Court restores order barring sale of Sh1.5bn land in Karen

Sunday March 20 2016

Appeal Court judges Hannah Okwengu and Fatuma Sichale (right). Together with Judge Sankale ole Kantai, they restored a caveat stopping Telkom Kenya from selling prime land in Karen. PHOTO | FILE | NATION MEDIA GROUP

Appeal Court judges Hannah Okwengu and Fatuma Sichale (right). Together with Judge Sankale ole Kantai, they restored a caveat stopping Telkom Kenya from selling prime land in Karen. PHOTO | FILE | NATION MEDIA GROUP 

By BENSON WAMBUGU
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The Court of Appeal has restored a caveat barring Telkom Kenya from selling 79 acres of prime land in Nairobi’s Karen area to an investor for Sh1.5 billion.

Although Lady Justice Fatuma Sichale dissented in her opinion, fellow Appeal judges Sankale ole Kantai and Hannah Okwengu, concurred that then High Court judge Mohammed Warsame was wrong in dismissing a suit challenging the removal of the caveat.

“Justice Warsame (now appellate judge) was clearly in error when he embarked on an examination of how the caveat was created and whether the appellant was entitled to lodge the same.

He also delved into examining how a decree issued by the High Court came to be,” observed judges Kantai and Ms Okwengu.

They further said Justice Warsame’s jurisdiction was limited to examine whether the registrar of titles and chief land registrar had followed the due process on removal of a caveat.

The contentious caveat was registered against the title by a developer, Exclusive Estate Ltd, after it entered into an agreement with Postel Housing Co-operative Society to build 514 houses for its members on the land adjacent to the Nairobi showground.

Postel alleged that Telkom, by purporting to sell the land to Aftraco Limited, had failed to disclose that it had no right over the property, which was subject to a litany of court cases and arbitration proceedings.

The society further stated that the current value of the land is more than Sh4 billion and the agreement to sell at Sh1.5 billion in secrecy was a clear indication of fraud by the parties. “It is telling that immediately the caveat was removed, Telkom purportedly entered into an agreement to transfer the suit property to Aftraco.

“The conduct of the parties in this matter was demonstrative of each party trying to steal a match on the other,” said Justice Hannah Okwengu.

Court records show that Postel had purchased 60 acres from the defunct Kenya Posts and Telecommunications Corporation (KP&TC) in 1993 for Sh21 million, deducted from members’ salary by way of check off, until 2006 when the full amount was recovered.

On the strength of Exclusive Ltd having proprietary interest in the disputed land after the agreement with the sacco, it moved to the High Court through lawyers Allen Gichuhi and Duncan Anzala seeking to quash the decision of the chief lands registrar to cancel the caveat.

Mr Francis Mburu, a director of Exclusive Ltd swore an affidavit saying that by an agreement of January 28, 1993, the sacco contracted his company to develop housing units on 60 acres but registered a caveat when Telkom purported to dispose the property to Aftraco. Mr Mburu argued that he was denied an opportunity to be heard, or given the statutory 45 days notice before the removal of the caveat by the chief land registrar.

CAVEAT

But Justice Warsame dismissed the suit on grounds that the caveat had been placed by persons who were strangers to the title. The judge said the caveat was registered to block Telkom from selling the property to Aftraco despite having received Sh150 million, representing 10 per cent of the purchase price.

“In my view, the chief land registrar was justified in cancelling or removing the caveat to correct an illegality perpetuated by Exclusive Ltd and Postel,” ruled the judge.

Exclusive then challenged the decision in the Court of Appeal and listed the registrar of titles, commissioner for lands, Telkom, Postel, chief land registrar and Aftraco as respondents.

Aftraco, through lawyer Ahmednasir Abdullahi, said Exclusive had perpetuated a fraud which the registrar of titles had brought to an end. He further said Exclusive and Postel had conspired to illegally transfer the land that did not belong to them. He urged the judges to uphold Justice Warsame’s findings.

But Mr Gichuhi and Anzala for Exclusive said Justice Warsame acted beyond his jurisdiction by going into the merits made by a public officer instead of examining the process of cancelling the caveat.

Appellate judges Kantai and Ms Okwengu concurred with Exclusive’s submissions and set aside Justice Warsame’s orders.

Aftraco is also embroiled in a dispute with Telkom over alleged breach of an agreement over sale of the land, accusing Telkom of acting against the terms of the contract after the sale was cancelled.