Kenindia Assurance Company Ltd v Kipnyekwei t/a Nyekwei & Company Advocates (Environment and Land Appeal E033 of 2022) [2026] KEELC 2694 (KLR)
The bottom line
#Kenya's Environment and Land Court ruled that arbitration clauses don't automatically stop lawsuits, service charge can't be collected through distress, and the landlord won its rent arrears claim.
What this practically means
#Executive summary
#Key legal issues
#Validity of the lease under Section 3(3) of the Law of Contract Act
The lease dated 27th December, 2018 and registered on 23rd August, 2019 was validly executed and registered; the Respondent produced no evidence of a different lease.
The lease was signed by the Respondent as Tenant with his signature attested by an advocate, and executed for the landlord by its Director and Secretary with signatures attested by an advocate. A duly registered counterpart bearing the Lessor's seal was produced. The Respondent alleged he signed a different lease initialled on every page but produced no copy. Under Sections 107 and 109 of the Evidence Act he bore the burden of proving that assertion and failed.
Effect of the arbitration clause on the trial court's jurisdiction
The arbitration clause did not oust jurisdiction; neither party applied for a stay, so both opted out of the clause and the trial court had jurisdiction over all issues.
Under Section 6(1) of the Arbitration Act, a party wishing to enforce an arbitration clause must apply for stay of proceedings not later than when entering appearance. Neither party did so. The clause could not, consistently with public policy, oust the court's jurisdiction; it merely suspends it upon timely application. The trial court therefore erred in limiting itself to the service charge issue and declining to determine the whole suit.
Whether distress could be levied for service charge and what was actually distrained
Service charge is not recoverable by distress; however, on the evidence the Proclamation Notice showed the distress was levied for rent arrears, so the distress was lawful.
Section 3 of the Distress for Rent Act permits distress only for rent or rent service; service charge is a civil debt recoverable as such. The court adopted Debra Limited and C.Y.O. Owayo. On the facts, the Proclamation Notice from Hegeons Auctioneers was expressly in respect of a matter of distress for rent, supported by demand letters and reminders for rent arrears. The Respondent's allegation of distress for service charge was therefore not proved.
Whether there were rent arrears
Rent arrears existed; the alleged rent reduction was unproved as it was not in writing, and the Respondent was liable for arrears plus rent for the period of holding over.
The Respondent claimed an oral or invoice-based rent reduction but produced no written notice as required by the lease, and admitted in testimony he had no evidence of it. The sums claimed in the Amended Defence and Counterclaim stood uncontroverted, with no tabulation offered by the Respondent. The Respondent also remained in occupation from October 2019 to August 2020 without paying rent, for which the Appellant was entitled to unpaid rent.
Refund of legal fees of KShs. 67,884/-
No refund could be ordered against the Appellant: payment was made by cheque to the advocate firm, and the lease had in fact been prepared and registered.
The letter of offer provided that the tenant would bear legal fees for preparation and registration. The Fee Note was addressed to the Respondent by Christine Oraro & Co. Advocates and payment was made by cheque drawn in favour of that firm. Section 45 of the Advocates Act requires proof in writing of such agreements. Moreover, by the time of payment the lease had been drafted and was later registered, so the claim that no work was done failed.
Legal principles established
#- An arbitration clause does not oust the jurisdiction of the court; it only operates to suspend jurisdiction upon a timely application for stay under Section 6(1) of the Arbitration Act, failing which the court may determine the dispute.
- Service charge is not rent or rent service within the meaning of Section 3 of the Distress for Rent Act, and no landlord may lawfully levy distress to recover service charge arrears.
- A party who alleges he signed a different version of a contract bears the burden of proving it.
- A party cannot recover money paid to a third party (advocate) from the other contracting party; refund claims must be directed to the recipient of the funds.
- Costs follow the event under Section 27 of the Civil Procedure Act.
Court orders
#- 1.The judgment/decree of the Hon. D. K. Mikoyan - Chief Magistrate in CM ELC No. 116 of 2019 dated 7th September, 2022 is set aside.
- 2.The Respondent to pay KShs. 285,749.85 in rent arrears accrued before lapse of the lease and KShs. 81,065/- being the auctioneer's fees.
- 3.The Respondent to pay a further KShs. 297,145.75 being unpaid rent from 1st October, 2019 upto August 2020 when he vacated the suit premises.
- 4.The Appellant shall have the costs and interests of this Appeal as well as costs of the suit in the lower court.
- On appeal from
- Chief Magistrate's Court, Eldoret
- CM ELC No. 116 of 2019
- Jurisdiction invoked
- First appellate jurisdiction of the Environment and Land Court over appeals from the Chief Magistrate's Court (ELC suit)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenindia Assurance Company Ltd v Kipnyekwei t/a Nyekwei & Company Advocates (Environment and Land Appeal E033 of 2022) [2026] KEELC 2694 (KLR)", Case Analysis (2026). Eldoret ELC Appeal (Memorandum of Appeal dated 4th October, 2022) arising from Eldoret CM ELC Suit No. 116 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/2694/eng@2026-05-07
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.