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Court dismisses Kenya Power appeal in Sh1.9m real estate firm lawsuit – Business Daily

Electricity House which is the Kenya Power head offices in a Picture taken on May 30, 2018. PHOTO | EVANS HABIL | NMG
Kenya Power has failed in its bid to overturn a High Court judgment that ordered it to pay a land and housing firm Sh1.9 million debt plus interest of 25 percent per annum from January 2005.
The utility firm suffered a blow after the Court of Appeal judges dismissed its appeal in the 15-year-old legal dispute.
The Court of Appeal dismissed the appeal on grounds that the High Court was correct in awarding the housing firm, Membley Housing Company, the amount.
The three-judge bench comprising justices Wanjiru Karanja, Mbogholi Msagha and Francis Tuiyott found that the interest was stipulated in the deal for the sale of land. Hence, the High Court was correct.
The judges also dismissed Kenya Power’s argument that the interest should not be paid for the entire 12-year period that the matter took to be determined in the High Court (2005 to 2016) as the delay was through no fault of its own.
But the judges found that the utility firm significantly contributed to the delay through adjournments of the defence hearing for various reasons.
The debt stemmed from a land transaction deal involving the purchase of 40 metres wide way leave crossing over part of property owned by Membley Housing Company in 2003.
It took possession of the land and erected power lines pylons to carry its 220 KV Olkaria – Dandora electricity transmission line.
Kenya Power bought the land measuring 4.4 acres at a price of Sh7 million but it paid a deposit of Sh702,000 being 10 per cent of the agreed purchase price so that the wayleave could be surveyed and excised, leaving a balance of Sh6.3 million.
The transfer of the wayleave was duly drawn, approved, stamped and registered in the name of Kenya Power on August 20, 2004.
The Housing firm then demanded payment of the entire balance of the purchase price as provided in the sale Agreement, but Kenya Power paid Sh4.3 million in January 2005 instead of the full balance of Sh6.3 million, leaving a balance of Sh1.9 million.
Kenya Power alleged that the land transfered to it was 3.3 acres and not 4.4 acres.
It also alleged that the housing firm was in breach of the Sale Agreement when it registered only a portion of the purchase property and could therefore not be entitled to the full balance of the purchase price.
The housing firm moved to court in 2005 and obtained a favourable judgment on September 16, 2016.
The trial judge found that according to the Sale Agreement Membley was entitled to interest upon the sum of Sh6.3 million at 25 per cent per annum, from November 3, 2004 (the deadline for payment of balance as per the sale agreement) to January 26, 2005 (when it paid the Sh4.3M).
The trial judge also found that Membley was entitled to further interest at the same rate on Sh1.9 million from January 26, 2005, to the date of payment in full, in addition to payment of the balance itself of Sh1.9 million.
The judge gave judgement for those sums and held that Membley had proved its case with respect to its claim for payment of the balance of the purchase price and the interest.
Kenya Power escalated the fight to the court of appeal and lost again.
“Kenya Power was liable to pay interest for the initial delay of payment of the actual balance of Sh6.3 million from November 3, 2004, to January 26, 2005; and further interest on the unpaid balance of Sh1.9 million at the rate of 25 per cent per annum,” said the appeallate judges.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.