Billionaire businessman Njenga Karume’s family has lost a multi-million shilling battle over a prime city property it was accused of illegally acquiring from petroleum dealer Kenya Shell Limited. The High Court, in a ruling, found that Karume Investments – a company owned by the late business magnate – had acquired the land illegally and must now vacate.
“The procedure through which the lease was issued to the interested party (Karume Investments Limited) remains a mystery, questionable and points to the respondent (Commissioner of Lands) having acted in bad faith, unfairly, and arbitrarily,” Justice Roselyn Wendoh said in a decision that the Karume family unsuccessfully challenged in the Court of Appeal.
Kenya Shell (now trading as Vivo Energy Kenya Limited) was the holder of the property lease until 2004 when Karume Investments Limited took possession of it under unclear circumstances.
The Karume family now faces eviction after Kenya Shell obtained a court order in June directing the Parklands Police station boss to provide security during its eviction from the property estimated to be worth more than Sh200 million.
The Court of Appeal’s decision brought to a close one of Kenya’s longest running commercial disputes that took more than 10 years in the High Court and the Court of Appeal to decide.
Kenya Shell was granted a 42-year and six-month lease on January 17, 1962 that was to expire in December 2004. The petroleum firm told the court that it had sub-leased the land to four businessmen in March 1963.
The businessmen developed some property on the plot under an agreement that the same would become Kenya Shell property upon expiry of the leases. The three businessmen, with consent of Kenya Shell, transferred sub-leases to Mr Karume in 1972 on similar terms. Five months later, with the consent of Kenya Shell, Mr Karume who died three years ago, transferred the sub-lease which was to expire on June 30, 2004 to Karume Investments Limited.
Kenya Shell in 1998 applied for extension of its lease, which was granted for a further 50 years with conditions. The petroleum dealer was to pay approval fees, pay enhanced land rent to be assessed by the Lands office, surrender the old title for a new one to be processed, submit a new deed plan signed by the director of survey and settle the legal fees.
The firm surrendered the title to the Commissioner of Lands as directed and paid the fees and rent in 1999. Kenya Shell says the property file was subsequently tampered with and documents stolen. The company notified the Commissioner of Lands of the theft and directed that a temporary file be opened.
Registration of the grant was, however, suspended since the sub-lease to Karume Investments was subsisting. The surrender and grant were left in the Land Registry’s safe to await removal of the sub-lease, only to disappear.
Meanwhile, Karume Investments made an application to Kenya Shell for renewal of the sub-lease that was due to expire on June 20, 2004. Kenya Shell declined to renew the sub-lease on grounds that it had breached certain conditions of the agreement.
On June 8, less than two weeks to expiry of the sub-lease, the Commissioner of Lands sought to know who between Kenya Shell and Karume Investments had developed the land. Kenya Shell says this was surprising since it was not one of the conditions to be fulfilled for extension of the lease. Kenya Shell says it informed the Commissioner of Lands that it owns developments on the land.
But the commissioner in September 2005 informed Kenya Shell the land had been subdivided, with the portion where the petrol station stands going to Kenya Shell and the other allocated to Karume Investments.
Kenya Shell moved to court in November 2005 to contest the decision. The firm argued that having been granted extension of the lease and complied with the set conditions, the Commissioner of Lands had no discretion to grant allotment to another firm.
The Commissioner of Lands opposed the suit, arguing that the land reverted to government on expiry of the lease and the commissioner was not bound to renew Kenya Shell’s lease.
Karume Investments was issued with an allotment letter on April 1, 2005 on grounds that it had done extensive development on the land. James Njenga Karume on behalf of Karume Investments argued that the application for allotment was submitted upon expiry of Kenya Shell’s lease and denied that the land was acquired irregularly.
But Justice Wendoh in her ruling raised doubt on the conduct of the Lands office and Karume Investments. The judge questioned the motive behind lifting some documents from the file, and the file going missing until Kenya Shell’s lease had expired.