https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3145

Bungoma Teachers Housing & Investment Co-operative Society Ltd v Bonito Properties Ltd (Environment and Land Case E023 of 2025) [2026] KEELC 3145 (KLR) (13 May 2026) (Ruling) Neutral citation: [2026] KEELC 3145 (KLR) Republic of Kenya In the Environment and Land Court at Bungoma Environment and Land Case E023 of 2025 AK Bor, J May 13, 2026 Between Bungoma Teachers Housing & Investment Co-operative Society Limited Plaintiff and Bonito Properties Limited Defendant Ruling 1.The plaintiff filed the application dated 26/8/2025 seeking to have the defendant compelled through a mandatory injunction to pay to the plaintiff forthwith rent arrears amounting to Kshs. 55,280,000/= for the period running from 1/8/2014 to date. It also sought to have the defendant restrained through a temporary injunction from erecting, improving, adding to or continuing with any construction works on the premises erected on Bungoma Township/457 also known as Bungoma Tourist Hotel (the suit premises) until further orders of the court. 2.The application was made on the grounds that the relationship between the plaintiff and the defendant is governed by the lease agreement dated 10/2/2014 which obligates the defendant to pay rent as stipulated in clause 19 of the lease of Kshs. 47,250,170/= and that the non-payment of the rent constituted a fundamental breach of the lease. The plaintiff’s claim is that the defendant had failed to pay rent for 10 years leading to the accrual of rent arrears was a breach of the lease, vitiated the agreement and unjustly enriched the defendant at the expense of the plaintiff. Additionally, that the defendant continued to make extensions and construction works on the suit premises without the plaintiff’s consent and in disregard of its proprietary rights. 3.Peter Simiyu Sirengo, the plaintiff’s Chairman swore the supporting affidavit and averred that upon assuming office, the committee reviewed the lease over the suit premises and sought legal advice. He deponed that clause 20 of the lease stipulated that the rent payable for the first 5 years was Kshs. 815,000/= per month and this would escalate by 15% to Kshs. 937,000/= for the sixth to tenth years. Subsequently, there would be a 15% escalation up to the 21st year. 4.Clause 19 gave the schedule for sharing business profits between the parties as 10% for the first 5 years, 12% from the sixth to tenth year, 15% for the 11th to 15th years and 20% after the 16th year. He averred that the defendant had not remitted any share of profits to the plaintiff for the last 10 years. He explained that the monthly rent was structured to be shared between the parties as follows:- the first 5 years the plaintiff’s share was Kshs. 400,000/= while the defendant’s share was Kshs. 415,000/=. For the 6th to 10 years the plaintiff’s share would be Kshs. 460,000/= and Kshs. 470,000/= for the defendant. From the 11th year, the plaintiff’s share would be Kshs. 527,730/= and the defendant share Kshs. 549,270/=. The defendant was expected to recoup its capital investment of Kshs. 138,814,000/=. 5.Mr. Sirengo contended that in real terms, the defendant had not invested a penny in the business. He argued that there was no justification for the defendant to retain 90% of the profit from the suit premises and that the lease did not disclose any tangible consideration paid by the defendant for the disproportionate benefit. He argued that the arrangement had prejudiced the plaintiffs’ members. According to the plaintiff’s books of account and bank statements, the defendant should have paid Kshs. 47,250,170/= on account of rent which he contended was a fundamental breach of the lease entitling the plaintiff to terminate it. He urged that an injunction was necessary to stop the defendant from carrying out construction and improvements on the suit premises without the plaintiff’s consent or consultation. He averred that the defendant continued to derive substantial benefits from the suit premises without paying any consideration to the plaintiff. 6.Ken Musebe swore the defendant’s replying affidavit in opposition to the plaintiff’s application dated 25/8/2025. He enumerated the orders sought in the application and reliefs sought in the plaint. He averred that the application was misconceived, fatally defective, contradictory and an abuse of the court process because the plaintiff was seeking to enforce the lease by demanding alleged rent arrears anchored on the lease and yet praying for its nullification. He argued that a party could not rely on a contract to obtain relief while simultaneously urging the court to declare that contract invalid. 7.Regarding the prayer for a mandatory injunction, he urged that such injunctions were only granted in very clear cases and upon satisfaction of strict conditions. He cited case law and added that the plaintiff had cast doubt on the validity of the lease in his pleadings. He argued that the dispute revolved around a contested lease agreement between the parties, rent arrears and the alleged breach of a disputed lease. He was emphatic that this matter required a full hearing and taking of evidence, which could not be done through a summary determination. 8.He added that the plaintiff was seeking to compel payment of tens of millions of shillings, which was a complex accounting matter incapable of summary determination or simple reversal. He maintained that a mandatory injunction was not warranted where the alleged rent arrears could be compensated by damages. He argued that the plaintiff had failed to satisfy the requirement for a mandatory injunction and that the contradictory pleadings and lack of supporting documentation undermined any prima facie claim. 9.Peter Simiyu Sirengo swore a further affidavit and exhibited copies of the lease agreement, certificate of lease and letters dated 2/9/2024 and 11/4/2025 addressed to the Plaintiff. 10.The application was canvassed through written submissions. The Plaintiff cited Kenya Breweries Limited v Washington Okeyo [2002] EA 109 where the Court of Appeal held that a mandatory injunction could be issued if the case was clear and straightforward or the defendant was plainly in default or the court decided that the matter ought to be decided at once. It also cited Sheriff Abdi Hassan v Nadhif Jama Adan [2006] eKLR where the court restated the factors for consideration before grant of a mandatory injunction on an interlocutory application. The court noted that before granting a mandatory injunction, a court needs assurance that at the trial it would appear that the injunction had been rightly granted. 11.The plaintiff submitted that it had made a case for the grant of a mandatory injunction and pointed out that the defendant admitted occupation and nonpayment of rent over the last ten (1) years. Further, that the defendant had not exhibited any proof of payment and was instead seeking refuge in arguments about the validity of the lease and complexity of accounting. The plaintiff argued that the Civil Procedure Rules allow pleading of alternative and inconsistent reliefs as long as they were regally sustainable. 12.The plaintiff argued that it was entitled to claim rent for the suit premises based on occupation while challenging the validity of the lease. It went on to argue that even if the lease were voidable, rent remained payable for the occupation of the suit premises. The plaintiff argued that the continuous non-payment of rent deprived it of income, proprietary benefit and the economic sustenance of its 2500 elderly members who devoted their life savings to develop the asset the defendant is enjoying at their expense. 13.Regarding the temporary injunction, the plaintiff submitted that a prima facie case was established by its ownership of the land known as Bungoma Municipality/457 on which the suit premises are erected. Further, that defendant admitted being in occupation of the premises but refused to pay rent and had not sought or obtained the plaintiff’s authority to extend, improve or alter the premises as it was doing. The plaintiff cited Mrao Limited v First American Bank of Kenya Limited [2003] eKLR in support of its claim. 14.The defendant submitted that the plaintiff had not established sufficient cause for grant of the prayers sought at the interlocutory stage. The defendant relied on the Kenya Breweries case and Lucy Wangui Gachara v Minudi Okemba Lore [2015] eKLR where the Court of Appeal faulted the trial court for erroneously granting a mandatory injunction at the interlocutory stage. The defendant argued that the plaintiff seeks to compel it to pay alleged rent arrears amounting to Kshs. 55,280,000/= from 1/8/2014 to date and that this was a monetary relief which could only be determined upon a full hearing and production of evidence including proof of the terms of the lease, rent payable, duration, validity of the lease and computation of arrears. It added that the plaintiff’s claim was neither clear nor undisputed to warrant a mandatory injunction. 15.The defendant argued that compelling payment of Kshs. 55,280,000/= at this stage would effectively determine the main suit without trial and prejudice its right to be heard. It went on to urge that the sum claimed was a special damage that must not only be pleaded but also be proved at the trial. It argued that awarding that sum at the interlocutory stage would amount to the court breaching known laws regarding claims for special damage. 16.The defendant submitted that the plaintiff had not satisfied the principles for the grant of a temporary injunction elucidated in Giella v Cassman Brown & Co. Limited [1973] EA 358. The defendant submitted that the Plaintiff had not established a prima facie case with a probability of success and that the substratum of its claim was a lease whose validity it was challenging. It added that there is a dispute as to the nature of the defendant’s occupation, the terms governing that occupation and legality of the alleged construction works. The defendant contended that what is before the court was a claim for rent which is quantifiable and that the alleged construction works could be addressed through damages if the Plaintiff were to succeed. 17.Regarding the balance of convenience, the defendant submitted that the Plaintiff’s interest could adequately be safeguarded through damages if it ultimately succeeded. That in actual sense, an order restraining construction works would occasion significant operational and financial prejudice to the defendant far greater than the plaintiff’s monetary claim. The defendant argued that a party could not approbate and reprobate and added that a party who alleges that a contract is void cannot seek to enforce obligations arising from the same contract. That if the lease were void, then it did not confer any enforceable rights or impose any binding obligations capable of enforcement in law. The defendant argued that the plaintiff’s pleadings revealed the existence of serious triable issues regarding the legal status of the lease, the nature of the defendant’s occupation and the basis upon which rent was claimed. 18.The plaintiff filed rejoinder submissions in which it asserted that even if the lease were defective, rent remained payable by virtue of occupation. It relied on section 60 of the Land Act and Mistry Amar Singh v Serwana Wofunira Kulubya. 19.The defendant also filed supplementary submissions urging that its failure to file the statement of defence was not an admission of the plaintiff’s claim. It argued that pleadings had not closed because the court had to determine the application dated 26/8/2025 before delving into the issues raised in the main suit. The defendant elaborated that it had filed a statement of defence dated 14/2/2026 denying the allegations in the plaint. 20.The issue for determination is whether the court to grant the orders sought in the application. The defendant does not dispute entering into the lease with the plaintiff. The defendant contended that the plaintiff’s claim was contradictory and an abuse of the court process because the plaintiff was demanding alleged rent arrears anchored on the lease while at the same time seeking its nullification. 21.The lease agreement between the defendant and the plaintiff dated 10/2/2014 is described as a registered capital lease agreement to build, renovate and furnish the premises to the standard of a three star hotel. The lease type was defined in terms of a fixed monthly rent payment and a variable profit sharing income. The lease set out the outstanding liabilities including land rates and rent. 22.Clause 13 of the lease gave the total capital investments by the defendant as Kshs. 138,814,000/= on construction, renovation and furnishing at Kshs. 106,780,000/= and outstanding liabilities of Kshs. 25,101,914/=. The lease gave the fixed rent valuation as Kshs. 815,000/= per month effective after commencing operations or the amount recommended by a valuer, whichever was higher. Clause 19 stipulated how the profits would be shared while clause 20 indicated how the proposed rent would be treated. Clause 26 stipulated how the lease would be terminated while clause 23 gave the lease period as 21 years. 23.The proposed date for opening of phase 1 of the renovated hotel was given as 20/8/2014. The proposed date for opening of phase 1 of the renovated hotel was given as 20/8/2014. This means that by the time the plaintiff filed suit and present application on 25/8/2025, the defendant had occupied the suit premises 11 years. The defendant neither led any evidence to prove that it had paid the rent since taking possession of the suit premises nor did it demonstrate that it had paid the plaintiff the profits contemplated in clause 19 of the lease. Rent payment was to be computed from the time the hotel became operational in August 2014 under clause 20 (b). Were the court to find that the lease was voidable, rent would still remain payable by the defendant for the occupation of the suit premises. The plaintiff’s claim is clear and undisputed and deserving of a mandatory injunction. 24.The defendant argued that an order restraining construction works would occasion it significant operational and financial prejudice far greater than the plaintiff’s monetary claim. Clause 14 of the agreement dated 10/2/2014 estimated that phase 1 period for the works would take five months before reopening while the estimated phase 1 works would run from 15/3/2014 to 20/7/2014. Clause 17 stipulated that future value addition constructions and renovations would be undertaken by Bonito Properties Limited and capitalized to Buticoh at agreed terms. 25.The plaintiff has established a prima facie case through its ownership of the land known as Bungoma Municipality/457, where the suit premises are erected. It has also demonstrated that it entered into a lease agreement with the defendant and that the defendant has breached the terms of the registered capital lease agreement after taking possession of the suit premises. 26.A mandatory injunction is issued directing the defendant to pay the plaintiff accrued rent arrears of Kshs. 47,250,170/= for the period 1/8/2014 up to August 2025. 27.A temporary injunction is issued to restrain the defendant from erecting, improving, adding to or continuing with any construction works on the premises erected on Bungoma Township/457 also known as Bungoma Tourist Hotel until further orders of the court. DELIVERED VIRTUALLY AT BUNGOMA THIS 13TH DAY OF MAY, 2026.K. BORJUDGEIn the presence of: -Mr. Saul Wasilwa for the Plaintiff.Mr. Teddy Ochieng for the Defendant.Court Assistant - Josephat Bett.