Sea Star Malindi Limited v County Government of Kilifi [2019] KEELC 3247 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT

AT MALINDI

ELC CASE NO. 47 OF 2016

SEA STAR MALINDI LIMITED.............................PLAINTIFF

VERSUS

COUNTY GOVERNMENT OF KILIFI..............DEFENDANT

JUDGMENT

BACKGROUND

1.  The suit before me was initially filed against four Defendants as Nairobi HCCC No. 595 of 2005 vide a Plaint dated 17th May 2005.  Following various amendments and the transfer of the suit to Malindi, the Plaintiff herein Messrs Sea Star Malindi Ltd pursued its claim on the basis of a Further Amended Plaint dated 26th October 2015 as filed herein on 27th October 2015.

2.  In its Claim as amended, the Plaintiff prays for Judgment against the sole remaining Defendant-the County Government of Kilifi(as successor in title to the Municipal Council of Malindi) for various categories of special damages on account of the demolition of a hotel that was erected on Land Portion No. 3170(Original No. 850/3) pleaded thereon as follows:-

a) Costs of reconstruction including Professional Fee Kshs 129,923,240. 00/-

b) Loss of expected revenue and profits from when hotel was expected to be opened to 31/12/2014……Kshs 558,448,457. 00/-

c) Expenses incurred by the Plaintiff’s Directors from January 2005 to January 2007 in visiting Kenya from Italy in connection with the demolition of their hotel…Euros, 102,624. 82

d) Interest at Bank Lending rates

e) Costs of this suit plus interest at Bank overdraft rates of interest.

f)  Any other relevant relief the Honourable Court may deem fit to grant.

3.  The basis of the Plaintiff’s claim is its contention that at all times material to this suit, it was the registered proprietor of a beach property registered as LR No. 3170 Malindi. Sometimes in or about 1996, the Plaintiff applied to the Defendant’s predecessor-the Municipal Council of Malindi for a permit to construct a 5-Star hotel thereon.

4.  Upon receipt of the permit and necessary approvals, the Plaintiff commenced construction of the hotel.  It is however its case that sometime in the year 1998, the Kenya Wildlife Service ordered it to stop the construction purportedly because the development was within 100 feet from the high water mark of the Indian Ocean and hence government land.

5.  On or about 15th January 2005 until 26th January 2005 the Defendants proceeded to demolish and destroy the hotel the Plaintiff had put up on the premises hence leading to the losses that the Plaintiff claims herein.

6.  In its Defence to the Further Amended Plaint dated 25th November 2015 as filed herein on 27th November 2015, the Defendant County Government of Kilifi denies that the Plaintiff is and/or remains the registered owner of the suit property.  The Defendant further denies that the Plaintiff submitted an application for development approval and/or that the Plaintiff received the approvals as alleged or at ll.

7.  In the alternative, the Defendant pleads that if indeed any approval was obtained, it was a matter within the Plaintiff’s knowledge that the approval was improperly obtained and was thus null and void ab initio.  It is further the Defendants case that it never authorized any demolitions and that if any demolitions were carried out, the basis thereof was provided in law.

8.  The Defendant asserts that the Plaintiff has not suffered the alleged or any loss and  damage and avers that an award of damages as sought herein would be contrary to public policy as the Plaintiff’s cause of action arose ‘ex turpi causa’ and/or through transgression of a positive law and should hence be dismissed with costs.

THE PLAINTIFF’S CASE

9.  At the trial herein, which partly commenced before the Honourable Justice Angote, the Plaintiff called three witnesses.

10. PW1- Gianluigi Cernuci is a director of the Plaintiff.  He told the Court that he is a Canadian Citizen but he permanently resides in Watamu within Kilifi County.  He told the Court that they incorporated the Plaintiff Company with one Mariella Pizzigoni on 7th June 1994.  The main object of the company was to build and operate a 5-Star hotel on a beach plot in the Watamu area.

11. PW1 testified that towards their goal, the Plaintiff purchased LR No. 3170 in Casuarina Malindi measuring about 0. 5783 Ha from one Gaetano Bortoloti at Kshs 4 Million.

12. Sometime in 1996, PW1 who is an Architect by profession embarked on preparation of architectural drawings for the proposed hotel which they submitted together with structural drawings to the defunct Municipal Council of Malindi for approval. The Plaintiff received a written approval from the Town Engineer on 15th August 1996.

13.  PW1 told the Court that pursuant to the approvals, the Plaintiff embarked on the construction of the hotel in 1997.  However, sometime in 1998, the Kenya Wildlife Service (KWS) ordered them to stop the construction purportedly because the development was being carried out within 100 feet from the Indian Ocean high water mark and that the hotel was being constructed on government land.

14.  PW1 testified that KWS notified the Council of their objection but on 7th July 1998, the Town Engineer wrote a Report dismissing the objection and thus giving the project a clean bill of health. KWS however refused to let the project succeed and the Plaintiff was forced to institute judicial review proceedings in Nairobi HC Mis Application No. 982 of 1997.  On 8th November 2003, the High Court quashed the decision of the KWS.

15.  It was PW1’s case that thereafter they resumed the construction of the hotel but sometime in January 2005, when the project was about 90% complete, the Municipal Council sent a squad to the Plaintiff’s property which squad proceeded to demolish the buildings erected thereon.  As a result, the Plaintiff suffered massive losses which they quantify at Kshs 658,371,697. 00/= as follows:-

a) Costs of reconstruction including professional

fees                                                                Kshs 129,923,240. 00/.

b) Loss of expected revenue and profits from

when the hotel should have opened

until 31/12/2014                                         Kshs 558,448,457. 00/-

Total                                                               Kshs 658,371,697. 00/=

16.  PW2-Wambua Alloys Nzalu was a Registered Quantity Surveyor.  He told the Court that he was called upon to carry out a study on the Plaintiff’s plot at Casuarina Road, Malindi.  He visited the site, took measurements and re-valued the project.

17.  PW2 told the Court that the state of the project at the time was such that he came to the conclusion that there was need to bring the same down, uproot the foundation and start afresh.  He estimated the cost of demolition and construction at Kshs 167,682,926. 50/- as at the year 2016.

18. PW3- Dennis Kamau Kiberenge was an Actuarial Scientist and a Manager at Price Water House Coopers.  He told the Court that he was engaged to value the lost future income following the demolition of the Plaintiff’s hotel.  In that regard, he prepared a Report dated 9th April 2015 which details the projected cash loss as from December 2015.

THE DEFENCE CASE

19. Despite being granted numerous adjournments, the Defence did not call any oral evidence in support of their case.

ANALYSIS AND DETERMINATION

20. The Plaintiff herein claims as against the Defendant various categories of pleaded special damages on account of demolition of a hotel which they claim to have partially erected on that parcel of land known as Portion No. 3170 Malindi.  As per the averments contained at paragraphs 6 and 8 of the Further Amended Plaint dated 26th October 2015, they accuse the predecessor of the Defendant herein-the defunct Municipal Council of Malindi of maliciously authorizing the construction and then turning around to demolish the hotel.

21. On its part, the Defendant denies the Plaintiff’s claim in totality  While they did not bring any oral testimony in support of their case, they aver in their Defence to the Further Amended Plaint dated 25th November 2015 that the Plaintiff’s cause of action is underpinned by a myriad of illegalities, including open disregard of the law on the limits to its title  in regard to the abutting Indian Ocean high watermark as well as illegalities pertaining to the approval obtained for the construction of the hotel.

22. It is thus the Defendant’s position that the Plaintiff’s claim is unenforceable and any resultant relief that may be due to the Plaintiff would be a violation of and contrary to the law and public policy.

23. From the material placed before me, it was not disputed that the Plaintiff is the registered proprietor of the parcel of land known as Portion No. 3170 Malindi. According to PW1, they purchased the said parcel of land in 1994 with a view to constructing a 5-star hotel thereon.  Accordingly, sometime in 1996, they presented the drawings of their proposed hotel to the Municipal Council of Malindi.  On 15th August 1996, the Council approved the building plans and granted the Plaintiff a building permit.

24. It was the Plaintiff’s case that on or around 20th August 1997 shortly after they had commenced construction of the hotel, the Kenya Wildlife Service(KWS) issued them with notice to stop construction on the site on the purport that the construction was being undertaken within the statutorily protected 100 feet of the Indian Ocean high water mark.

25. The dispute with the KWS was apparently escalated to the Council and on 7th September 1998, the Council issued a comprehensive Report in which they concluded, inter alia that the project should be allowed to continue as planned and designed as there existed in the Council’s view, no lawful reasons to revoke the same. It was the Plaintiff’s case that based on the Council’s re-assurance, they continued with the construction.

26. To the Plaintiff’s surprise however, on or around 15th January 2005, the Council turned around and proceeded to destroy and pull down the structures erected on the Plaintiff’s property.  It is the Plaintiff’s case that the Council’s actions were actuated by ill-will and that same were indefensible as it is the Council which had given approval to the Plaintiff to build in the first place.

27. Indeed, a perusal of the correspondence emanating from the Council at the time depicts an institution that was more than eager to approve and support the Plaintiff’s project.  However, in their letter dated 20th January 2005 that appears to have precipitated the demolition complained about, the then Town Clerk Patrick L. Ouya addressed the Plaintiff as follows:-

“RE: ILLEGAL DEVELOPMENT ON PLOT NO 707/1

It has been established that you erected a structure outside your plot limits fronting the beach.

This is to give you seven(7) days notice from the date of this letter to remove the said structure failure to which the Council will proceed to take appropriate action it deems fit without any further reference to you.”

28.  As it turned out, the Defendant did not testify in these proceedings and it remains unclear what structure if any, had been erected by the Plaintiff outside the said Plot limits.  According to the Plaintiff, shortly before they even received the said letter dated 20th January 2005, the Defendant proceeded to destroy and pull down their hotel.

29. As a result, the Plaintiff claims from the Defendant a total sum of Kshs 658,371,697. 00/- being the cost of reconstruction, professional fees and loss of expected revenue.  In addition, the Plaintiff claims a sum of Kshs 1,004,874,489/- as damages suffered and incurred as a result of the disruption occasioned by the Defendant from 2005 to-date.

30. As it were the Defendant did not do anything much to challenge and/or controvert the Plaintiff’s claim herein.  If indeed the Defendant demolished the Plaintiff’s structures as indicated herein then the Plaintiff is certainly entitled to compensation.  In that regard it would not only be fair but also just that the Defendant covers the cost of reconstruction of the Plaintiff’s project as well as the income that would consequently be lost by the Plaintiff during the intervening period.

31. This Court however takes judicial notice of the fact that arising from the same circumstances, the Plaintiff herein had also instituted Nairobi HCCC No. 579 of 1998 seeking inter alia damages for stoppage of the construction of the hotel from the Kenya Wildlife Service and it’s then Director one Dr. David Western.  That suit was later transferred to Malindi as ELC No. 56 of 2016.

32. In a Judgement delivered by this Court in regard to the said suit on 31st July 2018, this Court entered Judgment and awarded the Plaintiff costs as follows:-

a) Kshs 90,000,000/- being the cost of reconstruction of the hotel.

b) Kshs 30, 000, 000/- as general damages.

c) Interest on ‘a’ and ‘b’ at commercial bank rates until payment in full.

33.   In the said case, the Plaintiff had claimed among others general and exemplary damages for disruption of their construction from 20th August 1997 when the Kenya Wildlife Service was said to have stopped the construction of the hotel.  They also claimed for a sum of US $ 75,000/= as loss of profits from 1st December 1997 until the time of completion of the construction.

34.   Having considered the various awards made in my Judgment in the said case, I did not think that the Plaintiffs are entitled to a separate award against the Defendant in the sums claimed herein. As it were,  I was not satisfied that the Plaintiff had put up another hotel in 2005 which the Municipal Council of Malindi demolished and/or that the structures demolished would be of the amount which is similar to what the Plaintiff claimed from the Defendants in Malindi ECL Case No. 56 of 2016.  In my view these claims were intertwined and related and should have at best been pursued as one claim albeit against different defendants.

35.  Accordingly and for the reasons given, I did not find merit in the Plaintiff’s entire claim as I did not also find any evidence that the Plaintiff’s directors incurred the alleged or any travel expenses resulting from the demolition of the hotel.  In the result, the Plaintiff’s suit is dismissed.

36. In the unique circumstances of this case and given the role of the Defendant herein however, I think the Defendant shall be condemned to pay the costs of this suit.

Dated, signed and delivered at Malindi this 29th day of May, 2019.

J.O. OLOLA

JUDGE