Kwale International Sugar Company Limited v Cabinet Secretary To Treasury of Kenya & 1 other

13th March 2018 when the plaintiff was successful in setting them aside, and the petition was ultimately dismissed vide a judgment delivered on 13th January 2022. 5. It asserted that the Defendants failed to act promptly in challenging injunctions sought in the aforesaid petition. The plaintiff averred that though the defendants attempted to remedy the situation by allocating them alternative parcels of land being L.R. Nos. 5004/86, 12335/4 & 5056/6, the said parcels were either double-allocated or also occupied, leading to further disputes. 6. In addition to the occupation of all that parcel of land known as L.R. No. 27742 by squatters, the Defendants in breach of their statutory duty caused 1,000 hectares of the said land to be hived off and given to Base Titanium Ltd without due process or compensation to the plaintiff. 7. The Plaintiff contended that the sub-lease of the aforesaid land guaranteed it full, peaceful possession. The Defendants knew the project required uninterrupted access for irrigation infrastructure and highyield cane production, but they failed in their statutory and contractual duties, hence the plaintiff only had access to 50% of the land it had leased, which frustrated its legitimate expectations. 8. The Plaintiff asserted that it had invested over USD. 300 million including USD 140 million in syndicated loans and USD 160 million in equity, but due to the limited access to the leased land, the irrigation and power infrastructure was incomplete, the cane crushing equipment was underutilized, production reduced, costs increased and revenues depressed. Consequently, the plaintiff suffered losses of USD 277,664,162.00 comprising of additional project costs, operational losses, interest, hedging, restructuring, penalties, and associated financing costs. 9. In opposition to the Plaintiff’s case, the Defendants filed a Statement of Defence dated 31st May 2022, which was subsequently amended on 23rd November 2023 to introduce a counterclaim. In their defence, the Defendants denied all the averments contained in the plaintiff’s plaint. 10. The Defendants averred that the suit land originally belonged to Kenya Sugar Limited, later taken over by Ramisi Sugar Company Limited. Ramisi Sugar Company Limited then charged the parcel of land to Bank of India as security for financial facilities advanced to them by the bank, which later sold it after Ramisi Sugar Company Limited defaulted in its loan repayment obligations. Thereafter the Government of Kenya compulsorily acquired the suit parcel of land which comprised of 42,000 acres on 17th November 2006, part of which had squatters. 11. The Defendants contended that following the aforesaid acquisition, the Plaintiff through Pabari Group of companies was granted a sub-lease of all that parcel of land known as L.R. No. 27742 measuring approximately 15,000 acres vide a sub-lease dated 20th August 2007, subject to rent and conditions. The lease required use for sugar farming, restrictions on transfer, proper cultivation, fencing, and environmental protection. 12. The Defendants claimed that the Plaintiff took vacant possession of L.R. No. 27742 in 2007 and admitted as much in earlier proceedings being Environment and Land Court Constitutional Petition No. 8 of 2019 (formerly Mombasa High Court Constitutional Petition No. 65 of 2011). Furthermore, the Plaintiff’s own correspondence between the years 2007-2008 confirmed there were no squatters on the suit land, therefore any encroachment by squatters happened later due to the Plaintiff’s failure to fence and secure the land in breach of the sub-lease. 13. The above notwithstanding, the Government assisted the Plaintiff in addressing squatters when issues arose. The Defendants stated that all correspondence with the Plaintiff around August 2013 on the issues affecting the suit property took after the lapse of six years, from the date when the Plaintiff took https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 2

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possession of the suit land, which translates to the fact that the Plaintiff had acquired vacant possession of the suit property. 14. They further stated that the Plaintiff consented to surrender part of L.R. No. 12335/4 and L.R. No. 5004/6 which had been allocated to it as alternative land to the parts of the suit property that had become inaccessible, for resettlement. Therefore, the Plaintiff is not only estopped from claiming damages for the land excision that it consented to, but also any claims with respect to the two parcels of land is time barred pursuant to the provisions of section 136 of the Government Lands Act. 15. The Defendants averred that although the Government of Kenya later allocated the Plaintiff alternative land being L.R. No. 5056 measuring approximately 4,700 acres on 11th September 2017, the Plaintiff failed to take immediate possession of the land and develop it within forty eight months, as provided for in the lease, and instead left it to lie idle for a period of over three years before taking any steps, amounting to self-sabotage. 16. They contended that the injunctions issued by the Environment and Land Court were obtained by third parties, denied any delay in responding to the ELC Petitions and stated that they supported the Plaintiff’s project. 17. The Defendants asserted that the Plaintiff’s sub-lease was governed by the Government Lands Act and the Registration of Titles Act, thus its claim is time barred under the provisions of section 136 of the Government Lands Act, which bars claims after the lapse of one year from when the cause of action arose, whereas the alleged cause of action with respect to vacant possession arose in 2007 and that with respect to mining of minerals arose in 2012. 18. The Defendants’ position is that they fulfilled their obligations since the lease of the suit property and the alternative parcels of land was granted to the Plaintiff and the Plaintiff took possession of the parcels of land in question. Therefore, any losses that the Plaintiff later suffered was as a result of its own conduct. 19. They however asserted that pursuant to the provisions of Sections 83(2) & (5) and 84 of the Government Lands Act, the Plaintiff consented to the extraction of mineral ores on the suit land resulting in the surrender of part of the leased property by the plaintiff in 2012. 20. The Defendants denied the Plaintiff’s claim for special damaged and averred that the Plaintiff not only lacked financial capacity but it also breached financing agreements. They further averred that the Business Loss Report by Grant Thornton dated January 2022 is unreliable for it is exaggerated, based on flawed assumptions, ignores insolvency proceedings, license withdrawals, and internal mismanagement. 21. The Defendants contended that most of the losses claimed by the Plaintiff including interest and hedging costs are remote, managerial decisions not attributable to them. They further contended that by July 2008, the Plaintiff had already admitted losing 7,000 acres of the leased land leaving them with 9,000 acres thereof that they could reasonably, legitimately and prudently have expected to have access for their economic activities. 22. In addition, sometimes between 2014 to 2017, the Plaintiff’s sugar milling license was withdrawn by the Kenya Sugar Board, for breach of their statutory and contractual obligations to farmers, thus undermining the Plaintiff’s claim. In the end, the Defendant sought for an order dismissing the Plaintiff’s suit with costs. 23. In the counter claim, the Defendant sought for judgment against the Plaintiff for a declaration that the Plaintiff breached the Sub-lease Agreement dated 20th August 2007, an order terminating all subleases/ https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 3

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leases issued to the Plaintiff over all those parcels of land known as L.R. Nos. 27742 (CR. 42459/1), 5004/87, 12335/3 and 5056/6 (CR. 73693), an eviction order requiring the Plaintiff and its agents to vacate the aforementioned parcels of land within 30 days of delivery of the judgment in this suit and costs of the suit. 24. The Defendants’ case was that the Plaintiff failed to fence the suit parcel of land in breach of the sublease agreement, which required it to maintain and repair fences, boundaries, beacons, and farm roads on the land. They contended that the Plaintiff obtained vacant possession of the suit property in 2007, thus any squatter encroachment arose later due to the Plaintiff’s negligence or collusion, since it failed to fence and secure the land. 25. With respect to all that parcel of land known as L.R. No. 5056, the Defendant stated that the lease dated 11th September 2017 had time-bound obligations. For instance, under special condition 2 of the said lease, the Plaintiff was required to submit building plans within 6 months and complete construction within 48 months. 26. However, in breach of the said lease agreement, the Plaintiff never submitted plans, permits, or approvals. The Defendants asserted that the Plaintiff’s excuse of squatters challenging them in ELC Petition No. 43 of 2020, thus hindering their access to L.R. No. 5056, is invalid since the Plaintiff was granted vacant possession of the said land in 2017, but it failed to take possession and secure it for 3 years before the ELC Petition was filed. This therefore means that non-compliance was as a result of its own inaction, not squatters. 27. Subsequently, the Plaintiff filed a Reply to Defence and Defence to counter claim dated 5th December 2023. The Plaintiff denied all the allegations contained in the Defendants’ defence and defence to counter claim and reaffirmed the contents of its Plaint. It averred that the provisions under section 39 of the Limitation of Actions Act are applicable to the circumstances of this case, but as against the defendants. 28. The above notwithstanding, the Plaintiff asserted that the cause of action in this case relates to a continuing injury. The Plaintiff denied the Defendants allegations of breaching of financial agreements by the Plaintiff and stated that in any event, the defendant lacks the requisite locus standi to enforce to enforce those financing agreements. 29. The Plaintiff attributed the suspension of its license to the Defendants’ breaches and asserted that the Defendants cannot benefit from their own wrongdoing. The Plaintiff averred that contrary to the Defendants’ allegation that it failed to mitigate its losses, it took steps to do so by notifying the Defendants and accepting their proposed remedies, restructuring its financial facilities to avoid recall and winding up proceedings against it, applying to discharge the injunctive reliefs issued against it by the court in Mombasa Petition No. 65 of 2011, continuing with limited production despite challenges and securing shareholder financing to stay afloat. 30. The Plaintiff contended that it had no duty to erect fences, its obligation was only limited to maintaining and repairing the existing ones, but no fences were erected by the Plaintiff in the first place. The above notwithstanding, the Plaintiff stated that it could not fence areas still occupied by squatters since the Defendants failed to deliver vacant possession of the suit property. 31. The Plaintiff further stated that it had no obligation to build anything on all that parcel of land known as L.R. No. 5056 as the land was surrendered and replaced by L.R. No. 5056/R, which was designated for sugarcane growing and not buildings. It asserted that the Defendants’ claim for forfeiture should not be granted as it has been sought after inordinate delay, thus implying acquiescence and no termination notices have been issued for the leases/subleases. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 4

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32. In the end, the Plaintiff urged this court to enter judgment as per its Plaint dated 1st April 2022 and dismiss the Defendants’ Amended Statement of Defence & Counterclaim dated 23rd November 2023, and with costs. 33. This matter proceeded to hearing where the plaintiff called two witnesses to ventilate its case, whereas the defendants called six witnesses in support of their case. Plaintiff ’s Case 34. Mr. Harshil Kotecha, the Director of Projects in the Plaintiff company testified as PW1. He adopted his witness statements dated 1st April 2022 and 5th December 2022 as his evidence-in-chief and produced the documents in the Plaintiff’s Lists and Bundles of Documents dated 1st April 2022 and 5th December 2023 as Plaintiff exhibits Nos. 1 to 35. 35. He testified that the Government of Kenya compulsorily acquired 42,000 acres from the Bank of India, out of which 27,000 acres were earmarked for the resettlement of squatters, while 15,000 acres were registered as L.R. No. 27742. This portion was granted to the 1st Defendant and subsequently subleased to the Plaintiff by a sublease dated 20th August 2007 for a term of 99 years with effect from 1st June 2007. He produced the said sublease, which appears at pages 68 to 83 of the plaintiff’s bundle, as Plaintiff Exh. No. 9. 36. Mr. Kotecha contended that the Plaintiff was unable to access the leased land for purposes of implementing its project as 5,816 acres of the 15,000 acres had been occupied by squatters claiming equitable rights. He further stated that access to the land was barred by an injunction issued in Mombasa Petition No. 65 of 2011, which remained in force until it was set aside by a ruling delivered on 13th March 2018. The said ruling, appearing at pages 84 to 96 of the Plaintiff’s bundle, was produced as Plaintiff Exh. No. 10. 37. PW1 contended that the Defendants delayed in discharging the injunction, only taking steps in 2018 despite the Plaintiff’s requests through a letter dated 20th July 2016, found at pages 110 to 112 of the plaintiff’s bundle and produced as Plaintiff Exh. No. 12. He maintained that the defendants’ failure to grant the plaintiff full, unhindered, quiet and peaceful possession of the leased land constituted a breach of contract. 38. He further testified that the Government sought to compensate the Plaintiff by allocating alternative parcels of land being L.R. Nos. 5004/86 and 12335/4, but these parcels turned out to have been double-allocated. By a letter dated 27th August 2013, appearing at page 117 of the Plaintiff’s bundle and produced as Plaintiff Exh. No. 14, the Ministry of Lands demanded the surrender of the said parcels. 39. The Plaintiff consequently surrendered them vide a letter dated 29th August 2013, found at page 118 of the Plaintiff’s bundle and produced as Plaintiff Exh. No. 15, on the understanding that the Government would provide alternative land. PW1 claimed that by a letter dated 3rd November 2015, the 1st Defendant agreed with the National Land Commission’s proposal to compensate the Plaintiff with various parcels of land measuring approximately 3,473 hectares. The said letter appears at pages 131 to 133 of the plaintiff’s bundle and was produced as Plaintiff Exh. No. 18. 40. PW1 stated that by a letter dated 12th April 2016, appearing at pages 134 to 136 of the Plaintiff’s bundle and produced as Plaintiff Exh. No. 19, the National Land Commission forwarded to the Plaintiff a Letter of Allotment dated 5th April 2016, allotting it L.R. No. 5056 measuring approximately 1,906 hectares. He further stated that a Certificate of Title dated 18th September 2017 and a lease dated 11th https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 5

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September 2017, appearing at pages 137 to 143 of the Plaintiff’s bundle and produced as Plaintiff Exh. No. 20, were subsequently issued to the Plaintiff. 41. However, PW1 contended that the Plaintiff was again compelled by the Government to surrender 351.03 hectares of the said land, following which it was issued with a new Certificate of Title dated 26th August 2019, appearing at pages 146 to 147 of the plaintiff’s bundle and produced as Plaintiff Exh. No. 23. The new parcel measured 1,519 hectares and was identified as L.R. No. 5056/6. 42. It was PW1’s testimony that similar to L.R. No. 27742, the parcel L.R. No. 5056/6 was and still remains occupied by squatters despite assurances by the National Land Commission that they would be relocated. He stated that as a result, the Plaintiff was sued in Mombasa ELC Petition No. 43 of 2020, a copy of which appears at pages 148 to 149 of the Plaintiff’s bundle and was produced as Plaintiff Exh. No. 25. 43. PW 1 further stated that the Defendants in further breach of their statutory and contractual obligations, excised 1,000 hectares from the said parcel and allocated it to Base Titanium Limited without consulting or compensating the Plaintiff, and failed to either demand or remit compensation for the excision. 44. He contended that the Plaintiff had invested over USD 300 million in the project, comprising USD 140 million in syndicated loans and USD 160 million in shareholder equity. He stated that the Plaintiff resolved, with the Defendants’ consent, to create a charge over L.R. No. 27742 in favor of the lenders, as confirmed by a letter dated 8th January 2013 appearing at pages 488 to 490 of the Plaintiff’s bundle and produced as Plaintiff Exh. No. 32. 45. He asserted that this created a legitimate expectation that the Plaintiff would be granted full access to the leased land. However, he explained that the Plaintiff only had access to 50% of the leased land, which rendered irrigation and power systems incomplete. Consequently, the crushing plant was underutilized, production was reduced, and costs increased, resulting in losses assessed at USD 277,664,162.00 according to the Grant Thornton report dated January 2022, which appears at pages 496 to 830 of the Plaintiff’s bundle. 46. PW1 referred to the Defendants’ Replying Affidavit sworn by Purity Mwangi in Kwale ELC Petition No. 14 of 2021, appearing at pages 2 to 16 of the Plaintiff’s further bundle and produced as Plaintiff Exh. No. 34, in which the Defendants admitted that 2,355 hectares out of 6,072 hectares were occupied by squatters. 47. He further pointed to the judgment delivered on 27th January 2023 in the same petition, appearing at pages 17 to 47 of the plaintiff’s further bundle and produced as Plaintiff Exh. No. 35, in which the court confirmed the presence of squatters on the suit land and held that the Defendants had a duty to relocate or compensate them. 48. He testified that the Plaintiff’s sugar license was suspended due to its inability to pay outgrowers, which in turn arose from lack of access to land caused by the Defendants’ breach of their statutory and contractual obligations. In conclusion, PW1 maintained that the Defendants failed in their obligations, thereby occasioning the plaintiff operational and financial difficulties. 49. In cross examination by Mohamed S.C, learned Counsel for the Defendants, PW1 testified that although he had not previously been involved in the running of a sugar company, he had managed engineering projects. He confirmed that the Plaintiff company was incorporated around 2005/2006 after the sale of Ramisi Sugar Company, specifically to undertake the present project, and was part of the Pabari Group of companies. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 6

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50. He stated that the lease of the suit land had been granted at a nominal rate, with rent initially set at Kshs. 800 and later revised to Kshs. 3,006,000/= per annum. While he confirmed that the Plaintiff received a 99-year sublease and took possession in 2007, he was unable to demonstrate that rent had been paid as required, though he maintained that no demand for outstanding rent was ever issued. 51. PW1 testified that the project was designed as a modern and efficient sugar project with irrigation, machinery and a reliance on 70% own sugarcane production, and 30% from farmers. Referring to the feasibility study at page 280 of the Plaintiff’s bundle, he explained that it did not address squatters. He added that before acquiring the suit property, the plaintiff undertook community sensitization and engaged with the Government. 52. He admitted that squatters were present on the suit land as early as 2006, and while the Government was expected to resettle them, this issue was not raised before the lease was signed. He acknowledged that the lease agreement did not obligate the Government to provide the Plaintiff with suitable alternative land and conceded that as a tenant, the Plaintiff bore responsibility for keeping the land secure. 53. He further testified that squatters had initially been removed from the suit land and legal action taken against them, but part of the land later had to be surrendered due to renewed encroachment, resulting in alternative land being allocated, which also became problematic. He confirmed that in Mombasa ELC Petition No. 65 of 2011, court orders stopped further allocation of land from 26th October 2011 until 13th March 2018. 54. He admitted that the plaintiff’s first attempt to lift the said orders was in 2017, some six years later and acknowledged that this delay was purely its own decision and not due to Government interference. Nonetheless, he maintained that the Government had a contractual obligation to provide 15,000 acres and to resettle squatters, but failed to exercise reasonable care in doing so. 55. During cross-examination by Nyaoga S.C, learned Counsel for the Defendant, PW1 testified that the Plaintiff continued with its project during the pendency of the injunctive orders in Mombasa ELC Petition No. 65 of 2011, in which the court ultimately held that the suit land was private property and that squatters had neither title nor legitimate expectation over it. 56. He reiterated that the squatter problem existed from the inception of the lease, but the Government had promised to resettle them, and the Plaintiff relied on this assurance in making heavy investments. He clarified that the lease signed in 2007 was between the Plaintiff and the PS Treasury, under which the Plaintiff was obligated to pay rent in exchange for quiet and peaceful possession. He asserted that the Defendants breached the lease by failing to ensure the Plaintiff enjoys peaceful possession of the suit land. 57. PW1 contended that although the lease allowed the Defendants to re-enter in case of rent arrears, this was never invoked as the Plaintiff always paid rent. He stated that the Plaintiff only ever accessed about 50-60% of the leased land due to squatters, which hampered irrigation, cane growing and factory operations, leading to underutilization of the plant, operational disruptions and losses assessed at USD 277,664,162.00. 58. He further testified that the Plaintiff’s inability to fully utilize the land hindered its loan repayment obligations, and although its license was suspended in 2016/17, he attributed the suspension to the Defendants’ breach of its contractual obligations. He clarified that responsibility for paying farmers lay with the Plaintiff’s management and not the Defendants. He maintained that before signing the https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 7

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lease in 2007, the Plaintiff carried out due diligence confirming that the land was suitable for sugarcane farming, resulting in an Information Memorandum dated 15th March 2012. 59. PW1 admitted that by a letter dated 19th July 2008, he acknowledged that about 4,200 acres were unsuitable for cane growing, but insisted that the Defendants were still obligated to provide replacement land, even if not expressly provided in the lease. He conceded that the Information Memoranda dated 15th March 2012 and 11th June 2015 did not mention squatters, inaccessibility or conservatory orders, but explained that the Plaintiff had assumed vacant possession would be delivered. 60. He testified that when the land was charged to the bank as security, the bank was informed there were no potential challenges despite pending litigation. He was unable to confirm reinstatement of the Plaintiff’s license in June 2017 but denied that KEBS’ findings on sugar standards were the reason for license suspension, noting instead that the plaintiff successfully sued KEBS and judgment was entered in its favor. 61. It was acknowledged that a fire in 2019 destroyed sugarcane, for which insurance partly compensated USD 1.2 million under a material damage policy. Finally, PW1 testified that although the Plaintiff’s audited accounts showed reconciliation issues and delayed filings, they fairly represented its business position. He explained that project costs escalated from USD 179,768,846 in 2013 to USD 229,791,124 in 2016. 62. In addition, production began in 2015 with utilization at 43%, rising to 48% in 2016, but dropping to 4% in 2019 due to yield declines and lack of irrigation, further worsened by closure of the factory following KEBS’ intervention. He concluded that both parties were aware of the squatters from the inception of the lease, hence there was no need to notify the defendants afresh. 63. Upon cross-examination by Mr. Imende, learned Counsel for the Defendant, Mr. Kotecha maintained that the increase in project costs was mainly attributed to lack of access to land, and that the expert report included legal fees of USD 4,062,812, though no invoices or receipts were produced to support the same. He stated that additional costs also arose from relocation of a dam as reflected in the Bill of Quantities, and confirmed that a loan disbursement of USD 20 million was earmarked for the dam project, but no loan schedule was availed in evidence. 64. He further testified that the Plaintiff sought to recover interest paid in respect of a third loan restructuring, though this was not mentioned in his witness statement. PW1 stated that a forensic audit informed the revision of project costs, and that the claim also included swap and IPF costs of USD 5,984,362.00. He added that part of the cost escalation was attributable to the learning curve of the promoters who were transitioning from other industries into agriculture. 65. In re-examination, PW1 testified that the Plaintiff had prepared a business plan with an executive summary appearing at pages 174-179 and 284-288 of the Plaintiff’s bundle, and that Gilatex Trading Company negotiated with the Bank of India and the Government of Kenya on behalf of the Plaintiff, as reflected in minutes at pages 62-65 of the bundle. 66. He stated that squatters were not highlighted in financing discussions since the Government was handling their resettlement. He clarified that although a letter dated 25th April 2008 which appears at page 111 of the Defendants’ trial bundle indicated that most squatters had vacated, in reality the Plaintiff accessed the leased land in blocks rather than as a whole. 67. PW1 deposed that the Plaintiff leased 15,000 acres from the Government, comprising 3,519 hectares irrigable for sugarcane and 2,110 hectares for infrastructure. However, about 4,200 acres were found https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 8

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unsuitable for cane growing and squatters’ presence necessitated relocation of a dam and deviation of power lines, which contributed to project cost overruns. 68. He added that the existence of litigation over the leased land was disclosed to lenders, but they considered it immaterial and proceeded with disbursements after conducting site visits where they noted the presence of squatters. 69. PW1 further stated that a proposal for a 10-year license deduction was due to heavy land development but was disrupted by changes in AFA management. He clarified that the standardization mark applied only to sugar manufacturing and not to cane growing. He also explained that since the Plaintiff had no Internal Auditor between 2016 and 2019, PWC acted as its external auditor during this period, and that an internal auditor was subsequently appointed. 70. Mr. Vivek Patel, a Director at Grant Thorton Limited, a Chartered Accountant and a Fellow Member of Chartered Accountants, and Institute of Internal Auditors testified as PW2. He confirmed that he prepared a report dated January 2022, which he adopted as Plaintiff Exh. No. 36 and a Further Report dated 30th September 2024, which he produced as Plaintiff Exh. No. 37. 71. In reference to the PKF report dated 7th November 2024, Mr. Patel stated that while the initial project cost had been indicated as USD 200 million, the actual figure was USD 200,200,939.00 as shown at page 511 of his report, and this was derived from the financial model prepared by the Plaintiff’s management. He noted that interest during construction was reflected differently in the plaintiff’s documents as USD 8,714,820.00 at page 176 of the Information Memorandum and USD 5,574,114.00 at page 511 of the financial model, the difference arising from the sources of information used. 72. He further explained that the Information Memorandum reflected a total project cost of USD 198 million, whereas the financial model reflected approximately USD 200 million. PW2 clarified that reclassification is a common auditing practice whereby related costs, such as legal and banking fees, are grouped under general heads like expenses to simplify financial reporting. For this reason, individual ledgers may not tally with audited accounts, though the totals remain consistent. 73. He added that in his second report at page 12, any banking costs incurred during project development were properly treated as project costs. He testified that the accounting standards IAS 39 and IAS 7, which deal with financial instruments, were not applicable since the matter at hand involved capital instruments, and there is no standard requiring reclassification in such circumstances. 74. On pre-operating land development costs, Mr. Patel stated that his report at page 5/116 recorded USD 21,754,425.00 for the period 2014 to 2016 cumulatively, while the PKF report reflected only USD 4 million, having focused on the year 2021 alone. He disputed PKF’s conclusion at page 17 of their report that capital costs had been reported twice, clarifying that the figure of USD 50 million at page 511 of his report was merely a subtotal and not a duplicate claim. Regarding Sefreco, he explained that all payments made before the project became operational were classified as pre-operational expenses, while subsequent payments were recorded under legal and advisory fees, and a specific ledger was created to capture these costs. 75. PW2 pointed out that the PKF report contained an omission at page 35, paragraph 6(c), where an expense had not been recorded, which error had the effect of artificially increasing the tax liability. He further identified a discrepancy in fixed assets, where the tax return at page 11/16 reflected USD 23,853,476,476.00 while PKF at page 35 recorded USD 24,753,849,000.00. 76. Mr. Patel stated that the difference, approximately USD 2.9 billion, was accounted for as Deferred Tax Assets as reflected at page 12/16 and in the auditors’ accounts at page 533. He added that he could not https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 9

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ascertain the source of the figure Kshs 158,729,345.00 cited at page 36 of the PKF report, attributing it to issues of reclassification. Finally, PW2 confirmed that the ledger for services was not provided as it did not form part of the claim. 77. In cross-examination by Mr. Imende, learned Counsel for the defendant, PW2 testified that he joined Grant Thorton Limited in 2007 as an Associate and rose through the ranks, to becoming a Director. He holds a professional certificate in accounting but clarified that he does not head the advisory team, which is led by Parek Shah. Grant Thorton has five directors, and the firm mainly undertakes visibility, due diligence, and supervision work. 78. He stated that he was requested by a client to assess damages incurred on a reliance basis, which related to loss of profits, though he admitted not being familiar with the technical meaning of the term “reliance basis.” He pointed out that at page 6, paragraph 47 of the plaint, special damages had been calculated on this basis. Mr. Patel explained that in respect of page 497 of the report, the firm calculated the loss suffered by the plaintiff. 79. PW2 testified that while Grant Thorton had done advisory work in the sugar sector, including Butali Sugar and a Tanzanian sugar company, he was not an expert in the sugar business though he had an understanding of it and of the market conditions affecting costs. He emphasized that his methodology was based on comparing actual costs incurred with those expected and associating the resulting costs with lack of land access. 80. He confirmed that he had no experience in economic impact assessments, forecasting, or market analysis, his expertise being in accounting and financial management. The report in question was signed by Parek Shah, who would not testify, but he acknowledged that signing meant ownership. He confirmed that his name did not appear on the report, but he was involved from the beginning. He contended that the instructions to prepare the report came formally from the plaintiff and the scope was summarized at page 497. The parties agreed on fees without success-based incentives, though he admitted such fees exist with some clients. 81. Mr. Patel testified that in preparing the report, the firm relied on documents supplied by the plaintiff, as listed at paragraph 4 of page 497, but did not attach the financial models, though these had been used. He further testified that minutes of discussions with the Plaintiff’s management were kept but not presented in court. He acknowledged that not all documents were submitted, and he could not recall which ones were missing. 82. PW2 claimed that the methodology agreed on was to compare actual costs with expected costs, using projected breakdowns found in the financial model and the Information Memorandum. He stated that they made assumptions on interest rates, adopting 1% as the prevailing Treasury bill rate, but had no CBK extract to support this. He reiterated that all other data was provided by the plaintiff and was assumed accurate because it had been audited. 83. He admitted that the report’s conclusions were only as reliable as the data given. The reservation expressly noted at page 497 was that the report relied entirely on information provided by the plaintiff, which retained responsibility. He confirmed that the firm did not review raw data such as receipts or invoices. 84. On the substance of the claim, PW2 testified that the losses arose because the Plaintiff was unable to access 7,000 acres of leased land that had been encroached by squatters, though 8,000 acres remained accessible. He asserted that the restricted access increased costs since items planned for purchase earlier in 2013 were instead procured later in 2016 at higher prices. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 10

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85. Other possible factors such as poor execution, project delays, and a factory fire were not accounted for because the claim was confined to costs linked to lack of access to land. He acknowledged that the Plaintiff itself had attributed cost overruns at page 376 to delays in financial close, scope changes, and sponsor issues, but his report did not dissect these factors. Mr. Patel distinguished between an Information Memorandum, which is prepared for investors to raise capital, a Business Plan, which is a detailed internal management document, and a Feasibility Study, which precedes both and assesses viability. 86. He stated that he had not seen a Business Plan for the Plaintiff nor the forensic audit mentioned at page 500, and these documents did not inform his report. He further stated that he later came across the 2012 and 2015 Information Memoranda but confirmed they had not been used. 87. Regarding financial data, PW2 stated that ledgers were only referred to in his second report dated 30th September 2024, in response to PKF’s criticisms. These had been supplied by the plaintiff, he had not prepared them. He stated that he could not confirm when they were exported from the system and he did not verify their accuracy or assess the plaintiff’s internal controls. Without source documents such as receipts, he agreed the court could not confirm the accuracy of the ledgers. 88. He noted that reclassification of costs occurs during preparation of financial statements, but he could not say when or by whom this was done. He confirmed that his second report attributed pre-operating costs on land between 2013 and 2016 amounting to USD 21,754,425.00 to lack of land access. 89. Mr. Patel stated that what appears at pages 17/116 is shareholder loans. He noted that if the USD 50 million was put in Treasury bills, the Plaintiff would have made USD 17,000,000.00. He admitted not having seen any loan agreement or demand letter from the Plaintiff’s shareholders to the Plaintiff. He also referred to USD 10 million at pages 16/116 being reimbursable costs agreed with KRA, which remained subject to milestones. 90. He acknowledged that some claims, such as USD 919,706.00 in respect of Sofreco appearing at page 10 and USD 3.2 million in advisory fees, were not backed by underlying contracts or agreements, and that verification of such claims was not undertaken. Mr. Patel reiterated that the report was based entirely on information provided by KISCOL, without verification of raw data, and that while the report attributed additional costs to lack of land access, other contributing factors may have existed but were not considered. 91. Upon cross-examination by Mr. Nkarichia, learned Counsel for the defendant, Mr. Patel referred to paragraph 44 of the plaint, which gave the total figure as USD 277,664,162, also reflected at page 5 of his first report. He stated that there were typographical errors in items (e), (f), and (g), arising from “three restructures.” He contended that his methodology was to compare actual costs with expected costs, and he confirmed that any changes in items would alter the total. 92. He confirmed that the projected total cost was USD 200 million. He clarified that he did not rely on the feasibility report. He stated that at page 287, the expected cost was given as USD 83,449,046.00, but he was not provided with justification for the change. He testified that he prepared the report together with Mr. Parag from the outset but did not visit the Plaintiff. He added that had there been no delay, land preparation, buildings, and related costs would have been reduced. 93. PW2 reiterated that he had previously worked for Butali Sugar but had no information on the normal operating margins for sugar companies and that such margins could not be generalized. He confirmed that at page 509 of the report, he had given an expected operating margin of 57%, whereas at page 508 the operating profit margin for FY 2015 was recorded as –110%. He emphasized that the financial model was prepared before 2015 and that audited accounts typically take six months or longer. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 11

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94. At page 528, the audited accounts for the year ending 31st December 2015 were shown, having been issued on 15th January 2018, and at page 570 the accounts for the year ending 31st December 2016 were approved on 27th March 2019. He acknowledged that a prudent lender would have expected to see audited accounts. At page 530, he explained that his formula had relied on ledgers, while the auditors relied on reconciled ledgers. 95. Mr. Patel confirmed that he only saw the 2013 Information Memorandum after completing the report and did not see the 2016 version. Further, he did not obtain the Plaintiff’s bank statements and did not verify whether the loans were actually disbursed to the plaintiff. He confirmed that the report at page 500 did not take into account the loss of future earnings, though the scope of work had included this. 96. He acknowledged that tax losses could be carried forward and that at one time this was permitted for up to 10 years. At page 509, he observed that in calculating losses, tax payable was reduced. Mr. Patel claimed that the projected real sugar price per ton was drawn from the financial model, but he conceded that the prices could have been exaggerated. He explained that at page 556, the valuation used was Kshs 2,700 per ton of sugarcane, while at page 593 a valuation of Kshs 4,700 per ton of cane was used. He confirmed that the price given was for finished sugar and that the extraction or conversion rate, both terms meaning the same, was 10%. He admitted that he did not verify the financial model. 97. In re-examination, PW1 testified that the interest on shareholders' loan was at 10% as indicated in the financial statement at page 641. He clarified that the 3rd restructuring was meant to be 2nd restructuring. Defence Case 98. Mr. Zacharia Ndege, a Principal Land Administration Officer with the National Land Commission testified as DW1. He adopted his witness statement dated 3rd May 2023 as his evidence-in-chief and produced the documents in the Defendants’ Lists and Bundles of documents dated 16th November 2022 and 24th November 2023 as Defence exh. Nos. 1 to 49. 99. He testified that the Plaintiff had been undertaking development of a sugarcane plantation on land formerly occupied by the defunct Ramisi Sugar Factory in Kwale County. He explained that after the Government reclaimed 42,000 acres from the Bank of India following Ramisi Sugar Factory’s loan default, 15,000 acres were subleased to the Plaintiff under L.R. No. 27742 for a 99-year term commencing 1st June 2007, while 27,000 acres were set aside for resettlement of squatters. 100. He confirmed that L.R. No. 27742 was encroached upon by squatters occupying areas covering about 5,816 acres and that conservatory orders were issued barring the plaintiff from using parts of the land. DW1 contended that to address the squatter issue, the National Land Commission allocated alternative parcels of land being L.R. No. 5004/86 and L.R. No. 12335/4 to the Plaintiff, but these were later surrendered due to double allocation, with a promise of alternative land. 101. Further, subsequent correspondence between the National Land Commission and the National Treasury led to the allocation of L.R. No. 5056 measuring 1,906 hectares to the Plaintiff, of which 351 hectares were excised for public use, leaving 1,519 hectares which was thereafter registered as L.R. No. 5056/6. 102. He acknowledged that just as in L.R. No. 27742, access to L.R. No. 5056/6 was also hindered by litigation filed in Kwale ELC Petition No. 43 of 2020, in which squatters claimed ownership. However, in its judgment of 27th January 2023, the court directed the Government, through the CS Lands and the National Land Commission, to ensure compensation and relocation of genuine squatters within https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 12

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12 months. DW1 further noted that 1,000 hectares initially allocated to the plaintiff were annexed and allocated to Base Titanium under a mining lease. 103. He emphasized that squatters had occupied parts of the land even before independence and that much of the litigation, including Mombasa Constitutional Petition No. 65 of 2011 and Mombasa ELC Petition No. 43 of 2020, were instituted by squatters against the Plaintiff and the Government. He also observed that the County Government of Kwale had constructed a stadium and market on part of the land without any objection from the Plaintiff. He testified that despite holding lease documents, the Plaintiff had not taken action to evict squatters, while the Government had consistently endeavored to provide peaceful possession and resettlement of squatters through the CS Lands and the National Land Commission. 104. There was no cross-examination for this witness. 105. Ms. Veronica Muthoni Okoth, the Principal Economist with the National Treasury testified as DW2. She adopted her witness statement dated 16th November 2022 as her evidence-in-chief. She testified that the lease land was to be used for sugarcane farming, a sugar processing mill, and related activities, while the resettlement parcels were also intended to facilitate out grower farming in collaboration with squatters. 106. She confirmed that squatters were to be moved to the 27,000 acres set aside for settlement and that the Government relocated them accordingly. However, when the Plaintiff complained of squatting on its leased land, the Government used security agencies to address the situation and through the National Land Commission, and allocated the plaintiff alternative parcels of land. She claimed that in 2019, the Ministry of Lands valued the suit parcel at Kshs. 170,100,000/= and proposed a resettlement action plan. 107. Ms. Okoth further testified that various litigations by squatters stalled the Government’s efforts to conclusively resolve the squatter issue. She described squatting as a long-standing and politically sensitive matter in the coastal region. She added that the Government consented to charges registered by the plaintiff over L.R. No. 27742 in 2013 and 2015 to secure loans totaling USD 122 million, demonstrating its support for the project. She maintained that the Government had honored its statutory and contractual obligations and had not breached the lease agreement. 108. On the contrary, the Government consistently facilitated the Plaintiff’s operations, including supporting financing and land allocations. She attributed the Plaintiff’s challenges, including the suspension of operations by the Kenya Bureau of Standards in 2018, to factors unrelated to the Government. 109. In cross-examination, DW2 explained that the 15,000 acres leased to the Plaintiff was to be free of squatters. Therefore, the Government moved squatters from the 15,000 acres before execution of the lease, though she was unable to confirm the actual number relocated or whether they were issued with titles. 110. Ms. Okoth acknowledged that in 2008, the Plaintiff complained to the National Land Commission about the presence of squatters on the suit parcel of land, and referred to a letter dated 7th May 2008 from the District Land Adjudication and Settlement Office indicating that 980 squatters had refused to vacate, and recommending that the plaintiff be compensated with an additional 7,000 acres. She admitted that despite Government steps to allocate alternative parcels, those parcels were also inhabited by squatters and she did not know if the Government took further steps to evict them. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 13

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111. DW2 was referred to minutes at pages 62-64 of the plaintiff’s bundle of documents showing that the plaintiff initially proposed a crushing capacity of 5,000 TCD, expandable to 10,000 TCD, requiring 35,000 acres of cane, although only 15,000 acres were leased. She testified that while the lease obligated the Plaintiff to maintain fences, she could not confirm if any fences existed. 112. Ms. Okoth deposed that the lease provided for termination by the Government for breach upon two years’ notice, but she was not aware of such notice being issued. DW2 testified that following the filing of this suit, the Treasury convened a multi-agency team that visited the suit land for about two days and prepared a report, though she had not seen the report and could not confirm whether squatters were found on the land. 113. In re-examination, Ms. Okoth clarified that in reference to page 92 of the defendant’s documents, the Principal Secretary was merely acknowledging the contents of Mr. Swazuri’s letter dated 15th September 2015, at page 88. She explained that the PS granted the request concerning issuance of property and clarified that the Government had not breached the lease terms, but was only acting in a facilitative capacity. 114. Mr. Hassan Said Omar,the Kenya Bureau of Standards Coast Region Manager testified as DW3. He adopted his witness statement dated 23rd November 2023 as his evidence-in-chief. Mr. Omar stated that the Plaintiff first applied for a standardization mark for brown sugar on 11th December 2015 and was issued with permit no. 24973 on 22nd March 2016, valid until 21st March 2017. 115. He stated that subsequent renewals were subject to KEBS sampling and compliance tests, with some samples in 2016 and 2018 failing to meet the required standards (EAS 749:2010) in respect of water insoluble matter and colour. He asserted that permits were only renewed whenever compliance was achieved. 116. DW3 testified that in 2019, the Plaintiff reported a fire that damaged its cane conveyor system, preventing inspection and sampling until repairs were made. He however confirmed that KEBS renewed the Plaintiff’s permit on 25th March 2020 following compliance with a sample collected earlier that month, and again on 17th March 2021, expiring on 21st March 2023. He further confirmed that since expiry of the permit on 21st March 2023, the Plaintiff has not applied for nor paid for renewal, and therefore cannot currently undertake sugar manufacturing. 117. There was no cross-examination for this witness. 118. Mr. Jude Chesire,the Director and Head of the Sugar Directorate at the Agriculture and Food Authority (AFA) testified as DW4. He adopted his witness statement dated 28th May 2024 as his evidence-in-chief. He confirmed that the Plaintiff is a registered and licensed sugar factory situated in Ramisi, Kwale County, which commenced operations in March 2015. 119. He stated that upon being granted vacant possession of the leased land, the Plaintiff undertook infrastructure development, established nuclear estates, constructed a 3,500 TCD sugar factory and rolled out an out-grower scheme with farmers. The factory was licensed to produce 90,000 MT of sugar from 900,000 MT of sugarcane annually. 120. He claimed that the Sugar Directorate had received complaints from farmers against the Plaintiff, including delayed or non-payment for cane delivered, failure to pay recommended cane prices and charging for services not rendered. Consequently, the Directorate withdrew the Plaintiff’s milling license on some occasions. He described the Plaintiff’s performance as dismal, referring to statistics contained in the Defendant’s bundle of documents. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 14

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121. Mr. Chesire contended that the issue of squatters was first raised by the Plaintiff in 2012, after alternative land had already been allocated, thus in his view, the available land together with contributions from out-growers was sufficient for the project. He deposed that he never received any formal complaint from the Plaintiff regarding squatters on the leased land and questioned why the Plaintiff took from 2008 until May 2020 to raise the issue. 122. Upon cross-examination, DW4 explained that irrigated cane yields an average of 110 tons per hectare, while rain fed cane yields about 60 tons per hectare. Thus, to meet the licensed production target, the Plaintiff required approximately 8,200 hectares of land. He noted that the land leased to the Plaintiff by the Government measured 15,000 acres which is equivalent to about 6,070 hectares, thus was below the required acreage. He confirmed that he was not aware of the extent of land actually under outgrower schemes. 123. Mr. Chesire clarified that his earlier statement that the available land together with out-growers was sufficient was based on general information about the continuous nature of out-grower arrangements, as reflected in a brief on the plaintiff at page 124. He also testified that while the Sugar Directorate had withdrawn the Plaintiff’s milling license on several occasions, the complaints did not relate to failure to cultivate the entire leased land. DW4 claimed that the Directorate conducts an annual cane census to establish the acreage under cane production, therefore it had the Plaintiff’s figures. 124. In re-examination, Mr. Chesire clarified that it is the miller who determines the tonnage to be milled, the role of the Sugar Directorate is limited to licensing based on the miller’s application. He explained that one of the key considerations before issuing a license is the applicant’s demonstrated milling capacity and confirmed that the plaintiff applied on the basis that in addition to its own nucleus estate, it would rely on out-growers to meet its licensed milling capacity. 125. Douglas Kihara Kangi, the Director of Crops at the State Department for Crop Development, testified as DW5. Mr. Kangi deposed that around 2007, Kenya faced a sugar deficit of about 200,000 metric tonnes, prompting the registration of the plaintiff company as a miller with an expected output of about 80,000 metric tonnes annually. He confirmed that the Ministry of Agriculture facilitated the allocation of 15,000 acres of land under L.R. No. 27742 to the plaintiff through a lease executed by the Permanent Secretary to the Treasury and countersigned by the Permanent Secretary to Agriculture. 126. He stated that the plaintiff was granted vacant possession of the land free of squatters and acknowledged readiness to commence development, as evidenced by its correspondence to various government offices between 2007 & 2012, regarding project implementation, infrastructure, irrigation, and out-grower schemes. Mr. Kangi further testified that under the lease, once vacant possession had been handed over, the plaintiff was obligated to maintain fences, boundaries, beacons, and roads, and to protect the land from trespassers, including squatters. He emphasized that the Government fully discharged its obligations by granting the plaintiff vacant possession, enabling it to develop infrastructure, establish its factory, and commence operations. 127. On cross-examination, DW5 stated that while his written statement indicated that the plaintiff took vacant possession of the suit land without squatters in 2007-2008, he had not visited the land during that period. He referred to a letter dated 7th May 2008 from the Director of Land Adjudication and Settlement at page 97 of the defendant’s trial bundle, which recorded that 980 squatters had refused to be relocated and proposed compensation to the plaintiff with approximately 7,000 acres. He confirmed that the Kenya Sugar Board licensed the plaintiff to process 125 tonnes of cane per hour and produce about 80,000 metric tonnes annually, though he conceded he was not employed by the Board and had no documentary evidence in court to support the licensing figures. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 15

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128. DW5 was not subjected to any re-examination. 129. Peter Kahi, a partner with PKF, a Certified Public Accountant and a Certified Fraud Examiner testified as DW6. He stated that they were instructed by the 2nd defendant to prepare a forensic report, pursuant to which two reports dated 12th June 2024 and 7th November 2024 were produced in response to Grant Thornton’s earlier report. He produced the reports as Exhibits Nos. 50 & 51 respectively. DW6 stated that their review showed significant variances in the plaintiff’s claims, including projected costs of USD 8.4 million in 2013, actual expenditure of USD 21 million in 2016, yet only USD 4,296,781 reflected in the audited accounts. 130. He observed that some claims were exaggerated, such as actual costs of USD 29 million being inflated by USD 7 million, and that certain items, including capital costs of USD 50 million, were doublecounted. He further noted that a claim of USD 3.2 million for advisory/legal fees lacked contractual support, a claim of USD 8.5 million related to VAT refunds properly due from KRA, and other items such as alleged reimbursable Government costs, were unsupported by evidence of actual expenditure. DW6 emphasized that many of the plaintiff’s claims were exaggerated, duplicative, or unsupported for want of proof and in some instances, the costs claimed did not fall within the Government’s liability. 131. In cross-examination, Mr. Kahi explained the distinction between a financial audit, which is routine and intended to assess financial soundness, and a forensic audit, which is undertaken on a need basis where illegality is suspected. He confirmed that while he had extensive audit and consultancy experience, including in the sugar industry, his engagement in this matter was not a forensic audit but a review of claims. He noted that the auditors’ reports at pages 530, 572, 612 & 653 of the plaintiff’s bundle of documents were qualified on the basis of deferred tax assets and syndicated loans, not on absence of documents. He stated that while he relied on audited accounts, he did not have access to source documents or conduct a site visit, nor did he interview plaintiff’s management, which steps might have provided fuller information. 132. DW6 stated that his report questioned the independence of the plaintiff’s auditors, BDO East Africa, who had both compiled financial statements and acted as external auditors. He noted that the plaintiff faced compliance issues with KEBS between the years 2015 and 2021, including sugar colour and pH standards, although KEBS did not stop operations. He attributed such issues, together with delays in KRA returns, as signs of mismanagement. He conceded that some of his findings, such as the conclusion that the plaintiff had access to 5,003 ha of land, were based on feasibility studies and not verified data, and that had he seen the 2008 letter indicating inaccessibility of 7,000 acres, his conclusion would have been different. Finally, Mr. Kahi testified that in his first report, some amounts had been marked as payable where supported by evidence, while those with ‘0’ reflected no liability. He acknowledged an error at page 48 of his report showing USD 107,253,324.00. 133. In re-examination, Mr. Kahi testified that from pages 40 to 46 of his first report, no amounts were confirmed as payable, and that the figure reflected at pages 47 and 48 was an error, the correct position being ‘0’. He stated that he did not see the contract between Sofreco and the plaintiff and could not ascertain its role. He noted that KEBS reports had raised compliance issues and that the Sugar Directorate had issued a show cause letter citing eight malpractices which led to withdrawal of the plaintiff’s milling license. He explained that no computation of proportionate costs was undertaken for the two-year closure period. At page 34, he opined that the independence of BDO E.A. was compromised as they were reviewing financial statements they had themselves compiled, contrary to best practice. He added that while their reports were based on audited accounts, the figures therein differed from the plaintiff’s claims, which Grant Thornton had attributed to reclassification. In his https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 16

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analysis, the increase in building costs was not linked to lack of access to land, and a project plan would have been necessary to establish such causation. 134. At the close of the defendants’ case, the court gave directions for filing of written submissions. The plaintiff’s submissions dated 11th March 2025 & 19th May 2025 were filed by the law firm of Muriu Mungai & Company Advocates LLP, whereas the defendants’ submissions dated 14th May 2025 were filed by the Honourable Attorney General. 135. The plaintiff relied on the case of Suzanne Achieng Butler & Others v Redhill Heights Investments Ltd & Imperial Concepts Ltd [2016] KEHC 1313 (KLR) and submitted that that the question of jurisdiction as between the High Court and the ELC ought to be addressed functionally, with reference to the predominant purpose of the dispute. It also cited the Court of Appeal case of Diamond Trust Bank Kenya Ltd v FHH [2022] KECA 769 (KLR) in support of the proposition that, as its claim is for damages arising from breach of contractual and statutory obligations, the High Court is properly seized of jurisdiction. 136. On limitation, the plaintiff contended that section 136 of the repealed Government Lands Act was inapplicable, as the claim does not arise from acts done under that statute. Relying on the case of Rukan Limited v Dubai Bank Kenya Limited & 2 Others [2010] KEHC 3843 (KLR), it argued that the mere reference of the lease to the GLA does not subject this suit to its provisions. The plaintiff further maintained that the breach complained of constituted a continuing injury, the obligation to deliver vacant possession persisting throughout the lease term. Additionally, citing the Court of Appeal case of Kenya Ports Authority v Timberland (K) Limited [2017] KECA 67 (KLR), the plaintiff submitted that by virtue of section 39 of the Limitation of Actions Act, the Defendants are estopped from relying on limitation, their continued engagement having induced the plaintiff to believe that the breach would be remedied. 137. The plaintiff submitted that the defendants’ counterclaim was without merit, as the reliefs sought which included revocation of leases and forfeiture, fall within the exclusive jurisdiction of the Environment and Land Court. It further argued that, even assuming jurisdiction lay with this Court, the statutory notices required had not been issued, nor had any breach of the lease been established. The allegations of failure to maintain fences or erect buildings were also denied as unfounded. The plaintiff asserted that it had proved its case, contending that the defendants breached their statutory duty by permitting the compulsory acquisition of 1,000 hectares of the leased land for mining by Base Titanium Ltd without compensation, contrary to Article 40(3) (b) of the Constitution, the Land Act and the Mining Act. 138. It maintained that the defendants’ reliance on eminent domain was misplaced, as the power could not be exercised arbitrarily or without compensation and further submitted that the obligation to deliver vacant possession of the 15,000 acres was implicit in the covenant for quiet possession and necessary to give business efficacy to the lease, notwithstanding the absence of an express provision. The plaintiff contended that the defendants breached their contractual duty by failing to resettle all squatters as undertaken, and that the doctrine of estoppel barred the defendants from residing from their representations, on which the plaintiff had relied to invest in the project. It further argued that the defendants’ failure to produce the promised site visit report reinforced its case. The Plaintiff maintained that the injunction order issued in Mombasa Petition No. 65 of 2011 did not excuse performance, as possession ought to have been granted years earlier. 139. In any event, it relied on the Court of Appeal case of Postal Corporation of Kenya v Gerald Kamondo Njuki t/a Geka General Supplies [2021] KECA 906 (KLR) and submitted that a subsequent court order cannot absolve an established contractual breach.The plaintiff submitted, relying on Hadley v https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 17

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Baxendale (1854) 9 Exch 214 as applied by the Court of Appeal in the case of Collins v Ogango [2024] KECA 19 (KLR) and the case of Athey v Leonati [1996] 3 SCR 458, that recoverable damages are those arising naturally from a breach or within the contemplation of the parties at the time of contracting. It argued that access to the leased land was the foundation of its project, as confirmed by the feasibility study, information memorandum, and Sugar Directorate licences, all premised on developing a nucleus estate with out-growers. 140. The Plaintiff maintained that the failure to secure vacant possession fatally undermined its business model, preventing completion of irrigation infrastructure and the attainment of adequate cane supply. Accordingly, it concluded that its losses were directly attributable to the defendants’ breach, and that subsequent events such as the 2019 fire or withdrawal of licences were immaterial to its reliance claim for wasted expenditure. 141. On quantum, the plaintiff submitted that its claim of USD 277,664,162.00 was specifically pleaded and supported by expert evidence. It emphasized that it elected to proceed on a reliance basis, seeking wasted expenditure rather than loss of profits, in line with the principle in Soteria Insurance Ltd v IBM United Kingdom Ltd [2022] EWCA Civ 440, which places the burden on the defendant to demonstrate that such expenditure would have been wasted even in the absence of breach, a burden the defendants failed to discharge. 142. The Plaintiff maintained that its expert witness, PW2, based his analysis on audited financial statements and explained each head of loss, whereas the defendants’ expert report by Mr. Peter Kahi contained inconsistencies, omissions, and speculative conclusions, including reliance on outdated feasibility studies and disregard of key evidence such as the Land Adjudication & Settlement Officer’s letter confirming inaccessibility of 7,000 acres. It therefore urged the Court to reject Mr. Kahi’s report and accept PW2’s assessment as a fair reflection of its losses. 143. The defendants submitted that the law of limitation is not a mere technicality but a safeguard for fairness and certainty in the administration of justice, and that both the Government Lands Act (GLA) and the Limitation of Actions Act precluded the pursuit of stale claims. According to the defendants, the plaintiff advanced three causes of action including breach of the Sub-Lease for alleged failure to grant vacant possession, breach of statutory duty arising from the excision and allocation of land to Base Titanium and breach of legitimate expectation arising from correspondence. 144. On the first cause of action, the defendants contended that any alleged breach occurred upon execution of the Sub-Lease on 20th August 2007. Thus, by virtue of section 136(1) of the GLA, the plaintiff was required to bring any claim thereof within one year, or alternatively within six years under section 4(1) of the Limitation of Actions Act. In either case, the claim was time-barred by December 2013. 145. On the second cause of action, the defendants pointed to correspondence as early as April 2008 evidencing the excision of land and by 2013, alternative land had been offered as compensation. Accordingly, the cause of action arose in 2008 and was barred by 2009 under the Government Land Act or by 2014 under the Limitation of Actions Act. 146. As for legitimate expectation, they argued that it was fatally defective for want of specificity in pleadings and evidence, and in any event, no such expectation could arise within a purely contractual relationship. The defendants cited the Court of appeal case of David Stephen Gatune v Headmaster, Nairobi Technical High School & another [1986] KECA 97 (KLR) and further submitted that the plaintiff could not rely on estoppel under section 39 of the Limitation of Actions Act to defeat limitation, as estoppel only arises where there is an express or implied promise not to plead limitation, which was not the case here. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 18

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147. On the contrary, the defendants contended that the plaintiff slept on its rights for over a decade, and equity would not come to the aid of such indolence, as affirmed in authorities such as the Court of Appeal case of Maersk Kenya Limited v Murabu Chaka Tsuma [2017] KECA 204 (KLR). The defendants rejected the plaintiff’s argument that failure to give vacant possession constituted a continuing breach. 148. The defendants relied on the Court of Appeal case of Rift Valley Railways (Kenya) Ltd v Hawkins Wagunza Musonye & Desidery Tyson Otieno [2016] KECA 213 (KLR) and stated that a continuing breach arises only where there is an obligation to maintain an ongoing state of affairs. The duty to give vacant possession, they argued, is a one-off obligation performed upon execution of the lease. Its breach may have continuing effects, but it does not give rise to a continuing cause of action. The plaintiff’s reliance on this doctrine was therefore misconceived and, if accepted, would render the claim premature. 149. Further, to the foregoing, the defendants asserted that they did not breach their contractual and/or statutory duty to the plaintiff. They maintained that there was no express or implied duty to give vacant possession of the leased land to the plaintiff. On the contrary, the sub-lease under clause 7(a) expressly provided for quiet possession. Similarly, section 69(b) of the Government Lands Act implies a covenant that the Lessee shall quietly hold and enjoy the premises without lawful interruption. This, the defendants assert is distinct from vacant possession. The defendants refereed to the House of Lords in London Borough of Southwark and Another v. Mills and Others (A.P.) Baxter (A.P.) v. Mayor etc. of the London Borough of Camden [1999] UKHL 40; [1999] 4 All ER 449; [1999] 3 WLR 939 definition of what amount to quiet possession and stated that PW1 admitted under cross-examination that the squatters did not claim land through the PS Treasury and that the PS did not instruct squatters to settle on the land. Therefore, it cannot be said that the defendants did not discharge their contractual duty to the plaintiff as provided for under clause 7(a). 150. The defendants stated that although the plaintiff claims that it could not implement its project due to the presence of squatters, this is contradicted by evidence. They contended that at the time of the lease, the land was free from squatters, as testified by DW2 and DW5 under cross-examination. Several documents confirm this: sworn testimony by the plaintiff’s Head of Legal in Petition No. 65 of 2011 confirmed there were no residences or effective occupation before consolidation of the land. 151. Affidavits by Dr. Richard Lesiyampe clarified that squatters only encroached after the plaintiff had acquired the lease and minutes of a meeting at Ardhi House in February 2016 also confirmed that the government sub-let the land free of encumbrance and that the squatter problem only started after the plaintiff’s acquisition. Moreover, the plaintiff’s own letter of 25th April 2008 admitted that most squatters had complied with notices to vacate and only a small minority resisted, demonstrating that the plaintiff had received land free of squatters and had the capacity to evict the few that resisted. 152. The defendants submitted that the earliest formal complaint of squatters appears long after execution of the 2007 sub-lease. This was corroborated by the plaintiff’s Head of Legal testimony in ELC Petition No. 43 of 2020 that challenges of encroachment only arose in 2008. They contended that since the plaintiff on its own volition accessed the leased land in blocks, it left room for encroachment by squatters. 153. The defendants asserted that the squatter problem was as a result of the plaintiff’s failure to secure the entire leased land. The defendants relied on the UK Court of Appeal in Capitol Park Leeds PLC v Global Radio Services Ltd [2021] EWCA Civ 995 definition of vacant possession and submitted that vacant possession conventionally entails land free of people, encumbrances, and chattels. Therefore, they argued that the sub-lease could not have intended to pass land free of chattels or interests, as the https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 19

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plaintiff was acquiring a property with a pre-existing sugarcane plantation and factory which had the right to use under clause 7(b) of the sub-lease. 154. The defendants argued that a duty to grant vacant possession cannot be implied. As noted in Shirlaw v Southern Foundaries Ltd [1939] 2 KB 206, an implied term must be so obvious that it goes without saying. The express inclusion of quiet enjoyment in clause 7(a), and the alignment with section 69(b) of the GLA, shows the parties intended that covenant alone. In the premise, the defendants cited the Court of Appeal case of Ali Abdi Mohamed v Kenya Shell & Company Limited [2017] KECA 590 (KLR) and asserted that a legally binding agreement such as the 2007 sub-lease does not depend on the inclusion of economic terms and considerations. 155. On the allegation that the defendants breached their statutory duty to the plaintiff, the defendants referred to the provisions of section 12 of the repealed Land Acquisition Act and sections 111(1B) & (1C) of the Land Act and argued that by electing to take compensation through additional land, the plaintiff is estopped by operation of the law from claiming monetary compensation. 156. The defendants stated that causation is the link between the conduct of the defendant and the consequent damages. Thus, for liability to attach to the defendants, it is necessary to show direct and proximate causation. They cited the House of Lords in Monarch Steamship Co. v Karlshamns Oljefabriker (A/B) [1994] and further stated that the plaintiff may only recover damages for loss where the breach of the contract was the “effective” or “dominant” cause of that loss. 157. In view of the above submissions, the defendants contended that the cause of the plaintiff’s project increased costs if any cannot be attributed to the defendant, but to the plaintiff’s poor management. The above notwithstanding, the defendants argued that even if access to land was an issue, it cannot be the dominant and effective cause of the increase in project costs as is evident in the plaintiff’s own documentation and the testimony of its witnesses. 158. The defendants noted that the plaintiff alleges the project would be bankable if it accessed the entire 15,000 acres and relies on the Information Memorandum issued by the Syndicate Lenders in 2012 and 2015, which neither alludes to nor expressly states the plaintiff’s inability to access the entire 15000 acres leased. 159. Further, the plaintiff also represented to the syndicate lenders that it has good and undisputed title to the leased land and further that there are no encumbrances on any of the assets other than those granted specifically for the purpose of the finance documents. By this, the defendants emphasized that the plaintiff was confirming that it has uninterrupted access to the whole 15,000 acres leased form the defendants. 160. The defendants submitted that their Counterclaim was not for forfeiture but for specific performance under Special Condition 2 of the Sub-Lease, which expressly allowed re-entry in case of default. They argued that this contractual remedy required no notice, and the High Court had full jurisdiction to enforce it. In the alternative, and only if the Court found the relief to be one of forfeiture falling within the jurisdiction of the Environment and Land Court, they invoked the doctrine of “mixed-grill” cases, whereby a Court with jurisdiction over the predominant issue also determines all ancillary claims. 161. They relied on the case of In re Cytonn High Yields Solutions (In Liquidation) (Insolvency Petition E063 of 2021) [2024] KEHC 9136 (KLR) and argued that the issues in the plaint and counterclaim were so intertwined that they could not be severed. However, since the predominant issue was breach of contract, they submitted that the High Court had jurisdiction. 162. The defendants stated that the sublease expressly required submission of building plans within six months and completion of construction within forty-eight months, which terms were never complied https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 20

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with. They contended that the plaintiff’s assertion that the suit land was for cane growing alone was dismissed as frivolous, given the admitted expenditure on factory and infrastructure, and the contractual obligation to construct. 163. With respect to squatters, the defendants submitted that the plaintiff had admitted permitting encroachment by failing to secure the land, contrary to its obligations under clauses 4 & 5 of the SubLease to cultivate, manage, and maintain the land properly. The defendants maintained that it was the plaintiff’s delay in taking possession and failure to act that enabled squatters to enter the leased land, thus the duty to evict them rested solely on the plaintiff. 164. In rejoinder, the plaintiff contended that the defendants’ duty under Clause 7(a) of the Lease to allow it peaceably and quietly to possess and enjoy the suit land subsisted throughout the duration of the lease, such that every day of interference constituted a fresh wrong. 165. Therefore, the defendants’ suggestion that the obligation to give vacant possession arose only once at execution of the lease was erroneous. The Plaintiff further dismissed the defendants’ reliance on the Scottish decision of Warren James (Jewellers) Ltd v Overgate GP Ltd [2010] ScotCS CSOH 57, noting that under common law, an action may be brought during the continuance of a breach, with damages assessed up to the time of trial. 166. The plaintiff submitted that the defendants had expressly admitted at paragraph 20 of their defence that the sub-lease provided for vacant possession of 15,000 acres, thus negating their denial of any contractual duty. Thus, by failing to deliver such land, the defendants breached their contractual obligation to the plaintiff. On breach of statutory duty, the plaintiff argued that under Order 2 Rules 3 and 9 of the Civil Procedure Rules, it was sufficient to plead facts, not the statutory provisions themselves. 167. It maintained that the compensation sought was not for the excised land as such, but for the disruption and cost overruns caused to the plaintiff’s project by the excision and related land unavailability. In causation, the plaintiff rejected the defendants’ theories attributing loss to management inefficiency or delay, stressing that the proximate cause of its wasted expenditure was the lack of access to land. 168. The plaintiff insisted that it had discharged its burden of proof through audited accounts, which constitute primary evidence within section 65 of the Evidence Act, and expert analysis built on those accounts. Additionally, the plaintiff contended that it had mitigated its losses to the extent possible as it pursued the project on the land available while continuously engaging the defendants for the promised 15,000 acres. 169. Further, it borrowed funds to sustain the project, restructured loans, sought to vacate injunctions and resorted to out-growers to supply cane when the nucleus estate was unavailable. The plaintiff relied on the Court of Appeal case of South Nyanza Sugar Company Limited v Oreko [2022] KECA 570 (KLR) and argued that the law did not require it to abandon its investment or act unreasonably to reduce damages. 170. Finally, on the counterclaim, the plaintiff submitted that special condition 2, which the defendants sought to enforce, was contained in the surrendered title to LR No. 5056 and not in the subsisting leases over LR No. 5056/6 or LR No. 27742 and even if it were, the provisions were self-executing and did not require court enforcement. It rejected the argument that the counterclaim could be sustained under the mixed-grill doctrine noting that such doctrine applied to claims brought by a plaintiff straddling different jurisdictions, not to a counterclaim filed by defendants. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 21

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Analysis 171. I have considered and analyzed the evidence above in line with the pleadings filed, together with the written submissions by Counsel for the parties. The issues that arise for determination are – i. Whether this court has jurisdiction to determine the plaintiff’s plaint and the defendants’ counterclaim; ii. Whether the plaintiff’s claim is time barred; iii. Whether the defendant breached its contractual and statutory obligations to the plaintiff; iv. Whether the plaintiff suffered any losses as a result of the said breach; v. Whether the plaintiff is entitled to the reliefs sought in the plaint; and vi. Whether the defendants’ counter claim is merited. Whether this court has jurisdiction to determine the plaintiff ’s plaint and the defendants’ counterclaim. 172. The locus classicus on jurisdiction is the case of Owners of the Motor Vessel “Lillian S’ v Caltex Oil (Kenya) Ltd [1989] KLR 1, where Nyarangi, JA. held that – “ …Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction." 173. The Defendants’ position is that the Plaintiff’s claim has been filed before the wrong forum noting that the dispute between the parties herein, arose from sub-leases of parcels of land between the Plaintiff and the 1st Defendant concerning land use, thus falling under the exclusive jurisdiction of the Environment and Land Court as per the provisions of Section 13(2) (d) & (e) of the Environment and Land Court Act. 174. The Plaintiff on the other hand asserted that the dispute herein is not with respect to occupation and use of land in the strict sense, but on breach of the sub-lease agreements which led to the Plaintiff suffering monetary losses making it a commercial dispute, thus properly filed before this court. 175. This court notes that the Plaintiff also challenged the Defendants’ counterclaim on grounds that the orders sought therein cannot be granted by this court as they are a preserve of the jurisdiction of the Environment and Land Court pursuant to the provisions of Section 13(2) (d) & (e) of the Environment and Land Court Act. The Defendant in contrast submitted that the counterclaim seeks an order for specific performanceprovided for under the Sub- Lease under Special Condition 2. 176. It was argued that since the Plaintiff breached the sub-lease agreements, they triggered a contractual default entitling the Defendants to invoke the remedy of specific performance provided for in the lease, making their counter claim commercial dispute properly filed before this court. 177. On review of the pleadings filed by the parties herein, it is manifest that the Plaintiff’s claim is largely on breach of the sub-lease agreement entered into in June 2007, as a result of which, it is seeking special damages. The Plaintiff’s case is that the Defendants failed to grant them vacant possession of the leased land, thus they were unable to access the entire leased land, as almost 50% of it was inhabited by https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 22

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squatters. As a result, the sugar project it was incorporated to carry out was not properly implemented making them to suffer losses which they now claim from the Defendants. 178. The Defendants on the other hand in their counterclaim aver that the Plaintiff’s breached the 2007 lease agreement by failing to maintain and repair all fences, boundaries and beacons over the leased land. Consequently, squatters encroached into the leased land. 179. With respect to the lease over L.R. No. 5056/R, the Defendant stated that special condition 2 of the said lease required the Plaintiff to within six months of entering into the lease, submit in triplicate all building plans, drawings, elevations and specifications of the buildings it intended to construct on the leased land and to ensure that such buildings are constructed within forty eight months of the issuance of the leasehold. 180. However, to date, the Plaintiff has neither submitted the building plans, drawings and elevations nor constructed any buildings on the leased land as required, hence being in breach of the lease agreement. The Defendant also maintained that vacant possession over L.R. No. 5056/R was granted to the plaintiff in 2017, but the Plaintiff delayed to take possession of the said parcel of land, leaving it vulnerable to encroachment by squatters. 181. In addition to the foregoing, it is manifest that the reliefs sought in the counter claim are not for forfeiture in the strict sense, but rather for the court to declare that the Plaintiff is in breach of the sublease agreements entered into in 2007 and in 2017, the said sub-leases to be declared terminated and an order requiring the Plaintiff to vacate the parcels of land that had been leased to it pursuant to the said sub-leases. 182. I am of the considered view that in order to determine which court between the High Court and the Environment & Land Court has the requisite jurisdiction to determine the dispute between the parties herein, this court will have to apply thepredominant purpose test and/or dominant issue test which was elaborated by the court in Suzanne Achieng Butler & 4 Others vs Redhill Heights Investments Limited & Another [2016] eKLR as hereunder “ When faced with a controversy whether a particular case is a dispute about land (which should be litigated at the ELC) or not, the Courts utilize the Pre-dominant Purpose Test: In a transaction involving both a sale of land and other services or goods, jurisdiction lies at the ELC if the transaction is predominantly for land, but the High Court has jurisdiction if the transaction is predominantly for the provision of goods, construction, or works. The Court must first determine whether the pre-dominant purpose of the transaction is the sale of land or construction. Whether the High Court or the ELC has jurisdiction hinges on the predominant purpose of the transaction, that is, whether the contract primarily concerns the sale of land or, in this case, the construction of a townhouse." 183. I am cognizant of the Supreme Court’s finding in the case of Republic v Karisa Chengo and 2 Others SCK Petition No. 5 of 2015 [2017] eKLR where the Supreme Court emphasized that the High Court, the Environment and Land Court, and the Employment and Labour Relations Court are three different and autonomous courts which exercise different and distinct jurisdictions. Furthermore, Article 165(5) of the Constitution precludes the High Court from entertaining any matters that fall within the jurisdiction of the other two equal status courts. 184. The jurisdiction of the Environment and Land Court Act is provided for under section 13 of the Environment & Land Court Act which states that - https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 23

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1. The Court shall have original and appellate jurisdiction to hear and determine all disputes in accordance with Article 162(2) (b) of the Constitution and with the provisions of this Act or any other law applicable in Kenya relating to environment and land. 2. In exercise of its jurisdiction under Article 162(2)(b) of the Constitution, the Court shall have power to hear and determine disputes – a. relating to environmental planning and protection, climate issues, land use planning, title, tenure, boundaries, rates, rents, valuations, mining, minerals and other natural resources; b. relating to compulsory acquisition of land; c. relating to land administration and management; d. relating to public, private and community land and contracts, choses in action or other instruments granting any enforceable interests in land; and e. any other dispute relating to environment and land. 3. Nothing in this Act shall preclude the Court from hearing and determining applications for redress of a denial, violation or infringement of, or threat to, rights or fundamental freedom relating to a clean and healthy environment under Articles 42, 69 and 70 of the Constitution. 4. In addition to the matters referred to in subsections (1) and (2), the Court shall exercise appellate jurisdiction over the decisions of subordinate courts or local tribunals in respect of matters falling within the jurisdiction of the Court. 5. In exercise of its jurisdiction under this Act, the Court shall have power to make any order and grant any relief as the Court deems fit and just, including … 185. From the foregoing, it is manifest that both the claim by the Plaintiff and the Defendants arise from breach of contract. For the Plaintiff’s case, in as much as it arises from breach of contract, the Plaintiff does not seek orders and/or reliefs with respect to land use or title to land but for monetary compensation for the losses suffered as a result of the breach. 186. For this reason, in applying the dominant issue test, the Plaintiff’s claim is purely commercial in nature, which is outside the purview of the Environment & Land Court. I therefore hold that this court has the requisite jurisdiction to hear and determine it. 187. The Defendant’s claim on the other hand is on enforcement of the sub-lease agreement especially since it seeks orders declaring that the Plaintiff is in breach of the sub-lease agreements and that the leases are terminated, and an order requiring the plaintiff to vacate the leased parcels of land. In view of the foregoing, this court finds that while the Defendants’ counterclaim touches on leased parcels of land, the predominant purpose of both the Plaintiff’s claim and the Defendants’ counterclaim is contractual enforcement of the sub-leases rather than adjudication of issues of title, tenure, or land administration. 188. The remedies sought by both parties flow from alleged breaches of contractual obligations, and not from any contest over ownership or use of land in the strict sense envisaged under section 13(2) of the Environment and Land Court Act. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 24

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189. In Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others [2017] KECA 79 (KLR), the Court of Appeal drew a clear distinction between contracts that are incidental to the use of land and those that fall within the civil jurisdiction of the High Court, by holding that “ Such contracts, in our view, ought to be incidental to the ‘use’ of land; they do not include mortgages, charges, collection of dues and rents which fall within the civil jurisdiction of the High Court.” 190. By parity of reasoning, a dispute grounded on contractual obligations in a sub-lease such as rent, breach, or termination, does not in itself fall within the ELC’s exclusive jurisdiction. I therefore find that the dispute is predominantly commercial in nature and falls within the jurisdiction of this court. 191. Furthermore, even if this court were to find that the Defendants’ counterclaim raises issues which, in isolation, might fall under the purview of the Environment and Land Court, the Plaintiff’s claim and the Defendants’ counterclaim are so intertwined that their separation would not only occasion multiplicity of suits, but also risk inconsistent findings by two parallel courts to warrant determination by the same court. This is because, before the said claims are determined, courts would first have to determine whether there was a breach of the sub-lease agreements and if so, by which party. 192. In the circumstances, and guided by the principle that a court seized of the main cause may also determine ancillary or incidental issues necessary for the just and expeditious resolution of the dispute, I find that this court has jurisdiction to determine both the Plaint and the counterclaim. To direct the parties to pursue their claims before separate fora would occasion multiplicity of suits, and the risk of conflicting decisions. This approach accords with the overriding objective under sections 1A and 1B of the Civil Procedure Act and Article 159(2) (b) of the Constitution, which enjoin courts to facilitate the efficient and proportionate disposal of cases. Whether the plaintiff ’s claim is time barred 193. The Defendants raised the plea that the Plaintiff’s claim is statute-barred under section 136 of the Government Lands Act on the basis that the alleged cause of action arose upon execution of the sublease in 2007, when the Plaintiff took possession of the land, or at the latest in 2012 when part of the land was allegedly excised for mineral exploitation. The defendants accordingly urged this court to find that the Plaintiff’s suit filed on 1st April 2022 is incompetent for having been brought outside the prescribed period. 194. The Plaintiff on the other hand argued that the cause of action herein relates to a continuing injury and is therefore not caught by limitation. It further contended that its right of action could not crystallize until final determination of Mombasa Petition No. 65 of 2011, which had tied its hands through injunctive orders restraining access to the suit land until 13th March 2018 and was only dismissed on 13th January 2022. 195. Upon perusal of the pleadings filed herein, I opine that the Plaintiff’s claim is anchored on alleged breach of statutory and contractual duties to deliver vacant and peaceful possession of the leased land. It is now well settled that such an obligation is not discharged once and for all on the date of execution of the sub-lease, but is a continuing obligation for the entire term of the lease. 196. Therefore, where the lessee remains unable to access the land by reason of encroachment, injunctions, or compulsory excision and the issue is brought to the attention of the lessor and the lessor on several instances tries to rectify the situation, it cannot be said that the breach occurred on the lessees first https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 25

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attempt to access the leased land, but once the issue was raised with the lessor, anytime the lessor promised to remedy the issue but failed, constitutes a continuing breach. 197. Even though the sub-lease agreements may have been written and/or contemplated under the provisions of the Government Land Act, the Plaintiffs claim having been identified as that arising out of a contractual breach, ought to have been filed within 6 years from when the cause of action arose as provided for under section 4(1) of the Limitation of Actions Act which state as follows The following actions may not be brought after the end of six years from the date on which the cause of action accrued - 198. a. actions founded on contract; b. actions to enforce a recognizance; c. actions to enforce an award; d. actions to recover a sum recoverable by virtue of a written law, other than a penalty or forfeiture or sum by way of penalty or forfeiture; e. actions, including actions claiming equitable relief, for which no other period of limitation is provided by this Act or by any other written law. In the premise, it is evident that no one has a right to bring a suit based on contract after the lapse of six years. The Court of Appeal in the case ofDivecon v Samani [1995-1998] EA 48 in addressing the question of Limitation of actions Act held that “ ….to us, the meaning of the wording of section 4 (1) is clear beyond any doubt. It means that no one shall have the right or power to bring after the end of six years from the date on which a cause of action accrued, an action founded on contract. The corollary to this is that no court may or shall have the right or power to entertain what cannot be done namely, an action that is brought in contract six years after the cause of action arose or any application to extend such time for the bringing of the action. A perusal of Part III shows that its provisions do not apply to actions based on contract. In light of these clear statutory provisions, it would be unacceptable to imply as the learned Judge of the Superior Court did, that „„the wording of section 4 (1) of the Limitation of Actions Act (Chapter 22) suggests a discretion that can be invoked?" 199. In addressing whether the Plaintiff’s suit is statute-barred, the Court must first determine the point at which the cause of action arose. The sub-lease over the suit land was executed on 20th August 2007. It is not disputed that, by letters dated 25th April 2008 to the District Land Adjudication and Settlement Officer and 19th July 2008 to the Permanent Secretary, Ministry of Agriculture, the Plaintiff raised concern that 2,800 acres out of the 15,000 acres leased had already been allocated to Tiomin (K) Limited under a mining lease, while a further 4,200 acres were unsuitable for sugarcane cultivation. 200. The Plaintiff therefore requested replacement of approximately 7,000 acres with land of equivalent size suitable for sugarcane. Significantly, this complaint was made within one year of execution of the lease, and thus within the limitation periods prescribed under section 4(1) of the Limitation of Actions Act. 201. Following the Plaintiff’s complaint of 25th April 2008, the Ministry of Lands, by a letter dated 7th May 2008 addressed to the Director of Land Adjudication and Settlement, confirmed that the plaintiff had been allocated 15,000 acres within the Ramisi Phase I Settlement Scheme. The Ministry further noted https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 26

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that the balance of Phase I land was earmarked for allocation to squatters, some of whom were to be relocated from the Plaintiff’s parcel. 202. It was also confirmed that part of the land allocated to the Plaintiff had already been allocated to Tiomin Kenya Limited. During the subsequent squatter screening exercise, it emerged that approximately 980 squatters had been in occupation for over 40 years and refused to vacate, claiming the land as their ancestral home. The vetting committee therefore recommended that these squatters be allowed to remain, and that the Plaintiff be compensated with an equivalent 7,000 acres in Ramisi Phase II in place of the portions taken up by Tiomin and the squatters. 203. It is not disputed that between 2008 and the filing of this suit, the Plaintiff was allocated parcels of land known as L.R. Nos. 5004/86 and 12335/4 in an attempt to remedy the situation. However, these parcels were discovered to be subject to double allocations. The Plaintiff was subsequently required to surrender them, and in exchange was allocated L.R. No. 5056/6. 204. That parcel, however, was occupied by squatters and became the subject of litigation in Kwale ELC Petition No. 43 of 2020. In a judgment delivered on 27th January 2023, Lady Justice Dena confirmed the presence of squatters on L.R. 5056/6 and directed the Ministry of Lands, in consultation with the National Land Commission, to identify and relocate the genuine squatters residing thereon. 205. From the foregoing, it is clear that since execution of the 2007 sub-lease agreement, the Plaintiff has never enjoyed full access to the leased land, a fact consistently brought to the attention of the Defendants. The Defendants, in turn, undertook several steps to compensate the plaintiff by allocating alternative parcels equivalent in size to the portions encumbered by squatters. 206. It is also undisputed that litigation over L.R. No. 5056/6 was concluded only in 2023 and, even then, the squatters remained in occupation. In these circumstances, the cause of action for denial of possession cannot reasonably be said to have crystallized or become enforceable at the time of execution of the 2007 sub-lease. 207. The Court is therefore persuaded that the foregoing facts demonstrate that the alleged breaches did not amount to isolated or completed acts, but rather constituted continuing wrongs. The doctrine of continuing injury is well settled. The Court of Appeal in the case of The German School Society & another v Ohany & another [2023] KECA 894 (KLR) in addressing this principle held that; “ The principles underlying continuing wrongs and recurring/ successive wrongs have been applied to service law disputes. “A continuing wrong” refers to a single wrongful act which causes a continuing injury. “Recurring/successive wrongs” are those which occur periodically, each wrong giving rise to a distinct and separate cause of action. The Supreme Court of India in Balakrishna S.P. Waghmare v Shree Dhyaneshwar Maharaj Sansthan AIR 1959 SC 798 explained the concept of continuing wrong (in the context of the Indian Limitation Act) as follows: “It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection, it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury." ............... https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 27

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Also, the Supreme Court of India in M. Siddiq v Suresh Das (2020) 1 SCC 1 observed: 343. “…. A continuing wrong arises where there is an obligation imposed by law, agreement or otherwise to continue to act or to desist from acting in a particular manner. The breach of such an obligation extends beyond a single completed act or omission. The breach is of a continuing nature, giving rise to a legal injury which assumes the nature of a continuing wrong. For a continuing wrong to arise, there must in the first place be a wrong which is actionable because in the absence of a wrong, there can be no continuing wrong. It is when there is a wrong that a further line of enquiry of whether there is a continuing wrong would arise. Without a wrong there cannot be a continuing wrong. A wrong postulates a breach of an obligation imposed on an individual, whether positive or negative, to act or desist from acting in a particular manner. The obligation on one individual finds a corresponding reflection of a right which inheres in another. A continuing wrong postulates a breach of a continuing duty or a breach of an obligation which is of a continuing nature. [...] Hence, in evaluating whether there is a continuing wrong within the meaning of Section 23, the mere fact that the effect of the injury caused has continued, is not sufficient to constitute it as a continuing wrong. For instance, when the wrong is complete as a result of the act or omission which is complained of, no continuing wrong arises even though the effect or damage that is sustained may endure in the future. What makes a wrong, a wrong of a continuing nature is the breach of a duty which has not ceased but which continues to subsist. The breach of such a duty creates a continuing wrong and hence a defence to a plea of limitation." 208. The import of the foregoing is that a wrong can only be deemed continuing where the breach of duty itself persists. It is equally well established that where a cause of action accrues and the party liable subsequently acknowledges the claim, the right of action accrues from the date of such acknowledgment. 209. In the present case, the allocation of L.R. No. 5056/6 to the Plaintiff in 2017, as compensation for the portions of land encumbered by squatters and excised in favour of Tiomin Kenya Limited for mining, amounted to such acknowledgment. Consequently, under section 4 of the Limitation of Actions Act, the suit filed in 2022 was brought within the statutory six-year period, which would have lapsed in 2023. 210. For the foregoing reasons, the Court finds and holds that the Plaintiff’s claim is not time-barred. Whether the defendant breached its contractual and statutory obligations to the plaintiff. 211. The facts material to this dispute are largely uncontested. It is not in dispute that the Plaintiff was granted a sublease of L.R. No. 27742 for a term of 99 years commencing on 1st June 2007, for purposes of establishing a sugar project comprising sugarcane farming, irrigation infrastructure, power generation facilities, and related activities. 212. Under clause 7(a) of the 2007 lease, the Plaintiff was expressly guaranteed quiet enjoyment and peaceful possession of the leased parcels of land. However, the evidence on record demonstrates that, notwithstanding the grant of the lease, the Plaintiff’s occupation and use of the land was persistently disrupted. From the very outset, approximately 5,816 acres of the leased land remained in the occupation of squatters who were never relocated. 213. Moreover, in 2012, the Defendants excised approximately 1,000 hectares of the leased land and allocated it to Base Titanium Ltd for mining purposes without compensating the Plaintiff. The parcel https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 28

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subsequently allocated to the Plaintiff in compensation was, in turn, encumbered by squatters and therefore unsuitable for the intended project. 214. I am therefore of the considered view that the Plaintiff cannot be said to have enjoyed quiet possession and peaceful occupation of the leased parcels of land. From the time it acquired the lease, the Plaintiff has been embroiled in litigation with squatters occupying portions of the land and has been repeatedly shifted from one parcel to another under the guise of compensation for land already encumbered. 215. Further to the foregoing, this court agrees with the Defendant that the sub-lease agreements did not expressly obligate the Defendant to deliver vacant possession to the Plaintiff. However, by acknowledging the Plaintiff’s claim, as already established, and by taking steps and making arrangements to compensate the Plaintiff with alternative land equivalent to that occupied by squatters, the Defendant created a legitimate expectation on the part of the Plaintiff that such compensation would indeed be provided. 216. The Supreme Court of Kenya in Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others [2014] KESC 53 (KLR) held that; “ An instance of legitimate expectation would arise when a body, by representation or by past practice, has aroused an expectation that is within its power to fulfil. A party that seeks to rely on the doctrine of legitimate expectation, has to show that it has locus standi to make a claim on the basis of legitimate expectation" 217. A useful exposition of the doctrine of legitimate expectation is found in the South African case of South African Veterinary Council v Szymanski 2003 (4) SA 42 (SCA) at paragraph 28, where the court held that The law does not protect every expectation but only those which are 'legitimate'. The requirements for legitimacy of the expectation include the following: 218. i. The representation underlying the expectation must be 'clear, unambiguous and devoid of relevant qualification': De Smith, Woolf and Jowell (op cit [Judicial Review of Administrative Action 5th ed] at 425 para 8-055). The requirement is a sensible one. It accords with the principle of fairness in public administration, fairness both to the administration and the subject. It protects public officials against the risk that their unwitting ambiguous statements may create legitimate expectations. It is also not unfair to those who choose to rely on such statements. It is always open to them to seek clarification before they do so, failing which they act at their peril. ii. The expectation must be reasonable: Administrator, Transvaal v. Traub (supra [1989 (4) SA 731 (A)] at 756I - 757B); De Smith, Woolf and Jowell (supra at 417 para 8-037). iii. The representation must have been induced by the decision- maker: De Smith, Woolf and Jowell (op cit at 422 para 8-050); Attorney- General of Hong Kong v. Ng Yuen Shiu [1983] 2 All ER 346 (PC) at 350h - j. iv. The representation must be one which it was competent and lawful for the decision-maker to make without which the reliance cannot be legitimate: Hauptfleisch v. Caledon Divisional Council 1963 (4) SA 53 (C) at 59E - G.” The Supreme Court in Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others (supra) distilled the principles of legitimate expectation as follows a. There must be an express, clear and unambiguous promise given by a public authority; https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 29

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b. The expectation itself must be reasonable; c. The representation must be one which it was competent and lawful for the decision-maker to make; and d. There cannot be a legitimate expectation against clear provisions of the law or the Constitution.” 219. It is not in dispute that the Defendants, through several letters including one dated 7th May 2008, expressly assured the Plaintiff that it would be compensated by being allocated alternative land in place of the portions of the leased parcels occupied by squatters. In furtherance of this assurance, the Defendants did allocate several parcels to the Plaintiff, however these parcels were subsequently found to be either subject to double allocation, occupied by squatters, or embroiled in litigation. 220. As was observed in the case of Keroche Industries Limited v Kenya Revenue Authority & 5 others [2007] KLR 240, legitimate expectation may arise where a public authority, through its representations or conduct, induces a party to believe that it will act in a certain manner, and failure to honor such assurance amounts to an abuse of power and a breach of fairness. 221. In the circumstances, I am satisfied that by issuing letters expressly assuring the Plaintiff of compensation for the portions of the leased land encumbered by squatters, and by subsequently allocating alternative parcels for that very purpose, the Defendants created a clear and enforceable legitimate expectation on the part of the Plaintiff that it would indeed be compensated. The failure to honor this commitment constitutes a breach of that legitimate expectation. 222. The Defendants contended that the Plaintiff had been granted vacant possession in 2007 and that any subsequent encroachment by squatters was attributable to the Plaintiff’s failure to fence and secure the land. I am not persuaded by this argument since it is not in contest that the lease only required the Plaintiff to maintain and repair existing fences and boundaries, it did not impose an obligation to erect new fencing where none had been provided. 223. More fundamentally, the covenant for quiet enjoyment imposes a positive duty upon the lessor to ensure that the lessee is not substantially deprived of the benefits of the lease by the acts of the lessor or of third parties deriving rights through the lessor. In Kwale ELC Petition No. 43 of 2020, it was expressly found that the squatters occupying L.R. No. 5056/6 had been issued with offer letters by the Government but failed to act upon them within the stipulated ninety (90) days. Consequently, they could not claim any equitable interest in the said parcel of land. 224. PW1 testified that the Government, through the Defendants, was bound under the lease to guarantee the Plaintiff quiet and peaceful possession of the demised premises. He asserted that the denial of full and unhindered access to the land, whether occasioned by the occupation of squatters or by the excision and reallocation of portions of the leased area, constituted a breach of contract. 225. This evidence was supported by the courts findings in Kwale ELC Petition No. 14 of 2021 and Petition No. 65 of 2011. The Plaintiff further established that the problem of encroachment by squatters was long-standing and had been expressly acknowledged by the Defendants on several occasions. Indeed, in Kwale ELC Petition No. 14 of 2021, the Defendants admitted that substantial portions of the land were occupied by squatters. 226. Moreover, in a judgment delivered on 27th January 2023, the Environment and Land Court confirmed the continued presence of squatters on L.R. No. 5056/6 and directed the Ministry of Lands, in consultation with the National Land Commission, to undertake remedial measures. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 30

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227. In the circumstances, and upon careful evaluation of the evidence, I am satisfied that the Plaintiff has proved on a balance of probabilities that the Defendants failed to accord it quiet and peaceful possession of the leased land as covenanted. The subsequent actions of excising portions of the land, reallocating them, and offering alternative parcels that were unsuitable or otherwise encumbered, only served to compound and aggravate this breach. Accordingly, the Plaintiff’s claim is firmly anchored in breach of contract. 228. On the totality of the evidence, I am satisfied that the Defendants breached the sublease agreement dated 20th August 2007 and their statutory obligations. Whether the plaintiff suffered any losses as a result of the said breach 229. The cumulative effect of these breaches was severe. The Plaintiff claimed that it was unable to establish its irrigation infrastructure or cultivate cane at the scale envisaged. The milling plant remained grossly underutilized and the Plaintiff claims to have incurred losses amounting to USD 277,664,162. These losses, the plaintiff argued, were a direct consequence of the Defendants’ failure to deliver the leased property free from encumbrance and to ensure quiet possession as covenanted under the lease. The Defendants on the other hand asserted that the Plaintiff’s losses were self-inflicted or due to financial mismanagement. 230. In considering the Plaintiff’s claim for losses, it is apparent that there is a clear causal connection between the Defendants’ breach of their contractual obligations and the financial losses suffered. This court has already found that the evidence adduced establishes that the Defendants failed to ensure quiet and peaceful possession of the leased land by allowing squatters to occupy substantial portions and by excising land for allocation to third parties without proper compensation. 231. As a result, the Plaintiff was unable to fully implement its sugar project, including the development of irrigation systems, power generation facilities, and large-scale cane production. This disruption prevented the Plaintiff from deriving the anticipated economic benefits from the leased land and resulted in substantial wasted expenditure. The losses claimed are therefore foreseeable and directly attributable to the Defendants’ breach. 232. This court finds no merit in the Defendants’ suggestion that the Plaintiff’s losses were self-inflicted or due to financial mismanagement. This court appreciates that while the Plaintiff may have faced internal challenges, the direct and proximate cause of its inability to implement the project as planned was the Defendants’ failure to secure and deliver full vacant possession of the leased land and their excision of a substantial portion thereof without proper compensation. 233. Accordingly, this court finds that the Plaintiff has adduced sufficient evidence to establish on a balance of probabilities that the breach caused the financial and operational losses claimed. The availability of land was central to the success of the Plaintiff’s core business in operating the sugar factory. 234. Having so found, the Plaintiff is entitled to special damages to the extent proved, together with interest and costs of the suit. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 31

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Whether the plaintiff is entitled to the reliefs sought in the plaint 235. It is manifest that the reliefs sought by the plaintiff are in the nature of special damages. The Court of Appeal in the case of Jogoo Kimakia Bus Services LTD v Electrocom International LTD [1992] KECA 48 (KLR) defined what constitutes special damages as follows; "Special damages are the precise amount of pecuniary loss which the claimant can prove to have followed from the particular facts set out in the pleadings. They must be specifically pleaded." 236. It is now well settled that special damages must not only be specifically pleaded but also strictly proved. It is not in contest that the Plaintiff specifically pleaded special damages in the sum of USD 277,664,162.00 arising primarily from alleged delays in accessing leased land, partial utilization of the project site, and consequential financial losses. 237. This court notes that instead of production of receipts, invoices and bank account statements, the Plaintiff produced an expert report prepared by Grant Thornton dated January 2022. The court further notes that the said report was produced by PW2 an expert witness who testified that the said report was prepared by professional accountants and business valuers and was subjected to crossexamination. 238. The Court has carefully considered the testimony of the Plaintiff’s witnesses, the Grant Thornton report, and the Defendants’ evidence, including the PKF report and testimony of the Defendants’ witnesses. PW1 confirmed the presence of squatters and certain delays in accessing the land. He asserted losses amounting to USD 277,664,162, largely due to incomplete utilization of the leased land. His evidence relied on the Grant Thornton report, internal business plans, and his own testimony. He however admitted that he had no prior experience running a sugar company. PW1 further acknowledged that other contributing factors such as the 2019 factory fire and KEBS compliance issues, were not excluded from the calculations. 239. PW2 who was the plaintiff’s expert witness prepared the reports on special damages using a methodology that compared actual costs incurred versus projected costs, attributing differences to lack of land access. However, PW2 admitted that the reports relied entirely on data supplied by the plaintiff without independent verification. This court notes that PW2 also stated that he did not review invoices, receipts, or source documentation and that he could not confirm the accuracy of ledgers or financial models. PW2 testified that other factors affecting the project such as the factory fire, project delays, and mismanagement, were not accounted for. Additionally, PW2 admitted that he did not present supporting documents in support of certain claimed costs, including advisory fees, Sofreco payments, and interest. 240. The Defendants’ witnesses on the other hand testified that the Plaintiff was granted vacant possession free of squatters in 2007-2008. The Government undertook steps to resettle squatters and allocated alternative land but the Plaintiff had obligations to maintain fences and protect the land from trespassers. 241. It was also asserted that some claimed losses were attributable to mismanagement, KEBS compliance issues, project delays, and other unrelated factors, not Government breaches. The Defendants’ expert report on the other hand demonstrated that the Plaintiff’s claims were inflated, duplicated, or unsupported, and that certain project costs were not caused by lack of land access. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 32

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242. From the record, this court opines that the Grant Thornton report detailed the financial impact of the Defendants’ breaches, including additional project costs incurred due to interruptions and underutilization of installed infrastructure, operational losses arising from restricted access to irrigable land, interest, hedging, and restructuring costs occasioned by delays and disruption of the project, penalties and associated financing costs tied to syndicated loan obligations. 243. The Defendants challenged the report as exaggerated, based on flawed assumptions, and unreliable. The Plaintiff’s claim is based on the Grant Thorton Reports produced by PW2. On the other hand, the Defendants produced their expert report produced by DW6 rebutting the Plaintiff’s report in its entirety. The court on being faced with two conflicting expert reports stated as hereunder in the case of Kenya Ports Authority v Modern Holdings [E.A] Limited [2017] KECA 293 (KLR); “ We agree with the learned Judge that in the event of conflicting expert evidence, it is the duty of the court to consider the evidence and form its own opinion. However, in so doing the court must give cogent reasons why it prefers the evidence of one expert over the other.” 244. The onus of this court is to consider the reports and give reasons as to why it accepts or rejects one report over the other, or accepts both reports. In relying on the report, the court must consider the evidence therein together with the rest of the evidence on record. 245. The Defendants contend that PW2 relied on audited accounts without cross checking those reports with the source documents such as ledgers, receipts, invoices and delivery notes. The Defendants submitted that the failure by the Plaintiff to produce primary documents relied on by the expert was a willful attempt to withhold evidence that is averse to its claim. 246. The Defendants relied on the case of Sofie Feis Caroline Lwangu v Benson Wafula Ndote [2021] eKLR, in support of the argument that a party seeking to rely on any documentary evidence must produce its primary documents. It was submitted that the audited accounts are not primary documents, hence any claim based on secondary documents must be rejected. 247. On the other hand, the Plaintiff in its submissions at paragraph 316 relied on the authorities as listed hereunder indicating that courts have held that audited accounts without the source documents are proof of their contents. (See Kimatu Mbuvi t/a Kimatu Mbuvi & Bros v Augustine Munyao Kioko [2006] KECA 130 (KLR), Mary GAthoni Weru v Mt. Kenya Bottlers Limited [2021] KEHC 8904 (KLR) and Michael Gachie Mwarangu v Peter Gichuru Maina & 2 others [2016] KEHC 1252 (KLR). 248. In addition, the expert report was prepared by an independent external audit firm. In the Philippine case of Gerino Yukit & others v Tritran Inc & others [G.R. No. 184841, November 21, 2016], (source: elibrary.judiciary.gov.ph), in giving weight to the holding that a company economic status may be established through the submissions of financial statements, and if prepared by an independent external auditor will be more credible, the Supreme Court made reference to the case of Manatad v. Philippine Telegraph and Telephone Corp., where the court stated as follows; “ That the financial statements are audited by independent auditors safeguards the same from the manipulation of the figures therein to suit the company's needs. The auditing of financial reports by independent external auditors are strictly governed by national and international standards and regulations for the accounting profession. It bears to stress that the financial statements submitted by respondent were audited by reputable auditing firms. Hence, petitioner's assertion that respondent merely manipulated its financial statements to make it appear that it was suffering from business losses that would justify the retrenchment is incredible and baseless. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 33

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In addition, the fact that the financial statements were audited by independent auditors settles any doubt on the authenticity of these documents for lack of signature of the person who prepared it. As reported by SGV & Co., the financial statements presented fairly, in all material aspects, the financial position of the respondent as of 30 June 1998 and 1997, and the results of its operations and its cash flows for the years ended, in conformity with the generally accepted accounting principles.” 249. Here, the expert report relied on the audited accounts to establish the economic/ financial status of the Plaintiff company. I find that the Plaintiff’s Expert Report that relied on the Plaintiff’s audited accounts reflected the Plaintiff’s true financial position. I therefore dismiss the arguments by the Defendants that the Plaintiffs reports were qualified for lack of source documents. 250. The Court of Appeal in the case of Heineken East Africa Import Company Limited & another v Maxam Limited (Civil Appeal E403 & E404 of 2020 (Consolidated)) [2024] KECA 625 (KLR) in accepting a valuation report as sufficient proof for a claim for special damages affirmed that where a party adduces cogent expert evidence on financial loss, and the same is not displaced by the opposing party, such evidence constitutes adequate proof of special damages. 251. The Supreme Court of Kenya in the case of Attorney General v Zinj Limited [2021] KESC 23 (KLR) - held as follows with respect to admissibility of expert evidence as proof of special damages “ Having determined that the respondent’s right to property had been violated by the Government, the trial court, and later the appellate court, made orders for compensation in favour of the respondent. Both courts granted special and general damages. As we have arrived at a similar conclusion, we see no reason to interfere with the findings of the two superior courts in this regard. We take note of the appellant’s submission to the effect that in arriving at the quantum of special damages, the trial court placed reliance upon a Valuation Report by a private valuer. Such Report, in the view of the appellant, was not only unreliable, but could very likely have been tailored to support the respondent’s claim. However, in answer to this court’s question as to whether, the appellant had tabled in court, a Government Valuation Report to counter the contents of the impugned one, counsel for the appellant stated that no such Report was ever tabled at the trial court. The main basis upon which special damages can be granted for the deprivation of property, is the market value of the said property. In case of general damages, a court of law exercises discretion guided by the circumstances of each case. In granting special damages, the trial judge was guided by the Valuation Report tabled by the respondent. In the absence of a contrary report on record, we have no basis upon which to interfere with the award. Even if there had been one such other report, our jurisdiction to interfere would still have been largely circumscribed, unless the award had clearly ignored the fundamental principles of valuation as demonstrated by the counter-report 252. In the premise, and in line with the wasted expenditure principle stated by the court in the case of Soteria Insurance Ltd v IBM United Kingdom Limited [2022] EWCA Civ 440, the burden of proof shifts to the Defendant to demonstrate that the expenditure would have been wasted even in the absence of breach. The Plaintiff has shown that its expenditure was rendered futile due to the Defendant’s breach. This court finds that the arguments by the Defendants failed to discharge that burden having considered the explanations and basis of the Plaintiff’s expert report. 253. The expert report by the Plaintiff having been accepted, the next issue for determination is whether or not the Plaintiff has proved special damages of USD 277,664,162.00 to the required standard. The https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 34

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Plaintiff itemized the claim in the Summary of Costs at pg. 503 of the Plaintiff’s Trial Bundle. Each item must be examined to establish that it meets the standard of proof. a. 254. Additional project costs [2013 to 2016] at pg 511 The claim by the Plaintiff is USD 94,165,126.00 for additional project costs. This includes the claim for USD 8,556,220.00 as VAT, GOK Reimbursable Costs of USD 10,013,276.00 and Creditors and Overdraft at USD 703,649.00 which is said to have been attributable to the Defendants breach. I do agree with the Defendant’s analysis that these claims must be rejected as there is no link to the breach. The claim for VAT, GOK Reimbursable Costs and Creditors and Overdraft is disallowed. Under additional project costs, only USD 74,891,982.00 is allowed. b. Additional project & operational costs (Shareholder funded) [2016 to 2021] at pg 513 255. From the company’s balance sheet from 2016 to 2021, the shareholders injected an additional Kshs. 5,668,260,000 equivalent to USD 50,445,202.00, as per the evidence of PW2. It is not in dispute that there were factors that affected the Plaintiff’s operations in year 2019 and 2020 which included the fire incidence. It is therefore not justified why the addition of Kshs. 654,426,000.00 for years 2019 and Kshs. 2,369,291,000.00 for 2020 is claimed in full. 256. Under the wasted expenditure principle, it was the Defendants’ duty to show how the other factors affected the 2019 and 2020 figures. The Defendants did not do that. I however do not take that to mean the Plaintiff must get a windfall nor do I take it to mean that the entire claim for 2019 and 2020 must be rejected. 257. In assessing such difficult losses, Kenya Wildlife Service v Sea Star Malindi Limited [2024] KECA 364 (KLR) guided that; “ The court is aided in this task by what may be called the principle of reasonable assumptions – namely, that it is fair to resolve uncertainties about what would have happened but for the defendant's wrongdoing by making reasonable assumptions which err if anything on the side of generosity to the claimant where it is the defendant's wrong doing which has created those uncertainties." 258. Being so guided, I hereby exercise the court’s discretion and reduce the incremental costs for year 2019 and 2020 by 50%. The incremental costs for year 2017 and 2018 is allowed in full as this is attributed to the lack of access to land as a result of the breach by the Defendants. The total incremental costs are therefore allowed at Kshs. 4,156,401,500.00 being USD 36,704,358.00 at an exchange rate of Kshs. 113.24. USD 36,704,358.00 is allowed. c. Interest on shareholder funded additional projects at pg. 513 259. It was PW2’s evidence that if the USD 50,445,202.00 injected by the shareholders had been invested in interest bearing instruments such as government bonds, commercial paper, dollar deposit account, interest at commercial rates would accrue. This amounts to anticipated profits which is contrary to a wasted expenditure claim. I therefore do not accept that as the basis for awarding this claim. 260. Rather, from the audited accounts, it is disclosed that the shareholder’s loan with a 12-year term would attract an interest of 10% per annum. That interest in shareholders’ loan is not an anticipated cost as submitted by the Defendants. This is interest that has already accrued and must be paid as per the contract between the Plaintiff and the shareholders. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 35

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261. In the case of Nkuene Dairy Farmers Co-op Society Ltd & another v Ngacha Ndeiya [2010] KECA 20 (KLR), in relation to material damage, the court held as follows; “ In our view, special damages in a material damage claim need not be shown to have actually been incurred. The claimant is only required to show the extent of the damage and what it would cost to restore the damaged item to as near as possible the condition it was in before the damage complained of.” 262. Similarly, in Kenya Wildlife Service v Sea Star Malindi Limited [2024] KECA 364 (KLR), where the court in awarding Kshs. 90,000,000.00 based on quantity surveyor’s estimates of costs cited a passage from McGregor on Damages, 19th Ed at pg 349, as hereunder; “ Indeed, if absolute certainty were required as to the precise amount of loss that the claimant had suffered, no damages would be recovered at all in the great number of cases. This is particularly true since so much of damages claimed are in respect of prospective, and therefore necessarily contingent, loss…… Generally, therefore, although it remains true to say that ‘difficulty of proof does not dispense with necessity of proof’, the standard demanded can seldom be that of certainty. Even if it is said that the damages must be proved with reasonable certainty, the word ‘reasonable’ is really the controlling one, and the standard of proof only demands evidence from which the existence of damage can be reasonably inferred and which provides adequate data for calculating the amount.” 263. Guided by the above authorities, a special damage in form of a wasted expenditure claim such as interest on shareholder’s loan, the same need not be incurred or paid. I will allow the claim amounting to USD 17,210,631.00. d. 264. The Plaintiff claims USD 47,082,563.00. It was the evidence of the Plaintiff that the lenders gave an additional funding of USD 20 million as per the evidence of PW2. Contractually, the same accrued interest of USD 10 million as per the facility agreement and the financial statements. These are actual costs incurred. On the expected earning of USD 37,082,563.00 being interest on additional equity contribution of USD 74,165,126.00, the same is rejected as it is an expectancy basis claim, which does not meet the threshold of a wasted expenditure claim. Therefore, only USD 10,000,000 is awarded. e. 265. Interest on accrued interest, hedging & penalty It was PW2 evidence that on loans to the Plaintiff, a moratorium period of 2 years was granted before principal repayments could commence. Due to the challenges faced, the production was sub optimal. This called for an extension of moratorium period which had a net effect of higher interest as the principal was not amortized as initially agreed. Reference is made to the Facility agreements and the Syndicated Loan Movement Summary. Guided by the Kenya Wildlife Service case (supra), the claim of USD 16,502,489.00 is allowed since the amount ultimately has to be paid by the Plaintiff. f. 266. Interest on financing for the period at pg 512 Interest on non-amortized principal This is the interest on non-amortized principal which resulted from the restructure in year 2016. The claim of USD 1,99,594.00 is allowed, g. 2nd restructuring related costs https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 36

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267. Though the report indicates as 3rd restructuring, the same was amended orally in court by PW2. The Plaintiff seeks a total of USD 44,672,320.00 being USD 20,846,739.00 as accrued interest on restructuring, USD 3,490,024.00 as payment in kind, USD 17,983,953.00 as hedging costs and penalty interest, and USD 2,351,604.00 as restructuring fees. PW2 gave evidence that despite the restructuring in 2016, due to lack of access to land, they were forced into the 2nd restructure as per the Letter of Engagement dated 19th February, 2020. 268. The Plaintiff demonstrated that costs have been incurred or will be incurred due to the 2nd restructuring. I however agree with the Defendants that other factors contributed to the losses suffered by the Plaintiff. On this account, I exercise the discretion of the court and reduce the claim by 50%, therefore allowing USD 22,336,160.00. h. SWAP & IPF costs 269. It was the Plaintiff’s evidence that due to the restructuring of 2016, additional mechanisms to hedge against movement of interest was introduced by the lenders and which was through interest SWAPs. The claim under this head was Kshs, 677,658,000.00 which is equivalent to USD 5,984,362.00. The ISDA Master Agreement dated 28th February, 2013 and Amended & Restated Schedule to the 2002 ISDA Master Agreement dated 8th August, 2016 were availed in support of the claim. I allow the USD 5,984,362.00. 270. In summary, I find that the Plaintiff has proved Special Damages as hereunder; a. additional project costs USD 74,891,982.00 b. additional shareholders loan USD 36,704,358.00 c. interest on additional shareholders’ loan USD 17,210,631.00 d. interest on additional project costs USD 10,000,000.00 e. interest in penalties on first restructure USD 16,502,489.00 f. interest on non-amortized principal USD 1,990,594.00 g. costs related to 2nd restructure USD 22,336,160.00 h. SWAP & IPF costs USD 5,984,362.00 Total Usd 185,620,576.00 271. The Plaintiff prayed for interest at court rates from the date of filing suit. Guided by the authorities cited on interest on liquidated claims, the court exercises its discretion under section 26 of the Civil Procedure Act and awards interest from date of filing suit at court rates. Whether the defendants’ counter claim is merited. 272. Having found in favour of the Plaintiff on the issue of liability, this court finds that the Defendants’ counterclaim, based on an alleged breach by the Plaintiff, cannot succeed, as the evidence shows that the Defendants themselves materially obstructed the performance of the sublease. 273. This court therefore finds that the issue of repairing and maintaining fences is irrelevant, as the Defendants have not demonstrated that they ever erected fences on the suit land to justify such a claim. Moreover, the court has already established that squatters have occupied the leased land from the outset https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 37

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of the lease. Therefore, the Plaintiff’s alleged failure to maintain fences, boundaries, or roads cannot be said to have caused or contributed to the encroachment by squatters. 274. Regarding the submission of building plans, drawings, elevations, and specifications to the defendants within six months, and the requirement to construct all indicated buildings within forty-eight months of the grant of the leasehold interest, it is noteworthy that this issue was raised for the first time in the Defendants’ counterclaim. 275. The Plaintiff, however, asserted that it had no intention of constructing any buildings on L.R. No. 5056/6, as the land was designated solely for cane cultivation. On this basis, this court finds that the plaintiff could not have been required to submit building plans or specifications for structures it did not intend to construct. 276. In the circumstance, I am not persuaded that the Defendants’ counter claim is merited. As a result, it is hereby dismissed in its entirety. 277. The upshot is that the Plaintiff’s suit against the Defendants is merited. The Defendants’ counterclaim is dismissed. 278. Section 27 of the Civil Procedure Act provides that costs follow the event, therefore the Plaintiff having succeeded in this suit is awarded costs of the suit in the main suit and in the counter claim. 279. Before making the final conclusion, I take this opportunity to express my gratitude to all the counsels for their eloquence and well researched submissions, which had an invaluable assistance to this court in reaching a just determination of the dispute. Determination 280. In the circumstance I make the following orders i. That Judgment is entered in favour of the Plaintiff against the Defendants for USD 185,260,576.00 in Special Damages. ii. Accrued interest on (i) above at court rates from the date of filing suit until payment in full; iii. The Defendants’ Counter Claim is hereby dismissed; iv. Costs of the main suit and the Counter Claim are hereby awarded to the Plaintiff. Orders accordingly. DATED, SIGNED AND DELIVERED AT MOMBASA ON THIS 5TH DAY OF DECEMBER, 2025. …………………………… HON. F. WANGARI JUDGE OF THE HIGH COURT In the presence of; Mr. Kongere Advocate for the Plaintiff Ms. Langat, State Counsel and Ms. Nimo Advocate h/b for Mr. Nyaoga S.C for the Defendant Ms. Salwa, Court Assistant. F. WANGARI, J. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/19593/eng@2025-12-05 38

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