Drum Major Properties Limited v Kenya National Highways Authority & another; Nyange (Interested Party)

of Kenya Shillings Forty-Nine Million, One Hundred Sixteen Thousand, Eight Hundred Thirty-Six (Kshs 49,116,836.00) being the principal amount awarded to the Plainti by the 2nd Defendant as compensation for the compulsory acquisition of the portion hived o from property being Mavoko Town Block 64/534. (d) That the Defendants be and are hereby compelled to pay to the Plainti/Applicant interest due on the principal amount of the award in two (2) above calculated at the rate of 12% per annum from January 7, 2021 being the date of the award until payment in full. (e) That the costs of this application be awarded to the Plainti/Applicant. 2. The Originating Summons was supported by the adavit sworn on April 19, 2021 by Mutuku Kilewe, the Director of the Plainti, and the grounds on the face of the Originating Summons. The Plainti’s case was that they are the registered owner of the land known as Mavoko Town Block 64/534 situated in Athi River along Mombasa – Nairobi Highway (suit property). 3. The Plainti further stated that the 2nd Defendant acted on instructions by the 1st Defendant and issued a statutory notice in the Kenya Gazette that a portion of land from the suit property was to be acquired compulsorily by the 1st Defendant for purposes of construction of a second carriageway of the Athi River – Machakos Turno (A109) Road in Machakos County. Further that upon issuance of the notice above, a public hearing to identify the owners of the properties to be acquired was conducted and the persons to be compensated were required to avail copies of their identity cards, KRA Personal Identication Number (PIN) land ownership documents and bank account details. 4. It was the Plainti’s averment that through their Director Mr Mutuku Kilewe, they attended the hearings of the Defendants and they were conrmed the person to be compensated and subsequently upon due assessment, were issued with an award for the sum of Kshs 49,116,836/- for the acquisition of the portions to be hived o from their two parcels of land. The Plainti complained that the Defendants have failed to compensate the Plainti the aforesaid assessed sum, despite the 1st Defendant having notice to the Plainti’s tenants to vacate and their threats to demolish the permanent structures standing on the suit property. 5. The Plainti stated that they were aware that the Defendants have paid other persons whose properties were compulsorily acquired within the same locality and pursuant to the same process. Therefore, the Plainti stated that the Defendants are under obligation to pay them compensation for the suit property, promptly and sought for the said payment plus interest at 12% per annum. The Plainti produced a copy of title of Parcel No Mavoko Town Block 64 (GIMU) 534 measuring 0.2395 Ha, an award dated January 7, 2021, Plaintis demand letter dated April 8, 2021 and the letter from the 1st Defendant dated March 2, 2021. 6. Upon service, the 1st Defendant entered appearance by a Memorandum of Appearance led on May 25, 2021 while the 2nd Defendant entered appearance by a Memorandum of Appearance led on May 31, 2021. 7. The Originating Summons was opposed. The 1st Respondent, Kenya Highways Authority through one Milcah Muendo, the Assistant Director, Survey Mapping in the Survey Department in the Directorate of Highway Planning and Design at the Kenya National Highways Authority swore a replying adavit dated August 20, 2021. It was the 1st Respondent’s case that the 1st Respondent has the mandate of construction, managing, developing, operating, upgrading, rehabilitation and maintaining of National Trunk Roads. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 2

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8. The 1st Respondent stated that they were presently undertaking the construction of the second carriageway of Athi River – Machakos Turno Road (hereinafter referred to as the project). They conrmed that 0.039 Ha was acquired from Parcel Mavoko Town Block 64 (GIMU) /534 vide Kenya Gazette Notice No 7839 of September 30, 2016 for the Mombasa – Nairobi Standard Gauge Railway (SGR) project. That although the acquisition was under the Mombasa Nairobi SGR project, the same was to be used for the development of Athi River Machakos Road. 9. They further stated that part of the suit property was again gazetted for acquisition through Gazette Notice No 9536 of September 29, 2017. That however, acquisition of the parcel was cancelled through Gazette Notice No 7839 of March 6, 2020 because the road was redesigned to t in the existing 80 meter reserve and the area acquired by Kenya Railways through the above Gazette Notice of 2016. They also averred that the boundaries of the suit property were in conict with the road reserve and since the project was funded by the world cup, the 2nd Respondent inspected and carried out valuation and issued the Applicant with a compensation award for the aected developments so as to comply with the Word Bank Operation Policy on involuntary settlement. 10. The 1st Respondent stated that the 2nd Respondent in their letter dated February 22, 2021, forwarded a comprehensive compensation schedule to the 1st Respondent asking the latter to transfer the compensation amounts to their accounts for onward transmission to the beneciaries. That the Applicant was identied as a project aected person and hence a beneciary to the compensation. Further, that the 1st Respondent authorized expenditure of the funds for the project transferred to the 2nd Respondent’s bank account towards payment of the Applicant’s sum as per the award in the sum of Kshs 49,166,836.64. Hence, the 1st Respondent conrms that they compensated the Applicant in the sum of claimed and was to be given vacant possession to construct the project road. 11. The 1st Respondent stated that they were aware of a private dispute on ownership between the Applicant and one TMN and that the parties requested that the 2nd Respondent do preserve the allocated compensation funds payable in respect of the project until the family dispute and the matrimonial property case is settled and determined. They therefore stated that they fullled their obligation by forwarding the sums for compensation of the Applicants developments but that the delay in paying the Applicant was occasioned by the ownership dispute with the Applicant’s family. They pleaded that as the Government agencies had nothing to do with the dispute between the Applicant and one TMN, they should be allowed to take possession of the subject parcel of land to allow construction works to continue. That as the amount due to the Applicant was determined and forwarded, it would be unjust enrichment to grant interest at 12% per annum. The 1st Respondent attached the Gazette Notice dated 30th September 2016, Gazette Notice dated 29th September 2017 and March 6, 2020, letter dated 22nd February 2021 and compensation schedule from the 2nd Respondent to the 1st Respondent, a letter dated 3rd March 2021 and the [particulars withheld] Gross Settlement (RTGS), authorizing expenditure of the funds and letters dated July 9, 2020, June 25, 2020, July 16, 2018, July 13, 2018 and August 27, 2018 from TMN and WMK demonstrating the existence of a dispute on ownership of the suit property. 12. The 2nd Defendant also opposed the Originating Summons. Jacob Lemasika Kipaa, the Chief Valuation and Taxation Ocer of the 2nd Defendant, led a replying adavit sworn on July 2, 2021 on behalf of the 2nd Defendant. It was the 2nd Defendant’s case that they were mandated under Section 107 of the Land Act to compulsorily acquire interests in land on behalf of the County and National Government and that Section 111 of the Land Act requires the acquiring body to deposit funds with the 2nd Defendant before acquisition is undertaken. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 3

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13. They further averred that the 1st Defendant requested the 2nd Defendant to compulsorily acquire the suit property for the construction of the second carriageway of Athi River – Machakos Turn O Road (A109). That upon conclusion of the inquiry, the 2nd Defendant made an award of Kshs 49,166,836/in favour of the Plainti as compensation. 14. The 2nd Defendant maintained that under Section 115 (c) of the Land Act, the 2nd Defendant cannot make payment on compensation where there is a dispute as to the rights of the persons entitled to receive the compensation or as to the shares in which the compensation is to be made. The 2nd Defendant stated that the suit property is subject to court proceedings being Civil Suit No 37 of 2013 (OS) which Matter is yet to be determined and that that was also conrmed by a letter from the advocates for the Plaintis in that suit. 15. It was the 2nd Defendant’s contention that the Plainti was fully aware of the reasons for holding the remittance due to him and that therefore his suit is devoid of merit and a blatant abuse of the court process. 16. TMN led an application dated December 15, 2021 seeking to be joined to this suit as an interested party. On February 7, 2022, when the application came up for hearing, all the parties conrmed that they were not opposed to the application and therefore the court granted orders joining the Applicant TMN as an Interested Party to these proceedings, granting her 21 days to le and serve her pleadings. Pursuant to those orders, the Interested Party led her replying adavit dated March 1, 2022 on even date. 17. It was the Interested Party’s case that having learnt in 2018 that the suit property was earmarked for compulsory acquisition, she did a letter protesting the release of money meant for the project to the Plainti since the suit property was subject of a matter pending before court namely Nairobi HCC OS No 37 of 2013, which is pending hearing and determination. The Interested Party further stated that she led matrimonial property cause against MK who is her former husband and majority shareholder of Drum Properties Limited vide Nairobi HC OS 37 of 2013 which matter is pending hearing and determination. 18. According to her, although the land is registered in the name of Drum Major Properties Ltd, she acquired the same together with MK in the year 2004 during the subsistence of their marriage and that therefore, the transfer of the property to Drum Properties Ltd was to defeat the Interested Party’s claim. She maintained that she contributed towards the acquisition of the suit property. She sought that this matter should be stayed to await determination of Nairobi HC OS No 37 of 2013. 19. She attributed the delay in determining Nairobi HCC OS No 37 of 2013 to reasons beyond her control among them that the court le has on several occasions gone missing and that Mr Mutuku Kilewe contributed to the delay by failing to le his defence on time. She further lamented that despite MK being aware of an injunction over the suit property, he failed to disclose that fact to this court. Her position was that if MK is given access to compensation amount sought without her share being ascertained, she stands to suer great prejudice. 20. In a rejoinder, Mr Mutuku Kilewe led a supplementary adavit sworn on September 5, 2022. He stated that the injunction of the Interested Party was to derail the payment of the compensation sought as she was neither a director nor a shareholder of the Plainti and that she had not availed any evidence of the relationship between her and the Plainti. He also stated that the Plainti is not a party in the matrimonial cause. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 4

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21. He conceded that the dispute between him and the Interested Party was pending before the family court. His position was that if the family court decides that he should share any property or monies with the Interested Party, the latter can then execute the decree against him and therefore she should not deny the Plainti the moneys due to them. He stated that his failure to le a defence should not bar the Interested Party from prosecuting the matrimonial cause. 22. He maintained that the Defendants had conceded to his claim and that this court cannot decline granting remedies provided for in the Constitution. 23. On May 12, 2022, the court directed that the Originating Summons shall be determined by way of written submissions. On record are the Plainti’s submissions led on September 9, 2022, the 1st Defendant’s submissions led on October 19, 2022, the 2nd Defendant’s submissions led on October 21, 2022 and the Interested Party’s submissions led on September 15, 2022. Plainti ’s Submissions 24. Counsel for the Plainti submitted that pursuant to Article 40 of the Constitution, there is an obligation upon the state to ensure that no person is deprived of their property unless the deprivation is in public interest and upon just and prompt compensation. To buttress this position, counsel referred the court to the case of Geyser International Assets Limited v Attorney General & 3 others [2021] eKLR. 25. It was further submitted that the 1st Defendant conceded that the Plainti was identied as a project aected person and therefore a beneciary to the compensation. Counsel argued that it is now two years since the award was issued yet there is no payment made to the Plainti and no explanation has been given by the 2nd Defendant for failure to pay. Relying on the case of Modern Coast Builders and Contractors Limited v National Land Commission [2021] eKLR, counsel argued that the only reason that should justify non payment is where there is a challenge against title of the Plainti and that no such adverse claims challenging the Plainti’s title have been shown. It was therefore contended that delay in payment of the assessed award caused the Plainti great injustice and breach of their right to property ownership. Counsel pointed out that as the possession had already been taken by the 1st Defendant, the Plainti had lost his source of income as the property had been rented out at the time of acquisition. 26. On whether the claim by the Interested Party was justied, counsel submitted that upon inquiry, the 1st Defendant had already conrmed that the beneciary of the payment was the Plainti and that the 2nd Defendant never objected to the payment. 27. Counsel relied on the case of Salomon v Salomon & Co. [1897] AC 22, to contend that the Plainti and one MK were two separate entities and therefore the Interested Party had not shown his relationship with the Plainti. Further, counsel contended that there was no evidence of the manner of the Interested Party’s contribution in the purchase of the suit property. In addition, it was argued for the Plainti that the Interested Party had not provided any evidence from the family court to show an order declaring that she is entitled to a share of the compensation sought by the Plainti. Counsel argued that this court has no jurisdiction to determine matrimonial cause between the Interested Party and one MK. 28. Counsel pointed out that the Interested Party and Mutuku Kilewe had claimed and counterclaimed against each other and that these claims are still pending determination. Counsel referred to Section 7 of the Matrimonial Causes Act and the Case of E.T v Attorney General & another [2012] eKLR, to argue that this court has no jurisdiction to hear the dispute between the Interested Party and the Plainti. Counsel maintained that even if the family court were to decide in favour of the Interested https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 5

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Party, the latter shall not be without remedy and shall not suer any prejudice as the decree against MK would be enforceable in law. 1stDefendant’s Submissions 29. Counsel for the 1st Defendant submitted that although the Plainti had sought for an injunction in the Originating Summons, they had not satised the conditions for grant of injunction set out in the cases of Giella v Cassman Brown [1973] EA 358, Nguruman Ltd v Jan Bonde Nielsen & 2 others CA No 77 of 2012 and Mrao v First American Bank of Kenya Limited & 2 others [2003] eKLR. 30. It was argued for the 1st Defendant that the Plainti was guilty for non disclosure of material facts. Counsel contended that the 1st Defendant complied with the law and made an award for the sum claimed by the Plainti but that letters from Tecla MN and WMK demonstrated that the two had a claim on the suit property and requested that the compensation be withheld. Counsel was of the view that the compensation funds could not be released until the issue of ownership is resolved. 31. It was the position of the 1st Defendant that road construction is time bound and as the suit property had been valued and the amount ascertained, it would be against public interest to stop the project by injunction as sought by the Plainti which would result in contractual ramications to the detriment of tax payers. To buttress that argument, counsel referred the court to the cases of Kenya National Highway Authority v Shalien Masood Mughal & 5 others [2017] eKLR, Veronica Njeri Waweru & 4 others v City Council of Nairobi & 2 others [2012] eKLR and ELC Petition No 11 of 2017, Unilever Tea Kenya Limited v National Land Commission [unreported]. 32. Counsel argued that the 1st Defendant having complied with the law by remitting the compensation sum to the 2nd Defendant, they cannot be compelled to pay the Plainti. On the procedure for compulsory acquisition, counsel relied on the case of Patrick Musimba v National Land Commission & 4 others [2016] eKLR. 2ndDefendant’s Submissions 33. Counsel for the 2nd Defendant submitted that the Plainti was not entitled to the temporary injunction sought in the Originating Summons as they had not met the conditions for grant of temporary injunction set out in the cases of Giella v Cassman Brown (supra), Cyanamid Co. v Ethicom Limited [1975] All ER 504 and Mrao Ltd v First American Bank of Kenya & 2 others (supra). 34. It was contended for the 2nd Defendant that the issue of compulsory acquisition was not in dispute, what was in dispute is the person entitled to compensation as between the Plainti and the Interested Party and that that dispute has led to the withholding of the compensation funds by the 2nd Defendant. 35. Counsel argued that by dint of Section 115 (c) of the Land Act, the 2nd Defendant acted within the law by withholding payment of the compensation sum until the question of ownership of the suit property is determined. Counsel denied the Plainti’s claim that the 2nd Defendant had infringed on the Plainti’s rights. 36. It was further argued that the project is of great public interest and granting injunction would prejudice the public. Reliance was placed in the cases of Kenya National Highway Authority v Shalien Masood Mughal & 5 others (supra) and ELC Petition No 11 of 2017 Unilever Tea Kenya Limited v National Land Commission (unreported), for the proposition that public interest override private claims. 37. Counsel also submitted that he who comes to equity must come with clean hands. Counsel pointed out that the Plainti failed to disclose that Nairobi HC OS No 37 of 2013 which challenged ownership https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 6

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of the suit property was pending. Counsel relied on the case of Showind Industries v Guardian Bank Limited & another [2002] 1 EA 284, to buttress the argument that equity demands material disclosure. 38. Counsel maintained that once the dispute as to the rightful beneciaries is determined, the compensation funds will be remitted to the rightful party and that failure to remit the funds was occasioned by the pending dispute between the Director of the Plainti and the Interested Party in respect of the suit property. Interested Party’s Submissions 39. Counsel for the Interested Party submitted that the Interested P was a former wife of MK who is the majority shareholder of the Plainti and that the suit property was acquired jointly between the Interested Party and MK during the subsistence of their marriage, but that the property was secretly transferred to the Plainti. It was also submitted for the Interested Party that the suit property is the subject matter in Nairobi HC OS No 37 of 2013 and that the Plainti failed to disclose to this court that it is the Interested Party who placed a caveat against the release of the compensation funds and also failed to include her in this suit. 40. Counsel pointed out that it was not in dispute that the Interested Party and MK were married and later divorced. Further, that the Interested P by letter dated January 13, 2004 from [particulars withheld] Developing Company demonstrated that the suit property was bought in 2004 and that she contributed towards the purchase of the same. Counsel submitted that in view of the above, it follows that the suit property was matrimonial property which was irregularly transferred to the Plainti. Reliance was placed on Section 6 of the Matrimonial Property Act, the case of Mugo Muiru Investments Limited v EWB & 2 others [2017] eKLR and NM v DM [2018] eKLR. 41. Counsel argued that this suit should be stayed pending hearing and determination of Nairobi HC OS No XX of 2013. Counsel argued that there is a pending suit earlier led in respect of the suit property which is Nairobi HCC OS No XXof 2013 and that therefore this matter is sub judice. Counsel argued that the delay in that matter was occasioned by matters beyond the control of the Interested Party. Therefore they sought for stay of this matter pending determination of the matrimonial cause or in the alternative dismissal of this suit. Analysis and Determination 42. 43. I have carefully considered the Originating Summons, the replying adavits, annextures thereto and the submissions led by the parties. In my considered view, the issues that arise for determination are; a. Whether the Defendants should be compelled to pay the Plainti the sum of Kshs 49,116,836/- plus interest at 12% per annum form the date of the award till payment in full. b. Whether the Defendants are justied in withholding payment of the assessed compensation sum of Kshs 49,116,836/- to the Plainti. Article 40 of the Constitution 2010, protects the right to own and acquire property in any part of Kenya and specically provides that no one will be deprived of their property by the state unless the deprivation results in acquisition of land in accordance to Chapter Five of the Constitution or is for a public purpose and is done in accordance with the Constitution and any Act of Parliament that; (i) requires prompt payment in full, of just compensation to the person; and (ii) allows any person who has an interest in or right over that property a right of access to a court of law. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 7

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44. Essentially therefore, deprivation of property by the state which is generally manifest as compulsory acquisition has to be accompanied by prompt, full and just compensation, as provided in the Constitution and the Land Act. 45. In the case of Attorney General v Zinj Limited [Petition 1 of 2020] [2021] KESC 23 (KLR) (CIV) (3 December 2021), the Supreme Court of Kenya held as follows; 28. It follows that any compulsory acquisition process ought to have commenced with a requisite Notice to the Respondent, and any other persons claiming an interest in the land, the public purpose for which the land was to be acquired, ought to have been clearly stated. Most critically, the resultant acquisition ought to have been attended with prompt payment in full, of a just compensation to the Respondent. 46. The process for compulsory acquisition has been provided for in Sections 107 to 131 (Part VIII) of the Land Act. Section 107 of the Act provides that whenever there is need for either the County or National Government to acquire land, the Cabinet Secretary or the County Executive Committee member makes a request for the acquisition of the land to the National Land Commission. Where the Commission establishes that the request meets the requirements in Article 40 (3) of the Constitution, the Commission ensures the land in question is mapped out and valued and ensure the acquiring authority has identied the number and register of the persons in actual occupation of the land and establish the time they have uninterruptedly occupied the land or their ownership interest therein. The commission then publishes in the Gazette the intention to acquire the land. Section 112 of the Act provides that 30 days upon publishing of the Notice of intention to acquire land, an inquiry date is set to hear matters of proprietary and claims for compensation by persons interested in the land, and thereafter the inquiry is done. Section 111 provides that where the land is compulsorily acquired, just compensation must be paid in full to all persons whose interests in the land have been determined. 47. In the instant case, there is no dispute that the owner of the suit property is entitled to compensation in the sum assessed by the 2nd Defendant. What is in dispute is the ownership of the suit property as the Interested Party has stated that the suit property was jointly acquired in 2004 by herself and one MK, during the subsistence of their marriage, and that the latter is the majority shareholder of the Plainti. The Plainti has not challenged the marriage aforesaid. The question of whether the Interested Party contributed to the purchase of the suit property is a question pending determination before the family court in Nairobi vide HC OS No 37 of 2019. The Interested Party has shown that she raised objection to the payment of the compensation sum to the Plainti in 2018 vide her various letters, and she maintains that unless the matrimonial property dispute is determined, the Plainti should not be paid the compensation funds. 48. The Defendants agree with the Interested Party’s position that unless the question of ownership is determined in Nairobi HC OS No37 of 2013, they cannot pay the compensation sum to the Plainti. They rely on Section 115 (c) of the Land Act to contend that there is a dispute on the sharing of the compensation funds between the persons interested in the suit property and therefore they cannot pay before that dispute is resolved. 49. Section 115 of the Land Act provides as follows; (1) After notice of an award has been served on all the persons determined to be interested in the land, the Commission shall promptly pay compensation in accordance with the award to the persons entitled thereunder, except in a case where – https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 8

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(a) …….. (b) …………. (c) there is a dispute as to the right of the persons entitled to receive the compensation or as to the shares in which the compensation is to be paid. 50. It is therefore clear that when there exists a dispute on who should be paid compensation or in respect of the shares of the persons claiming compensation, then the National Land Commission is not obligated to pay until the dispute is determined. 51. The fact that there is a dispute regarding ownership of the suit property vide Nairobi HC OS No37 of 2013 is not disputed. The Defendants agree that whoever owns the suit property is entitled to compensation but contend that ownership of the suit property is disputed and therefore that they can only pay the compensation once that dispute is settled. 52. In my considered view, as there is a claim by the Interested Party that she owns a share of the suit property which claim is still pending hearing and determination vide Nairobi HC OS NoXX of 2013, by dint of Section 115 (c) of the Land Act, the 2nd Defendant is justied and within their statutory mandate to withhold payment of the assessed compensation until the question of whether or not the Interested Party owns a share of the suit property is determined. 53. It is clear that as early as 2018, the Interested Party by herself and through her advocate raised objection on the payment of the compensation to the Plainti, yet the Plainti failed to disclose such objection and or join the Interested Party to this suit. The Interested Party also demonstrated that she obtained an injunction restraining Mr Mutuku Kilewe from dealing in any way with the suit property vide the Civil Suit No XX of 2013 (OS) yet no disclosure was made concerning this order by the Plainti. This clearly demonstrates that the Plainti has concealed material facts and that he led this suit in bad faith and with intention to circumvent the pending suit and contrary to Section 115 (c) of the Land Act. 54. In the premises, I nd and hold that the Defendants are justied in holding the compensation funds until the determination of Nairobi HC OS No37 of 2013. I therefore nd no merit in the Plainti’s claim and I hereby dismiss the suit with costs to the Defendants and the Interested Party. As the Defendants have shown that they have to complete the project in time to arrest detrimental contractual consequences which will be prejudicial to the tax payer, and having sought to be allowed to proceed with the project, I order that they take vacant possession of the suit property. 55. Orders accordingly. DATED, SIGNED AND DELIVERED AT MACHAKOS VIRTUALLY THIS 22ND DAY OF FEBRUARY 2023 THROUGH MICROSOFT TEAMS VIDEO CONFERENCING PLATFORM A. NYUKURI JUDGE In the presence of; No appearance for the Plainti No appearance for the Defendants No appearance for the Interested Party Josephine – Court Assistant https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/15784/eng@2023-02-22 9

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