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ELCDismissedNot stated in the judgment as provided· [2023] KEELC 927 (KLR)

Airworks Kenya Limited v Kenya Aerospace Limited & another (Environment & Land Case E164 of 2022) [2023] KEELC 927 (KLR)

Environment and Land Court
9 February 2023
OAO. A. Angote
3,142 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~13 min to read original · ~4 min brief

The bottom line

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A Kenyan court refused to stop an auctioneer from seizing a tenant's goods because the tenant broke its own debt settlement agreement with the landlord.

What this practically means

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Executive summary

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The Plaintiff, a tenant of the 1st Respondent since 2018, moved the Environment and Land Court by notice of motion dated May 9, 2022 under Order 40 rules 1 and 2 of the Civil Procedure Rules seeking to restrain the 1st Respondent and Garam Investments Auctioneers from proclaiming or attaching its goods in the space it occupies on L.R. No. 209/11964 pending the hearing of the suit. The Applicant contended that under a Debt Settlement Agreement executed in 2021, the accumulated rent arrears on surrendered space were convertible into a civil debt recoverable only by suit, ousting distress for rent, and that it was up to date with rent and service charge on the retained space. The Respondents opposed, asserting the agreement contained a default clause rendering it void upon missed monthly remittances, that the Applicant breached it, and that substantial rent and service charge arrears remained. Angote J applied the Giella v Cassman Brown principles as elaborated in Nguruman and Mrao. He found the agreement was in force from May 2021, that the Applicant failed to make the stipulated monthly payments with significant shortfalls, and that under Clause 5 such breach rendered the agreement null and void. The agreement neither treated the debt as a civil debt nor ousted the landlord/tenant relationship. The Applicant thus failed to demonstrate a clear and unmistakable right, had no prima facie case, and had approached the Court with unclean hands by initially omitting the default clause. The application was dismissed with costs to the Respondents.

Key legal issues

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01

Whether the Applicant established a prima facie case with a probability of success for an interlocutory injunction

Holding

No - the Applicant breached the payment schedule in the Debt Settlement Agreement, which could render the agreement void, and so no clear and unmistakable right to protection was demonstrated

Reasoning

The Debt Settlement Agreement required monthly remittances (USD 15,000 then USD 20,000 per month). The Applicant made irregular payments with shortfalls of USD 30,000 and USD 40,000 in the respective periods. Clause 5 provided that default may render the agreement null and void, entitling the lessor to debt recovery proceedings. Having itself breached the agreement it relied on, the Applicant could not show a right infringed, and the agreement did not oust the landlord/tenant relationship or the right to levy distress.

p. 6
02

Whether the Debt Settlement Agreement converted rent arrears into a civil debt recoverable only by suit, thereby ousting distress for rent

Holding

No - nothing in the agreement states the amounts owed were a civil debt; they were referred to as outstanding accumulated rent payable contemporaneously with current rent, and the agreement did not oust the landlord/tenant relationship

Reasoning

Clauses G and H of the agreement describe the money owed as outstanding accumulated rent to be paid contemporaneously with current rent, with a staged payment plan. Nothing expressly or impliedly treats the debt as a civil debt or ousts the Distress for Rent Act. The landlord's conduct showed it treated the agreement as voided following breach, reviving its entitlement to levy distress under the current lease.

p. 5

Legal principles established

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  • An injunction is an equitable remedy that will not be granted where the applicant has approached the Court with unclean hands.
  • A party cannot assert a right founded on an agreement which, by its own breach, has prima facie been voided.

Court orders

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  1. 1.The application dated 9th May 2022 is dismissed with costs to the Respondents
Jurisdiction invoked
Order 40 rules 1 and 2 of the Civil Procedure Rules, 2010

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, "Airworks Kenya Limited v Kenya Aerospace Limited & another (Environment & Land Case E164 of 2022) [2023] KEELC 927 (KLR)", Case Analysis (2023). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/927/eng@2023-02-09

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