Kenya Railways loses rental battle with company and is expected to repay millions

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Kenya Railways loses rental battle with company and is expected to repay millions

Wednesday January 12, 2022

Managing Director and CEO of Kenya Railways Corporation Philip Mainga on Tuesday March 16, 2021. PHOTO | DENNIS ONSONGO | NMG

BY BRIAN OCHARO
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summary

  • Court records show that the company has been owned by Milly Glass Works Ltd. since 2012. 10.2 million shillings annually as rent as opposed to 146,000 to be collected from the company over the same period.
  • Environment and regional court judge Sila Munyao has described this as an unjust enrichment, to which the court cannot turn a blind eye.
  • KR defended his lawsuit on the grounds that it was justified to increase the rent in this way. She has denied that her right to a rent increase has been abolished or has expired.

Kenya Railways Corporation was hit in a rental dispute with a container and tableware manufacturer after a Mombasa court ordered it to reimburse millions of shillings illegally collected as rent from the company.

Court records show that the company has been owned by Milly Glass Works Ltd. since 2012. 10.2 million shillings annually as rent as opposed to 146,000 to be collected from the company over the same period.

This means that if the company made the payment of 10.2 million Sh. has complied and performed annually, Kenya Railways so far more than 90 million Sh. instead of 1.4 million Sh. had received.

Environment and regional court judge Sila Munyao has described this as an unjust enrichment, to which the court cannot turn a blind eye.

“I will use my discretion to instruct KR to reimburse the company for all amounts paid in excess of Sh146,000 per year. This amount must be refunded immediately and any installment paid will accrue interest at the court rates from the time it is paid until it is paid in full, ”the judge said

It was also found during the proceedings of this case that the company ignored an order issued on March 14, 2013, prohibiting it from collecting Sh10.2 million annually from the company.

The court record indicates that the government agency has been coercive of this money from the company despite an order requiring the company to continue to pay an annual rent of Sh146,000 pending the hearing and determination of this case.

“Now I wonder why KR continues to sell Sh 10.2 million despite the clear terms of the said orders. demanded. This request is illegal for me. There is clearly an unjust enrichment that I cannot turn a blind eye to, ”said the judge

The dispute between the company and the state agency began in 2012 when KR increased the annual rent on a property it leased to the company from Sh14,000 to Sh10.2 million.

Court documents show that KR leased property to the company through a 1980 lease for an 81 year term effective January 1, 1977 for an annual rent of Sh22,000.

The company argued that the lease terms specifically provided that after any 30 year period the KR could have the right to increase the annual rent to an amount equal to 1/20 of the unimproved property value at the time of this revision.

But in violation of those terms of the lease, the company stated that in 1994 KR increased the annual rent from Sh22,000 to Sh146,000 before the end of the 30 years, which is the rent it continued to pay through December 2011.

The company argued that this increase was contrary to the terms of the lease, and has asked the court to issue orders prohibiting the government agency from doing so by Jan.

However, KR defended his lawsuit, arguing that it was justified to raise the rent in this way. She has denied that her right to a rent increase has been abolished or has expired.

The authority also advocated being able to change the rent at any time after 30 years.

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