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ELCPartially AllowedNot stated in the judgment· [2020] KEELC 1418 (KLR)

PBM Nominees Limited v Uchumi Supermarkets Limited [2020] KEELC 1418 (KLR)

Environment and Land Court
27 July 2020
3,936 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court confirmed it can hear rent disputes and awarded a landlord over Kshs 61 million based on the tenant's own written admissions.

What this practically means

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Executive summary

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The plaintiff sued on 25/6/2018 for rent arrears, service charge and interest totalling Kshs 147,610,693.20 under a sub-lease, and moved for summary judgment or, alternatively, judgment on admission of Kshs 61,304,565.60. The defendant raised a preliminary objection contending that the claim was a civil debt within the High Court's jurisdiction, relying on the Court of Appeal's Co-operative Bank v Patrick Kangethe Njuguna decision, and argued that the admissions relied on were without prejudice correspondence and that entry of judgment would infringe its right to be heard under Article 50(1). The court disposed of the preliminary objection first. Applying Article 162(2)(b) and Section 13 of the Environment and Land Court Act, and following Nakumatt Holdings v Ideal Locations, which involved materially identical facts (a rent claim against a tenant in insolvency), the court held the ELC had jurisdiction, distinguishing Kangethe as a mortgage case; even on Kangethe's own criteria the breached contract was a lease concerning use of land. On the motion, the court found that the Deed of Acknowledgment of Debt and two letters evidenced a plain, unconditional admission of Kshs 61,304,565.60, and that neither letter bore a without prejudice endorsement; the burden of showing payment or lawful grounds for non-payment had not been discharged. However, the principal prayer for Kshs 147,610,693.20 failed because the figure's derivation and the effect of the agreed lease surrender and 50% discount required trial. The preliminary objection was dismissed and judgment on admission entered for Kshs 61,304,565.60, with leave to enforce, the balance proceeding to trial and costs awarded to the plaintiff on both applications.

Key legal issues

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01

Jurisdiction of the ELC over a claim for rent arrears arising from a sub-lease, where the defendant argued the claim was a mere civil debt for the High Court

Holding

The ELC has jurisdiction; the claim arises from breach of a lease relating to use and occupation of land, and the court followed Nakumatt Holdings over Kangethe as the latter concerned mortgages

Reasoning

Article 162(2)(b) and Section 13 of the ELC Act confer jurisdiction over disputes relating to rents, use and occupation of, and title to, land. The Kangethe decision concerned mortgages, whereas Nakumatt concerned an identical landlord-tenant rent claim with pending insolvency proceedings. Applying Trans World Safaris, the court resolved the conflict in favour of Nakumatt. Even under Kangethe's criteria, the breached contract was a lease relating to use of land.

p. 4
02

Whether the letters dated 25/4/2018 and 8/5/2018 were privileged without prejudice correspondence

Holding

The contention was rejected; neither letter bore a without prejudice endorsement nor suggested it in its text

Reasoning

The defendant claimed the admissions were made in without prejudice settlement discussions and were privileged. The court examined the letters and found nothing on their face to indicate without prejudice status, so they could properly ground judgment on admission.

p. 5
03

Whether the plaintiff was entitled to judgment on admission for Kshs 61,304,565.60

Holding

Yes; the debt was duly acknowledged and admitted, unconditionally, in the Deed and the letters, and there was no evidence of payment

Reasoning

The defendant did not dispute execution of the Deed of Acknowledgment of Debt nor the two letters acknowledging the debt. Once the plaintiff produced these, the burden shifted to the defendant to show payment or lawful grounds for non-payment, which it did not discharge. The unexplained figure of Kshs 147,610,693.20 and the question of lease surrender and the 50% discount, however, required trial.

p. 5

Legal principles established

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  • A lease-related claim for rent and service charge arising from use and occupation of land falls within the jurisdiction of the Environment and Land Court under Article 162(2)(b) and Section 13 of the ELC Act.
  • Letters relied on as admissions must bear a 'without prejudice' endorsement or otherwise show on their face that they were made on that basis to attract privilege.
  • Judgment on admission may be entered only where the admission is plain, clear, unconditional, obvious and unambiguous, and where the debtor has not shown payment or lawful grounds for non-payment.

Court orders

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  1. 1.The defendant's preliminary objection dated 12/7/2018 is dismissed for lack of merit
  2. 2.Judgment on admission is entered for the plaintiff against the defendant for the sum of Kshs 61,304,565.60
  3. 3.The rest of the plaintiff's claim shall proceed to trial
  4. 4.The plaintiff has leave to forthwith enforce the judgment on admission
  5. 5.The plaintiff shall have costs of the preliminary objection and the notice of motion dated 18/7/2018

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(b)
  • Constitution of Kenya, 2010Article 163(3)
  • Constitution of Kenya, 2010Article 165(5)
  • Constitution of Kenya, 2010Article 50(1)
  • Constitution of Kenya, 2010Articles 42, 69 and 70
  • Environment and Land Court ActSection 13
  • Environment and Land Court ActSection 4
  • Insolvency ActSection 430

Cases cited (9)

  • Owners of Motor Vehicle Lillian “S” v Caltex Oil (K) Ltd
    (1989) IKLR
  • Co-operative Bank of Kenya Limited v Patrick Kangethe Njuguna & 5 others
    (2017) eKLR; Civil Appeal No 83 of 2016
  • Samuel Kamau Macharia & Another v Kenya Commercial Bank Ltd & 2 others
    (2012) eKLR
  • Nakumatt Holdings Limited & Another v Ideal Locations Limited
    (2019) eKLR
  • Trans World Safaris Kenya Limited v Somack Travel Limited
    [1997] eKLR
  • Isaac Awuondo v Surgipharm Limited & Another
    [2011] eKLR
  • Guardian Bank Limited v Jambo Biscuits Kenya Limited
    [2014] eKLR
  • Ideal Ceramics Ltd v Suraya Property Group LTD
    Nairobi HCCC Number 408 of 2016
  • Kenya Commercial Bank Limited & Another v Suntra Investment Bank Limited
    [2014] eKLR
Jurisdiction invoked
Article 162(2)(b) of the Constitution of Kenya 2010 and Section 13 of the 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, "PBM Nominees Limited v Uchumi Supermarkets Limited [2020] KEELC 1418 (KLR)", Case Analysis (2020). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1418/eng@2020-07-27

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