Court rules out illegal lease agreement in Elgon Place case, orders refund of rent

             The Elgon Place building in Nairobi’s Upper Hill area.

The Environment and Lands Court in Nairobi has thrown out a more than Sh1 billion case against the judiciary in a battle over Court of Appeal building lease.

Justice David Mwangi in his judgment not only threw out the case filed over the controversial lease of Elgon Place in Upper Hill, but he also ordered the landlord to refund Sh53 million paid as rent between 2013 and 2014.

The judge said that partitioning ought to have been subjected to competitive bidding and should not have been roped in by the landlord.

The case was filed by Sealink Holding and Sentrium Contracts against the Registrar of the Judiciary and the Attorney General.

Sentrium claimed that it partitioned the building to fit judges' chambers and courtrooms while Sealink is said to be the owner of the building.

“Such agreements made with the clear intention of subverting the law cannot be enforced by a court of law. They are null and void. Such must be the fate of the document titled Head of Terms and the addendum.”

“The court will therefore dismiss the claim for the monies claimed arising from the fit out and partitioning works undertaken by the second plaintiff on the basis of illegality and non-compliance with the law of this country,” ruled the Judge.

At the same time, the judge found that it was intriguing that after Sealink won the tender, it turned the tables against the Judiciary by dictating its own terms.

The Judge found that the deviation from Kenya shillings to US dollars and the clear variation on what had been offered as space was an indicator that the tender was non-responsive.

The Judiciary had advertised for 4,000 square feet while Sealink offered 49,000 square feet.

Justice Mwangi ordered Sealink to refund USD 156, 849 (Sh25 million in current rate) paid as rent for three months in 2013.

“I already stated that this court and any other court for that matter shall not enforce an illegal contract. I need not say anymore,” he said.

Sealink claimed Sh969 million in rent arrears alongside Sh89 million interest and Sh91 million service charge.

According to them, the Judiciary had remained in the building from 2014 to January 31, 2019.

It emerged that the Judiciary wrote to the agent- Knight Frank Kenya Limited, demanding that it terminate the lease.

Sealink and Sentrium argued that the move was a breach of contract as the deal was to last for 10 years. The contract had no termination clause, Justice Mugo heard.

On its end, Sentrium argued that the fit-outs and partition works had significantly changed the nature and structures of the property so much that it would be impossible to restore it to its original state.

The court heard that the Judiciary had promised to restore the building to its former state but they had not made good the promise. The cost of restoration was assessed at Sh73 million.

While urging Justice Mwangi to dismiss the case, the registrar first argued that the Judiciary was unaware that Sealink had hired Sentrium to partition the building.

According to the Judiciary, the lease ought to have been subjected to competitive bidding.

It argued that the lease was not binding as the law was not followed.

The Judiciary in a counter-argument urged the judge to order Sentrium to reimburse the rent that had already been paid.

Justice Mwangi heard that it received a tender document that was different. It pointed out that Knight Frank submitted its bid indicating that the rent and car parking would be paid in US dollars while it was required that bidders ought to have quoted in Kenya shillings.

At the same time, Judiciary argued that the lease was for 10 years but the document by the firm was six years.

The judiciary stated that it never occupied the Elgon Place building owing to the illegalities in the procurement process and on account of radiation which made it unfit for occupation and use.

It was alleged that the telephone masts near the place would have exposed judges, litigants and Judiciary employees to harmful radiation.

However, Justice Mwangi found that the premises had been cleared by the Communications Commission of Kenya to be safe for occupation.

“In any event, the first plaintiff commissioned assessments which were in agreement with the findings of the Communications Commission of Kenya (CCK) that the suit property was fit for human occupation. The Defendants did not offer any evidence to contradict the evidence of the expert presented by the plaintiffs,” said the judge.

Court of Appeal judges declined to move in on the strength of an expert opinion that the Elgon Premise was not safe for occupation. “

However, Sealink experts found out that the radiation levels were almost 300,000 times below acceptable limits and concluded that the building was therefore safe and habitable.