Bell & another v I. L. Matterello Limited
The bottom line
#Kenya's Court of Appeal cut a landlord's damages award from KShs.2 million to KShs.500,000, confirming landlords cannot re-enter leased premises without proper notice.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the High Court lacked jurisdiction to determine the dispute, which the appellants contended fell within the ELC's jurisdiction
- 2.Whether the trial court erred in awarding a relief (refund of KShs.270,000.00 rent deposit and exemplary damages) not pleaded
- 3.Whether the trial court misapplied itself on the award of damages of KShs.2,000,000.00 as punitive and exemplary damages
- 4.Whether the trial court failed to appreciate the evidence as advanced by the parties
Key legal issues
#Jurisdiction of the High Court over landlord-tenant commercial disputes
The trial court was properly seized of the dispute; the ELC Act does not confer jurisdiction over landlord and tenancy relationships over premises leased for commercial enterprise.
The court construed section 13(2) of the Environment and Land Court Act, which enumerates disputes the ELC may hear, including those relating to land, contracts and instruments granting enforceable interests in land. It found nothing in that provision donating to the ELC mandate over landlord-tenancy disputes concerning premises leased for running a commercial enterprise such as a bar and restaurant. The substratum of the dispute was commercial, not a land title or use question, so the High Court was properly seized.
Award of unpleaded reliefs (rent deposit refund and exemplary damages)
The refund of the KShs.270,000.00 rent deposit was properly awarded under the court's inherent power and the general prayer as a consequential relief; exemplary damages were wrongly introduced suo motu.
Neither the deposit refund nor exemplary damages were pleaded. However, the deposit featured in the evidence of both sides, and the refund was consequential to the finding that nothing was outstanding, so it could be awarded under the general prayer 'any other relief'. Exemplary damages, by contrast, were not pleaded and there was no principle permitting the court to introduce them suo motu and factor them into the pleaded punitive damages head.
Quantum of punitive damages
The award of KShs.2,000,000.00 was inordinately high because it wrongly factored in unpleaded exemplary damages and unproved loss of earnings; substituted with KShs.500,000.00 as punitive damages only.
Applying settled principles on appellate interference with damages, the court found basis for interference: the trial judge factored in unpleaded exemplary damages and an element of loss of earnings which fell into the category of special damages requiring specific pleading and proof, having been discounted in the judgment. Considering comparable awards and the circumstances that no rent was outstanding and the deposit was held, KShs.500,000.00 was sufficient compensation.
Lawfulness of the appellants' re-entry and rejection of the counterclaim
The re-entry was unlawful for want of the contractual two months' rent arrears and the statutory thirty days' notice; the counterclaim was properly dismissed for want of proof.
The tenancy agreement permitted re-entry only upon proven rent arrears of two months, but rent was fully paid up to 31st January 2015 and February's rent was not yet due. Section 75 of the Land Act required at least thirty days' notice before re-entry, which was not served. The counterclaim failed because the repair claims were unproven (no receipts, inconsistent figures, unsigned estimate by an unverified architect) and no rent or electricity bills were outstanding.
Legal principles established
#- The ELC has no jurisdiction over landlord and tenancy disputes concerning premises leased for running a commercial enterprise; such commercial disputes fall within the High Court's jurisdiction.
- A court may not grant relief that was neither pleaded nor prayed for by the parties, save where the unpleaded issue was left to the court for decision or the relief is consequential to the main relief.
- Exemplary damages cannot be introduced suo motu by a court and factored into a pleaded award of punitive damages.
- A landlord's right of re-entry under section 75 of the Land Act crystallizes only after service of at least thirty days' notice; extra-judicial self-help re-entry is unlawful.
Court orders
#- 1.The appeal against the factoring into the punitive damages award of an element of exemplary damages is allowed
- 2.The award of KShs.2,000,000.00 as punitive and exemplary damages is set aside and substituted with an award of KShs.500,000.00 as punitive damages only
- 3.The award of KShs.270,000.00 to the respondent as refund for rent deposit is affirmed
- 4.The trial court's order dismissing the appellants' counterclaim is affirmed
- 5.The appellant will have ¼ costs offset against the respondent's award of costs against them both on appeal and at the trial
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Mombasa, Commercial Division
- Mombasa HCCC No. 39 of 2015
- Jurisdiction invoked
- Section 29(1) of the Court of Appeal Rules (first appeal); dispute over jurisdiction of High Court vis-à-vis ELC under Articles 162(2) and 165(5) of the Constitution
Relief refused
#Appellants' invitation to overturn the trial court's rejection of their counterclaim
The reasons given by the Judge for rejecting the counterclaim were well founded in fact and law
Appellants' plea that the trial court lacked jurisdiction and that the proceedings were a nullity
Section 13(2) of the ELC Act does not confer on the ELC jurisdiction over landlord and tenancy disputes over commercial premises
Appellants' invitation to scale damages down to between KShs.100,000.00 and KShs.250,000.00
The court found KShs.500,000.00 sufficient compensation as punitive damages in the circumstances
Costs
The appellant will have ¼ costs offset against the respondent's award of costs against them both on appeal and at the trial.
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.
In the result, we find and hold that the trial court was properly seized of the issues in controversy as between the rival parties before it and rightly determined these on their merit.
The award of KShs.2,000,000.00 as punitive and exemplary damages is set aside and substituted with an award of KShs.500,000.00 as punitive damages only.
The award of KShs.270,000.00 to the respondent as refund for rent deposit is affirmed.
The appellant will have ¼ costs offset against the respondent’s award of costs against them both on appeal and at the trial.
there was no known principle of law under which these exemplary damages could have been introduced by the court suo motu and factored in those claimed under the head of punitive damages
pursuant to section 75 of the Land Act, a landlord’s right of re-entry only crystallizes after service of at least thirty (30) days’ notice, a prerequisite not complied with by the appellants.
Issues in the judgment
#Delivery venue inconsistency: judgment of the Court of Appeal at Mombasa certified as delivered at Nairobi
Duplicate paragraph numbering in the judgment
PW1's evidence quoted as deposit of KShs.217,000.00, inconsistent with KShs.270,000.00 used throughout
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Bell & another v I. L. Matterello Limited", Case Analysis (2022). Civil Appeal 72 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/168/eng@2022-02-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.