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ELCAllowedE.L.C. Case No. 287 of 2005· [2018] KEELC 1959 (KLR)

Phoenix Properties Limited v Equip Agencies Limited & 6 others [2018] KEELC 1959 (KLR)

Environment and Land Court
30 August 2018
2,268 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Nairobi court ordered tenants to hand back the property and pay over Kshs. 23 million in rent arrears after their lease expired.

What this practically means

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Executive summary

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Phoenix Properties Limited, registered proprietor of L.R. No. 209/9722, sued seven defendant companies for vacant possession, eviction, Kshs. 23,699,000 in rent arrears from May 2002 to October 2004, and mesne profits of Kshs. 900,000 per month from 1/11/2004. The premises had been leased to the Defendants for six years from 1/11/1998, but they remained in occupation after expiry. The Defendants denied executing the lease, alleged unilateral alteration of its terms, claimed they occupied under verbal agreements, and asserted they were controlled tenants under the Landlord, Tenant (Shops, Hotels and Catering Establishments) Act. Intervening proceedings saw the BPRT decline jurisdiction over the 1998-2000 period and find no periodic lease arose, and an appeal from that ruling remains pending. At trial, the Plaintiff's director proved the lease, the correspondence, the distress for rent and the auction realising Kshs. 2,820,000 which was credited. The Defendants' director conceded the 1998 tenancy but claimed the Plaintiff owed them Kshs. 129,026,793 without evidence, and no counterclaim was filed. The Defendants' supplementary documents were expunged for late and improper filing, and an application to review that order was dismissed. The court found no extension under Clause 8(a) since the Defendants were in rent arrears and never applied in writing; no alteration of the lease was proved; and the contempt issue had been dealt with by the Court of Appeal. The Plaintiff's case was proved on a balance of probabilities: prayers (i), (ii) and (iii) were allowed, with costs to the Plaintiff borne by the Defendants jointly and severally, with interest at court rates.

Key legal issues

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01

Existence and terms of the lease

Holding

The court found the lease of 6 years from 1/11/1998 was entered into and was not altered by the Plaintiff; the Defendants' own witness produced a similar lease and conceded the tenancy agreement.

Reasoning

It was not in dispute that the parties entered a 6-year lease commencing 1/11/1998 and the Defendants took possession. The Defendants alleged unilateral alteration of the lease but led no evidence; the lease produced by their director was similar to the Plaintiff's. The BPRT had also found no periodic lease was created on expiry.

p. 3
02

Extension/renewal of the tenancy and controlled tenancy status

Holding

No extension was agreed; the Defendants never applied under Clause 8(a) and were in breach of the rent covenant, disqualifying them from renewal; they were not protected/controlled tenants.

Reasoning

Clause 8(a) required a written request 6 months before expiry and no breach of covenants. The Defendants were in breach by failing to pay rent as prescribed. The BPRT had declined jurisdiction over the 1998-2000 period and found no periodic lease arose on expiry, and no evidence showed a verbal extension.

p. 3
03

Indebtedness, rent arrears and mesne profits

Holding

The Plaintiff proved rent arrears of Kshs. 23,699,000 (after crediting auction proceeds) and entitlement to mesne profits at Kshs. 900,000 per month from 1/11/2004.

Reasoning

The Plaintiff's evidence that the Defendants occupied from May 2002 without paying rent was uncontroverted; the Plaintiff credited the Kshs. 2,820,000 auction proceeds. The Defendants' counter-assertion that the Plaintiff owed them Kshs. 129,026,793 was unsupported by evidence and no counterclaim was filed. The contempt issue had been dealt with by the Court of Appeal.

p. 3

Legal principles established

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  • A tenant in breach of covenants, notably payment of rent, cannot invoke the option to extend the lease, and absent evidence of an agreement to extend, occupation after expiry is without basis.

Court orders

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  1. 1.Prayers (i), (ii) and (iii) of the Plaint dated 4/5/2005 are allowed, being vacant possession of L.R. No. 209/9722, eviction of the Defendants, and payment of Kshs. 23,699,000 plus interest at court rates together with mesne profits of Kshs. 900,000 per month from 1/11/2004 until vacant possession is handed over
  2. 2.The Plaintiff to have the costs of the suit, borne by the Defendants jointly and severally, together with interest at court rates
Jurisdiction invoked
Environment and Land Court jurisdiction over disputes relating to land and leases (Environment and Land Court Act)

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, "Phoenix Properties Limited v Equip Agencies Limited & 6 others [2018] KEELC 1959 (KLR)", Case Analysis (2018). E.L.C. Case No. 287 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/1959/eng@2018-08-30

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