Fredico Investments Limited v Graphic Investments Limited (Environment & Land Case 72 of 2019) [2024] KEELC 200 (KLR)
The bottom line
#A Kenyan landlord that promised to renew a tenant's lease, then evicted the tenant anyway, was ordered to pay over KES 14 million.
What this practically means
#Executive summary
#Key legal issues
#Existence of a binding agreement to renew the lease
The Defendant's letter of 7th September 2009, coupled with its acceptance of rent for December 2009, created a valid, binding and enforceable agreement to renew; eviction in breach of it was wrongful
The court found the 7th September 2009 letter expressly confirmed renewal for 5 years 3 months. Although marked without prejudice, it was mutually tendered. The Defendant's acceptance of December 2009 rent and conduct created a legitimate expectation and operated as estoppel under section 120 of the Evidence Act. Relying on Kenya Commercial Bank v Popatlal Madhavji, the court held an agreement to lease/renew need not be in registered written form to bind inter partes. Eviction on 4th January 2010, in the face of subsisting injunction orders, breached that agreement.
Admissibility of the without prejudice letter
The letter was admissible because the Defendant tendered it as its own exhibit and consented to its production; the objection was waived
The court acknowledged that without prejudice correspondence is inadmissible under section 23(1) of the Evidence Act. However, the Defendant had two opportunities to object to the letter's production (4th November 2021 and when it produced the same letter as Exhibit D3) and did not. Invoking the doctrine of waiver per 748 Air Services Limited v Theuri Munyi, the court held the Defendant could not resile at submissions stage; doing so was approbating and reprobating.
Quantum of loss for breach of the agreement to renew
Loss of business computed at Kes.400,000/- monthly profit for 63 months, less rents and goodwill, yielding Kes.11,750,000/-; plus Kes.1,980,000/- for destroyed partitions and refund of deposit and professional fees
The financial report (Exhibit P20) by PW2, unchallenged by any rival expert opinion, established monthly profits of Kes.400,000/-. The court deducted 63 months' rent (Kes.9,450,000/-) and goodwill (Kes.4,000,000/-) from projected profits (Kes.25,200,000/-). The unimpeached loss adjuster's report fixed the partition damage at Kes.1,980,000/- after 10% depreciation. DW1's credibility was rejected due to contradictions with DW2 and prior adverse finding by the Duty Judge.
Claim for malicious destruction of property
The Defendant was responsible for the demolition of the stalls on 4th January 2010 despite the subsisting injunction; DW1's contrary testimony was disbelieved
DW1 contradicted himself (denying a 7th September 2009 meeting he had earlier conceded) and contradicted DW2 on the police visit of 31st December 2009. The court noted the earlier adverse finding by the Duty Judge that DW1 attempted to cheat the court. The OB year error (2009 instead of 2010) was excused as a clerical slip. The court accepted the loss adjuster's report at Kes.1,980,000/- net of depreciation.
Legal principles established
#- An agreement to renew a lease, as distinct from the renewed lease itself, need not comply with section 3(3) of the Law of Contract Act; a letter by a landlord offering renewal can constitute a valid, binding and enforceable agreement inter partes
- A without prejudice letter becomes admissible and usable where the party producing it tendered it in evidence without objection and the adverse party also tendered or consented to its production; the objection is waived
- An expert financial report stands unless challenged by a contrary expert opinion; a party who does not procure a rival expert cannot invite the court to disregard the report
- General damages are not awardable for breach of contract; recoverable loss must be specially pleaded and specifically proved
- A landlord who, by representation and conduct (including acceptance of rent after the alleged renewal), induces a tenant to believe the lease was renewed, is estopped from resiling
Court orders
#- 1.Judgment entered for the Plaintiff in the sum of Kes.11,750,000/- being loss of business
- 2.Award of Kes.1,980,000/- as value of the damaged partitions/stalls
- 3.Refund of 4 months rent deposit in the sum of Kes.472,000/-
- 4.Refund of professional fees paid for the loss assessment report in the sum of Kes.49,880/-
- 5.Interest on the awarded sums at court rate of 14% per annum from the date of filing the suit until payment in full
- 6.Plaintiff awarded costs of the suit, to be taxed and certified by the taxing officer
- 7.Any other relief not expressly granted declined
- Jurisdiction invoked
- Original civil jurisdiction (lease and contract dispute; no constitutional or appellate basis cited)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Fredico Investments Limited v Graphic Investments Limited (Environment & Land Case 72 of 2019) [2024] KEELC 200 (KLR)", Case Analysis (2024). Not stated in the judgment (suit commenced by Plaint dated 2nd December 2009, Further Amended Plaint dated 28th January 2011). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/200/eng@2024-01-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.