KenyaArticle 40
  • Constitution of KenyaArticle 47
  • Kenya Railways ActSection 87(a)

Cases cited (1)

  • Geothermal Development Company Limited Vs Attorney General & 3 Others
    (2012) eKLR
Jurisdiction invoked
Constitution of Kenya, Articles 40 and 47 (constitutional petition for violation of property rights and fair administrative action)

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, "Designs Unlimited Limited & another v Kenya Railways Corporation [2020] KEELC 396 (KLR)", Case Analysis (2020). Petition (Nairobi, Environment and Land Court). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/396/eng@2020-11-05

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