The Supreme Court has set aside the Court of Appeal’s decision and directed that the long-standing dispute between Kenya Wildlife Service (KWS) and Sea Star Malindi Limited be re-evaluated by the appellate court to determine liability afresh.
In its judgment, Chief Justice Martha Koome and four other judges ruled that both the Environment and Land Court (ELC) and the Court of Appeal wrongly relied on an earlier judicial review decision to determine liability without conducting a full merits-based review of the case.
The dispute dates back to 1994 when Sea Star Malindi Limited purchased a parcel of land adjacent to the Malindi Marine National Park with plans to build a high-end hotel.
By 1996, the company had secured building approvals from the Municipal Council of Malindi and commenced construction, expecting to have the project completed and operational by December 1997.
However, the project soon came to a halt after KWS intervened.
In April 1997, KWS issued a stop order, alleging that part of the construction extended into a 100-foot buffer zone from the high-water mark, a protected area established under Legal Notice No. 99 of 1968.
Although KWS temporarily lifted the stop order in June 1997, the agency reinstated it in August of the same year, accusing Sea Star of breaching approval conditions by installing waste facilities on porous coral rock and continuing construction in prohibited areas.
Armed wardens were stationed at the site to stop further development. Sea Star protested these actions, arguing that the land was private property and that the stop orders were unlawful.
The company initiated judicial review proceedings in 1997 to challenge KWS’s decision.
In November 2002, Justice Onyango Otieno ruled in Sea Star’s favor, quashing the stop order and declaring that the land in question extended to the high-water mark and was not part of the public foreshore.
Armed with this ruling, Sea Star pursued a separate civil suit in 1998, seeking substantial damages for what it described as unlawful interference with its development project.
“Towards that end, the respondent sought an order that the appellant is liable for the damages and losses incurred by the respondent from August 20, 1997, to the date when the reconstruction shall be completed,” the judgment read.
The company claimed losses exceeding Sh100 million, including reconstruction costs and anticipated income of $75,000 per month, which it argued it would have earned had the hotel opened as planned.
In 2018, Justice Olola of the Environment and Land Court ruled in favor of Sea Star, treating the 2002 judicial review decision as conclusive proof of liability. The court awarded Sh90 million for reconstruction costs and an additional Sh30 million in general damages, plus interest at commercial bank rates.
KWS, however, appealed the ruling, arguing that the trial court failed to assess evidence of liability and had wrongly assumed that the judicial review ruling automatically established fault.
The Court of Appeal, in a 2024 judgment, upheld the ELC’s finding on liability but reduced general damages from Sh30 million to Sh3 million, terming the initial award excessive.
“The majority judgment found that the trial court had misapprehended the essence of an award of general damages in a claim of violation of rights. In that, the trial court ought to have made a nominal award of general damages to protect and remedy the respondent’s constitutional right to its property,” read the judgment.
“Accordingly, they set aside the award of Sh30,000,000 issued as general damages on the ground that it was excessive and substituted the same with an award of Sh3,000,000.”
It also replaced commercial interest with standard court rates. Justice Gatembu, however, dissented, warning that the ELC had erred by failing to independently evaluate the evidence and by treating the judicial review outcome as binding in the civil suit.
KWS then turned to the Supreme Court, arguing that the lower courts had misinterpreted the scope of judicial review.
The agency insisted that its actions were lawful measures taken to protect a fragile marine ecosystem, and that critical issues, such as whether the construction encroached on a protected strip of land, had never been examined in detail.
Sea Star maintained that the judicial review ruling had already vindicated its rights and that KWS should be held liable for the significant financial losses suffered over the years.
In its June 27, 2025, ruling, the Supreme Court agreed with KWS and overturned the Court of Appeal’s decision.
The justices faulted both the ELC and the appellate court for failing to conduct a full merits-based trial on liability and damages.
“Although the appellant was found to have acted irrationally and illegally in issuing the letters stopping the respondent’s construction in the judicial review proceedings, in determining the question of liability, it was obligatory for the trial Judge to evaluate the entire pleadings and evidence on merit,” the judges noted.
"It is for this reason that we must find that the two superior courts below did not test the merits of the defence (KWS) by the appellant.”
The court stated that findings made in judicial review proceedings, particularly those predating the 2010 Constitution, are confined to assessing the legality of administrative actions and cannot, by themselves, determine civil liability or the amount of damages.
The ruling emphasised that judicial review is designed to test the lawfulness of administrative action but not to resolve disputes over fault or compensation.
The court further held that critical factual and legal issues had been overlooked.
“A judicial review determination does not confer automatic liability in a subsequent civil claim for damages,” the justices noted.
“The lower courts had a duty to evaluate the totality of evidence presented, including the statutory mandate of KWS to safeguard protected marine areas, before apportioning liability.”
Consequently, the Supreme Court set aside the Court of Appeal’s judgment and remitted the matter for fresh evaluation.
The court also directed the appellate judges to consider consolidating the case with related suits involving the Kilifi County Government to avoid the risk of double compensation.
Each party was ordered to bear its own costs in the Supreme
Court proceedings.
