A decision by the county government of Mombasa purporting to vary a warehousing company annual land rates from KES 743,400 to KES 1.8 million has been quashed by court.
This is after the Environment and Land Court (ELC) in Mombasa declared that the actions of the county government in increasing Kilindini Warehouse Ltd’s annual land rates without due process are unlawful, unconstitutional, null and void ab initio (from the beginning).
It also ruled that the county government demand letter dated August 18, 2024, requiring Kilindini Warehouse Ltd to pay KES 2 million within seven (7) days, which was irregular, unconstitutional and incapable of enforcement in law.
“The county government of Mombasa has not demonstrated that it had prepared the valuation rolls or any supplementary rolls before demanding for the increased rates from the petitioner,” ruled the ELC.
The ELC noted that under the Constitution, county governments have the power to impose property rates (commonly referred to as land rates) but the power is not absolute.
It ruled that counties must strictly adhere to the constitutional principles of public participation, statutory valuation processes and the explicit distinction between land tenure types.
The ELC further noted that courts in the country consistently enforce specific principles regarding how counties must legally implement and collect land rates.
“It is trite that county governments cannot arbitrarily impose new rates or alter existing ones without a valid valuation roll and proper public participation,” noted the ELC.
In its petition, Kilindini Warehouse Ltd (the petitioner) told the court that it is the registered and beneficial owner of a parcel of land in Kilindini, Mombasa, which is developed and used for industrial purposes.
The warehousing company sued the county government saying that it has consistently paid annual land rates of KES 743,400, being the assessed rate prior to the impugned variation.
The petitioner also told the court that on or about December 6, 2023, the respondent (county government) issued it with a statement indicating an alleged outstanding balance of KES 1.1 million.
Kilindini Warehouse Ltd also said that upon further inquiry, it was brought to its attention that as from April 13, 2023, the respondent had unilaterally varied the annual land rates payable from KES 743,400 to KES 1.8 million, an increment calculated based on 35 per cent of property value as opposed to the previous 14 per cent.
It further said that the basis of the variation was not communicated (to it) nor was any lawful process followed to implement a drastic increment.
The county government argued that the petition by the warehousing company was an afterthought consisting of unsubstantiated allegations intended to mislead the court.
The respondent argued that it exercised its mandate under the promulgated Mombasa Finance Act and increased the rate payable from 14 to 35 per cent.
It argued that the increment process was taken through the prerequisite legislative process that included collection of public views through public participation barazas.
The county government also told the court that it met the public and various stakeholders who shared their views on the proposed increment to rates payable.
According to the county government, the petitioner failed to share their views on the proposal to raise the revenue raising measure proposed in the Mombasa Finance Act, 2022.
The court said that it had considered the issue on whether the petitioner was given adequate notice for the increment of the land rates and found that it (notice) was not reasonable as it gave it less than 14 days to participate.
“I do find that the respondent has not demonstrated that he complied with the principles of public participation,” ruled the ELC.
It also issued a permanent injunction restraining the respondent from demanding, levying, recovering, distressing for or in any manner enforcing payment of the impugned enhanced land rates against the petitioner unless and until full compliance with the Valuation for Rating Act (Cap 266), (repealed) the Public Finance Management Act, 2012, and the Constitution.
The ELC also issued an order compelling the county government to strictly comply with the provisions of the National Rating Act, the Public Finance Management Act, and the Constitution before imposing or enforcing any future variation of land rates.
The ELC also issued an order directing the county government to reimburse Kilindini Warehouse Ltd all money paid pursuant to the unlawful increment, including KES 2.2 million remitted on May 14, 2025, or in the alternative, credit the same towards its (petitioners) lawful rates payable in subsequent financial years.