How Orbit won Sh11b award against State

By Wahome Thuku

Court of Appeal judge Roselyn Nambuye is awaiting to be vetted afresh by the Judges and Magistrates Vetting Board following the nullification of its earlier determination that she is unfit to serve.

Nambuye had been kicked out of office in July for allegedly delaying the delivery of more than 60 rulings and judgments for years.

While waiting for the second vetting, she has been working hard to clear backlog of cases. One of the rulings, which she delivered last week, has shaken the Government.

It is a case she handled while still serving at the High Court before she was elevated last year, a Sh6 billion dispute between Orbit Chemical Industries, a detergent manufacturing and distributing firm, and the Ministry of Lands.

The company owns about 92.2 acres of land in Embakasi, Nairobi. On September 28, 1987, the Registrar of Titles registered a caveat prohibiting any dealings in the property.

The genesis

The land remained unoccupied and unused for years before it was invaded by squatters.

The company consistently asked the Government to remove the squatters or buy the land from them, but nothing happened.

On January 14, 2000, the Commissioner of Lands sent them a letter admitting there were no reasonable grounds for registration of the caveat.

On August 11, 2004, the company sued the Ministry through the Attorney General.

Through lawyer Mathew Oseko, the firm put up a case that the Registrar had no powers to register that caveat under the law.

The Registrar had not specified what had been violated under Section 65 of the Registration of Titles Act.

Oseko argued the registration was vague, indefinite and with no particulars hence unreasonable, null and void. There was no fraud, improper dealing, error or misdirection in acquisition of the land.

Further, they said the caveat had allowed squatters to invade the land, which was a natural and foreseeable consequence.

The caveat could not be lifted because the land file went missing at the Registrar.

Company claims

They claimed that by preventing them from entering, developing the land or dealing in it, the Government had expropriated their property. It amounted to trespass to the land without compensation contrary to Section 75 of the now repealed constitution. The caveat had prevented them from utilizing the property for fish processing and warehouse.

The Government should be held liable for the loss of user, income, profits and possession of the land, they submitted.

They sought declaration that the Registrar of Titles had no right to enter and register the caveat, the same was null and void and was taking private property without compensation.

Orbit Chemicals asked for compensation for the loss of income to the tune of Sh3, 489,550 per month from the date of the registration of the caveat, general damages for trespass, interests and costs of the case and an order to have the caveat removed.

In his defence, the AG conceded the caveat (caution) on the land had been registered but denied having caused the squatters to invade and occupy the land. He also denied other allegations made by the company.

Orbit Chemicals made an application to have the AG’s defence struck out and judgment entered against them.

The application was granted by the High Court on September 22, 2006. The court ordered that the matter goes to formal proof. Thereafter, the case was adjourned several times to have the parties settle it out of court.

The Government asked the company to quantify its claim for an out of court settlement. Orbit Chemicals quantified the claim to Sh18 billion.

The Ministry gave the bill to chief economist at the Finance Ministry a Mr Tuamwari to analyze and he came up with Sh851 million as the adequate compensation.

The company rejected the figure. The Ministry requested that a joint meeting of experts was held to negotiate the pay off. The meeting was held in the AG’s chambers on March 4, 2008.

Vital negotiations

Orbit Chemicals were represented by lawyer Oseko and an expert, Mr Okudo Akumi, while the AG was represented by Senior State Counsel Anthony Ombwayo (now judge) and Mr Tuamwari.

The company’s claim was scaled down to Sh8 billion. The ministry asked for 25 per cent reduction and the company accepted.

Mr Tuamwari prepared a document, which was to be presented to court as the compromise agreement. The parties informed the court of this agreement but even after several adjournments it was never recorded in court.

The company filed an application on July 24, 2008, asking the court to enter a judgment against the Government in accordance with the agreement for a sum of Sh6, 015, 113,000 plus interest at the rate of 14 per cent per annum as well as the cost of the suit. They asked that the money be paid within 30 days. That is the application that went before Nambuye.

The AG denied knowledge that Lands Ministry had accepted to pay Sh6 billion as out of court settlement. He asked that the matter go to formal proof of liability.

The AG argued that the amount had been inflated, that it had been rejected by the Lands and Finance ministries, that Mr Tuamwari was not authorized to bid the Government in a contract under the law. He said paying such figure would cripple the operations of the Lands Ministry.

Justice Nambuye acknowledged the land was property of Orbit Chemical and under the law the proprietorship was protected.

They had the right to decide what use to put in the property only within the limits of the law.

By coming up with their figure of Sh851 million compensation, the ministry was admitting having wronged the company and that they were under obligation to settle the damages.

“The defendant can’t claim to hide under an allegation of the figure being inflated when in fact it had been greatly reduced from the initial Sh18 billion,” Nambuye ruled.

She said the mere allegation of inflation could not hold in the absence of any claim by the ministry that they were going to take steps to have another group of agents work on it.

Nambuye noted that negotiations arose from court proceedings and not negotiations of government contract and rejected argument that Tuamwari could not bid the government in a contract.

Costs of suit

After thorough analysis of the case, Nambuye finally held that the company had a well-founded claim. And there was no reason for the court to reopen the matter to have the parties proceed for formal proof of the damages.

“The plaintiff is entitled to the reliefs sought because the settlement or compromise reached was within the apparent authority of agents of both sides,” she concluded.

The judge entered a judgment against the Ministry in the sum of Sh6 billion. She also ordered that interest be calculated at court rates from March 4, 2008, the date of assessment.

The ministry will also pay costs of the entire suit from 1987. The figure thus adds up to well over Sh11 billion from the taxpayers’ kitty.

Nambuye said the delay in delivery of the ruling was highly regretted and was occasioned by systemic work constrains.