Thara & another v Actae Development Limited & another (Civil Appeal E094 of 2022) [2024] KECA 1480 (KLR)
The bottom line
#Kenya's Court of Appeal upheld the lease but threw out a Kshs. 1.36 million service charge award because the claimant failed to strictly prove the exact amount claimed.
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 learned Judge was at fault in not finding that the respondents breached the terms of the Sub-lease
- 2.Whether the learned Judge erred in allowing the respondents’ counterclaim and finding that the appellants were liable to pay the revised service charge
- 3.Whether the learned Judge erred in entering judgment for both respondents
Key legal issues
#Whether introduction of the Hotel-Type Scheme/Rental Scheme through the SCFMA and Deed of Adherence breached the permitted user clause of the Sub-lease
No breach. The Sub-lease expressly contemplated the management contract and required execution of the Deed of Adherence; the SCFMA and Deed of Adherence operationalised the Sub-lease, particularly the undefined term 'occasional house guests', and did not extend the permitted user.
The Sub-lease contained an entire agreement clause but Clause 6.2 expressly acknowledged the negotiated management contract and obliged the Lessee to execute a Deed of Adherence. The term 'occasional house guests' was undefined and, per Black's Law Dictionary, includes a paying guest; the number and criteria were left to the Management Company. Construing the three documents together, the ancillary agreements gave effect to, rather than varied, the Sub-lease. Rewriting the term to exclude paying guests would breach the settled rule that courts cannot rewrite contracts for parties.
Whether the 2nd respondent strictly proved its counterclaim for service charge of Kshs. 1,357,542
No. The claim was in the nature of special damages requiring strict proof; the amount was partly based on projections and the respondents failed to lead primary evidence of how the figure was computed.
A special damages claim must be pleaded and strictly proved. DW2 conceded no accounts were attached to exhibits; the sum claimed rested partly on projected rather than actual costs. In a dispute over quantum, the claimant had to explain with clarity how the figure was reached; merely sending statements was insufficient. The respondents' submissions also failed to address proof of the specific sum.
Whether judgment could be entered on the counterclaim for both respondents when only the 2nd respondent counterclaimed
No; the trial court erred, though the error had no practical consequence given the dismissal of the counterclaim.
The respondents conceded the 1st respondent had no counterclaim. Precedent establishes that a court cannot grant relief on an unpleaded counterclaim and a declaration cannot issue for a defendant absent a counterclaim. The error was capable of correction but became academic once the counterclaim was dismissed on proof grounds.
Legal principles established
#- A claim in the nature of special damages must not only be pleaded with specificity but must also be strictly proved; a claimant who disputes the exact figure must explain how the figure was arrived at
- No judgment may be entered in favour of a party who did not plead or raise a counterclaim
- Where a contract contemplates ancillary documents such as a management contract and deed of adherence, those documents are to be read together with the principal contract and do not, merely by virtue of being ancillary, vary its permitted user
Court orders
#- 1.Dismissal of the appeal on the first issue (no breach of the Sub-lease established)
- 2.Setting aside the judgment and decree on the counterclaim and substitution of an order dismissing the 2nd respondent's counterclaim
- 3.No order as to costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- Environment and Land Court
- Mombasa ELC Case No. 196 of 2015
- Jurisdiction invoked
- First appeal under the Court of Appeal Rules (appellate jurisdiction over the Environment and Land Court)
Relief refused
#Appeal against the finding that there was no breach of the Sub-lease
The SCFMA and Deed of Adherence were contemplated by the Sub-lease and gave effect to it; there was no conversion of permitted user
Costs
No order as to costs of the appeal; each party to bear their own costs of the 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.
It is one thing to find that the appellants were liable to pay service charge but another thing altogether to find that they were indebted to the 2nd respondent in the sum of Kshs. 1,357,542.
the 2nd respondent failed to satisfy the standard for proof of special damages which requires that the same be proved with much certainty and particularity.
To do so would amount to us rewriting the contract for the parties, which we ought not to do.
A party who has not raised a counterclaim is not entitled to judgement in his favour
We set aside that award and substitute therefor an order dismissing the counterclaim. Save for that, the appeal otherwise fails.
Issues in the judgment
#The judgment text is heavily corrupted in multiple passages (OCR-type errors), including counsel submissions and quotations, e.g. garbled rendering of trial evidence and paragraph 24 text
The date of the plenary hearing is printed inconsistently as '27th May, 20204'
The prayer (a) in the plaint is printed with a corrupted date ('4th March, 2011' vs '2nd June 2010' for the Agreement of Lease) and a wrong parcel number in one passage ('Kwale/Galu Kinondo/661' vs 'Kwale/Galu Kinondo/561')
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Thara & another v Actae Development Limited & another (Civil Appeal E094 of 2022) [2024] KECA 1480 (KLR)", Case Analysis (2024). Civil Appeal No. E010 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1480/eng@2024-10-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.