Court upholds freeze on sale of railway property

Politics and policy

The High Court had issued orders barring the sale of the two parcels of land alongside Nairobi Railways Club on September 12, 2014. PHOTO | FILE 

By BRIAN WASUNA, bwasuna@Ke.nationmedia.com

Posted  Wednesday, January 14   2015 at  00:01

In Summary

• Justice Eric Ogola orders a permanent freeze on the transfer of three Kenya Railways properties until a Sh26 billion dispute with a Chinese developer is determined.
• Justice Ogola refused to lift a caveat on two of the three prime parcels of land in a bid to protect Erdemann from loss in the event that it wins its claim against Kenya Railways.

The High Court has ordered a permanent freeze on the transfer of three Kenya Railways properties until a Sh26 billion dispute with a Chinese developer, Erdemann Properties, is determined.

Justice Eric Ogola refused to lift a caveat on two of the three prime parcels of land in a bid to protect Erdemann from loss in the event that it wins its claim against Kenya Railways.

Kenya Railways and its pension scheme had asked the judge to let them complete the sale of Makongeni Estate and Mobray Court, a high-end office block on Kindaruma Road in Kilimani, Nairobi, arguing that they were at advanced stages of completing the sales.

The judge had issued orders barring the sale of the two parcels of land alongside Nairobi Railways Club on September 12, last year but Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) filed an application seeking to set aside the order.

Justice Ogola agreed with the Chinese firm, arguing that the retirement scheme did not mention that the land was a subject of sale negotiations during the proceedings that led to the freeze order.

“Before this court rendered the ruling, KRSRBS was aware which of its properties were already engaged to be sold to third parties. Kenya Railways never made any arguments to inform the court of these facts. Erdemann’s interests must also be secured,” the judge said.

Erdemann filed the suit in 2012 after the pension scheme failed to offer it a contract to develop a Sh40 billion complex on the 63-acre land surrounding Nairobi Railways Club despite winning the tender.

READ: Railways Club land at stake in Sh26bn case

The pension scheme wanted to replace Makongeni Estate and Mobray Court with two alternative pieces of land, but Erdemann argued that the value of the parcels of land was not equal.

The pension scheme says the land has been bought by another firm, Flexus Limited, and that freezing the sale would expose it to legal action from the aggrieved buyer.

Justice Ogola dismissed the argument on lack of supporting evidence that the land had been sold.

The sale, the retirement benefits scheme holds, is to facilitate the dues it pays out to pensioners.

Erdemann, however, insists that Kenya Railways is disposing assets which may leave it without a cause of action in the event that it wins the case.

Justice Ogola further accused KRSRBS of delaying the suit by filing several applications which are holding back determination of the main suit.

“The impression created by KRSRBS is that it is a frustrating litigant who has to date filed five applications in two years. This can easily amount to an abuse of the court process. It is important that KRSRBS appreciates that Erdemann has a case capable of succeeding,” he added.