Shiloah Investment Limited v Ouma t/a Nate 1 Cafe (Environment and Land Appeal E029 of 2023) [2025] KEELC 5237 (KLR)
The bottom line
#A Kenyan court ruled that a tenant who walks out of a fixed-term lease early owes rent up to moving out plus limited damages—not rent for the remaining lease years.
What this practically means
#Executive summary
#Key legal issues
#Whether the lease without a termination clause was lawfully terminated by the Respondent
The purported termination was unlawful and amounted to a breach of the lease
Relying on the Supreme Court's decision in Kwanza Estates v JKUAT, which concerned an identical fixed-term lease lacking a termination clause, the court held that pacta sunt servanda applies and such a lease cannot be unilaterally terminated before expiry. The Respondent's letter of 3rd September 2012 therefore constituted a breach of contract, and the trial court erred in holding the tenancy was properly terminated.
Whether the Respondent was entitled to a refund of the Kshs. 148,500/- deposit
No refund was due because the Respondent breached the lease and left unpaid service charges, rent and restoration costs
The deposit was security for the Respondent's performance of her lease obligations, including payment of rent and service charge and returning the premises in good repair. The Respondent breached the lease, remained in occupation to April 2013, left an outstanding electricity bill and failed to repaint. She was therefore not entitled to the refund; indeed a service-charge refund balance was deducted from damages owed to her.
Whether the Appellant could claim rent for the unexpired term of the lease
Clause 2(m) of the lease, entitling the landlord to rent for the entire period after termination, was unenforceable
Following Kwanza Estates, the court held it is unconscionable to compel a tenant to remain in premises or to pay rent for the unexpired term after vacating; both parties must mitigate loss. The landlord's remedy is rent up to vacating plus damages. The court awarded damages equivalent to three months' rent (Kshs. 172,260/-), without VAT, and after deducting the refundable service-charge balance, the damages came to Kshs. 82,032.50.
Whether the distress for rent levied against the Respondent was lawful
The distress for Kshs. 161,457/- was unlawful since only Kshs. 104,037/- was due, and no rent was claimable while the illegal distress was in force
From the Appellant's own Ledger Account, as at 29th September 2012 only the September rent (Kshs. 57,420/-) and the actual service charge for January to June 2012 (Kshs. 46,617/-) were due, totaling Kshs. 104,037/-. Distress for Kshs. 161,457/- was therefore unlawful and rightly lifted on 16th November 2012; the landlord could not claim October and November 2012 rent while the illegal distress subsisted.
Legal principles established
#- A fixed-term lease without a termination clause cannot be unilaterally terminated before expiry; such termination is a breach of contract rendering the termination notice void
- The remedy for premature termination of a fixed-term lease is rent due up to the date of vacating and damages for breach, not rent for the unexpired term; the landlord must mitigate
- Damages for premature termination of a fixed-term lease may reasonably be limited to three months' rent, and such damages attract no VAT since they are not rent
- A first appellate court must re-evaluate the evidence and draw its own conclusions while bearing in mind it did not see or hear the witnesses
- The legal burden of proof lies with the party who desires the court to give judgment as to a legal right or liability
Court orders
#- 1.The Respondent's suit in the lower court is dismissed
- 2.Judgment entered for the Appellant against the Respondent for Kshs. 46,617/- for the actual service charge from January to June 2012
- 3.Judgment for the Appellant for Kshs. 57,420/- for the rent for December 2012
- 4.Judgment for the Appellant for Kshs. 36,362/- for the actual service charge for July, August, September and December 2012
- 5.Judgment for the Appellant for Kshs. 252,648/- for the rent from January to April 2013
- 6.Judgment for the Appellant for Kshs. 39,999/- for the actual service charge for January to April 2013
- 7.Judgment for the Appellant for Kshs. 29,727/- for the electricity bill left unpaid
- 8.Judgment for the Appellant for Kshs. 28,545.50 for the costs of painting the suit property
- 9.Judgment for the Appellant for Kshs. 82,032.50 for damages for breach of contract after the deduction of the service charge refund due to the Respondent
- 10.The Appellant shall have the costs of the appeal and the lower court suit
- On appeal from
- Chief Magistrate's Court, Kisumu (Environment and Land)
- Kisumu CMC ELC No. 48 of 2017
- Jurisdiction invoked
- First appellate jurisdiction over the subordinate court's decision in Kisumu CMC ELC No. 48 of 2017
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Shiloah Investment Limited v Ouma t/a Nate 1 Cafe (Environment and Land Appeal E029 of 2023) [2025] KEELC 5237 (KLR)", Case Analysis (2025). Not stated in the extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2025/5237/eng@2025-07-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.