Export Processing Zones Authority v Lowdan Exporters (EPZ) Limited (Civil Appeal E113 of 2022) [2024] KECA 864 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed landlords can terminate leases per contract terms, even if they accept rent after issuing a termination notice.
What this practically means
#Executive summary
#Key legal issues
#Whether the appellant had valid reasons to terminate the leases
The appellant terminated the leases on valid grounds: the respondent's failure to develop the properties, failure to pay rent, and breach of mandatory lease terms; receipt of rent arrears did not defeat the contractual right to terminate by notice.
The Court found the uncontradicted testimony of DW1 and the documentary evidence demonstrated the respondent's refusal, failure or neglect to develop the properties, non-payment of rents for 2013-2016, and breach of mandatory lease terms. The receipt of rent arrears in 2017, after the termination notice, did not operate as a waiver of the right to terminate by notice under clause 21.1 of the leases.
Whether the learned Judge rewrote the contract between the parties
By relying on the MOU and the land-swap negotiations to excuse the respondent's breaches, the learned Judge rewrote the contract; the MOU did not stand in the way of strict enforcement of the leases.
The express terms of the leases provided for termination with sufficient notice, and the respondent was in breach of conditions appurtenant to the grants. The MOU did not override the leases. Finding otherwise was tantamount to the Judge rewriting the contract, contrary to the settled principle that courts do not rewrite contracts between willing parties absent coercion, fraud or undue influence.
Whether the learned Judge erred in disallowing the appellant's undefended counterclaim
The Judge erred by relying on the respondent's bundle of documents not formally produced in evidence; the counterclaim should have been determined on the pleadings and evidence adduced, following the no-evidence-no-finding rule.
The respondent filed no defence to the counterclaim, which proceeded undefended. The parties set the agenda by their pleadings; the Judge was bound by them and could not descend into the arena by importing extraneous, unproduced material. Absent fraud or illegality, an undefended claim supported by evidence should have succeeded on the pleadings and testimony before the court.
Whether the Judge failed to order forfeiture/surrender of the leases
The respondent having surrendered vacant possession, it could not continue to cling to the leases and clog the appellant's Article 40 property rights; relief compelling surrender of the lease documents was warranted to prevent unjust enrichment.
Termination was water under the bridge since the respondent had surrendered possession; the only live issue was remedies. The respondent could not fairly retain registered leases against a lessor whose termination notice had expired and who is constitutionally guaranteed the right to property under Article 40. The Court adopted the unjust-enrichment principle from Chase International.
Legal principles established
#- It is not the business of courts to rewrite contracts between parties; parties are bound by the terms of their contracts unless coercion, fraud or undue influence are pleaded and proved.
- A trial court must confine itself to the pleadings and evidence formally adduced; it may not rely on extraneous material not produced at trial, particularly where a counterclaim is undefended.
- A counterclaim must be determined on its merits regardless of whether it is raised as a sword or a shield.
Court orders
#- 1.A declaration that the leases in respect of parcels LR Nos. MN/VI/4797, MN/VI/4798 and MN/VI/4799 stood terminated as at the date of expiry of the termination notice dated 27th January 2017
- 2.The Judgment and Decree of the ELC at Mombasa (N. A. Matheka, J.) dated 28th July 2022 in ELC Case No. 127 of 2017 set aside
- 3.A mandatory injunction compelling the respondent to execute all requisite documents to facilitate surrender of the leases in favour of the appellant within thirty (30) days of service
- 4.Failing compliance, the Deputy Registrar to execute the requisite instruments of surrender of lease in place of the respondent
- 5.The costs of the respondent's suit and of the appellant's counterclaim in the superior court to be borne by the respondent
- 6.The costs of the appeal and of the due execution of the orders to be borne by the respondent
- On appeal from
- Environment and Land Court at Mombasa
- ELC Case No. 127 of 2017
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (rule 88(1) referenced); appeal as of right against the ELC judgment
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- ISL Kenya Limited v Export Processing Zones Authority[2026] KEELC 5621 (KLR)17 Sept 2026distinguished
Cite this brief
#Cite this brief
Caselaw, "Export Processing Zones Authority v Lowdan Exporters (EPZ) Limited (Civil Appeal E113 of 2022) [2024] KECA 864 (KLR)", Case Analysis (2024). Civil Appeal at Mombasa (ELC appeal from ELC Case No. 127 of 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/864/eng@2024-07-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.