Ruaraka land baron loses Sh10b city property claim

Tuesday, May 4th, 2021 00:00 |
Top and Bottom: Views of the on going construction of Posta Sports Grounds along Ngong Road in Nairobi. PD/Kenna Claude

Controversial businessman Francis Mburu would be smiling all the way to the bank on the strength of an arbitration process that granted him ownership of a prime piece of land valued at close to Sh10 billion.

This is until last month when the High Court intervened and overturned the award, dealing a massive blow to one of Kenya’s notorious land dealers best remembered for the controversial sale of the Sh3.2 billion Ruaraka land on Thika Road. 

In the latest case, the shadowy 72-year-old land dealer was embroiled in a dispute over the prime piece of land situated at Jamhuri estate, off Ngong Road in Nairobi, on which the government is currently constructing an ultra-modern public sports complex.

The land was initially owned by the defunct Kenya Posts and Telecommunication Corporation (KPTC), now Telkom Kenya.

In September 2019, an arbitrator had ruled that the 60-acre piece of land legally belongs to Exclusive Estates Limited (EEL), which is associated with Mburu.

The property was also claimed by Aftraco Limited, a company associated with Mombasa Governor Ali Hassan Joho, after it entered into a deal with Telkom 10 years ago to acquire part of the property.

The land was valued eight years ago at Sh6 billion by Camp Valuers, which translates to Sh100 million per acre, but could now be in the range of Sh10 billion  going by the current market rates.

Sole arbitrator

Nairobi lawyer Zehrabum Janmohamed, who was the sole arbitrator in the dispute, had ruled that Mburu is entitled to 60 acres from the 79-acre parcel of land.

“It’s declared that the Deed of Assignment dated January 15, 2009 between Postel Housing and Exclusive Homes and the decree issued in this regard on January 22, 2009 are valid and binding on this tribunal,” Janmohamed had ruled.

She then moved to declare the sale agreement between Joho’s firm and Telkom dated July 5, 2011, null and void.

Buoyed by the ruling, Mburu moved to court seeking orders to enforce the award.

It is against this backdrop that Telkom and Joho’s lawyers opposed the application and successfully overturned the arbitrator’s decision to grant Mburu the land for which he had not paid a cent.

“Telkom notice of motion dated November 1, 2019, and Aftraco’s motion dated October 31, 2019, are hereby allowed and the Arbitral Award published on September 16, 2019, by the arbitrator Janmohamed is hereby set aside,” Justice Ngenye Macharia stated in a ruling dated April 22, 2021.

Justice Macharia ruled that although the trader did not purchase the plot, the arbitrator handed him the land on grounds that a deal he had entered into, with a State agency to develop the property about 30 years ago gave him legitimate claim to the land.

KPTC had entered into a deal with Mburu’s EEL in 1990 for a proposed joint development of 2,430 housing units on plot number 7656, with the defunct KPTC intending to excise 60 acres for the then Sh1.46 billion housing scheme. However, the project did not materialise.

The judge faulted Janmohamed, saying she had demonstrated bias against Telkom by applying different standards of interpretation of a deal, that is alleged to have transferred the land from Telkom to Mburu.  

“There is no doubt that the arbitrator demonstrated bias against Telkom by applying different standards of interpretation of the two agreements.

As rightly submitted by the first defendant, she (arbitrator) rejected the claim of illegality on the basis that she required strict proof of the allegations made by Telkom and refused to make any assumptions in relation to the said allegations,” the judge observed.

“The introduction of the requirement for strict proof in relation to Telkom as contrasted with her eagerness to make assumptions in favour of Exclusive (Mburu’s firm) and Postel amounted to treating the parties before her differently, which is an instance of clear mishandling of the arbitration and, therefore, misconduct on her part,” she further ruled. 

She also faulted the arbitrator for “re-writing” the agreement between Telkom and Mburu.

“The court hereby finds that the arbitrator exceeded her jurisdiction by rewriting the contract between parties and thus hereby sets aside the award dated September 6, 2019,” Judge Macharia declared.

Mburu had listed Telkom and Postel Housing as respondents, while Aftraco is shown as an interested party.

Aftraco claimed that it bought the entire 79 acres from Telkom in 2011 for Sh1.52 billion, and paid a deposit of Sh152 million after entering into a deal.

Consent order

Mburu had moved to court then and managed to stop the transaction between Telkom and Aftraco, setting off a battle in the corridors of justice.

Janmohamed was appointed as the sole arbitrator through a consent order dated May 11, 2011, by Justice Muga Apondi.

In 2011, Joho’s family firm entered a deal to buy the entire parcel of land at Sh1.52 billion, insisting during submissions that it was a bona fide purchaser and had already paid Sh152 million.

At one time, then High Court Judge Mohammed Warsame ruled to remove a caveat placed on the land by Mburu, paving the way for Telkom to transfer the land to Aftraco.

However, in a majority decision, Court of Appeal judges Sankale ole Kantai and Hannah Okwengu reinstated the order barring the sale in March 2016, in a case in which Lady Justice Fatuma Sichale dissented.

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