Supreme Court sends Malindi hotel developer, KWS 27-year-old dispute back to appeals

The Supreme Court’s decision to refer the case allows for a re-evaluation of the damages awarded to Sea Star Limited and the extent of KWS’s liability.

At the heart of the case is the developer’s claim for damages over a KWS 1997 decision to deploy wardens who took possession of the land in question and remained stationed there in an attempt to prevent any further construction.

“We find that the suit against the KWS, the subject of this appeal, should be remitted back to the Court of Appeal for re-appraisal/re-evaluation of the evidence on record to determine the question of liability and other consequential issues. In addition, taking into account that the matter was first instituted in court in 1998, we further direct that the same be heard on a priority basis,” said the Supreme Court.

In ordering fresh evaluation of the liability, the five-judge bench led by Chief Justice Martha Koome noted that there is a related case at the Court of Appeal and the question of liability was likely to be determined.

The said case concerned a decision of the High Court delivered in October 2023 in which the developer was awarded Sh709.8 million. This sum covered reconstruction costs, general damages for loss of income and professional fees incurred by the company.

Another verdict by the Court of Appeal delivered in April 2024 had awarded the developer Sh3 million as general damages for violation of its constitutional right to property and Sh90 million for reconstruction of the facility.

“We do not know whether the two matters are likely to converge before the Court of Appeal. Whatever the case, the approach we have taken is still cautious of a possibility of the developer receiving double compensation for the same loss,” said the judges.

The other judges in the bench were Deputy Chief Justice Philomena Mwilu, Smokin Wanjala, Njoki Ndung’u and Isaac Lenaola.

Sea Star Malindi Limited purchased the contested land, which is adjacent to the Malindi Marine National Reserve and Park (Marine Park), in 1994 with the intention of constructing a hotel.

They obtained approval for the building plans from the now-defunct Municipal Council of Malindi in 1996, after which they commenced construction with a projected completion date of December 1, 1997.

However, this ambition was thwarted when, in April 1997, with the construction about 40 percent complete, the KWS directed the company to stop the project on the ground that it was encroaching on a protected area.

The KWS alleged that the project was within a distance of an area covering 100 feet of the high-water mark of the Indian Ocean, which was part of the delineated marine park.

According to the State agency, the encroachment had the effect of interfering and adversely affecting the delicate ecosystem of the marine park. Consequently, KWS exercised its powers and stopped the construction work.

The KWS argued that if the construction was allowed to continue it would have led to irreversible consequences and a complete loss of an essential natural resource.

Following correspondence between the company and KWS, the latter gave what it termed as ‘special permission’ to the developer to complete the construction of the structure it had begun in a letter dated June 6, 1997.

The company was, however, directed not to put up any other structure or encroach on the protected area.

In August 1997, KWS withdrew the permission on the grounds that the company had failed to adhere to the conditions.

The company was accused of not only constructing waste disposal facilities, including a septic tank, on porous coral reefs, but also continuing to encroach on the protected area.

KWS prohibited the developer from continuing with the construction, prompting the developer to seek court redress. The dispute escalated up to the Supreme Court.

It claimed that it suffered heavy financial losses since it was unable to complete the construction of the hotel as projected and repay the loan of Sh70 million, which it had taken out at an interest rate of 35 percent per annum to finance the construction.

The developer contended that the KWS’s conduct left the construction work unattended exposing it to deterioration, which in turn necessitated demolition and reconstruction of parts of the building.

The company argued that the contested land was private property, and that it had never been public or government land, nor had it been compulsorily acquired by the government.

It claimed that it was entitled to utilise the land in question, which it held as a freehold, in any manner it deemed fit, including the construction of a hotel in line with plans approved by the defunct Municipal Council.

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