Mavic Investments Company Limited v Little Sheep Investments Limited (Environment & Land Case 105 of 2019) [2024] KEELC 101 (KLR)

d. Any other relief the Hon. Court may deem fit and just to grant. Defendant’s Response to the Plaintifi ’s Case 3. The Defendant’s responded to the Plaintifi’s case through its amended Statement of Defence and Counter-claim dated 1st September, 2021. The Defendant denied the Plaintifi’s claim in its entirety. It averred that it leased the suit property with a view to developing stalls on it and subleasing them to third parties. It further asserted that it had always paid rent to the Plaintifi on time as and when it was due and denied being in arrears as claimed by the Plaintifi or at all. 4. The Defendant’s case was that the Plaintifi’s alleged notice of termination of the lease was defective for purporting to terminate the lease on fictitious and unjustifiable grounds. The Defendant therefore insists that the lease with the Plaintifi is still subsisting and it is therefore entitled to quiet possession of the suit property. 5. The Defendant alleged that it had expended a total sum of Kshs 3,200,000/= to obtain change of user of the suit property and payment of rates due to the suit property. It had further obtained all the necessary consents and approvals from the relevant bodies and had since completed construction on the suit property. 6. The Defendant afirmed that the Plaintifi as the Landlord was free to access the suit property on condition that it gives the Defendant adequate notice in accordance with the provisions of the lease agreement. The Defendant prayed for the dismissal of the Plaintifi’s case against it asserting that it did not disclose any cause of action against it. 7. In its counter-claim, the Defendant while acknowledging the lease agreement with the Plaintifi asserts that it expressly informed the Plaintifi that it would construct commercial units on the suit property and lease them to third parties. It was therefore necessary to obtain a change of user from ‘residential dwelling house’ to ‘commercial use’. The condition of change of user was indeed incorporated into the lease agreement under clause 6 which mandated the Defendant to obtain the necessary approvals and consents at its own costs prior to making any developments on the suit property. 8. The Defendant in performance of its obligations under the lease, and with the assistance of the Plaintifi, applied for and obtained the necessary consents for change of user of the suit property and also for the construction of the commercial units on the suit property. That was how the Defendant expended the sum of Kshs 3,200,000/= being payments to the County Government of Nairobi City County. 9. The Defendant enumerated in its Counter-claim the works undertaken from mid-2017 to the end of April, 2018. In that respect, the Defendant alleged that it expended a further sum of Kshs 58,735,508/ =, with the full knowledge of the Plaintifi. The Defendant opened the stalls developed on the suit property on 1st May, 2018 when it started vetting potential tenants. 10. The Defendant accuses the Plaintifi of using underhand tactics in an attempt to unlawfully evict it from the suit property. The conduct of the plaintifi, according to the Defendant, amounts to breach of the terms of the lease whose particulars have been enumerated at paragraph 22 of the Counter-claim. 11. The Defendant pleads that the Plaintifi intends to unjustly benefit from the its developments on the suit property by converting them to its own commercial needs. The suit property is occupied by tenants who pay the Defendant a monthly rent of Kshs 1,600,000/=. The entire development set up by the Defendant is valued at approximately Kshs. 82,000,000/=. The Defendant pleads that it stands to lose https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 2

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the monthly rental income and its investment on the suit property should the Plaintifi evict it from the suit property. The Defendant therefore counter-claims against the Plaintifi for: a. Costs of the approvals and consents incidental to change of user at Kshs 3,200,000/=. b. Current market value of the developments made by the Defendant at Kshs 82,000,000/=. c. Dismissal of the Plaintifi’s suit with costs. d. Judgment against the Plaintifi for Kshs 85,200,000/=. e. Costs of the Counter-claim. f. Any other reliefs the court deems fit to grant. Plaintifi ’s Defence to Counter-Claim. 12. In its reply to the Defendant’s Counter-claim, the Plaintifi asserted that the lease between it and the Defendant was subject to payment of rent as and when it fell due. The Plaintifi further denied giving consent to the Defendant as expressly required under clause 6 of the lease for the construction of the alleged shops/stalls on the suit property. The Plaintifi denied knowledge of the amounts allegedly expended by the Defendant in construction. 13. The Plaintifi reiterated that it had not received rent as entitled to under the lease from the Defendant. The Defendant was in rent arrears hence in breach of the lease agreement. The Plaintifi insisted that it was therefore justified and within the law in terminating the lease with the Defendant. It was additionally entitled to re-enter the suit property and take possession of it. It prayed for the dismissal of the Defendant’s Counter-claim with costs. Evidence Adduced at the Trial 14. There were attempts to settle this matter amicably out of court. However, when the parties failed to reach a settlement, the matter was set down for hearing. 15. At the hearing, Plaintifi called its director, Mr. Victor Nzomo as its only witness. The Defendant on its part called Mr. Samuel Gicheru, its director as DW1 and Mr. Paul Matumbi, a valuer as its 2nd witness. Evidence adduced on behalf of the Plaintifi: 16. PW1 adopted his witness statement dated 7th July, 2022 and filed on the same date as his evidence in chief. He further produced the 4 documents on the Plaintifi’s list of documents as exhibits in support of the Plaintifi’s case. 17. The witness statement forms part of the record of the court and I need not replicate its contents verbatim in this ruling. It afirmed the averments in the Plaint. 18. In response to questions by the Advocate for the Defendant in cross-examination, the Plaintifi’s witness (hereinafter referred to as PW1) confirmed the lease agreement between the Plaintifi and the Defendant. PW1 confirmed that the lease allowed the Defendant to carry on developments on the suit property. The Plaintifi was aware of the developments on the suit property though PW1 stated that he had not been to the suit property since serving the termination notice at the beginning of the year 2018. At the time of issuance of the notice, the developments on the suit property looked almost complete. The suit property prior to the developments undertaken by the Defendant was a single residential house. https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 3

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19. PW1 confirmed that the Plaintifi was aware the developments undertaken by the Defendant were commercial in nature. He too confirmed that they (the Plaintifi) had consented to the change of user. 20. PW 1 stated that he was not aware that the Defendant had used Kshs 3,500,000. 21. PW1 explained that the Defendant’s default was in regard to the rental amounts payable and the frequency of payment of the rent. The Notice issued (PE2) was issued on a “without prejudice” basis. It was sent via email. 22. PW1 explained that, ‘without prejudice’, meant notwithstanding any other action that the Plaintifi was entitled to take under the lease agreement. He admitted that clause 9 of the lease agreement provided that no variation notice was to be sent by electronic mail. PW1 further stated that the lease agreement had no provision for a termination notice. 23. In re-examination, PW1 afirmed that when rent fell due for 30 days, whether demanded or not, the Plaintifi as Lessor had the right to re-enter the suit premises and repossess the same. Evidence Adduced on Behalf of the Defendant. 24. The first Defendant’s witness (hereinafter referred to as DW1) is a director of the Defendant Company. He adopted his witness statement dated 29th June, 2022 as his evidence in chief. He further produced the documents on the Defendant’s list of documents as exhibits in support of the Defendant’s Defence and Counter-claim. The statement forms part of the record of this Court. 25. Under cross-examination, DW1 confirmed that the Defendant has been in continuous possession of the suit property since the signing of the lease agreement. The Defendant had only been ousted for a period of one (1) week when the Landlord had thrown them out but it regained possession. The Defendant is the one who collects the rent from the suit property. 26. The Defendant pays quarterly rent of Kshs 900,000/= to the Plaintifi. He asserted that he did not receive the alleged termination notice from the Plaintifi. 27. DW 2 was a valuer who prepared the valuation report dated 21st June, 2021. It valued the developments by the Defendant on the suit property at Kshs 82,000,000/=. 28. In cross-examination, DW2 confirmed that his instructing client was Soko Safi Ltd. In the valuation report, he had stated that the tenant was Soko Safi Ltd. At the time of the report, the rent being collected from the suit property was Kshs 1.6 million per month, which was on the lower side due to the efiects of Covid-19. The goodwill per stall was Kshs 1.0 million. Court’s Directions after the Hearing 29. At the conclusion of the hearing of the case, the court directed parties to file written submissions. Both parties have complied and I have had the opportunity to read the submissions filed. Issues for Determination 30. There is no dispute that the Plaintifi and the Defendant herein entered into a lease agreement in respect to the suit property dated 1st August, 2016 for a period of 8 years. The terms of the lease agreement are also not in contention. Each party has indeed produced a copy of the lease agreement as an exhibit in support of their respective positions. 31. The main issue for Determination is whether the Defendant defaulted in payment of rent as alleged by the Plaintifi and consequently, whether the Plaintifi lawfully terminated the lease with the Defendant. https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 4

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That will then determine whether the Plaintifi is entitled to an order of vacant possession. In respect of the Defendant’s Counter-claim, the issues for determination are consequent to the findings above, that is to say, if the Plaintifi is entitled to vacant possession, what would be the fate of the Defendant’s Counter-claim? Analysis and Determination A. Whether the Plaintifi has Established Default by the Defendant 32. As already indicated above, the Plaintifi’s claim is that the Defendant failed to pay rent in accordance with the terms and stipulations of their lease agreement dated 1st August, 2016 which rent was payable quarterly and in advance. The Plaintifi asserts that where the rent was not paid for a period of 30 days from the date it fell due, the lease agreement allowed it to terminate the lease and regain possession of the suit property. The Plaintifi purportedly exercised this right vide its notice of 1st March, 2018. The Defendant however, refused to hand over possession of the suit property necessitating the filing of this suit. 33. The Defendant denied the Plaintifi’s allegations of default insisting that it had at all times paid the rent due and owing to the Plaintifi as and when it fell due. 34. At this juncture, the burden of proof was on the Plaintifi to proof the allegation of default against the Defendant. Section 107 (1) of the Evidence Act places the burden of proof upon the party who desires that the court gives judgment as to any legal right or liability dependent on the existence of facts which he asserts. 35. The Plaintifi’s case was premised on the alleged default in payment of rent by the Defendant. The Plaintifi was therefore bound to prove the allegation of the default by the Defendant. 36. The Plaintifi in his plaint does not plead the figures nor the period of the alleged default as correctly pointed out by the Defendant in its submissions. PW1 in his testimony did not also address the figures nor the duration of the alleged default by the Defendant. 37. In its submissions, the Plaintifi solely relies on its letter of 21st February, 2018. It submits that the said letter details the breach by the Defendant together with calculations of the rent arrears due as at 21st February, 2018. The Plaintifi further asserts that the Defendant was aware of the letters detailing the breach but did not produce evidence to demonstrate payment of the rent arrears. 38. The said letter of 21st February, 2018 is addressed to the Defendant Company. It informs the Defendant that it is aware that it currently owes the Plaintifi Company a total sum of Kshs 3,048,734/= calculated as per the enclosed schedule. It informs the Defendant Company that unless the said sum of Kshs 3,048,734/= is received in full on or before the 28th February, 2018, the lease shall cease and determine. 39. The above letter was followed by the notice of 1st March, 2018 which is purportedly the notice of repossession. It is framed in the language of clause C(2) of the lease agreement which provided that; “ If the said rent or/any additional rent or any other payment due hereunder by the lessee or any part therefore is unpaid in the space of Thirty (30) days after it becomes due, whether the same shall have been legally demanded or not, or if the demised premises becomes vacant or deserted or if there shall be any breach or non-performance or non-observance by the lessee of any of the covenants agreements and conditions restrictions stipulations and provisions herein contained and on the part of the lessee to be performed and observed, then the Lessor may at any time thereafter enter upon the demised premises and the same have again https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 5

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repossess and enjoy as in its former state anything herein contained to the contrary in anywise notwithstanding without prejudice to any right of action or remedy of the Lessor in respect of any antecedent breach of any covenant by the Lessee.” 40. The intention of the earlier letter of 21st February, 2018 was to determine the lease between the parties upon expiry of the notice (on the termination date). This letter on its part is framed in the language of Clause C(3) of the lease agreement which on its part provides that, “ the lease is determinable by either party on giving notice and receiving acceptable of such notice in writing and the expiration of the period of such notice this agreement shall cease and determine but, without prejudice to any right of action accrued to either party during the currency of the agreement.” 41. The Plaintifi in its plaint pleads that it terminated the lease agreement through the notice dated 1st March, 2018. However, as I already pointed out, the notice of 1st March, 2018 was a notice of repossession not of termination of the lease. The letter informs the Lessee that, ‘…the Lessor has opted to enter upon the demised premises, and have again repossess and enjoy the same as in its former estate…’ 42. The termination notice is indeed the letter of 21st February, 2018. In determining whether the Plaintifi lawfully terminated the lease agreement, the court will have to determine whether the said letter of 21st February, 2018 complied with Clause C (3) (cited above) of the lease agreement. 43. It is necessary to state at this point that parties are bound by the terms of their own agreement. The Court of Appeal in the case of National Bank of Kenya Ltd –versus Pipe Plastic Samkolit (K) Ltd (2001) 2 EA 5003, (2011) eKLR, stated that: “ A Court of Law cannot rewrite a Contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue infiuence are pleaded and proved.” 44. That was the same position in Pius Kimaiyo Langat -vs- Co-operative Bank of Kenya Ltd [2017] eKLR, where the same Court stated that: “ We are alive to the hallowed legal maxim that it is not the business of courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue infiuence are pleaded and proved.” 45. The Position was afirmed in the case of Danson Muriuki Kihara –versus Johnson Kabungo [2017] eKLR. 46. Clause C(3) of the lease agreement between the Plaintifi and the Defendant in this case provides three pre-conditions to termination; 47. a. Issuance of notice; b. Receipt of acceptance of such notice in writing; and c. Expiration of the notice period. The Notice of 21st February, 2018 was clear on the termination date. It, in compliance with the provisions of clause C(3), required the Defendant to indicate acceptance of the notice. However, no evidence was provided by the Plaintifi confirming receipt of acceptance in writing of the notice by the Defendant. https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 6

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48. In the absence of such evidence of receipt, the said notice was non-compliant with Clause C(3) of the lease agreement and therefore inconsequential and invalid. It did not terminate the lease agreement between the Plaintifi and the Defendant, if that was the intention. 49. The Plaintifi’s case was that the Defendant has continued to deny it access even after termination of the lease. Having found that the lease agreement has not been validly and lawfully terminated, the Plaintifi’s case fails. The lease between the Plaintifi and the Defendant is therefore lawfully subsisting and the Defendant is entitled to continue its possession of the suit property until the end of the term of the lease or until the lease is validly and lawfully terminated. 50. The conclusion is that the Plaintifi has not proved its case. It is therefore not entitled to an order of vacant possession. Its case is hereby dismissed. 51. As I stated at the point of framing the issues for determination, the Defendant’s Counter-claim is dependent on the finding as to whether or not the Plaintifi is entitled to an order of vacant possession. Having found that the lease agreement between the parties has not been lawfully terminated and is still subsisting and binding between the parties, the Defendant’s Counter-claim lacks basis. The above finding pre-empts the Defendant’s Counter-claim. I therefore proceed to dismiss it as well. In any event, the Defendant has not proved any breach of the lease against the Plaintifi. 52. Having arrived at the above decision, it is only appropriate that each party bears its own costs. 53. Consequently, the final order is that the Plaintifi’s suit is dismissed. The Defendant’s Counter-claim too is dismissed. Each party shall bear its own costs. 54. The Court wishes the parties peaceful co-existence for the remainder of the term of the lease. It is so ordered. JUDGMENT DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 18TH DAY OF JANUARY, 2024. M.D MWANGI JUDGE In the virtual presence of: Mr. Adolo for the Plaintifi No appearance for the Defendant Court Assistant: Yvette https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/101/eng@2024-01-18 7

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