Court clears way for American pensioner’s Sh226million 10 apartments purchase row against developer

An American pensioner who invested his retirement savings in the multimillion-shilling 88 Nairobi luxury apartment project has secured a major legal reprieve after the Environment and Land Court (ELC) rejected an attempt by developer EightyEight Nairobi Limited to have his petition struck out.

The court ruled that the dispute is not merely a commercial disagreement over a private sale contract but involves proprietary interests in land and constitutional protection of property rights—issues falling squarely within the specialised court’s jurisdiction.

The decision allows retired United States citizen Rizak Shay to pursue claims that the developer, EightyEight Nairobi Limited unlawfully terminated agreements for the purchase of 10 apartments and retained substantial sums he had already paid.

Shay says he invested his pension and retirement benefits in the project, paying USD1.25 million (about Sh161 million) towards apartments valued at USD1.75 million (about Sh226 million).

Court documents show that his payments fully covered the purchase price of seven units—3001 to 3007—on the 30th floor. Shay argues that the payments created enforceable proprietary interests in the apartments.

His petition names EightyEight Nairobi Limited, the Nairobi Land Registrar and the Attorney-General, with other purchasers in the development listed as interested parties.

Shay accuses the developer of terminating the agreements unlawfully, extinguishing his accrued property interests and registering a charge over the development without recognising his interest.

He has asked the court to preserve the apartments pending determination of the case, warning that he risks substantial and irreparable loss if the units are sold or transferred.

At the centre of the dispute is a three-day demand issued by the developer requiring him to pay an additional USD250,000 or face rescission of the agreements.

Shay contends the notice was invalid because it was not served through his advocates as required under the sale agreement. He also argues that the developer had previously accepted payments outside contractual deadlines before abruptly insisting on strict compliance.

He further challenges clauses allowing the developer to forfeit 50 per cent of the purchase price following termination and postpone refunds until the apartments are resold, describing the provisions as punitive and unconstitutional.

EightyEight Nairobi Limited disputed the court’s jurisdiction, arguing the case was essentially a commercial dispute arising from a private sale agreement involving construction and investment rather than disposition of land.

The developer also invoked an arbitration clause, insisting that contractual disputes should be resolved through arbitration under the Arbitration Act. It challenged the inclusion of the Land Registrar and Attorney-General, arguing their joinder artificially transformed a private commercial dispute into a public-law and constitutional matter.

The Nairobi Land Registrar backed the application to strike out the petition, maintaining that although land was involved, the dominant character of the dispute was commercial because it arose from an off-plan investment agreement.

The court, however, disagreed.

It found that the agreement expressly provided for the sale of identified sectional units and that its primary purpose was acquisition of proprietary interests in land.

The fact that the apartments were still under construction when the agreement was signed did not change the character of the transaction.

“The mere fact that the development was to be completed after execution of the agreement does not convert the transaction into a purely construction or commercial contract so as to oust the jurisdiction of this court,” the judge ruled.

The court cited Section 13(2)(d) of the Environment and Land Court Act, which gives it jurisdiction over disputes involving contracts and other instruments granting enforceable interests in land.

It also found that Shay’s petition raises questions concerning land administration, registrable interests and constitutional protection of property rights.

The judge equally declined to send the dispute to arbitration, finding that the petition extends beyond contractual enforcement.

“The petition seeks declarations relating to alleged proprietary interests in land, the validity of dealings affecting the suit property, and constitutional reliefs against parties who are not all privy to the arbitration agreement,” the court said.

The ruling therefore leaves the substantive battle over Shay’s apartments, millions of shillings paid and the legality of the developer’s actions open for determination at trial.