Jomo Kenyatta University of Agriculture and Technology v Kwanza Estates Limited [2022] KEELC 256 (KLR)
The bottom line
#A Kenyan university could not escape a lease early because the contract had no break clause, and Covid-19 hardship was not legal frustration.
What this practically means
#Executive summary
#Key legal issues
#Whether the lease was frustrated by operation of or change in law and by the Covid-19 pandemic
No frustration. The alleged placement policy and the Universities Act 2012 predated the lease of 1st May 2016, and economic hardship from reduced government funding and Covid-19 closures does not discharge contractual obligations.
The court held that both the statutory provisions and the 2014 placement policy were already in place when the lease was executed, so no change in law occurred. Hardship events may have caused economic difficulty but that does not excuse performance; frustration must be narrowly invoked and cannot flow from a bad bargain.
Whether the notice dated 10th July 2020 validly terminated the lease
It did not. The lease contains no termination clause, and clause 5.26 addresses only the obligation to yield up the premises in repair; the notice did not invoke any operative termination provision.
The court perused the lease and found no termination clause. Relying on Kenya Commercial Bank Ltd v Popatlal Madhavji, where a lease term exceeds five years, mid-term termination is unavailable and a tenant remains obligated to pay rent to expiry. Non-registration did not distinguish that case since an unregistered agreement remains valid inter partes.
Whether the unregistered lease was enforceable
Yes, as between the parties. Non-registration renders it valid inter partes without protection against third parties.
Following Bachelor's Bakery v Westlands Securities as restated in Mega Garment Limited v Mistry Jadva Parbat & Co, the court held that a lease for a term exceeding one year requires registration, but an agreement creating such a lease is enforceable between the parties even absent registration, so non-registration did not assist the plaintiff.
Quantum on the counterclaim
KShs 40,000,000 restoration costs per the consent of 2nd June 2021 and KShs 71,965,138.70 rent for 1st February 2021 to 30th April 2022.
Restoration was settled by consent at KShs 40 million. The defendant was under a duty to mitigate and could not wait endlessly for payment. As rent to 31st January 2021 was paid and admitted, only the balance from February 2021 to lease expiry was computed and awarded.
Legal principles established
#- An unregistered lease agreement is valid and enforceable inter partes between the parties, though it gives no protection against third parties
- The doctrine of frustration must be kept within narrow limits and cannot rest on economic hardship, nor on a change of law already in force when the contract was made
- Courts will not rewrite contracts between parties; parties must live with the consequences of their agreements
Court orders
#- 1.The plaintiff's suit is dismissed with costs to the defendant
- 2.A declaration that the lease entered into between the parties on 1st May 2016 remains in force and has no break clause and the plaintiff is obligated to continue paying the stipulated rent up to 30th April 2022
- 3.A declaration that the purported notice of termination of lease issued by the plaintiff dated 10th July 2020 is null and void in law
- 4.KShs 40,000,000 all inclusive being the cost of restoring the premises to its original state, in terms of the consent recorded on 2nd June 2021
- 5.KShs 71,965,138.70 being rent for the period 1st February 2021 to 30th April 2022
- 6.Costs of the counterclaim with interest
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a lease dispute concerning land parcel Block 9/90 Nakuru Municipality
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Jomo Kenyatta University of Agriculture and Technology v Kwanza Estates Limited [2022] KEELC 256 (KLR)", Case Analysis (2022). Not stated in the extract (ELC suit, Kakamega). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/256/eng@2022-04-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.