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ELCOther· [2022] KEELC 3945 (KLR)

Lowdan Exporters (Epz) Limited v Export Processing Zones Authority (Environment and Land Case Civil Suit 127 of 2017) [2022] KEELC 3945 (KLR)

Environment and Land Court
28 July 2022
3,453 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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A Kenyan court blocked a landlord's eviction after it accepted rent following a termination notice, ruling that accepting rent cancels the right to terminate.

What this practically means

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Executive summary

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The plaintiff, Lowdan Exporters (EPZ) Ltd, was the lessee of three parcels at Kipevu Export Zone, Mombasa (MN/VI/4797, 4798 and 4799) under leases executed on August 8, 2013 for 50 years, intended for a cereals bagging plant for export markets. It sued for mandatory injunctions restraining termination of the leases and interference with compensation negotiations with the National Land Commission after the defendant, the Export Processing Zones Authority, issued a termination notice on January 27, 2017. The defendant counterclaimed, alleging breach of the leases through failure to develop within 24 months, non-payment of rent and non-payment of licence fees, and sought a declaration of termination, eviction, surrender of leases and costs. The plaintiff's case was dismissed on May 23, 2022 for non-attendance, and the counterclaim proceeded undefended but was determined on its merits. The court found that after issuing the termination notice the defendant accepted cheques on March 27, 2017 covering rent for 2016 and 2017 and licence renewals, and confirmed receipt, thereby waiving the right to terminate for non-payment. On development, the court found that the pending Kenya Ports Authority land swap over two parcels interrupted the plaintiff's quiet possession protected by clause 22 of the leases and section 65 of the Land Act. Relying on Flex Construction Solutions Ltd v Verandel Court Ltd and Aroko v Ngotho, the court held the counterclaim unproved and disallowed all relief sought in it, with each party bearing its own costs.

Key legal issues

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01

Waiver of the right to terminate a lease by accepting rent after a termination notice

Holding

The ground of non-payment of rent and licence renewal could not sustain termination because the defendant accepted the arrears and confirmatory payments after issuing the notice, thereby waiving the right to terminate

Reasoning

The termination notice issued on January 27, 2017 cited non-payment of rent and non-development. The defendant then accepted cheques on March 27, 2017 totalling USD 33,046.00 covering rent for 2016 and 2017 and licence renewals, and confirmed receipt in writing on March 30, 2017. The court held this acceptance constituted waiver of the termination right on those grounds.

p. 5
02

Implied covenant of quiet enjoyment and interruption by pending acquisition/land swap negotiations

Holding

The KPA land swap offer over parcels MN/VI/4798 and 4799 interrupted the plaintiff's peaceful and quiet possession, protected by clause 22 of the leases and section 65 of the Land Act, undermining the non-development ground

Reasoning

The MOU between EPZA and KPA earmarked two of the three parcels for transfer for road expansion. The plaintiff enquired about compensation from 2014 and the defendant itself told the National Land Commission that the plaintiff had not commenced developments. The court found the swap offer interrupted quiet possession, so non-development could not ground termination.

p. 5
03

Whether the counterclaim was proved

Holding

The defendant failed to prove its counterclaim on a balance of probabilities and all relief sought was disallowed

Reasoning

The plaintiff's suit had been dismissed for non-attendance, so the counterclaim was heard as undefended. Nonetheless, on the evidence — acceptance of rent after the termination notice and the interrupted possession caused by the pending land swap — the defendant could not prove entitlement to termination, eviction or surrender of the leases.

p. 6

Legal principles established

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  • A lessor who continues to accept rent after issuing a termination notice for non-payment of rent and non-renewal of licences waives the right to terminate on those grounds
  • An implied covenant binds a lessor to give the lessee peaceful and quiet possession during the term, per clause 22 of the leases and section 65 of the Land Act
  • Mere default in payment of rent does not defeat a tenant's right to quiet possession unless the default amounts to a breach of covenant entitling re-entry, and continued receipt of rent indicates waiver

Court orders

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  1. 1.The plaintiff's case dismissed on May 23, 2022 for non-attendance despite service
  2. 2.All orders/relief sought in the defendant's counterclaim disallowed
  3. 3.Each party to bear its own costs

Authorities

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Legislation

  • Export Processing Zones ActCap 517; section 3(2); section 19; section 29(2)(e)
  • Land Actsection 65

Cases cited (2)

  • Flex Construction Solutions Limited vs Verandel Court Limited
    (2012) eKLR
  • Aroko vs Ngotho & another
    (1991) KLR
Jurisdiction invoked
Original civil jurisdiction over the lease dispute (Land Act, Export Processing Zones Act); counterclaim heard as an undefended claim

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, "Lowdan Exporters (Epz) Limited v Export Processing Zones Authority (Environment and Land Case Civil Suit 127 of 2017) [2022] KEELC 3945 (KLR)", Case Analysis (2022). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/3945/eng@2022-07-28

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