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ELCPartially Allowed· [2024] KEELC 3780 (KLR)

Halar Industries Limited v Executors of the Estate of Tahir Sheikh Said & another (Environment and Land Case 467 of 2018) [2024] KEELC 3780 (KLR)

Environment and Land Court
30 April 2024
4,694 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that rent owed on a leased property belongs to a deceased owner's estate, and the tenant must negotiate a new lease or vacate within 90 days.

What this practically means

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Executive summary

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The Plaintiff, Halar Industries Limited, sued over premises on LR No 209/8854, claiming it held a 5-year lease dated 19th October 2016 with the 2nd Defendant at Ksh 873,000 monthly rent, and that the 1st Defendant, claiming to act for the estate of the deceased registered owner Tahir Sheikh Said Ahmed, unlawfully harassed it and sought eviction. The 1st Defendant counterclaimed for vacant possession, declarations of trespass and conversion, and mesne profits; the 2nd Defendant counterclaimed seeking validation of the lease and release of joint account funds. The court framed six issues. It held the suit had not abated despite alleged non-service, since the 1st Defendant filed a defence and suffered no prejudice. Adopting Justice Obaga's ruling in the Osman Tahir Sheikh Said case, it found the executors had locus standi before grant of probate. On the lease's validity, the court pierced the corporate veil, holding the deceased was the alter ego of the 2nd Defendant, so a valid lease existed with him; the unregistered lease nonetheless bound the parties as a contract. However, the lease had expired, so the Plaintiff was not entitled to quiet possession absent new terms with the estate. No trespass or mesne profits were found, but reasonable rent of Kshs 970,920 monthly from the date of death is payable to the estate, discounted by deposits. Rental income and interest in the joint account were ordered released to the estate under Section 45 of the Law of Succession Act; the Plaintiff must vacate within 90 days if no new lease is agreed. Each party was ordered to bear its own costs.

Key legal issues

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01

Whether the suit abated for failure to serve summons

Holding

No; the 1st Defendant entered appearance, filed a defence under protest, and suffered no prejudice

Reasoning

The court distinguished Pius Kimaiyo Langat as pre-2010 Constitution, noting fair hearing and substantive justice considerations. Since the 1st Defendant participated fully, including filing a defence and counterclaim, it would be unjust to lock the Plaintiff out of the seat of justice. The case proceeded to full determination.

p. 5
02

Whether the 1st Defendant had locus standi as executors before grant of probate

Holding

Yes; executors derive title from the will and may sue to protect estate property even before probate

Reasoning

Relying on the ruling of Obaga J in the Osman Tahir Sheikh Said case, which itself drew on Virginia Edith Wamboi Otieno, the court held that section 80(1) of the Law of Succession Act renders an executor's acts valid from death, as property vests in the executor from the moment of death. The 1st Defendant therefore had locus to file the claim.

p. 6
03

Whether there was a valid lease between the Plaintiff and the 2nd Defendant

Holding

Yes; the court pierced the corporate veil, finding the deceased was the alter ego of the 2nd Defendant and there was a lease with him

Reasoning

The deceased signed the lease for the company bearing his name with his son as co-director, title was in his name, and rental income was paid to the company's accounts during his lifetime. Treating the Plaintiff as a trespasser would be a great injustice; the two-pronged alter ego/injustice test for veil-piercing was satisfied.

p. 7
04

Whether the Plaintiff is entitled to quiet possession

Holding

No; the lease has expired and quiet possession can only follow new terms agreed with the estate

Reasoning

Having found a lease with the deceased through his alter ego company, the court noted the 5-year lease from October 2016 has long expired. Administration of the estate belongs to the Probate Court, so continued occupation depends on negotiating new lease terms with the estate.

p. 8
05

Whether the 1st Defendant is entitled to mesne profits

Holding

No mesne profits for trespass, but reasonable rent of Kshs 970,920 per month is payable to the estate from the date of death

Reasoning

The Plaintiff entered with the owner's permission and later under a joint account consent, so there was no trespass and no mesne profits. However, reasonable rent - the figure the parties themselves agreed in the consent - is payable from the date of death, discounted by deposits in the 2nd Defendant's accounts during the deceased's life and the joint interest-earning account.

p. 8
06

Who should benefit from the rental income in the joint account

Holding

The estate of the deceased; the company cannot continue collecting rental income after his death

Reasoning

Invoking Section 45 of the Law of Succession Act prohibiting intermeddling with a deceased's free property, the court held the rental income belongs to the estate of Tahir Sheikh Said, on whose behalf the 1st Defendant filed suit. Funds and interest in the joint account are to be released to the estate.

p. 8

Legal principles established

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  • Executors of a will may file proceedings to protect the deceased's property even before grant of probate
  • Courts will pierce the corporate veil where the company is the alter ego of a person and adherence to separate personality would sanction fraud or injustice
  • An unregistered lease operates only as a contract between the parties who executed it
  • Upon death of the registered owner, no person may intermeddle with free property of the deceased; the Law of Succession Act applies
  • Failure to serve summons is not fatal where the defendant has entered appearance and filed a defence and no prejudice is shown

Court orders

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  1. 1.The Plaintiff to pay Kshs 970,920 per month from the date of death of the deceased to date, discounted by the deposits and interest in the joint account
  2. 2.Rental income and interest collected in the joint account to be released to the estate of the late Tahir Sheikh Said
  3. 3.If the Plaintiff and the 1st Defendant are unable to agree on terms of a new lease, the Plaintiff to vacate the suit property within 90 days
  4. 4.Each party to bear their own costs for the suit

Authorities

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Legislation

  • Land Registration ActSections 36(1) and 43(2)
  • Law of Succession ActSections 45, 80(1) and 80(2)
  • Evidence ActSection 107(1)
  • Constitution of Kenya2010 (right to fair hearing)
  • Civil Procedure RulesOrder 5 Rule 15

Cases cited (16)

  • Alfred Njau v City Council Of Nairobi
    (1983) KLR 625
  • Nanjibhai Prabhudessai & Co Ltd v Stanbic bank Ltd
    (1968) EA 670
  • Osman Tahir Sheikh Said & Another (suing as executors of the will of Tahir Sheikh Said Ahmed v Nomad Energy Limited; Sabir Tahir Sheikh Said & 5 Others (interested parties)
    [2019] eKLR
  • Pius Kimaiyo Langat v Cooperative Bank of Kenya Limited
    (2017) eKLR
  • Udaykumar Chandulal Rajani & 3 others v Charles Thaithi
    1991 eKLR
  • Virginia Edith Wamboi Otieno v Joash Ochieng Ougo & another
    (1987) eKLR
  • Sakina Sote Kaittany
  • Solomon v. Solomon and Co. Ltd
    [1897] AC 22
  • In re Estate of Mark Kiptarbei Too (Deceased)
    [2019] eKLR
  • Halsbury's Laws of England, 4th Edn para. 90
  • Jones v. Lipman & Another
    [1962] 1 All ER 442
  • H. L. Bolton (Engineering Co. Ltd v. T. J. Graham & Sons Ltd
    [1956] 3 ALL ER
  • Mega Garment Limited –v- Mistry Jadva Parbat & Co.(EPZ) Limited
    (2016) eKLR
  • Multi-choice Kenya Ltd V Mainkam Ltd & Anor.
    (2013) eKLR
  • Invergue Investments v Hacketh
    (1995) 3 All ER 842
  • Kenya Hotel Property Ltd
Jurisdiction invoked
Original civil jurisdiction over a land dispute concerning title LR No 209/8854 (not expressly stated in the judgment)

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, "Halar Industries Limited v Executors of the Estate of Tahir Sheikh Said & another (Environment and Land Case 467 of 2018) [2024] KEELC 3780 (KLR)", Case Analysis (2024). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/3780/eng@2024-04-30

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