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Case Brief · caselaw.co.ke
Court of AppealAllowedCivil Appeal 277 of 1996· [1998] KECA 29 (KLR)

Twiga Properties Limited v Gadinos Pizzas Limited

Court of Appeal of Kenya
5 June 1998
2,604 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~10 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that a tenant who misses the deadline to renew a lease loses that right, and an agreed binding arbitration award stands unless fraud or serious misconduct is proven.

What this practically means

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Executive summary

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The appellant landlord let a shop in Twiga Towers to the respondent under a lease expiring on 14th February 1995, containing an option to renew requiring written request at least six months before expiry. The option was not exercised in time. After the landlord filed suit for possession, the parties consented to refer the disputes disclosed in the pleadings to sole arbitration by Mr. P. J. Ransley, agreeing the award would be final and binding. The arbitrator found the option was not validly exercised, that there was no waiver or estoppel by conduct, and that the respondent had to vacate. The High Court (Ole Keiwa, J) set aside the award, finding waiver and that the respondent became a statutory tenant by holding over, relying on Dhupa v Birdi. The Court of Appeal allowed the appeal. It held that an option to renew must be strictly adhered to; that waiver/estoppel requires a representation acted upon to detriment, absent here; that Dhupa v Birdi was irrelevant to business tenancies under Cap 301; and that, the parties having consented to a final and binding award, the judge was not justified in setting it aside absent fraud, dishonesty or manifest error. The Court restored the award in its entirety, to be converted into judgment of the superior court, with costs to the appellant both here and below.

Key legal issues

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01

Exercise of the option to renew

Holding

The option was not exercised in time; the respondent lost its right to renew and to have fair open market rent determined by an arbitrator.

Reasoning

The option clause required written request not less than six months before expiry, i.e. by 14th August 1994. It was common ground this was not done. The arbitrator found the letter of 14th September 1994 was not served on the plaintiff, and in any event was out of time. The right to arbitrate the rent arose only upon valid exercise of the option.

p. 2
02

Waiver and estoppel by conduct

Holding

The appellant's offer of a new lease and discussions did not waive strict compliance with the option clause; no representation was acted upon to the respondent's detriment.

Reasoning

The arbitrator found the offer of a new lease was a new transaction outside the lease, which the respondent could accept or reject. The respondent did not act to its detriment on any representation. The learned judge erred in making a finding of waiver without even having the arbitration proceedings before him.

p. 3
03

Finality and challenge of the arbitral award

Holding

The consent order referring disputes to arbitration with a final and binding award could not be challenged absent fraud, mistake, misrepresentation or arbitrator misconduct; there was no error of law on the face of the award.

Reasoning

Counsel had ostensible authority to bind their clients to the reference. The Flora Wasike principles on consent judgments were acknowledged but the court held the award binding unless the arbitrator acted dishonestly, fraudulently or was utterly wrong. The arbitrator decided all the issues framed, so remission was unnecessary.

p. 4
04

Statutory tenancy by holding over

Holding

The learned judge erred in holding the respondent became a tenant by holding over; Dhupa v Birdi was irrelevant to business tenancies under Cap 301.

Reasoning

The lease exceeded five years and so was outside Cap 301. Dhupa v Birdi concerned a residential monthly tenancy under the Rent Restriction Act following a 1966 amendment, and had no relevance to business tenancies. The judge was also not called upon to decide the holding-over question.

p. 4

Legal principles established

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  • Where parties with ostensible authority agree to refer disputes to arbitration and be bound by the award, the award is binding unless the arbitrator acted dishonestly, fraudulently or in a manner showing he was utterly wrong.
  • An option to renew a lease must be strictly adhered to; failure to exercise it within the stipulated time extinguishes the right to renew.
  • Waiver/estoppel by conduct requires a representation intended to be acted upon and detrimental reliance; an offer of a new lease which is not accepted does not constitute waiver of strict compliance with an option clause.
  • A lease for a period exceeding five years falls outside the Landlord Tenant (Shops, Hotels & Catering Establishments) Act, Cap 301, so no statutory tenancy arises by holding over.

Court orders

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  1. 1.Appeal allowed
  2. 2.Ruling and order of the High Court set aside
  3. 3.The arbitrator's award restored in its entirety
  4. 4.The award may be converted into the judgment of the superior court
  5. 5.Appellant to have costs of the appeal and costs of proceedings in the High Court
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 642 of 1995
Jurisdiction invoked
First appeal to the Court of Appeal against a ruling of the High Court (no specific constitutional/statutory provision stated in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Twiga Properties Limited v Gadinos Pizzas Limited", Case Analysis (1998). Civil Appeal 277 of 1996. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1998/29/eng@1998-06-05

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.