Sunny Sundy Holiday Home Ltd v Paul Kimani Ng’ang’a & Caroline Naswa Ng’ang’a [2021] KEELC 4565 (KLR) | Lease Agreements | Esheria

Sunny Sundy Holiday Home Ltd v Paul Kimani Ng’ang’a & Caroline Naswa Ng’ang’a [2021] KEELC 4565 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT

MALINDI

ELC CASE NO. 47 OF 2017

SUNNY SUNDY HOLIDAY HOME LTD...............................................PLAINTIFF

VERSUS

PAUL KIMANI NG’ANG’A

CAROLINE NASWA NG’ANG’A......................................................DEFENDANTS

JUDGMENT

BACKGROUND

1. By its Plaint dated 3rd March 2017 as amended on 17th October 2018, Sunny Sundy Holiday Home Ltd (the Plaintiffs) prays for Judgment against the two Defendants jointly and severally for:

a) A permanent injunction restraining the Defendants, their Servants, agents, employees and/or any other person claiming under them from re-entering, dealing, leasing, constructing, wasting, damaging, intruding, trespassing, developing and/or interfering with the property known as Marine Holiday House situated on land Portion No. 2916 (Original No. 514/55) and land Portion No. 2911 (Original No. 514/50);

b) A declaration that the Defendants are in breach of the lease agreement dated 12th July 2016;

c) Damages for breach of the lease agreement dated 12th July 2016;

d) Payment of Kshs 4,529,114/-

e) Costs and interest.

2. Those prayers arise from the Plaintiff’s contention that on 12th July 2016, it did enter into a lease agreement in which the Defendants leased the said Marine Holiday House situated in Casuarina, Malindi for the business of hotel and restaurant for a period of five years and 3 months.  The Plaintiff avers that pursuant to the said Agreement, the Defendants were supposed to have made payments totaling Kshs 3,000,000/- as at 1st January 2017.

3. The Plaintiff asserts that contrary to the Agreement and in total breach thereof, the Defendants issued various cheques which were dishonoured on many occasions due to insufficiency of funds.  The Defendants subsequently upon protests by the Plaintiff paid a sum of Kshs 2,135,000/- but have refused to pay for water and electricity bills as well as rent arrears due for the second year.

4. But in their joint Written Statement of Defence and Counterclaim dated 24th November 2017, Paul Kimani Ng’ang’a and Caroline Naswa Ng’ang’a (the Defendants) deny that the amounts claimed by the Plaintiff are due and owing and have put the Plaintiff to a strict proof thereof.

5. The Defendants aver that the Plaintiff’s director conspired with and engaged the Police and other persons such as auctioneers to unnecessarily harass and extort money from them and rendered their carrying on of business at the demised premises unbearable and untenable.  They further assert that without any cause or reason, the Plaintiff, in breach of the Agreement proceeded to interfere and interrupt the running of the business and made unreasonable demands.

6. The Defendants further accuse the Plaintiff of storming the leased premises without any warning and or reason and forcibly ejecting the Defendants and their staff from the premises.  The Defendants assert that by the Plaintiff’s said actions, they have been unnecessarily inconvenienced and have lost business especially from bookings that were already confirmed.

7. The Defendants further aver that at the time of their ejection from the suit premises, the Plaintiffs proceeded to hold their property and goods worth over Kshs 700,000/-. As a result, and by way of their Counterclaim, the Defendants urge that the Plaintiff’s suit be dismissed and that Judgment be entered in their favour for: -

a) A declaration (that the) property and goods held by the Plaintiff ostensibly as lien cannot be held as such and the same be released to the Defendant forthwith;

b) The Plaintiff does render an account of all the business carried out by it from 28th February 2017 and all proceed(s) therefrom be released to the Defendants forthwith;

c) Costs of this suit; and

d) Any other relief the Court deems fit to grant.

The Plaintiff’s Case

8. At the trial herein, the Plaintiff called one witness who testified in support of its case.  The Defendants did not however call any witnesses.

9. PW1- Paolo Di Maria is a director of the Plaintiff and a businessman in Malindi.  He told the Court that on 12th July 2016, the Plaintiff entered into a lease agreement with the Defendants wherein the Defendants leased the premises known as Marine Holiday House situated on land Portions Nos. 2916 and 2911 in Casuarina Malindi for hotel and restaurant business.

10. PW1 testified that the five years and three months lease provided that the mode of payment of rent and for payment of Kshs 1,200,000/- as security deposit on or before 31st August 2016. In this respect as at the 1st January 2017, the Defendants were to have made payments totaling Kshs 3,000,000/-. In breach of the Agreement, the Defendants issued various cheques which were dishonoured due to insufficiency of funds on a number of occasions.

11. PW1 told the Court they protested and reported the matter of the cheques to the Police. The Defendants then promised to pay and entered into another agreement with the Plaintiff on how to pay but never kept those promises.  PW1 testified that the Defendants only made half-hearted and erratic payments totaling Kshs 1,999,000/- but refused to pay water and electricity bills totaling Kshs 65,225/- and Kshs 36,899/- respectively.

12. PW1 testified further that on 6th February 2017, they wrote a demand letter to the Defendants giving them 20 days to clear all outstanding payments failure to which the Plaintiff would re-enter the leased premises and re-take possession.  PW1 told the Court that the Defendants ignored the notice consequent to which the Plaintiff took vacant possession of the property on 28th February 2017.  The Plaintiff claims as a result of the breach, the sum of Kshs 2,760,000/- being rent due for the second year as per the termination clause of the lease agreement.

13. On cross- examination, PW1 testified that the lease provided for payment of rent for the second year even where the Lease Agreement was terminated.  He told the Court he had the utility bills showing the Defendants did not pay for electricity and water even though he had not included them in his list of documents.

14. PW1 conceded that the Defendants had paid the Plaintiff Kshs 2. 13 Million by the time they took back the premises.  They had also paid for six months.  He further told the Court he was not aware that Clause ‘g’ of the Contract was unfair to the Defendants.

Analysis and Determination

15. I have perused and considered the pleadings filed herein, the sole testimony of the Plaintiff’s witness and the evidence placed before the Court.  I have similarly perused and considered the rival submissions and authorities placed before me by the Learned Advocates for the Plaintiff and the Defendants.

16. At the heart of this case is a Lease Agreement dated 12th July 2016 executed between the Plaintiff and the Defendants.  The Agreement drawn by Kanyi J & Company Advocates stipulated the terms of the contract between the parties and for its termination before the expiration of the five years and three months term stipulated in the Lease.

17. That Agreement stipulated that rent for the first year would be Kshs 2,400,000/- and further that the Plaintiff would pay a security deposit of Kshs 1,200,000/- on or before 31st August 2016.  According to the Plaintiff, the Defendants breached the terms of the Agreement in that they failed to pay rent for January 2017 to March 2017 totalling Kshs 410,000/-.  The Defendants are also accused of only paying the sum of Kshs 745,000/- as security deposit rather than the sum of Kshs 1,200,000/- stipulated in the Agreement. In addition, the Plaintiff asserts that the Defendants failed to pay for electricity and water bills totalling Kshs 102,114/-.

18. The Plaintiff told the Court that contrary to their Agreement, the Defendants instead issued cheques which were returned unpaid due to insufficient funds in the Defendants’ account.  When the Plaintiff reported the issue of the cheques to the Police, the Defendants agreed via an addendum to the Agreement dated 16th January 2017 to pay a penalty of Kshs 202,000/-.

19. It is however their case that the Defendants again failed to keep their promises prompting them to issue a demand letter on 6th February 2017 in which they gave notice of their intention to re-enter and re-take the demised premises unless the Defendants cleared all outstanding arrears within 20 days of the Letter of demand. It was the Plaintiff’s testimony that the Defendants ignored the notice and accordingly on 28th February 2017, they took back vacant possession of the premises. The Plaintiff told the Court that under the Agreement, they are still entitled to be paid rent for the months of April 2017 to June 2017 as well as rent for the second year of the lease.

20. On their part while conceding that they executed the Agreement with the Plaintiff, the Defendants deny that they issued any cheques that were dishonoured by their Bank.  They instead accuse the Plaintiff of harassing them using the Police and other strangers thereby frustrating their business and rendering it unviable.

21. In their Counterclaim filed herein, the Defendants accused the Plaintiff of unreasonably ejecting them and retaining their goods worth Kshs 700,000/- in the demised premises.  The Defendants did not however call any witness in support of their Counterclaim and the inescapable conclusion is that the said Counterclaim was abandoned.

22. In their submissions before me, the Defendants asserted that they were faithful to the terms of the contract and even paid the initial instalment of Kshs 600,000/-. It is however their case that unforeseen hindrances by the Plaintiff through Police harassment and intimidation hindered the performance of the contract thereby leading to its termination.

23. At the same time, the Defendants assert that the terms of the Agreement were extremely harsh and unconscionable and hence the terms thereof could not be performed by themselves.

24. As to whether the contract was harsh or unfair to the Defendants, I did not think that that was a defence available to the Defendants in the circumstances herein.  I did not find any evidence that the Lease Agreement was executed by the parties out of some coercion or fraud. While the Defendants cited Clause ‘a’ on termination of the lease as unfair in its requirement for the Defendants to pay rent for the second year where the lease was terminated in the first year, it was clear from a reading of Clause ‘b’ thereof that the converse would equally apply and the Plaintiff would be required to pay all the total amount due as rent for the second year and to release the security deposit to the Defendants where they were to be found to be in default of the Agreement.

25. As the Court of Appeal stated in Kasturi Limited –vs- Nyeri Wholesalers Limited (2014) eKLR: -

“Upon the grant of a lease or tenancy, both the landlord and tenant are in general estopped from denying the validity of the transaction.  In the instant case, neither the landlord nor the tenant is permitted to assert that the tenancy which they created is invalid.”

26. While the Defendants denied in their pleadings issuing the cheques that were dishonoured, the Plaintiff’s director Paolo Di Maria (PW1) produced herein in evidence copies of various cheques drawn by the Defendants from their CFC Stanbic Bank Account showing that the same were returned and the reason given for the return is shown as “Refer to Drawer”.  In other instances, the reason given is that “payment (was) stopped by the Drawer.”

27. It was therefore clear to me that the Defendants were being less than candid in their claim that they did not issue dishonoured cheques.  They did not call any witness either in support of their generalized denials in the defence and or in support of their Counterclaim.  They do not even specify or name the goods that were allegedly retained by the Plaintiff which they claim were valued at Kshs 700,000/-.

28. As was held in Mary Njeri Murigi –vs- Peter Macharia & Another (2016) eKLR: -

“Where a party fails to call evidence in support of its case, that party’s pleadings remain mere statements of fact since in so doing the party fails to substantiate its pleadings.  In the same vein, the failure to adduce any evidence means that the evidence adduced by the Plaintiff against them is uncontroverted and therefore unchallenged.”

29. Similarly, in the matter before me, the Plaintiff’s case remains unchallenged as the Defendants failed to discredit and/or challenge the Plaintiff’s evidence even under cross- examination.  In the premises, I am satisfied that the Plaintiff has proved its case on a balance of probabilities.  There is however no proof of any damages suffered by the Plaintiff as sought under Prayer No. ‘C’ of the Amended Plaint.

30. Accordingly, I hereby enter Judgment for the Plaintiff as prayed in terms of Prayers No. ‘a’, ‘b’ and ‘d’ of the Amended Plaint.,

31. The Plaintiff shall also have the costs of this suit and of the Defendants’ Counterclaim.

Dated, signed and delivered at Malindi this 29th  day of January, 2021.

J.O. OLOLA

JUDGE