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ELCPartially AllowedNot stated in judgment (plaint filed 12 April 2018)· [2021] KEELC 1454 (KLR)

Melisa Awour Odera v Keringet Estates Limited [2021] KEELC 1454 (KLR)

Environment and Land Court of Kenya
21 October 2021
11,520 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~46 min to read original · ~4 min brief

The bottom line

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A Tiwi Beach sublease holder was given 90 days to pay arrears and 12 months to finish her house to avoid losing the property.

What this practically means

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Executive summary

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The plaintiff, sole proprietor of a registered sublease over approximately one acre of the defendant's 12.5-acre head lease at Kwale/Tiwi Beach Block/338, sued seeking declarations of ownership, an injunction against interference with access, and mesne profits, contending that the defendant's notices of forfeiture were irregular because no accounts or invoices for service charge were given and the incomplete house received no services. The defendant counterclaimed for forfeiture of the sublease effective 28 October 2014, re-transfer of 4,000 ordinary 'B' shares, Kshs. 2.5 million comprising accrued service charge, Euro 9,000 contractor's fees and Kshs. 841,153/= building costs. The court held that the service charge of Kshs. 23,000/= per month was a minimum fixed in the sublease, payable without invoice or particularisation, and that the plaintiff was liable from execution of the sublease, jointly with her ex-husband before the transfer. The transfer of Dr. Gaeckle's half share to the plaintiff pursuant to a German divorce court order could not be vetoed by the lessor and was no breach. Although a contractual right of forfeiture existed under Clause 5(a), actual forfeiture was doubtful since the lessor never took possession, denied no access, and registered no determination. Exercising discretion under Section 76 of the Land Act, the court gave the plaintiff 90 days to pay arrears and 12 months to complete the house, failing which forfeiture could proceed under a regulated valuation and sale machinery with the plaintiff receiving at least the forced sale value. Mesne profits and the declarations were refused; the counterclaim sums of Euro 9,000 and Kshs. 841,153/= were dismissed for want of proof. The court further ordered payment of correct stamp duty on the true sum of Kshs. 15 million, a restriction in the register, surrender of the erroneous title over the whole 12.5 acres, and costs of the main suit and counterclaim against the plaintiff.

Key legal issues

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01

Interpretation of the service charge covenant

Holding

The plaintiff was liable to pay service charge at the minimum rate of Kshs. 23,000/= per month from execution of the sublease, jointly with Dr. Gaeckle before the transfer, without need of invoices

Reasoning

Clause 2 stipulated a minimum service charge of Kshs. 23,000/= per month where private residential units did not exceed three. Written particulars were only required where a higher charge was stipulated. Nothing in the sublease made service charge contingent on completion of the house or occupation, and the defendant in fact provided written accounts on 6 July 2014 and through its advocates on 1 December 2014. The obligation was joint while the lease was held jointly.

p. 6
02

Legality of the transfer of the half share to the plaintiff

Holding

The transfer of Dr. Gaeckle's half share to the plaintiff pursuant to a divorce court order was not a breach of the sublease notwithstanding the absence of the lessor's consent

Reasoning

Although Clause 3(e) and Section 55 of the Land Registration Act required the lessor's written consent to dealings with leases, the transfer here was not a voluntary sale but an act in obedience to a court order in the German divorce proceedings. The court ordered the transfer and the lessor cannot veto what a court has ordered; if aggrieved, it should have applied to that court. The lessor's advocates had acknowledged the divorce award without threatening action.

p. 7
03

Right of forfeiture and whether the sublease was forfeited

Holding

A contractual right of forfeiture existed under Clause 5(a) despite exclusion of Sections 53-56 RLA, but it was ambiguous whether the lease was ever actually forfeited since there was no proof of repossession, denial of access, or registration of the determination

Reasoning

Clause 7 of the sublease excluded Sections 53-56 of the (repealed) Registered Land Act, but parties could provide an equivalent contractual right; Clause 5(a) allowed re-entry and repossession upon unremedied breach after 30 days' notice. However, forfeiture determines the lease and the lessor takes possession; here the defendant never took actual possession, allowed the plaintiff access, and never registered a determination, leaving ambiguity.

p. 9
04

Relief against forfeiture and appropriate orders

Holding

Exercising discretion under Section 76 of the Land Act, the court gave the plaintiff a chance to avoid forfeiture by paying arrears within 90 days and completing the house within 12 months, with a regulated sale machinery in default

Reasoning

Both the RLA (Section 59) and the Land Act (Section 76) allow relief against forfeiture, and the court has wide discretion without laid-down guiding principles. The plaintiff had made a heavy investment but refused to pay service charge and breached the construction covenant; it was unfair for her to burden the defendant with expenses while the development remained incomplete. Conditional orders balancing both interests were therefore fashioned.

p. 9
05

Proof of the counterclaim for contractor's fees and building costs

Holding

The claims for Euro 9,000 contractor's fees and Kshs. 841,153/= building costs were not proved and were dismissed

Reasoning

The alleged building contract was oral with no reference for its terms and conditions. There was no proof that Euro 9,000 was agreed as contractor fees or that Kshs. 841,153/= was spent on the plaintiff's behalf; no receipts were brought. The defendant was not a registered contractor and building was not shown to be among its core businesses, so no fee could be inferred from business practice or regulated fees.

p. 10

Legal principles established

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  • A minimum service charge fixed in a lease is payable without invoice or particularisation; written particulars are only needed where the charge exceeds the stipulated minimum
  • A transfer of a joint lessee's share effected pursuant to a court order (divorce settlement) cannot be vetoed by the lessor under a consent covenant; the court order overrides the terms of the lease
  • Excluding statutory forfeiture provisions without substituting elaborate contractual provisions leaves grey areas as to how forfeiture operates
  • Actual forfeiture requires more than issuing a forfeiture notice; the lessor must demonstrate repossession such as taking possession, denying access, or registering the determination of the lease
  • Under Section 76 of the Land Act the court has wide discretion to grant or refuse relief against forfeiture, with no laid-down guiding principles, looking at all surrounding circumstances
  • An oral contract may be enforceable, but the claimant must still prove the agreed sums; thin evidence of unparticularised sums cannot sustain judgment

Court orders

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  1. 1.The plaintiff to pay the accrued service charge, plus any proportion of rent/charges or other expenses, within 90 days, service charge being a minimum of Kshs. 23,000/= per month while private dwelling houses do not exceed three
  2. 2.Thereafter the plaintiff to continue paying service charge at the minimum of Kshs. 23,000/= per month unless circumstances change so that the service charge reduces
  3. 3.The plaintiff to embark on completion of the house within a reasonable completion period of 12 months
  4. 4.In default, the defendant to be at liberty to exercise its right of forfeiture, determine the lease and take possession; upon such forfeiture the defendant to pay the plaintiff at least the forced sale value of the premises, assessed by an agreed valuer or the Government Valuer within Kwale County, with prescribed sale machinery if the defendant cannot pay
  5. 5.The plaintiff's prayer for mesne profits dismissed
  6. 6.The plaintiff's declarations sought in the plaint declined/subsumed by the orders made
  7. 7.In default of compliance, the plaintiff to forfeit her shares in the defendant company; she to execute a share transfer, failing which the Deputy Registrar to execute it to the defendant or the buyer of the premises
  8. 8.The defendant's counterclaim for Euro 9,000 contractor's fees and Kshs. 841,153/= building costs dismissed for want of proof
  9. 9.The correct stamp duty to be paid on the true contract sum of Kshs. 15,000,000/= including any penalties and/or interest, and a restriction to be entered in the register of the sublease indicating liability to pay stamp duty
  10. 10.The plaintiff to surrender the erroneous title issued for the whole 12.5 acres; the Land Registrar to find a way of distinguishing the sublease from the head lease so they do not bear the same description
  11. 11.The plaintiff to pay the costs of the main suit and of the counterclaim, with a set-off of taxed costs against amounts due to the plaintiff upon repurchase by the defendant or sale to a third party in default

Authorities

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Legislation

  • Land Registration ActSection 55
  • Registered Land Act (repealed)Sections 53, 54, 55, 56 and 64
  • Land ActSections 75 and 76
  • Stamp Duty Act
  • Sublease agreement dated 3 May 2011 (contract)Clauses 2, 3(e), 3(m), 5(a) and 7
  • Constitution of KenyaRight to property (invoked by the plaintiff)

Cases cited (3)

  • Wakf Commissioners of Kenya vs Farida Almasi Mukira & 2 Others
    (2020) eKLR
  • National Bank of Kenya Limited vs Pipeplastic Samkolit (K) Limited & Another
    (2002) EA 503
  • Abdulkarim Shariff Abdirahim & Another v Awo Shariff Mohammed T/A A.S Mohammed Investments
    (2014) eKLR
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over the sublease dispute concerning land parcel Kwale/Tiwi Beach Block/338

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Melisa Awour Odera v Keringet Estates Limited [2021] KEELC 1454 (KLR)", Case Analysis (2021). Not stated in judgment (plaint filed 12 April 2018). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/1454/eng@2021-10-21

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