Property Development and Management Company - PDM (Kenya) Limited v Bernard Kasema t/a Millionaire Associates & 2 others
The bottom line
#A Nairobi court ruled a landlord must refund a tenant's deposit balance and pay damages for seizing his seats without a court order.
What this practically means
#Executive summary
#Key legal issues
#Nature of the tenancy where no formal lease was executed
The agreement to lease was not a lease under Section 3(3) of the Law of Contract Act; the relationship was a month-to-month periodic tenancy terminable by 15 days' notice under Section 106 ITPA
A lease over immovable property must be in writing, contain all agreed terms, be executed by both parties and attested per Section 3(3) of the Law of Contract Act. Only the agreement to lease was executed; the intended lease was never generated, executed or registered. Following Rogan-Kamper and Bachelor's Bakery, the agreement operated as a contract inter partes but the tenancy became periodic under Section 106 ITPA, which applied to pre-2012 tenancies.
Entitlement to refund of the security deposit
The 1st Defendant was entitled to a refund of Kshs 179,820.33, being the deposit of Kshs 587,634.20 less rent arrears of Kshs 407,813.87
Although no formal lease existed, the agreement to lease's terms were binding inter partes per Chon Jeuk Suk Kim, so the 1st Defendant remained liable for the January–March 2014 quarterly rent despite the termination notice. The plaintiff's letter of 11th March 2014 fixing arrears at Kshs 407,813.87 was unchallenged, and the deposit payment of Kshs 587,634.20 was uncontroverted; the balance is refundable.
General damages for unlawful detention of the 100 seats
The detention of the seats without a court order was conversion; general damages of Kshs 200,000 awarded
The plaintiff had no legal mandate to detain the seats even if it believed the termination unlawful; its remedy was to litigate. The unchallenged evidence showed the seats were detained and only released during the suit. Applying the definition of conversion/detinue, the court found deprivation of the owner's use and possession and awarded Kshs 200,000 as general damages.
Loss of business and loss of user
Claim dismissed for failure to specifically plead and prove the special damages
Loss of business and loss of user are claims for special damages requiring particular pleading and specific proof. The 1st Defendant neither particularised the nature of the loss nor the amount, and no evidence was tendered showing the extent of any loss. Following Patrick Muturi v Kenindia Assurance, a plaintiff deprived of a chattel may recover full value plus special loss, but only if pleaded and proved.
Legal principles established
#- In the absence of a formal executed and registered lease, an agreement to lease creates binding contractual terms inter partes, and the tenancy is a periodic (month-to-month) tenancy terminable by 15 days' notice under Section 106 of the Indian Transfer of Property Act
- Sections 106 and 107 of the ITPA remain applicable to leases/tenancies entered into before the Land Act 2012 came into force
- A landlord has no lawful authority to detain a tenant's property without a court order; such detention constitutes conversion
- Claims for loss of business and loss of user are special damages which must be specifically pleaded and specifically proved
Court orders
#- 1.Refund of Kshs 179,820.33 to the 1st Defendant being the excess monies retained by the Plaintiff beyond what was lawfully due
- 2.Kshs 200,000 as General Damages for conversion
- 3.Claims not specifically granted deemed denied
- 4.Interest at court rates on the refund from 24th March 2015
- 5.Interest at court rates on the general damages from the date of Judgment
- 6.Costs of the counterclaim to the 1st Defendant
- 7.1st Defendant also entitled to costs of the suit per the order of 3rd November 2021
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a dispute concerning a lease of premises on LR No 209/5575 (Cambrian Building), Nairobi
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Property Development and Management Company - PDM (Kenya) Limited v Bernard Kasema t/a Millionaire Associates & 2 others", Case Analysis (2022). Civil Suit 137 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/13619/eng@2022-10-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.