Ruling on land may cause diplomatic row between Kenya and Kuwait

President Uhuru Kenyatta (front, left) talks with the Emir of the State of Kuwait, Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah (front, right), at the Bayan Palace in Kuwait City. PHOTO | DPPS

What you need to know:

  • Kenyan government pushed to have property's ownership reverted to Kuwaiti ruler Sheikh Jabil Alhamed Al-Jabir Al-Sabah after it was allegedly transferred to a private company in questionable circumstances

  • High Court recently found that Shimoni Resort was legal owner.

  • Attorney-General Githu Muigai has appealed decision.

A diplomatic row between Kenya and the Kingdom of Kuwait could be in the offing following a court ruling that has deprived the Gulf State of a multi-billion-shilling property in Nairobi that it acquired in 1962.

Despite the Kenyan government’s push to have the property's ownership reverted to Kuwaiti ruler Sheikh Jabil Alhamed Al-Jabir Al-Sabah after it was allegedly transferred to a private company in questionable circumstances, the High Court recently found that Shimoni Resort Ltd was the legal owner. Attorney-General Githu Muigai has now appealed the decision.

The parcel of land in Westlands, measuring almost two-acres, was transferred to Shimoni Resort, a company owned by two partners of a city law firm and has been the subject of a four-year court battle with filings alleging fraud in the transaction.

The push and pull in court ended on April 15, 2016 when Justice John Mutungi ruled in favour of Shimoni despite the AG submitting that it had acquired the property from another company that had no valid title to the land. Mr James Orengo, the Lands minister in the Grand Coalition Government, had ordered the cancellation of the title to revert ownership to Kuwait.

Aggrieved by Justice Mutungi’s decision, the AG has asked the Court of Appeal to find that a private entity cannot benefit from an illegality as Shimoni had no valid title to claim ownership of the land belonging to Kuwait.

Justice Mutungi, in a ruling delivered on his behalf by his counterpart Justice Samson Okong’o, said Shimoni’s title could only lose protection of the Constitution if it had been proved that the firm acquired the property fraudulently or was aware of the fraud.

He said the acts of the Registrar of Titles and Commissioner of Lands to cancel Shimoni’s title as directed by the minister were high-handed and denied the company a fair chance to defend itself.

The judge awarded Shimoni Sh2 million as general damages and directed the Registrar of Titles to reverse the cancellation of entries on land parcel LR 1870/IV/71 and reinstate Shimoni as the registered owner. He also awarded the company costs of litigating the suit.

Lands ministry records produced in court by the AG showed the disputed parcel measuring 0.7689 hectares was transferred to the State of Kuwait through its ruler in 1962 by Mohammed Yahia Alwarib for Sh125,000.

The transfer, according to a sworn affidavit by a senior registrar of titles Edwin Munoko, was under the leasehold of 99 years from April 1, 1904. However, the leasehold was later extended for a term of 50 years from March 1, 2001.

Everything was quiet and the property remained undisturbed until September 23, 2002 when an entry IR 89699/2 was made at the ministry transferring the parcel to Koibarak Trading Company for Sh1 million.

KUWAIT RULER

Koibarak, whose directors are listed as Kelse Mabale, Leonard Kelly Mabale and Humphrey Mgungu Mabaleho, are purported to have bought the property from the Kuwaiti ruler for Sh1 million but there were no records of the Sheikh acknowledging payment.

A few weeks later, on November 8, 2002, Koibarak sold the land to Miniscule Investment Ltd for Sh1.3 million and the transfer was registered as IR 89699/3. Miniscule directors are listed as Jitendra Prabat and Birage Prabat, both Britons.

Shimoni Resort, the company at the centre of the controversy, allegedly bought the land from Miniscule on December 8, 2009 for Sh130 million and its transfer registered as IR89699/4.

On the same day, Shimoni, whose directors are Mr Edward Kamau and Mr Njoroge Nani Mungai, senior partners of Muriu Mungai and Company Advocates, charged the property to African Banking Corporation to secure a Sh50 million. The charge was registered against the title as IR 89699/5.

A senior state counsel, Mr Allan Kamau, who represented the Lands ministry, Registrar of Titles and the Commissioner of Lands decried the purported transfers to Koibarak and Miniscule, saying they were fraudulent.

Mr Kamau told Justice Mutungi that investigations had revealed that the registered owner, the ruler of the State of Kuwait, had not participated in the alleged transactions. He further stated the transaction leading to the transfer of the parcel to Shimoni was questionable.

The court was informed that the Embassy of Kuwait in Nairobi had lodged a complaint with the Directorate of Criminal Investigation over the fraudulent transfer of its land and indicated it had no dealings with Koibarak.

The DCI report revealed that the transfer of the property to Koibarak and to Miniscule were fraudulent and so was the subsequent transfer by Miniscule to Shimoni. The AG’s contention was that Shimoni could not acquire a valid title from a party that did not possess such a title in the first place.

Based on the complaint by the Kuwaiti government, Mr Orengo, now Siaya Senator, directed that the ownership be restored to the Gulf State.

Court records show the registrar of titles acted on the directions and cancelled entries made against the title and effectively restored the ownership of the property to the Kuwait ruler. This prompted Shimoni to lodge a petition in court contesting the minister’s action.

The company, through Mr Kamau, a director, accused the minister of contravening the rights to property ownership and fair administrative action. It argued in court that the minister’s orders were implemented without following due process and insisted the company had bought the property without being party to any alleged fraud or misrepresentation.

REVERSE ENTRIES

Shimoni sought an injunction directing the Registrar of Titles to reverse the entries and reinstate it as the registered owner of the property.

Further, the firm pleaded for an award of Sh2.3 billion as damages arising from the minister’s illegal actions. The amount included Sh1.6 billion in “loss of profits for the expected development”.

But the AG dismissed the claim for damages saying the amount was speculative and grossly exaggerated. The judge declined the payment saying the same was not proved.

Shimoni argued that it conducted due diligence before purchasing the property and was satisfied that the land had no encumbrances.

“Shimoni demonstrated that it was the registered proprietor of the suit property and had not acquired it fraudulently,” submitted Mr Paul Muite for Shimoni.

After the company filed the suit in 2012, it is said to have requested for an out-of-court settlement with the State Law Office.

According to records in our possession, the Lands ministry had initially supported the position taken by Mr Orengo in Parliament following a letter of January 4, 2013 addressed to the AG by Mr Munoko on behalf of the Chief Land Registrar.

Mr Munoko said it was necessary to cancel the entries “otherwise the relationship between our country and the State of Kuwait would be badly affected.” He also noted that the claim that Shimoni had suffered loss of Sh2.3 billion was “ridiculous”.

And in a curious legal opinion addressed to the Land Principal Secretary Mariamu El Maawy, Senior Deputy Solicitor General Muthoni Kimani on behalf of the AG on September 11, 2013, warned that the government stood to lose a huge amount if the ministry failed to hand over the property to Shimoni.

The letter advised that the matter be settled out of court because allowing it to reach its legal conclusion would cost the government dearly. The letter said the registrar had no powers to cancel the title. The AG further argued that it had not been proved that Shimoni fraudulently transferred the land. And even if fraud was proved before the cancellation, the letter said the company should have been given a chance to defend itself.

 “It is, therefore, our recommendation that this matter be settled out of court on the following terms: that we enter into consent on your behalf (Land ministry) with the petitioner to withdraw the petition with no orders as to costs. That the entries cancelled from the register be reinstated in favour of the petitioner,” the AG advised.

In a subsequent letter responding to the AG’s legal opinion which was dated September 11, 2013, the Chief Registrar of Land had apparently changed tune and wrote: “ If that opinion is going to save our ministry from loss through expensive litigation, it is advisable that we settle the matter amicably.”

But the AG later disowned the legal opinion from his office advising the Land ministry to transfer land belonging to the State of Kuwait to a private company.

He insisted the mater should be heard in court to its logical conclusion.