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ELCPartially AllowedNot stated in the extract (ELC suit, Kakamega)· [2022] KEELC 256 (KLR)

Jomo Kenyatta University of Agriculture and Technology v Kwanza Estates Limited [2022] KEELC 256 (KLR)

Environment and Land Court
27 April 2022
6,550 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~26 min to read original · ~4 min brief

The bottom line

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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

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Executive summary

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Jomo Kenyatta University of Agriculture and Technology sued Kwanza Estates Limited seeking declarations that a six-year lease of Kwanza House, Block 9/90 Nakuru (1st May 2016 to 30th April 2022) had been frustrated by change of law and rendered commercially impossible following the KUCCPS placement policy reducing self-sponsored students and the Covid-19 closure of universities, that a three-month termination notice dated 10th July 2020 had ended the lease, and injunctions against distress. Kwanza Estates denied frustration, maintained the lease had no break clause, and counterclaimed for rent to expiry and restoration costs totalling KShs 162,469,481, though restoration was later settled at KShs 40 million by a consent of 2nd June 2021. The court framed three issues: frustration, termination by the July 2020 notice, and reliefs. It held the Universities Act 2012 and the 2014 placement policy predated the lease, so no change in law occurred, and economic hardship cannot excuse performance. Finding no termination clause in the lease, and applying Kenya Commercial Bank v Popatlal Madhavji, it held the notice null and void and the lease binding to expiry. The plaintiff's suit was dismissed with costs. On the counterclaim, the court awarded the consented KShs 40 million restoration sum and KShs 71,965,138.70 as rent for 1st February 2021 to 30th April 2022, together with counterclaim costs and interest.

Key legal issues

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01

Whether the lease was frustrated by operation of or change in law and by the Covid-19 pandemic

Holding

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.

Reasoning

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.

p. 6
02

Whether the notice dated 10th July 2020 validly terminated the lease

Holding

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.

Reasoning

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.

p. 6
03

Whether the unregistered lease was enforceable

Holding

Yes, as between the parties. Non-registration renders it valid inter partes without protection against third parties.

Reasoning

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.

p. 5
04

Quantum on the counterclaim

Holding

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.

Reasoning

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.

p. 7

Legal principles established

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  • 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

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  1. 1.The plaintiff's suit is dismissed with costs to the defendant
  2. 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. 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. 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. 5.KShs 71,965,138.70 being rent for the period 1st February 2021 to 30th April 2022
  6. 6.Costs of the counterclaim with interest

Authorities

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Legislation

  • Jomo Kenyatta University of Agriculture and Technology ActRepealed Act (establishment of plaintiff)
  • Universities ActSection 56
  • Land Registration ActSection 43(2)
  • Registration of Documents ActSection 4
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap 301Section 4
  • Companies ActIncorporation of the defendant

Cases cited (16)

  • Chon Jeuk Suk Kim & another v E. J. Austin & 2 others
    [2013] eKLR
  • Kenya Commercial Bank Limited v Popatlal Madhavji & another
    [2019] eKLR
  • Five Forty Aviation Limited v Erwan Lanoe
    [2019] eKLR
  • National Carriers Ltd -vs- Panalpina (Northern) Ltd
    (1980) Int.Com.L.R. 12/11
  • Sri Ashwin Bhanulal Desai -vs- Bijay Kumar Manish Kumar Huf
    7 November 2019
  • Garibi Limited v Ogilvy East Africa Ltd
    [2014] eKLR
  • Brand City Limited v United Housing Estate Limited
    [2016] eKLR
  • Bid Insurance Brokers Limited v British United Provident Fund
    [2016] eKLR
  • Chimanlal Meghji Naya Shah & Another v Oxford University Press (EA) Limited
    [2007] eKLR
  • Ann Wairimu Wanjohi v James Wambiru Mukabi
    [2021] eKLR
  • Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another
    [2014] eKLR
  • Samuel Chege Gitau & another v Joseph Gicheru Muthiora
    [2014] eKLR
  • Mega Garment Limited v Mistry Jadva Parbat & Co. (Epz) Limited
    [2016] eKLR
  • Bachelor's Bakery Ltd v Westlands Securities Ltd
    (1982) KLR 366
  • Pius Kimaiyo Langat versus Co-operative Bank of Kenya Ltd
    [2017] eKLR
  • National Bank of Kenya Ltd versus Pipe Plastic Samkolit (K) Ltd & another
    [2011] eKLR
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

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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, "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.