Company & another v Kimani (Environment and Land Appeal E030 of 2024) [2026] KEELC 3744 (KLR)

3. On the basis of the foregoing grounds, the Appellants pray that this Court allows the appeal with costs, sets aside the ruling of the Business Premises Rent Tribunal dated 12th November 2021 together with all consequential orders, substitutes the same with an order dismissing the Respondent's claim, and grants such further or other relief as the Court may deem just and expedient in the circumstances. Submissions The appeal was heard by way of written submissions. Appellants' Submissions 4. The Appellants filed their Written Submissions dated 11th July 2025 and Supplementary Written Submissions dated 2nd April 2026 in support of the Amended Memorandum of Appeal. Counsel for the Appellants submitted that, being a first appellate court, this Court is under a duty to reevaluate, re-analyse and reconsider the entire evidence on record and arrive at its own independent conclusions. It was contended that the Tribunal's decision was vitiated by errors of law, misdirection on the evidence and jurisdictional defects, thereby warranting interference by this Court. 5. Counsel submitted that the Tribunal misapplied the law on contractual interpretation by holding that the lease agreement was ambiguous and thereafter resorting to extrinsic evidence to construe its terms. According to the Appellants, the Lease Agreement dated 20th October 2015 expressly provided for a rent deposit of Kshs. 50,000/= and made no reference whatsoever to the disputed sum of Kshs. 500,000/=. ELCLA E030 OF 2024 2

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6. It was argued that the Tribunal erred in invoking Sections 97 and 98 of the Evidence Act to admit evidence outside the written agreement and thereby vary its terms. In support of this position, reliance was placed on Dominic Charles Muthuuri Vs National Industrial Credit Bank Ltd [2003] KEHC 981 (KLR), where the Court held that a written contract constitutes the exclusive memorial of the parties' agreement and cannot be contradicted by extrinsic evidence. The Appellants also relied on Fidelity & Commercial Bank Limited Vs Kenya Grange Vehicle Industries Limited [2017] eKLR, as cited in Equity Bank (Kenya) Limited Vs Wachira [2025] KEHC 16358 (KLR), for the proposition that the meaning of a contract must be derived from the document itself. 7. The Appellants further submitted that the Tribunal's finding that the sum of Kshs. 500,000/= constituted a rent deposit was unsupported by evidence and amounted to mere speculation. Counsel argued that pursuant to Section 107(1) of the Evidence Act, the burden rested upon the Respondent to prove, on a balance of probabilities, that the payment was intended to be a contractual deposit. 8. It was submitted that no addendum, variation agreement, written acknowledgment or correspondence was produced to demonstrate that the parties had altered the express terms of the lease. The Tribunal was therefore faulted for treating an unverified allegation as proof merely because the alleged recipient of the funds was deceased, contrary to the established principles governing the burden of proof. 9. On the issue of liability, the Appellants submitted that the Tribunal erred in imposing liability upon the 2nd Appellant in her personal capacity in respect of an alleged payment made to her deceased husband. Counsel argued that the alleged transaction neither involved the 2 nd Appellant nor the 1st Appellant, which was the contracting party under the lease, and ELCLA E030 OF 2024 3

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that any claim arising therefrom could only have been pursued against the estate of the deceased. It was further submitted that the Tribunal disregarded the doctrine of privity of contract and improperly imposed liability on a party who was neither privy to the alleged transaction nor shown to have assumed any legal obligation thereunder. 10. Reliance was also placed on Husamuddin Gulamhussein Pothiwalla (Administrator, Trustee and Executor of the Estate of Gulamhussein Ebrahimji Pothiwalla) Vs Kidogo Basi Housing Cooperative Society Limited & 31 Others [2009] KECA 400 (KLR), where the Court of Appeal reaffirmed that courts cannot rewrite contracts freely entered into by parties. The Appellants consequently urged the Court to allow the appeal, set aside the Tribunal's ruling and dismiss the Respondent's claim with costs. Respondent's Submissions 11. In response to the appeal, the Respondent filed written submissions dated 17th April 2026 opposing the appeal and urging the Court to uphold the ruling of the Business Premises Rent Tribunal. Counsel submitted that the appeal raises a single substantive issue, namely whether the Tribunal erred in finding that the Appellants were holding the Respondent's rent deposit of Kshs. 500,000/=. It was contended that the issue of the deposit was squarely before the Tribunal and that the Appellants had initially denied receipt of the money before subsequently seeking to characterize it as goodwill after documentary evidence of payment was produced. 12. Counsel submitted that the Respondent proved payment of the Kshs. 500,000/= through certified bank statements evidencing an RTGS transfer made on 21st October 2015, one day after execution of the tenancy agreement. According to the Respondent, the transaction was expressly ELCLA E030 OF 2024 4

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described as a "down payment" and was made to an account held in the name of James Gichure Kionga, the person who executed the lease on behalf of the 1st Appellant. It was further submitted that despite service of a Notice to Produce, the Appellants failed to avail the relevant bank records, thereby justifying the Tribunal's finding that the payment had been proved and that the explanation subsequently advanced by the Appellants was unsupported by evidence. 13. The Respondent further argued that the Tribunal properly considered extrinsic evidence under Section 98 of the Evidence Act in determining the true nature of the payment. Counsel maintained that there was no evidence whatsoever to support the Appellants' contention that the sum represented goodwill, noting that the tenancy agreement contained no goodwill clause and that there was no sale of business, transfer of clientele, or any other basis for such a claim. Reliance was placed on Galaxy Paints Company Limited Vs Falcon Guards Limited [2000] EA 885 and Raila Amolo Odinga & Another Vs Independent Electoral and Boundaries Commission & 2 Others [2017] eKLR for the proposition that parties are bound by their pleadings and cannot introduce unpleaded matters as the basis of their case. 14. On the evidentiary and liability issues, counsel submitted that the Respondent had discharged the burden of proof on a balance of probabilities, relying on William Kabogo Gitau Vs George Thuo & 2 Others [2010] 1 KLR 526 and Palace Investment Limited Vs Geoffrey Kariuki Mwenda & Another [2015] eKLR. The Respondent further argued that the Appellants' failure to produce bank records within their possession warranted an adverse inference, citing Lucy Nyambura Gitanga Vs Viraj Properties Limited & Another [2021] eKLR and Kimotho Vs Kenya Commercial Bank [2003] 1 EA 108. ELCLA E030 OF 2024 5

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15. Counsel additionally contended that payment to the deceased director who acted for the 1st Appellant bound the company under the principles of agency and ostensible authority as recognized in H.L. Bolton (Engineering) Co. Ltd v T.J. Graham & Sons Ltd, Freeman & Lockyer Vs Buckhurst Park Properties (Mangal) Ltd, and HelyHutchinson Vs Brayhead Ltd [1967] 1 QB 549. The Court was therefore urged to dismiss the appeal with costs and affirm the Tribunal's decision. 16. I have considered the Amended Memorandum of Appeal, the Record of Appeal, the impugned ruling, and the submissions filed by the parties. The issues arising for determination in the present appeal are as follows: a) Whether the Tribunal erred in law and fact in finding that the sum of Kshs. 500,000/= paid by the Respondent constituted a refundable rent deposit and not goodwill. b) Whether the Tribunal erred in imposing liability upon the Appellants, particularly the 2nd Appellant, in respect of the said sum. Analysis and Determination 17. This being a first appeal, this Court is obligated to re-analyse the evidence and material that was placed before the Tribunal and draw its own independent conclusions. In Selle & Another Vs Associated Motor Boat Company Limited & Others [1968] EA 123, the Court held that a court hearing a first appeal is not necessarily bound to accept the findings of fact by the court below. The Court stated as follows: “An appeal to this court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusion though it should always bear in mind that it has neither seen ELCLA E030 OF 2024 6

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nor heard the witnesses and should make due allowance in that respect.” 18. Guided by the foregoing principles, I now turn to the issues identified for determination; Whether the Tribunal erred in law and fact in finding that the sum of Kshs. 500,000/= paid by the Respondent constituted a refundable rent deposit and not goodwill. 19. The Appellants contend that the Tribunal erred in finding that the sum of Kshs. 500,000/= paid by the Respondent constituted a refundable rent deposit rather than goodwill. Their argument is premised on the fact that the tenancy agreement dated 20th October 2015 expressly provided for a rent deposit of Kshs. 50,000/= and made no reference to any additional deposit. They further fault the Tribunal for relying on evidence outside the written agreement to arrive at its conclusion. 20. I have carefully reviewed the tenancy agreement, the proceedings before the Tribunal and the impugned ruling. It is common ground that the tenancy agreement expressly provided for a deposit of Kshs. 50,000/=. It is equally not disputed that the Respondent produced evidence before the Tribunal showing that on 21st October 2015, a day after the execution of the tenancy agreement, he transferred a sum of Kshs. 500,000/= to an account belonging to James Gichure Kionga, who had executed the tenancy agreement on behalf of the 1 st Appellant. The fact of payment was therefore established through documentary evidence. 21. The dispute before the Tribunal was not whether the payment was made but rather the purpose for which it was made. Whereas the Respondent maintained that the amount was paid as a refundable deposit ELCLA E030 OF 2024 7

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in connection with the tenancy, the Appellants asserted that it constituted goodwill. Under Section 107(1) of the Evidence Act, whoever desires a court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. Further, Sections 109 and 112 of the Evidence Act place the burden upon a party to prove facts especially within his knowledge. 22. While the Appellants argued that the payment represented goodwill, no documentary evidence was produced before the Tribunal to support that assertion. There was no goodwill agreement, receipt, acknowledgement, sale of business agreement or any other document demonstrating that the parties had agreed that the sum of Kshs. 500,000/= would be paid as goodwill. Equally, there was no evidence that any business together with its attendant goodwill was transferred to the Respondent. In contrast, the Respondent produced bank records evidencing the payment and explained the circumstances under which it was made. 23. The Appellants further argued that the Tribunal improperly relied on extrinsic evidence contrary to Sections 97 and 98 of the Evidence Act. Those provisions embody the parol evidence rule and generally prohibit the admission of oral evidence to contradict, vary, add to or subtract from the terms of a written contract. However, the issue before the Tribunal was not the interpretation of a contractual clause contained in the tenancy agreement. Rather, the Tribunal was called upon to determine the nature of a separate payment which was not expressly addressed in the agreement. In my view, the Tribunal was entitled to consider the surrounding circumstances and documentary evidence in order to ascertain the character of that payment. ELCLA E030 OF 2024 8

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24. The Tribunal found that the Respondent had proved payment of the sum and that the Appellants had failed to substantiate their contention that it constituted goodwill. Having independently re-evaluated the evidence on record, I find no reason to fault that conclusion. The Appellants' explanation remained unsupported by evidence and amounted to a bare assertion. On a balance of probabilities, the evidence before the Tribunal favoured the Respondent's version that the payment was made in connection with the tenancy and was refundable. 25. Consequently, I am not persuaded that the Tribunal misdirected itself either on the facts or the law in finding that the sum of Kshs. 500,000/= constituted a refundable deposit and not goodwill. The Appellants have therefore failed to establish any basis upon which this Court may interfere with that finding. Whether the Tribunal erred in imposing liability upon the Appellants, particularly the 2nd Appellant, in respect of the said sum 26. The Appellants contend that the Tribunal erred in imposing liability upon the 2nd Appellant in respect of the disputed sum of Kshs. 500,000/=. It was submitted that the money was allegedly paid to the late James Gichure Kionga and that any claim arising therefrom ought to have been pursued against his estate rather than against the 2 nd Appellant personally. 27. I have considered the record of appeal and the impugned ruling. It is not disputed that the tenancy agreement dated 20th October 2015 was executed on behalf of the 1st Appellant and that the late James Gichure Kionga was the person who dealt with the Respondent on matters relating to the tenancy. It is also not disputed that the disputed payment ELCLA E030 OF 2024 9

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of Kshs. 500,000/= was made immediately after the execution of the tenancy agreement and in connection with the tenancy transaction. 28. Having found that the payment was made in connection with the tenancy and was refundable to the Respondent, the question that remains is whether the Tribunal erred in directing liability against the Appellants. The record demonstrates that the Respondent's claim was founded on the landlord-tenant relationship and not on an independent personal transaction between the Respondent and the 2 nd Appellant. The monies were found to have been received in the course of that tenancy relationship through the person who acted for and represented the landlord. 29. Further, the Appellants did not place before the Tribunal any evidence demonstrating that the late James Gichure Kionga received the money purely in his personal capacity and wholly outside the affairs of the 1 st Appellant. The burden of proving that fact rested upon the Appellants pursuant to Sections 109 and 112 of the Evidence Act, the relevant facts being peculiarly within their knowledge. In the absence of such evidence, the Tribunal was entitled to draw the inference that the payment was received on behalf of the landlord in relation to the tenancy. 30. Upon re-evaluating the evidence on record, I am not satisfied that the Appellants have demonstrated any error of law or fact on the part of the Tribunal in relation to liability. I therefore find no basis for interfering with the Tribunal's finding on liability and this ground of appeal consequently fails. ELCLA E030 OF 2024 10

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Disposition 31. In the result, the appeal is hereby dismissed. a) The ruling and orders of the Business Premises Rent Tribunal delivered on 12 th November 2021 in Nairobi BPRT Tribunal Cause No. 986 of 2019, Derrick James Kimani Vs Kionga Investments Company & Jane Njoki Gichure, are hereby upheld. b) The Respondent shall have the costs of the appeal. It is so ordered. DATED, SIGNED and DELIVERED virtually at NAIROBI on this 18th day of June, 2026. MOHAMMED N. KULLOW JUDGE Judgement delivered in the presence of: Mr. Gikaria Mr. Hiram Philomena W ELCLA E030 OF 2024 for the Appellants for the Respondent Court Assistant 11

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