Land lease row hits Sh2.5bn Railways pensioners project
Rift Valley Railways headquarters in Nairobi. A multi-million project is pitting an investor against trustees of the Kenya Railways Staff Retirement Benefits Scheme. The subject of the row is a plot on Nairobi’s Haille Sellasie Avenue, opposite the headquarters. PHOTO | FILE
What you need to know:
- Under the agreement, the scheme would grant a 50-year lease to Jipe Close starting January 2010, with the latter paying Sh100 million premium and Sh15 million monthly rent.
- Jipe Close says it later found out that the scheme did not have a title to the land hence it could not confer the lease.
- The retirement scheme says it is willing to refund the Sh39 million to Jipe Close or deposit it in court as it awaits hearing and determination of the case.
A multi-million project is pitting an investor against trustees of the Kenya Railways Staff Retirement Benefits Scheme.
The subject of the row is a plot on Nairobi’s Haille Sellasie Avenue, opposite Rift Valley Railways headquarters. In 2009, the pensioners’ scheme invited firms to develop the land by setting up ventures that could generate income for the scheme.
Investment company Jipe Close has now moved to the High Court saying the scheme — which benefits over 9,000 pensioners — has declined to complete a lease that it entered five years ago after winning the bid to develop the 237,200-square-feet plot.
Under the agreement, the scheme would grant a 50-year lease to Jipe Close starting January 2010, with the latter paying Sh100 million premium and Sh15 million monthly rent.
Jipe Close planned to construct a basement car park with a capacity of 800 cars, 1,500 ground floor shops and offices on the second floor. Further, 30 restaurants, banking halls and other social amenities with a projected net profit of at least Sh30,975,600 per month were also to come up in the Sh2.5 billion project.
LETTER OF OFFER
Jipe Close says it paid Sh39 million as part of the Sh100 million premium expecting that it would sign a lease. This has not happened and the scheme has not given any logical reason, says Jipe Close in court papers.
Jipe Close says it later found out that the scheme did not have a title to the land hence it could not confer the lease. “This revelation was contrary to prior express representation by the scheme regarding its capacity to grant a lease for 50 years over the land,” said Jipe Close.
“Jipe Close has on account of the scheme’s failure to secure a title to the land, held back on releasing Sh61 million necessary to complete payment of the Sh100 million being the total standing premium.”
The company wants the court to stop the pensioners’ scheme from selling, transferring or leasing the property to “other party than Jipe Close” until the case is heard and determined.
In its response to the suit, the welfare scheme said it expressed intention to lease the property to Jipe Close but on condition that the developer pays Sh100 million premium, Sh15 million monthly rent and that the firm be granted possession of the plot after paying stamp duty, administration costs, first year’s rent and signing of a lease agreement.
On receiving the letter of offer, however, Jipe Close allegedly did not comply with these requirements. Instead, it started shifting goal posts, the welfare scheme notes.
Jipe Close, the scheme says, turned to endless correspondence over the matter “in clear demonstration that the company never had the intention or ability to engage in the said transaction”.
The scheme says there was no agreement that Jipe Close would pay Sh39 million as initial payment. This amount, the welfare says, did not constitute “contractual performance on the part of Jipe Close”.
IRREPARABLE LOSS
Having failed to honour its side of the deal, there is no contract that can be enforced, the scheme notes.
The retirement scheme says it is willing to refund the Sh39 million to Jipe Close or deposit it in court as it awaits hearing and determination of the case.
“Whereas it is true that we do not have a certificate of title over the suit property registered in our name, the property was, however, transferred and vested unto us by legal notice number 169 by the sponsor in exercise of statutory powers under section 13 of the Kenya Railways Corporation Act,” the scheme notes.
The lack of a registered certificate of title in the welfare’s name could not be an excuse for Jipe Close not to honour its obligations, it adds.
If the orders sought by Jipe Close are granted, the scheme says it stands to suffer irreparable loss as it will be completely unable to use the suit property for the benefit of over 9,000 pensioners who entirely rely on the income sourced from such property to earn a living.
A ruling on whether to grant orders sought by Jipe Close will be delivered on March 5,2015.
