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ELCPartially AllowedNot stated in the excerpt (plaint dated 19th February 2018, amended 13th November 2019)· [2021] KEELC 2938 (KLR)

Pampa Grill Limited & another v North Lake Limited & another [2021] KEELC 2938 (KLR)

Environment and Land Court
10 June 2021
8,212 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~33 min to read original · ~4 min brief

The bottom line

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A Kenyan hotel wrongfully evicted after its lease expired won Kshs 18 million in deposits, lost goods and punitive damages, but not lost profits.

What this practically means

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Executive summary

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The 1st plaintiff leased L.R No. 330/352, Nairobi from the 1st defendant for five years and three months, expiring 30th November 2017, operating a restaurant through the 2nd plaintiff. After notice of non-renewal, the plaintiffs remained in occupation, paid December 2017 rent and a further deposit, and obtained tribunal orders restraining interference with their possession. The 1st defendant, however, obtained ex-parte eviction orders in Nairobi CMCC No. 9414 of 2017 on the same date, evicted the plaintiffs on 18th January 2018 through Siuma Auctioneers, and then withdrew the lower court suit. The defendants filed no defence and the suit proceeded to formal proof with three witnesses: a director, an accountant who projected 2018 profits, and a quantity surveyor who assessed renovation costs. The court framed six issues. It found no implied or periodic lease arose after expiry, holding that acceptance of rent did not create a tenancy under sections 38 and 60(2) of the Land Act. It held the lower court eviction orders were illegal, null and void, as no rule authorised eviction pending hearing, service was not proved, and the suit was withdrawn to defeat challenge. The eviction was consequently illegal and malicious, though not in contempt of the tribunal orders, which conflicted with orders of equal force. Judgment was entered against the 1st defendant for refund of both security deposits, Kshs. 11,942,455 for goods converted, stolen or destroyed, and Kshs. 5,000,000 general and punitive damages, with interest and costs; renovation costs, December 2017 rent and loss of profits were refused.

Key legal issues

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01

Whether an implied lease or periodic tenancy arose after expiry of the lease on 30th November 2017

Holding

No implied lease or periodic tenancy arose; there was no written agreement for renewal as required by section 38 of the Land Act, and rent was not accepted for two months as required by section 60(2)

Reasoning

The lease had no renewal clause and the lessor gave notice of non-renewal. Section 38 of the Land Act requires contracts for disposition of an interest in land to be in writing and signed. Acceptance of December 2017 rent was not proved and, in any event, only continued acceptance for two months creates a periodic tenancy under section 60(2). No agreement to renew was evidenced.

02

Whether the eviction breached the tribunal orders of 15th January 2018

Holding

No contempt was established because two conflicting orders of equal force were issued on the same day over the same subject matter

Reasoning

The lower court and the tribunal issued conflicting orders on 15th January 2018 over the same property. Until a higher court resolved which order was enforceable, enforcing either could not constitute contempt of the other; both had equal force, and a tribunal order filed in the lower court is enforceable as that court's order under section 14 of the Landlord and Tenant Act.

p. 5
03

Whether the lower court eviction orders were illegal, fraudulent, null and void

Holding

The eviction orders were illegal, null and void; no provision authorised eviction pending hearing of an application or suit, and the suit was withdrawn before inter-partes hearing

Reasoning

The lower court granted eviction orders ex-parte on temporary basis without service of hearing notices, executed them, and then the 1st defendant withdrew the suit a day after eviction. The court found no rule authorising eviction pending determination, that possession at interlocutory stage requires a temporary mandatory injunction or Order 36 rule 1(b) procedure, and that the proceedings were muddled with irregularities violating natural justice.

p. 7
04

Whether the plaintiffs were served with the lower court pleadings and orders

Holding

The 1st plaintiff was not served; the uncontroverted averments and unchallenged evidence of PW1 stood unopposed

Reasoning

The defendants filed no defence and did not appear at trial, so the plaintiffs' averments of non-service were uncontroverted and PW1's evidence unchallenged. The court found the 1st defendant's conduct after obtaining the orders demonstrated it did not want the 1st plaintiff to be heard.

p. 7
05

Whether the eviction was illegal and malicious

Holding

The eviction was unlawful because it rested on a void order, and its manner demonstrated malice

Reasoning

Since the eviction was executed under a void order, it was conducted without a lawful court order; a landlord must obtain an order of a competent court or tribunal to obtain possession. The forceful manner of eviction, executed during business hours with police and auctioneers without allowing removal of goods, left no doubt the eviction was malicious.

p. 8
06

Which heads of damages were proved

Holding

Refund of both security deposits and compensation for converted, stolen and destroyed goods were proved; renovation costs, December rent, loss of profits failed; general and punitive damages of Kshs. 5,000,000 awarded

Reasoning

The first security deposit was contractually refundable at lease expiry; the further deposit was paid in expectation of a lease never granted, so it cannot be retained. Renovation expenses were borne under a rent moratorium and waiver with no reimbursement clause. Loss of profits failed as the plaintiffs had no right of occupation in 2018. General and punitive damages were justified by the illegal and malicious eviction, tempered by expiry of the lease.

p. 8

Legal principles established

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  • Acceptance of rent after expiry of a lease does not per se create a lease or entitle the tenant to an extension; a periodic tenancy arises only where the lessor accepts rent for two months after termination under section 60(2) of the Land Act, 2012
  • There is no legal basis for an order of eviction pending the hearing of an application or suit; possession at interlocutory stage may only be granted through a temporary mandatory injunction in exceptional circumstances or summary possession under Order 36 rule 1(b) of the Civil Procedure Rules
  • A judgment or order procured by extrinsic fraud is void and liable to collateral attack at any time
  • A void order is a nullity requiring no setting aside, and every proceeding founded on it is equally void
  • Unless a tenant consents to give up possession, a landlord must obtain an order of a competent court or statutory tribunal to obtain possession

Court orders

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  1. 1.Judgment entered for the plaintiffs against the 1st defendant for Kshs. 900,000/= being the first security deposit
  2. 2.Kshs. 1,292,073/= being further security deposit
  3. 3.Kshs. 11,942,455/= being the value of or compensation for the plaintiffs' goods or assets that were converted, stolen, destroyed and/or damaged during the illegal eviction
  4. 4.Kshs. 5,000,000/= being general and punitive damages for illegal eviction
  5. 5.Interest on items 1 and 2 at court rates from the date of filing suit and on items 3 and 4 at court rate from the date of judgment until payment in full
  6. 6.Costs of the suit

Authorities

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Legislation

  • Land Act, 2012Section 38(1)
  • Land Act, 2012Section 2 (definition of 'disposition')
  • Land Act, 2012Section 60(1) and (2)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Chapter 301 Laws of KenyaSection 14
  • Civil Procedure RulesOrder 36 rule 1(b)

Cases cited (4)

  • Jones v Willard
    224 Va. 602, 607 (Va. 1983)
  • Fritts v Krugh
    92 N.W.2d 604, 354 Mich. 97 (1958)
  • Macfoy v United Africa Co. Ltd.
    (1961) 3 All ER 1169
  • Gusii Mwalimu Investment Co. Ltd & 2 Others v Mwalimu Hotel Kisii Ltd
    Civil Appeal No. 160 of 1995
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over a dispute concerning a lease of land known as L.R No. 330/352, Nairobi

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, "Pampa Grill Limited & another v North Lake Limited & another [2021] KEELC 2938 (KLR)", Case Analysis (2021). Not stated in the excerpt (plaint dated 19th February 2018, amended 13th November 2019). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/2938/eng@2021-06-10

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