Oil marketer KenolKobil got a reprieve after a court suspended the execution of a judgment where it was ordered to pay over Sh32 million to its former landlord, Canarian Holdings Ltd.
The suspension however comes with conditions, including a demand that the oil marketer deposits the whole decretal amount as of the date of judgement in an interest-earning account in the names of advocates of both parties.
Decretal is the total amount payable, including cost of suit, legal expenses, interest, principal amount plus any recovery charges and arbitration fees.
Justice Stephen Kibunja, of the Environment and Land Court (ELC) in Mombasa, also directed KenolKobil to deposit all the accrued mesne profits to date in the account and continue depositing them monthly. Mesne profits mean income lost by a landlord because the property is occupied without the landlord's permission.
“Should the plaintiff fail to comply with any of the conditions, the stay (suspension) order to automatically lapse,” ruled Justice Kibunja. The stay (suspension) orders were issued pending a hearing and determination of an appeal by KenolKobil at the Court of Appeal against ELC’s decision to order it to pay Canarian Holdings Ltd.
The court ruled that the application for stay by KenolKobil had merit and that the suspension of execution of the order should be granted on condition security is provided. “I am of the view that justice in the case would be better served by an order that costs..." abide the outcome of the appeal,” ruled Justice Kibunja.
KenolKobil had argued that it had good grounds of appeal and that the court should grant the stay order sought.
It argued that if it were made to pay the decretal amount of money to Canarian Holdings Ltd it would be difficult to recover it if it eventually succeeds on appeal.
Canarian Holdings Ltd argued that the application by the oil marketer was intended to obstruct its right to enjoy the fruits of its judgement.
It also argued that KenolKobil had not tendered any proof to show that it (Canarian) would be unable to pay back the decretal amount if judgement is executed.
In October last year, the court had ordered KenolKobil to pay over Sh32 million to its former landlord for restoration works and mesne profits at monthly rent rates under expired lease agreements in respect of three service stations.
It further issued a declaration that KenolKobil breached a clause of the lease over parcels of land where Changamwe, Mtwapa, and Jomvu service stations stood by transferring its shares to M/s Rubis Energie SAS resulting in a change of control without first obtaining Canarian Holdings Ltd (lessor’s) written consent.
Canarian Holdings Ltd in its counterclaim had accused KenolKobil of breaching the terms of their lease agreements.
The court had ruled that KenolKobil’s action of ceding its shares to another legal entity without first obtaining written consent from Canarian Holdings Ltd amounted to a breach of the respective terms of the three leases.
“The plaintiff (Canarian Holdings Ltd) was thereafter entitled to exercise its right of forfeiture and re-enter the premises in accordance with the provision of section 73(1)(a) of the Land Act No. 6 of 2012,” said Justice Kibunja.
The judge said that KenolKobil’s continued occupation on the Changamwe Service Station premises from May 1, 2019, to November 8, 2020, was without the plaintiff’s authority, consent, or concurrence and hence amounted to trespass.
He further said that there is no dispute that the leases for subdivisions for Mtwapa and Jomvu service stations expired by effluxion of time on January 1, 2020, and October 1, 2020, respectively.
Justice Kibunja also ruled that KenolKobil took possession of the three service stations at the commencement of the leases when they were in good order as they were newly built.
The court further said that Canarian Holdings Ltd had proved to the standard required that KenolKobil vacated the three demised properties without fully discharging its obligations under the leases to bring the premises in “good and tenantable condition.”
According to Canarian Holdings Ltd, it was a term in the leases with KenolKobil that it (KenolKobil) was not to transfer, assign, or part with possession of the leased premises without its written consent and that a breach of the terms entitled it to re-enter the premises without notice and determine it.
KenolKobil argued that its legal status as a limited liability company had not changed and there had been no material change that was detrimental to the contractual relationship between itself and Canarian Holdings Ltd.
This application is tied to the pending appeal before the Court of Appeal.
