Designs Unlimited Limited & another v Kenya Railways Corporation (Petition E014 of 2020) [2025] KEELC 8120 (KLR)
The bottom line
#Kenya's Environment and Land Court ruled that Kenya Railways set lease renewal terms as a commercial landlord, and constitutional challenges to those terms failed.
What this practically means
#Executive summary
#Key legal issues
#Competency of the Petition (Section 87(a) Kenya Railways Corporation Act and constitutional avoidance)
The competency issue and the Section 87 challenge were already determined in the ruling of 6th October 2022 and are moot; the Petition raises genuine constitutional questions because it invokes Articles 22 and 23 and seeks remedies under Article 23(3), so constitutional avoidance does not apply.
The court noted the Section 87(a) point had been fully canvassed and decided in a prior ruling, rendering that contention moot, including the Article 48 complaint. On avoidance, the court found the Petition set out constitutional questions and sought declaratory and prerogative reliefs contemplated under Article 23(3) in proceedings under Article 22, going beyond traditional judicial review. The preliminary objection was therefore rejected.
Whether Special Conditions 14 and 15 were breached
No breach. The conditions envisage renewal only upon mutual agreement ('as may hereafter be agreed upon') and do not impose a mandatory duty to negotiate or accept terms; freedom of contract applies.
The court construed the clauses objectively as contractual covenants. The phrase 'as may hereafter be agreed upon' means renewal occurs only on mutually agreed terms. The doctrine of freedom of contract permits a party to accept, reject or seek negotiation of an offer, but compels no negotiation. PW1's admission that no negotiations occurred when the original leases were granted in 1983 and 1998 further undermined the claim.
Whether lease renewal by Kenya Railways was administrative action under Article 47
It was not. It was a commercial and contractual transaction exercised in the Respondent's corporate and proprietary capacity under the Kenya Railways Corporation Act.
Applying the Japan Export Vehicle Inspection and Kenya Ports Authority v Autoports line of authority, the court held that a public body entering into contracts pursuant to statutory powers does not thereby engage in public law. Absent statutory procedural prescriptions, the relationship is governed by private law. The offers for renewal, specifying rent, premium and duration, reflected contractual discretion, not determinations of rights through statutory or quasi-judicial processes.
Whether the proposed rent and stand premium were unreasonable
No. Both parties' valuers arrived at identical rateable values for both parcels, and the Petitioners did not show the Respondent applied a wrong formula or acted arbitrarily.
The court compared the two valuation reports and found the rateable values identical for each parcel, with divergence only in computation of ground rent and premium from the undisputed value. Without contestation of the foundational figures or evidence of arbitrariness, capriciousness or improper purpose, the reasonableness challenge under Article 47 and Wednesbury principles failed.
Legitimate expectation
Not established. Sehmi was distinguished because it concerned NLC-administered public land under Section 13 of the Land Act, which does not apply to the Respondent's proprietary land; in any event the Petitioners were given renewal offers, so no denial of renewal arose.
Applying the CCK criteria, no express, clear and unambiguous promise of renewal was shown. Section 13 of the Land Act governs pre-emptive rights for land administered by the NLC, not leases held by a statutory corporation managing its own assets commercially. The dispute stemmed from dissatisfaction with revised terms, not refusal to renew, and thus fell within contract negotiation, not administrative justice.
Alleged violations of Articles 27, 40, 10 and 232
Not proved. No evidence of discrimination on a prohibited ground or arbitrary treatment; the expired leases left no proprietary interest under Article 40; and no breach of national values or public service principles was established.
The court adopted the Gichuru definition of discrimination and found no evidence the Petitioners were treated differently from similarly situated tenants or that rent was set on a prohibited ground. Since the leases had lapsed, no subsisting proprietary right existed to protect under Article 40. The pleas under Articles 10 and 232 failed for want of evidence.
Legal principles established
#- Special conditions in a grant or lease form part of the contractual terms and are construed as express covenants under ordinary contract principles
- A statutory corporation leasing its property in its proprietary and commercial capacity is not performing administrative action amenable to Article 47 or judicial review remedies
- A tenant whose lease has expired has no proprietary right capable of protection under Article 40
- Where parties derive lease renewal rights from a self-contained contract, public law remedies do not lie absent statutory procedural requirements
Court orders
#- 1.The Petition is dismissed with costs to the Respondent
- Jurisdiction invoked
- Articles 22 and 23 of the Constitution (enforcement of Bill of Rights)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Designs Unlimited Limited & another v Kenya Railways Corporation (Petition E014 of 2020) [2025] KEELC 8120 (KLR)", Case Analysis (2025). Petition dated 22nd September 2020 (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/8120/eng@2025-11-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.