Court orders landlord to deposit Sh20m as security in Nakumatt suit

A near-empty Nakumatt outlet in Mombasa last year.
A near-empty Nakumatt outlet in Mombasa last year. FILE PHOTO | NMG 

A court has ordered Nakumatt Supermarket's landlord in Diani to deposit Sh20 million as security pending the hearing and determination of a case filed by the retailer.

In its application to the court, the troubled supermarket is seeking to have the landlord restrained from interfering with its business premises.

Environment and Land Court Judge Ann Omollo directed South Coast Holding Ltd to make the deposit in an escrow account to be opened in the joint names of the advocate on record for the two parties.

“The said sum, which is to be treated as security in the event the application succeeds, to be made within 21 days from today,” the judge said.

Justice Omollo also granted the retailer leave to respond to the replying affidavit by the defendant if need be within 10 days.

In the case, the retailer wants South Coast Holdings Ltd restrained from utilising and dealing with its equipment at the premises in Diani where it used to operate its business.

The retailer told the court it rented the suit property in 2009 for use as a supermarket with quiet and peaceful possession.

This is until last year when it ran into cash flow problems due to the turbulent economic times in the country.

Nakumatt, through lawyer Mutiso Ngonze, argues that due to the economic hardship it ran into, two companies filed insolvency petitions seeking to liquidate it.

Withholding supplies

Mr Ngonze says that the retails woes increased further when suppliers also started withholding supplies to the supermarket resulting in low stock on the shelves.

The actions therefore rendered it unable to meet its liabilities as and when they fell due.

The retail submitted that in November last year, the landlord, South Coast Holdings Ltd, closed entries into and out of its business premises thereby barring it and its customers from accessing the supermarket on account of undisclosed rental arrears.

The retailer further argues that in January this year, the landlord unlawfully gained access to the premises through breaking and commenced trading, utilising fixtures, fittings, furniture and equipment, property of the supermarket.

Nakumatt says all outstanding arrears prior to an ‘Administration Order’ given by the High Court in Nairobi remain subject of the administration and are only payable upon approval of the administrator’s schedules of payment by the creditors.

Illegal eviction

“The defendant has continued with the lock-out on the suit property as well as use of the equipment to the plaintiff exclusion,” Nakumatt says in its court papers.

The retailer says its claim against the landlord is for illegal eviction, damage of its movable property and profits from use of its equipment.

It argues that pursuant to its illegal eviction, it lost all equipment and stock in the premises and all hard records of the items.

Nakumatt argues that the defendant has failed to admit liability and make good its claims despite the demand made and notice of intention to sue.

The supermarket says that unless orders sought are issued, it will suffer irreparable loss through wastage of its goods and disruption of its commercial enterprise.

The application has been fixed for hearing on February 13, 2019.