Sealink Holdings Limited & another v Chief Registrar of the Judiciary & 2 others (Environment & Land Case 474 of 2016) [2024] KEELC 370 (KLR)
The bottom line
#Kenya's Environment and Land Court threw out Sealink Holdings' claims and ordered the company and its contractor to refund public money because their contracts with the Judiciary broke procurement law.
What this practically means
#Executive summary
#Key legal issues
#Legality of the fit-out and partitioning arrangement
The arrangement was illegal and the resulting contract null and void
The tender advertisement and documents were silent on fit-out and partitioning works. The Head of Terms and the Addendum of 14th March 2013, which introduced the 2nd Plaintiff as contractor without competitive procurement, violated Article 227 of the Constitution and the PPDA, 2005. Direct procurement was not shown to have been authorised or documented. Agreements deliberately designed to circumvent procurement law cannot be enforced by a court.
Refund of advance payments
The counter-claim for refund of Kshs 53,820,311.09 was allowed
Since the underlying contract was illegal, the court would not lend its aid to the plaintiffs. Amounts paid out of public funds to the 2nd Plaintiff as part payments must be returned to the public coffers, with interest at court rates from the date of filing the counter-claim.
Responsiveness of the tender
The bid was non-responsive and the award unlawful
The bid quoted in USD contrary to the requirement for Kenya Shillings, did not disclose it was on behalf of the 1st Plaintiff, and the subsequent Head of Terms and lease materially deviated from the tender document (10-year term instead of 6, added service charge and deposit, larger space). Section 68 of the PPDA, 2005 required the written contract to be based on the tender documents. The deviations rendered the contract illegal, null and void.
Frustration of the lease
Frustration was not made out
The alleged radiation concerns were not unforeseeable and should have been investigated before contracting. The plaintiffs' expert evidence established the building was fit for occupation and the defendants led no contradicting evidence. In any event the contracts were already void ab initio, so there was nothing to frustrate or terminate.
Rent between termination notice and vacation
Not payable
Apart from the illegality of the contract, the plaintiffs' own witness admitted that the 1st Plaintiff, through Knight Frank, prevented the Judiciary from vacating the premises by warning it not to remove properties. The plaintiffs could not claim rent for a period during which they themselves blocked the defendant's exit.
Legal principles established
#- A public entity's procurement of goods and services must comply with Article 227 of the Constitution and the applicable procurement statute; contracts procured in breach are illegal and unenforceable
- Courts will not lend their aid to enforce illegal contracts even where the illegality is raised belatedly or by the procuring entity itself
- Contractors and suppliers bear an equal duty to ensure compliance with procurement law and cannot rely on ignorance of the procuring entity's internal non-compliance
- A bid that materially deviates from the mandatory requirements of the tender document is non-responsive and any award based on it is contrary to the procurement law
- A contract void ab initio is a nullity and needs no court order to set it aside
Court orders
#- 1.Declaration that the notification of award issued to Knight and Frank Ltd on 26th September 2012 in respect of tender No. JUD/12/2012-2013 was illegal/null and void
- 2.Declaration that the lease dated 22nd April 2013 registered on 17th September 2013 over L.R. No. 209/19114 Nairobi is illegal and null and void
- 3.Judgment for the 1st and 2nd Defendants against the 1st Plaintiff for USD 156,849 with interest at court rates from the date of filing the counter-claim until payment in full
- 4.Judgment for the 1st and 2nd Defendants against the 2nd Plaintiff for Kshs 53,820,311.09 with interest at court rates from the date of filing the counter-claim until payment in full
- 5.Costs of the suit and counter-claim awarded to the 1st and 2nd Defendants, borne by the plaintiffs jointly and severally
- Jurisdiction invoked
- Original civil jurisdiction of the High Court/ELC over contract and lease disputes; procurement framework under Article 227 of the Constitution and the Public Procurement and Disposal Act, 2005
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Sealink Holdings Limited & another v Chief Registrar of the Judiciary & 2 others (Environment & Land Case 474 of 2016) [2024] KEELC 370 (KLR)", Case Analysis (2024). Not stated in the judgment extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/370/eng@2024-01-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.