City Hall braces for battle with defaulters as grace period ends

The City Council of Nairobi is preparing for a bruising showdown with thousands of rate defaulters who will not have paid up by tomorrow’s close of the month-long grace period.

Town Clerk Roba Duba says that the end of the grace period, which spared the defaulters punitive interest and penalties charged on such debts, will pave the way for a new phase that may see thousands of property owners lose them.

Mr Duba said City Hall would make good its promise to recover the debts by auctioning the defaulters’ properties, revealing that the campaign had collected only Sh1.3 billion by Friday last week.

“The auctioneers’ hammer will certainly fall on these properties,” he said.

City Hall had planned to collect Sh3.5 billion from thousands of defaulters taking advantage of the waiver period to settle their debts, but has only realised one third of the amount.

Mr Duba said on Friday that City Hall would invoke the Rating Act – the law he claims empowers it to collect rent from the affected properties until its dues are fully paid or auction the indebted property to recover the debt.

“We have set up a team to prepare a revised list of defaulters for further action beginning Tuesday (tomorrow),” Mr Duba said.

“As far as we are concerned, we have served the defaulters with the 14-days’ notice as is required by law and can now take further action undeterred,” he said. City Hall has been running a month-long campaign to recover the billions of shillings that individuals, private companies and government agencies owe it in unpaid rates, warning that it would ‘‘clamp’’ any property in default after the grace period.

It has not been clear what the ‘‘clamping’’ of a building would mean in real life – but Mr Duba now says City Hall will seek legal authority to collect rents from the properties in default or seek orders to auction the properties altogether.

The Rating Act requires the rating authority (in this case City Hall) to take the defaulter to court and prove that they have not only failed to pay their rates and/or penalties, but that adequate notice has been given to them to do so.

It is only when the court grants the council’s prayers in such a suit that it can move in to sell a defaulter’s property.

“A decree granted by a subordinate court in favour of the rating authority (plaintiff) under this section may be enforced by any mode of execution authorised by any rules made under the Civil Procedure Act and...,” the Rating Act says in part.

“The decree-holder may apply to the High Court by originating summons to order the sale of such land in enforcement of such charge, and the High Court may make an order directing the sale of such land....,” the law says.

This leaves City Hall with the unenviable task of filing thousands of suits against rate defaulters, a move that would not only add to the Judiciary’s heavy litigation burden but also cost millions of shillings and many years to resolve.

The law also gives the rating authority (City Hall) the power to start collecting rent from the affected properties until the total amount – actual accrued rates and penalties - is recovered.