Agip (K) Limited v Mohideen Alibhai Gilani [2003] KECA 23 (KLR)
The bottom line
#Kenya's Court of Appeal ruled a landlord cannot end a 30-year lease early using a compensation clause — tenants who pay rent are entitled to stay.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether Clause 3(iii) of the lease conferred on the lessor (plaintiff) the right to terminate the lease before the expiry of the 30-year term.
- 2.Whether the learned Judge erred in law and fact in entering summary judgment against the defendants under Order XXXV rule 1 of the Civil Procedure Rules.
- 3.Whether the learned Judge erred in dismissing the defendants' counterclaim on the ground that it sought identical reliefs to those in the plaint.
- 4.Whether the learned Judge erred in failing to deal with the defendants' statutory protection under section 53(a) of the Registered Land Act (Cap 300).
Key legal issues
#Construction of Clause 3(iii) of the lease - whether it conferred a right of termination on the lessor.
It did not. Clause 3(iii) is a compensation clause operative only where the lease has already been determined for a reason attributable to the lessor; it confers no power on the lessor to terminate the lease, and the purported termination was unlawful.
The clause operates on the premise that the lease has already been determined for a reason attributable to the lessor and then provides compensation at Shs 9,700 for each month of the unexpired term, payable before the lessee vacates. Had the parties intended a unilateral termination power, the clause would simply have provided that the lessor could terminate before the end of the term. Instead it contemplates something the lessor does - such as contracting to sell with vacant possession or transferring to an owner who refuses to recognise the lease - which causes the determination.
Statutory protection of the lessee under section 53(a) of the Registered Land Act (Cap 300).
The defendants, who were paying the reserved rent and observing and performing the lease covenants, were entitled in law to peaceable and quiet possession; the learned Judge's failure to deal with this substantial point was an error.
Section 53(a) of the Registered Land Act implies in every lease a lessor's covenant that, so long as the lessee pays the rent and performs the agreements and conditions on his part, the lessee may peaceably and quietly possess and enjoy the premises without lawful interruption. No breach of covenant or non-payment was alleged against the defendants. Their statutory protection was a substantial point which the learned Judge failed to address at all; had he done so, he would have appreciated that the plaintiff had no right to terminate.
Whether summary judgment under Order XXXV rule 1 of the Civil Procedure Rules was properly entered against the defendants.
It was not. The defence raised a valid triable issue - that the plaintiff had no right to terminate the lease - and the defendants should have been given leave to defend; striking out the defence and entering judgment for the plaintiff was erroneous.
Summary judgment under Order XXXV rule 1 is inappropriate where the defence raises a triable issue. The defence expressly averred that the plaintiff had no right to terminate the lease, a question turning on the construction of Clause 3(iii) and the statutory protection of section 53(a). The learned Judge held the defendants had no defence, but that was a valid defence they should have been allowed to urge at trial. Unconditional leave to defend was therefore the proper course, and striking out the defence was erroneous.
Whether the defendants' counterclaim was properly dismissed because it sought identical reliefs to those in the plaint.
The dismissal was erroneous. The mirror-image character of the counterclaim was no bar to it; the most important relief the defendants could seek was a declaration that the plaintiff was not entitled to terminate the lease.
The learned Judge dismissed the counterclaim because it sought identical reliefs to those in the plaint. The Court held that in the circumstances the most important relief the defendants could seek was a declaration that the plaintiff was not entitled to terminate the lease, and the plaintiff's own declaration claim was no bar. The Judge also failed to deal with the defendants' statutory protection under section 53(a), a substantial point which, if considered, would have shown the plaintiff had no right to terminate. Dismissal of the counterclaim was therefore erroneous.
Legal principles established
#- A lease clause providing compensation upon determination of the lease 'for any reason attributable to the lessor' is a compensation provision and does not confer on the lessor a unilateral right to terminate the lease before the expiry of the term.
- Under the implied covenant in section 53(a) of the Registered Land Act (Cap 300), a lessee who pays the reserved rent and performs the lease covenants is entitled to peaceable and quiet possession of the leased premises for the term without lawful interruption by the lessor.
- A defence that clearly avers that the plaintiff had no right to terminate the lease is a valid defence which the defendant must be allowed to urge; summary judgment cannot properly be entered where such a triable issue is raised.
- A counterclaim is not barred merely because it seeks reliefs mirroring those claimed in the plaint.
Court orders
#- 1.Appeal allowed.
- 2.The ruling and decree of Rimita J dated 30th March 2001 set aside.
- 3.The defendants' defence and counterclaim reinstated.
- 4.The defendants given unconditional leave to enter and defend.
- 5.The plaintiff's Notice of Motion dated 6th January 2001 dismissed with costs.
- 6.The plaintiff to pay the defendants their costs of this appeal.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nakuru
- H.C.C.C. No. 509 of 2000
- Jurisdiction invoked
- Not expressly stated in the judgment; the matter is a first appeal from the ruling and decree of the High Court of Kenya at Nakuru to the Court of Appeal.
Relief refused
#The plaintiff's application for summary judgment and dismissal of the defendants' counterclaim (Notice of Motion dated 6th January 2001).
Clause 3(iii) of the lease conferred no right of termination on the lessor and the defence clearly averring that the plaintiff had no right to terminate was a valid defence which the defendants should have been allowed to urge at trial.
Costs
The plaintiff's Notice of Motion dated 6th January, 2001 is dismissed with costs. The plaintiff to pay the defendants their costs of this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Accordingly we are of the opinion that Clause 3 (iii) did not give the plaintiff the right to terminate the defendants' lease and in purporting to do so the plaintiff acted unlawfully.
This clause does not give the lessor the right to terminate the lease. If that was the intention, the clause would have been framed differently.
As we have already said the defendants were paying the reserved rent and observing and performing the other terms and conditions of the lease, they were, in law, entitled to peaceable and quiet possession.
There was a clear averment in the defence that the plaintiff had no right to terminate the lease. That was a valid defence to the plaintiff's claim and the defendants should have been allowed to urge it.
The fact that the plaintiff had also sought a declaration that he had validly terminated the lease was no bar to the defendants asking for a declaration that the defendant had acted unlawfully.
For these reasons, we allow this appeal and set aside the ruling and decree of Rimita J dated 30th March, 2001. The defendants' defence and counterclaim are hereby reinstated and the defendants are given unconditional leave to enter and defend.
Issues in the judgment
#The date of judgment is incomplete in the source: only the year 2003 is stated, with the day and month left blank. The dateOfJudgment recorded here is a placeholder for the year only.
Internal inconsistency in the lease date: the judgment earlier describes the lease as dated 17th December 1987, but later refers to it as dated 28th December 1987.
Party identification is confused: the judgment explains that the first defendant changed its name to Shell & BP (Malindi) Kenya Ltd, yet Shell & BP (Malindi) Kenya Limited also appears separately as the second defendant/second appellant described as the first defendant's agent, and the relationship between the two appellants is not resolved.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Agip (K) Limited v Mohideen Alibhai Gilani [2003] KECA 23 (KLR)", Case Analysis (2003). Civil Appeal No. 238 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2003/23/eng@2003-03-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.