William Kabogo, Tatu City Sh4.5bn feud won’t be settled in London

A Sh4.5 billion land ownership dispute pitting former Kiambu Governor William Kabogo against investors of the Tatu City real estate project will be resolved by local courts after a judge declined a request to have the matter determined in London through arbitration.

One of the parties in the dispute, Fundamental Property Ltd, wanted the dispute referred to an arbitral tribunal because the land sale agreement had a foreign component and a clause providing for an elaborate arbitration process in London.

But Justice Wilfrida Okwany found that although the sale agreement concerns Fundamental Property Ltd and Mr Kabogo's company, Gilulu Investments Ltd, there is a web of 11 other companies and individuals intricately and intimately connected to the suit property.

"It will not be possible to conclusively resolve the dispute without involvement of the 11 other parties. The situation would be different if the dispute was only between Gilulu and Fundamental, in which case, this court would not hesitate but refer the dispute to arbitration in line with the initial intention of the parties to the agreement," said the judge.

The request by Fundamental was supported by Mr Kabogo's former lawyer and business ally, Ms Mary Chege, who was once a director of Gilulu Investments.

The sale agreement between Fundamental and Gilulu is dated July 11, 2016, in which Mr Kabogo paid Sh348 million as 10 per cent deposit for the purchase of land measuring 128 acres in Tatu City.

He paid the money through his other company named Acres and Homes Ltd (principal purchaser).

The money was received by Rendeavour Services Ltd, a Tatu City shareholder associated with Mr Stephen Jennings, who is the majority shareholder in the Tatu City projects, at Family Bank although the registered owner of the property is Gunga Properties Ltd (the principal vendor of the land).

Sale agreement

Gunga was not a party in the sale agreement but was transacting through Fundamental (the nominated vendor).

Court papers further indicate that Gunga was also transacting through Mr Jennings, Mr Christopher Baron, Kofinaf Company Ltd and Rendeavour Services Ltd -- the defendants in the matter.

In the transaction deal that has since gone sour, the former governor wants court to find that the sale agreement is valid and issue a permanent injunction restraining the defendants from terminating the agreement.

He also wants the court to order lifting of the corporate veil of Gunga, Kofinaf, Fundamental and Rendeavour for purposes of ascertaining the true beneficial owners of the property.

Mr Kabogo and his two companies (Gilulu and Acres and Homes Ltd) were opposed to the arbitration proposal, saying it was not genuine because Ms Chege had attempted to take over control of Gilulu.

They accused Ms Chege of colluding with Gunga, Fundamental, Mr Baron and Mr Jennings to concede to the arbitration by first purporting to change the legal representation of Gilulu in order to accede to Fundamentals request for arbitration.

They added that the suit property is situated in Kenya and the transaction was conducted through a Kenyan bank and was governed by Kenyan laws.

In its ruling, the court held that referring the differences between Gilulu and Fundamental to the arbitral tribunal while the rest of the parties pursue their case in court would create a scenario where there are parallel proceedings over the same subject matter in two different forums.

"This court is at a loss as to how the two forums will determine the dispute, in the absence of the 11 other parties who are reported to have played critical roles in the subject dispute. Most importantly, considering the claim that the suit land belongs to Gunga Properties Ltd, which was not a party to the sale agreement, one wonders how a decision will be made before the arbitral tribunal concerning the said land in absence of Gunga," stated the judge.

She ruled that the proposed arbitration will not promote the access to justice envisaged under Article 159 of the Constitution as it will have the effect of driving away other necessary parties from the seat of justice.

Conflicting instructions

The case will, however, delay, after the judge directed Gilulu to sort out its legal representation in court as set out in the Companies Act.

Justice Okwany made the order after two law firms, Otieno Ogola & Company and W G Wambugu & Company Advocates, appeared in court with conflicting instructions to represent the company in the dispute.

The court heard from Ms Chege that the latter was appointed by the company following a resolution of the board.

But Mr Kabogo told the court that Ms Chege had failed to disclose that she ceased acting as a director for Gilulu and he was the one in charge of the company. She did not deny that she had relinquished the management of the affairs of Gilulu to Mr Kabogo.

In his affidavit, he also made damning revelations against Ms Chege, ranging from breach of lawyer-client confidentiality and material non-disclosure.

"Initially she acted for me as my advocate and even organised for the meeting between myself and Jennings, which she christened in her correspondence as a meeting between the "buyer and the seller" in respect to property LIQ No. 11285 measuring 1005 acres. She has further acted for me in other transactions with Tatu City Ltd and Mr Baron and Mr Jennings," he said.

The case will be mentioned on February 14, 2022.

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