Koira Limited v Abbas Soud Ali El Busaidy, Ilhammohamed Said, Al Busaidi Abdulla Saud Al- Busaidi And Soud Salim Soud (Administrators Of The Estate Of Sir Ali Salim El Busaidi) & another [2019] KEELC 3499 (KLR)
The bottom line
#A Kenyan court confirmed that a lease renewal option is only a preference, not a guaranteed right — and unpaid rent killed the tenant's claim.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Is the 1st or 2nd Defendant bound under the terms of the indenture dated 20th January 1914 to grant a renewal of the lease for a further period of 99 years on the same terms contained in the earlier indenture?
- 2.If so, are the plaintiffs entitled to the prayers in the re-amended plaint?
- 3.Whether the 2nd Defendant is entitled to the protection of an innocent purchaser for value without notice
Key legal issues
#Whether the 1st defendant was bound to renew the 1914 indenture for a further 99 years
The 1st defendant was justified in refusing renewal; the plaintiff was in breach of the rent covenant and the option to renew only gives a preference, not a mandatory right
The 1914 indenture required annual rent payable in advance on 1st January each year. The plaintiff's own payments (1995 to Malindi School Trust and 2010 to Pandya & Talati) were irregular, unexplained and did not match the covenant. Sections 107 and 109 of the Evidence Act placed the burden on the plaintiff to prove timely payment, which it failed to discharge. Demand was irrelevant to renewal, and the option to renew is a preference per Katsuri Ltd.
Whether lack of landlord's consent to the 1977 assignment was a breach
Lack of consent did not amount to a breach because the indenture did not specifically require the landlord's consent to assignment
The lease allowed re-assignment subject to the covenants in the indenture, but the indenture did not specifically make obtaining the landlord's consent one of those covenants. The court therefore rejected the 1st defendant's plea that the assignment to the plaintiff in 1977 was irregular for want of consent.
Whether the 2nd defendant is a bona fide purchaser for value without notice
No; the 2nd defendant, having not paid the full purchase price and being implicated in a transaction under criminal investigation and pending litigation, cannot claim that protection
The 2nd defendant's own witness admitted paying only Kshs 5,000,000 in cash, with the balance withheld because the vendor was arrested and charged in criminal case no. 190 of 2013. Applying the Katende v Haridar criteria, a purchaser must prove purchase for valuable consideration and good faith. Pending ELC Case 4 of 2013 and the withheld consideration defeated the defence.
Whether the 1st defendant is entitled to vacant possession
Yes; having dismissed the plaintiff's claim, the court found the 1st defendant entitled to vacant possession as counterclaimed
The lease expired on 31st December 2012 and was not renewed because of the plaintiff's breach. Since a tenant cannot impose itself on a landlord after expiry, the 1st defendant's counter-claim for vacant possession succeeded.
Legal principles established
#- An option to renew a lease on the same terms is not a mandatory obligation on the landlord; it confers only a preference on the tenant
- A tenant cannot impose or force herself on a landlord where the lease has expired
- A purchaser who has not paid the full purchase price cannot claim the protection of a bona fide purchaser for value without notice
- Specific performance is discretionary and founded on a valid enforceable contract, and will be refused where damages are adequate or hardship would result
Court orders
#- 1.The plaintiff's suit is dismissed
- 2.Judgment entered in favour of the 1st defendant as prayed in the counter-claim, namely vacant possession of the suit premises
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court at Mombasa (first-instance suit on leasehold/land dispute); no constitutional or statutory basis expressly invoked in the extract
Relief refused
#Specific performance of the 1914 indenture to renew the lease for a further 99 years
The option to renew is a preference, not a mandatory obligation, and the plaintiff breached the indenture by failing to pay ground rent annually in advance
Permanent injunctions restraining dealings with the suit properties and interference with tenants
The plaintiff's case failed as the lease was validly refused renewal for breach of the rent covenant
Endorsement of the plaintiff's interest on the freehold titles / Land Registrar orders
No basis where the plaintiff's claim for renewal failed and the plaintiff was in breach of the indenture
Costs
Not expressly stated in the judgment text; the plaintiff had sought 'Costs of and incidentals to this suit' but no final costs order appears in the extract
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.
the option to renew on the same terms" is not a mandatory requirement imposed on a landlord to renew a lease. In my opinion and I so hold, the clause is meant to give the plaintiff preference when the term comes to an end.
In light of the foregoing, it is my finding that the Plaintiff's case cannot succeed and is hereby dismissed. Instead, I find that the 1 st has proved that it is entitled to vacant possession of the suit premises. Accordingly I enter judgment in his favour as prayed in the counter-claim
the pendency of the suit between the two defendants coupled with the fact that the 2nd defendant is still holding part of the consideration for the suit properties denies the 2nd defendant the defence and protection an innocent purchaser for value without notice as guaranteed
the plaintiff was clearly in violation of the terms of the indenture agreement of the 20th January 1914 by failing to pay ground rent every 1st January of every year from 1977
Issues in the judgment
#The judgment text ends abruptly after announcing judgment on the counter-claim; the detailed counter-claim orders and any costs order are not set out in the extract provided
The coram/judge's name is not printed in the extract provided
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Koira Limited v Abbas Soud Ali El Busaidy, Ilhammohamed Said, Al Busaidi Abdulla Saud Al- Busaidi And Soud Salim Soud (Administrators Of The Estate Of Sir Ali Salim El Busaidi) & another [2019] KEELC 3499 (KLR)", Case Analysis (2019). ELC Suit 288 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3499/eng@2019-03-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.