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The Nairobian

Court grants NSSF reprieve in Sh1.3b property fight with Koinange family

Business

By Paul Wafula | Jun 05, 2016

The National Social Security Fund (NSSF) has won a six-year court battle against the Koinange family over a prime beach plot at the coast.

The pension fund last week won an appeal against Sifa International, which is owned by Lena Koinange, over 14.5 acres on Milele Beach.

Palm City Grill and Entertainment Director David Waiganjo (right) outside the pub in Mombasa County on Friday 3rd June. The property inside the grill was removed from the premises after a court order barring the management to continue staying in the land due to unpaid debts. The land is alleged said to be owned by National Social Security Fund (NSSF). Photo/Kelvin Karani.

On Friday, NSSF evicted the company from the premises three days after the Appeal Court ruled in its favour. The land is worth Sh1.3 billion, and the family had set up Palm City Grill and Entertainment Hotel.

The ruling gave the pension fund a new fighting chance over the parcel, which was already being subdivided. It also overturned an earlier ruling that would have seen pensioners pay millions of shillings in compensation to the Koinange family.

Sifa International had moved to court seeking orders to stop the pension fund from ejecting it after its lease had expired. It was also seeking more than Sh100 million in damages.

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A court had earlier awarded the company Sh16 million and another Sh500,000 as compensation for loss of business, despite it having defaulted on its rent payments.

NSSF, which has also accused the Koinanges of subdividing the parcel and seeking to own it through adverse possession, appealed the ruling.

A brief to the Labour minister seen by The Standard says in April last year, a Mr David Waiganjo Koinange filed another case in Mombasa against the fund, claiming possession of one of the plots on the grounds that he had been living on it for almost 14 years.

“Mr Koinange happens to be the brother of Ms Lena Koinange, who is the director of Sifa,” the brief reads.

The Koinanges, who have links to the First Family, are one of the wealthiest families in Kenya and own vast acres of land in the country.

NSSF leased its beach plot, divided into six parcels, to Sifa International in February 2004. The lease was for five years and a month, and NSSF was to be paid a monthly rent of Sh120,000 for the first two years of the lease.

This amount was to be increased by 15 per cent after every two years for the remainder of the term. This means the new rent was Sh138,000 a month for the third and fourth year, and Sh158,700 for the final year. The lease expired in February 2009.

The lease contract allowed Sifa the first option to buy the land if NSSF decided to sell it. The company had turned the premises into a hotel and tourist resort.

But the two fell out in early March 2006 when NSSF put up the land for sale. The pension fund wrote to the company reminding it that it had the first option to buy the plot.

The ruling notes that the company requested it be furnished with the price of each unit, copies of the title and the deed plan to enable it conduct due diligence and possibly make an offer.

But NSSF did not respond to the request, instead giving Sifa a 14-day notice to exercise its option to purchase. This is when the matter headed to court.