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Telkom Kenya gets reprieve in Sh40m Mombasa land rates dispute
Telkom stated that it had continued to dutifully and promptly remit to the defendant the annual rates for the subsequent years for the property up to and including the rates payments for 2008.
Telkom Kenya got a reprieve after a court declared that it does not owe the defunct Municipal Council of Mombasa Sh40 million on account of rates, interest, or penalties between 1998 and 2008 for a parcel of land in the city.
The Environment and Land Court (ELC) further ruled that Telkom does not owe the defunct municipality, currently the County Government of Mombasa, any money in respect of any of the company’s properties situated within the ratable area.
The ELC also ruled that the defunct municipality’s demand letter dated August 21, 2008, subsequent correspondence, and threatened enforcement proceedings are fraudulent, illegal, null, and void.
In its November 28 decision, the ELC also issued a permanent injunction restraining the county, whether by itself, servants, agents, advocates, auctioneers, or any of them, from demanding the money or any similar amount from Telkom.
It also retrained the devolved unit from commencing or prosecuting any recovery proceedings against Telkom or from attaching, advertising, selling, transferring, leasing, evicting, parting with possession of, or interfering with the telco’s use and occupation of the land where Mombasa Telephone house is located or any of its immovable properties within the ratable area.
The court ruled that after the reconciliation and payment in 1999, the property did not accrue arrears and that Telkom continued to pay annual rates as demanded by the defunct municipality each year up to and including 2008.
“The defendant’s subsequent demand for Sh40 million was therefore inconsistent with its own prior conduct and unsupported by evidence,” ruled the ELC.
The court also noted that the county did not produce any valuation roll, rate demand notices indicating arrears, or accounting records showing that the plaintiff had defaulted in any year between 1999 and 2008.
It ruled that the statutory framework under the Rating Act, Cap. 267 requires that rates be levied annually based on a valuation roll, demand notices be served, and arrears be computed in accordance with the Act.
“In the absence of such notices and records and in light of the plaintiff’s documentary evidence of consistent payments, the court must conclude that the plaintiff complied with its obligations, the defendant’s silence and failure to produce records is fatal to its assertion of arrears,” ruled the court.
The ELC also ruled that the county government’s threatened enforcement through newspaper advertisements and threatened auction was irregular, noting that the Rating Act prescribes a structured enforcement regime including service of demand notices and lawful sale procedures.
“The defendant’s unilateral publication of the plaintiff as a defaulter without antecedent statutory notices was unlawful and prejudicial,” ruled the ELC.
Telkom had told the court that the property, among others, had previously been owned by Kenya Posts and Telecommunications Corporation (now defunct) before it was vested in it in 1999.
The plaintiff further stated that in 1999, it had requested the then municipality to provide a detailed statement of outstanding rates for all the properties vested in it, including the suit property within its ratable area.
The defendant duly complied and forwarded to the plaintiff a schedule delineating the contributions made by the plaintiff’s predecessor in lieu of rates for the period between the years 1996 and 1999 and the then outstanding amount payable.
The plaintiff stated that upon receipt of the statement, it had duly settled the delineated outstanding Sh2.2 million, which was acknowledged by the defendant.
Telkom stated that it had continued to dutifully and promptly remit to the defendant the annual rates for the subsequent years for the property up to and including the rates payments for 2008.
The defendant opposed the case, saying it had issued a demand notice to the plaintiff in respect of accrued rates.
It said that the defunct municipality had failed, refused, and ignored the said demand, thereby rendering its actions necessary.
The defunct municipality had told the court that Telkom had failed, refused, and ignored to act as demanded by it.
The defendant had also told the court that the plaintiff had been truly and justly indebted to it in outstanding rates and accrued rent.
The defunct municipality had told the court that Telkom had had an outstanding debt with it and could not have availed itself of the remedy of injunctions prayed for in the case.
