Karani v Shunem Academy Limited & another (Environment and Land Case 70B of 2021) [2025] KEELC 6113 (KLR)

The court held the lease was of the land on which the school stood, not merely the school business. Since the parcel was registered in the co-director's name, the 1st defendant company could not lease it, and only the registered-owner director could sign. The Turquand rule protects outsiders dealing with a company over its own property, but here the land was not company property, so the doctrine could not validate the execution.

The consideration clauses were ambiguous, but both parties did not pursue the assertion that goodwill was paid at signing. The plaintiff produced no evidence of reconciling bank statements or proof of payment. The court applied sections 107 and 109 of the Evidence Act and Karugi v Kabiya on the persistent burden of proof, finding that payment of goodwill could not be assumed unless proved.

Because the plaintiff entered with the 2nd defendant's permission and paid KShs 1,000,000 for assets, the defendant could not invoke summary eviction procedures for unlawful occupiers. Having occupied for about one year, the plaintiff could only be removed through a court order. The violent self-help eviction was unlawful, but as the lease was invalid, compensation was limited to general damages for eviction and detention of vehicles.

Although the lease stated five years but ran from 1/1/2018 to 1/1/2022 (four years), the court resolved the ambiguity by reference to the goodwill of KShs 9,000,000 payable at KShs 600,000 per term and the five-year renewal clause, concluding the intended term was five years and hence registration was not required under Section 61 of the Land Act.