The Court of Appeal justices’ decision to reject the energy company’s appeal in the 15-year-old legal case dealt a blow to the company.
The High Court made the appropriate decision in giving the money to the housing company, Membley Housing Company, hence the Court of Appeal dismissed the appeal on those grounds.
The Wanjiru Karanja, Mbogholi Msagha, and Francis Tuiyott-led three-judge panel concluded that the interest was spelled out in the land sale agreement. As a result, the High Court was right.
The justices also rejected Kenya Power’s claim that interest should not have been paid for the full 12-year period from 2005 to 2016 during which the case was heard by the High Court because the delay was not the company’s fault.
However, the courts discovered that the utility company considerably contributed to the delay by postponing the defence hearing for a number of reasons.
The debt was a result of a land transaction in 2003 that involved buying a 40-meter-wide way leave spanning over a piece of Membley Housing Company property.
It acquired the site and built pylons to support the 220 KV Olkaria-Dandora electricity transmission line.
Kenya Power paid KSh7 million for the 4.4-acre parcel of land, but first paid a deposit of KSh702,000, or 10% of the agreed-upon amount, so that the wayleave could be surveyed and excised, leaving a KSh6.3 million remainder.
On August 20, 2004, Kenya Power properly drew, approved, stamped, and registered the transfer of the wayleave.
A balance of KSh1.9 million remained after Kenya Power paid KSh4.3 million in January 2005 instead of the full amount of KSh6.3 million as required by the sale agreement, which was subsequently requested by the housing firm.
According to Kenya Power, the land that was transferred to it was only 3.3 acres, not 4.4 acres.
It further claimed that the housing firm had violated the Sale Agreement by registering only a portion of the purchased home, negating its right to the remaining balance of the purchase price.
On September 16, 2016, the housing company won a favourable ruling after filing a lawsuit in 2005.
According to the Sale Agreement, the trial court determined that Membley was entitled to interest on the sum of KSh6.3 million at a rate of 25% per year from November 3, 2004 (the due date for the balance payment under the Sale Agreement) until January 26, 2005. (when it paid the KSh4.3M).
In addition to receiving the KSh1.9 million balance due, the trial court determined that Membley was also entitled to extra interest at the same rate on KSh1.9 million accrued from January 26, 2005, to the date of full payment.
The judge awarded those sums as judgement and determined that Membley had established its case in support of its demand for payment of the remaining balance of the purchase price and interest.
Kenya Power took the battle to the court of appeals but lost there as well. The appeals court judges stated that Kenya Power has the responsibility of paying interest for the original delay in payment of the actual balance of KSh6.3 million from November 3, 2004, to January 26, 2005, as well as additional interest on the unpaid balance of KSh1.9 million at a rate of 25% per annum
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