KeNHA gets relief in Sh769m Mombasa by-pass land suit

A landowner whose property was compulsorily acquired by the government for construction of the Mombasa Southern Dongo Kundu bypass and Kipevu terminal link road has suffered a setback after the court halted its Sh769 million compensation.

The ruling means that Fort Properties Ltd will have to wait a bit longer before receiving compensation from the Kenya National Highways Authority (KeNHA) for its two properties measuring approximately 2.217 and 7.333 hectares, respectively.

Court of Appeal Judges Agnes Murgo, Kibaya Laibuta, and George Odunga concurred with KeNHA that its operations would be severely impacted if the firm were allowed to garnishee, attach, and pay out of its Sh765.6 million.

“Since the applicant is a public corporation undertaking statutory duties, and neither the applicant nor the respondents stand to benefit if the sums in question remain frozen, we hereby direct that the attachment be lifted forthwith,” said the judges.

KeNHA moved to the court in April this year seeking orders to halt the execution or implementation of the orders issued by the Environment and Land Court in Mombasa.

KeNHA said there was no guarantee the substantial sums of money would be recovered if they were paid to the firm whose directors might disappear without a trace if the intended appeal were to succeed.

The corporation lamented that there was no guarantee that the substantial sums of money would be recoverable if they were paid to the firm, a private entity with no known business or financial capacity to refund the said amount, and whose directors might disappear without a trace if the intended appeal were to succeed.

“In the meantime, KeNHA’s critical statutory functions would be hindered to the detriment of the public, as no budgetary allocation was made for such payments,” the state corporation stated.

This dispute arose from ELC, where the firm sued the Attorney General, KeNHA, and the National Land Commission (NLC) over compensation for property acquired by the state.

This dispute arose from ELC, where the firm sued the Attorney General, KeNHA, and the National Land Commission (NLC).

The firm claimed that the NLC issued it a certificate of award for Sh242.9 million and Sh114.2 million, respectively, for the two properties taken by the government.

It expressed discontent that the compensation was never made, despite pursuing the matter with both the NLC and KeNHA. The ELC court subsequently awarded the firm Sh242 million, along with interest.

Armed with the ELC judgment, the firm filed another case seeking orders to garnishee a sum of Sh931.6 million held to the credit of KeNHA. In May of last year, the court granted this application, paving the way for the payment.

However, KeNHA filed another application seeking to have the order reviewed. This application was dismissed, while the private firm’s request for payment within 30 days was granted.

KeNHA then moved to the Court of Appeal to challenge the ruling that allowed payment to the firm, lamenting that the implementation of the freezing of its bank account has placed it at significant prejudice, as the corporation is unable to process the salaries of its employees and fulfill its critical mandate.

“The critical statutory functions would come to a complete halt, in addition to incurring contractual liabilities from contractors on site, whose budgetary allocations from the National Treasury would have been arbitrarily paid out to a private entity,” said KeNHA.

The corporation has argued that it has a viable appeal based on an error of law in refusing to uphold the statutory immunity against the execution of its funds and property.

It also contended that the general public and public interest stand to suffer irreparably should its account remain frozen, adding that the amount in question wholly comprises interests after it had settled Sh242.9 million.

“KeNHA, being a government agency and state corporation, will in the normal course of government business have the decretal sums budgeted for and paid to the private firm if its intended appeal fails; therefore, there should be no order as to security for costs,” said the corporation.

Through its director Ketan Patel, the firm stated that KeNHA paid Sh150 million and Sh16 million in partial settlement of the decretal sum upon taking out garnishee proceedings.

“KeNHA’s application is unmerited as it seeks to blur the lines between what constitutes a state corporation and what defines a government agency,” said Mr Patel.

The appellate judges sided with KeNHA, halting the payment pending the hearing and determination of the corporation’s appeal.