https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11927

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **MILIMANI LAW COURTS** **COMMERCIAL AND TAX DIVISION** **COMMERCIAL APPEAL NO. E220 OF 2023** **BETWEEN** **CRJE(EAST AFRICA)LIMITED……………………………...…….………APPELLANT** **AND** **THERMARX EAST AFRICA LIMITED……………………………..….RESPONDENT** **(*Being an appeal from the Judgement and Decree of Hon. B.M. Cheloti, PM dated 18th August 2023 at the Magistrates Court, Milimani in Civil Case No. E1434 of 2021*)** **JUDGMENT** **Introduction and Background** 1. Before the court for determination are appeals filed by both parties in respect of the judgment of the subordinate court dated 18th August 2023 where the Appellant was ordered to pay the Respondent Kshs.3,509,455.00/= being the costs of repairing and restoring the subject premises to its original condition less the deposit of USD 18,000 held by the Respondent. The Appellant was then to transfer the water and electricity meters back to the Respondent. 2. The Appellant’s case before the subordinate court was that the parties entered into a lease agreement on 25th June 2020 for a residential house on L.R No. 209/7480, Kanjata Road for a period of six months, from 1st July 2020 to December 2020. The Appellant averred that as a condition for occupying the premises, it paid a refundable deposit of USD 18,000, approximately Kshs.1,977,300.00/- and that it occupied the premises for about five months and vacated before the lease expired having issued the required three-month notice to the Respondent, as per Clause 12 of the lease. 3. That after serving the vacation notice, the Appellant informed the Respondent that it would undertake the necessary renovations of the premises and it hired contractors to perform the renovations. The Appellant contended that upon completion of the renovations, it inspected the premises with the Respondent’s director and the contractors and the director requested further renovations, which the Appellant claims it instructed the contractors to carry out. 4. The Appellant averred that despite fulfilling the lease conditions, including the renovations, the Respondent failed, refused, and/or neglected to refund the deposit of USD 18,000. It accused the Respondent of breach of the lease agreement by failing to refund the deposit and thus sought a refund of the deposit sum due and owing and general damages for breach of contract. 5. The Respondent responded to the suit by way of a statement of defense and counterclaim admitting to the lease agreement and the deposit of USD 18,000 but it contested the nature of the deposit. The Respondent denied that the deposit was refundable as alleged, stating the Lease Agreement is silent on its refund and it argued the deposit was paid to guarantee the Appellant’s strict compliance with the lease terms and it was only refundable upon full compliance. The Respondent denied the Appellant’s claims that it properly restored the premises and stated the Appellant vacated the premises in breach of Clauses 16 and 8 of the Lease Agreement, which required the tenant to hand over the premises in the same condition as at the start of the lease, including painting, varnishing and repairs. 6. The Respondent claimed that the Appellant’s renovations were unsatisfactory, as the premises remained in an untenable condition and could not be let out and that it notified the Appellant of this and requested it to redo the repairs, but the Appellant failed to do so. The Respondent claimed it procured a registered valuer who assessed the cost of repairing the premises to its initial condition at KShs.3,509,455.88/- and that it commenced its own repair works. 7. The Respondent also accused the Appellant of failing to clear and transfer the water and electricity meters back to the Respondent’s name and it asserted that it was not obliged to refund the deposit, as the funds were applied to repairing the premises due to the Appellant’s failure to restore it. 8. The Respondent also accused the Appellant of breach of contract for failing to conduct repairs on the premises at the time of vacating, failing to restore the premises to its initial condition, declining to redo the unsatisfactory repairs after being notified by the Respondent and failing to transfer back the electricity and water meters to the Respondent’s name. In its counterclaim, the Respondent sought an award of Kshs.3,509,455.88/- for the cost of repairing the premises to its initial condition, loss of rental income as the Respondent claimed the premises had remained unlettable from December 2020 due to the Appellant’s breach and it asserted the Appellant is liable for the loss of rental income for the 14 months until 1st March 2022 that the property remained unoccupied. 9. The Respondent also sought damages for breach of contract and exemplary damages for the Appellant’s alleged oppressive and arbitrary conduct and it prayed that the Appellant’s suit be dismissed with costs, and that judgment be entered in its favor on the counterclaim for the amounts mentioned above, plus interest and costs. 10. The matter was set down for hearing where the Appellant called its administrator, Chao Zhan (PW1), a Quantity Surveyor, Benson Onduso (PW2) and Anselim Shete (PW3). On its part, the Respondent called its advocate, Prakash Sanas (DW1) and Muringa Senite, a Quantity Surveyor (DW2). Thereafter the parties filed written submissions in support of their respective positions and after considering the pleadings, evidence and submissions, the learned magistrate rendered the judgment. The subordinate court noted that that it was not disputed that the Respondent was dissatisfied with the Appellant’s renovations, and this was communicated via email and that the Appellant claimed it undertook repairs but was not allowed to take photographs. That the Respondent produced photographic evidence showing the poor state of the premises before repairs were undertaken and that these photographs were not disputed by the Appellant. 11. The subordinate court found that the Appellant failed to prove its case on a balance of probabilities because it did not restore the premises to the condition required by the lease agreement, thereby breaching the contract. Conversely, the court found that the Respondent proved its counterclaim on a balance of probabilities and it dismissed the Appellant’s suit and upheld the Respondent’s counterclaim by directing that the Appellant pays the Respondent Kshs.3,509,455.00/-, which is the cost of repairing and restoring the premises to its original condition, less the USD 18,000 deposit already held by the Respondent, that the Appellant was to transfer the water and electricity meters back to the Respondent. Also awarded was interest and each party was to bear it sown costs of the suit. 12. As stated, both parties are dissatisfied with this decision hence the present appeal grounded on the Appellant’s Memorandum of Appeal dated 6th September 2023 and the Respondent’s Notice of Cross Appeal dated 3rd November 2023. The Appellant faults the learned magistrate for holding that it was not in dispute that the Respondent was dissatisfied with the repairs, leading to the erroneous conclusion that the Appellant did not undertake any repairs as per the agreement. That the learned magistrate failed to properly consider the Appellant's evidence regarding the renovations it undertook, erroneously concluding that no renovations were done. 1. Further, that the learned magistrate erred by finding that the Respondent's photographic evidence was not disputed, thereby erroneously concluding that the Respondent had to renovate the premises because the Appellant had not. The Appellant contends that the learned magistrate failed to appreciate the evidence of PW2 who testified about the renovations undertaken by the Appellant and that she failed to appreciate that the Appellant occupied the premises for only six months and could not have caused wear and tear amounting to millions of shillings. That the learned magistrate completely ignored the evidence of PW3, an expert witness whose testimony discredited the Respondent's evidence and that she erred by finding that the Respondent had proved its case, yet its claim was for special damages of repair costs that were pleaded but not proved with receipts or other documentation. 2. The Appellant also states that the learned magistrate failed to appreciate the time gap between when the Appellant left and when the alleged renovations were undertaken, failing to consider the possibility that another tenant may have caused the damage and that she erred by ordering the Appellant to transfer water and electricity meters back to the Respondent, as the Appellant has no control over the meters and the order is unenforceable. It accuses the learned magistrate of failing to appreciate the submissions and list of authorities filed on behalf of the Appellant and for the aforementioned reasons seeks that the judgment of the subordinate court be set aside in its entirety and judgment be entered in favor of the Appellant for the refund of the deposit as prayed in the Plaint. It also seeks that the Respondent's counterclaim be dismissed with costs and that costs of the appeal and the suit in the subordinate court be borne by the Respondent. 3. On its part, the Respondent avers that the learned magistrate erred by finding that the Appellant breached the lease agreement but failed to award damages for the loss of rental income pleaded as USD 84,000 for the period the premises remained without a tenant due to the Appellant's breach. That despite finding that the Appellant's failure to restore the premises constituted a breach, the learned magistrate failed to find that this breach occasioned the Respondent loss of rental income and that the Respondent ought to be compensated for the same. Further, that the learned magistrate erred by failing to award the Respondent costs for the suit and counterclaim without giving any reasons, despite the Respondent having succeeded in its claim as she ordered each party to bear its own costs, which is contrary to the principle that costs follow the event. 4. As such, the Respondent prays that its cross-appeal be allowed and the judgment of 18th August 2023 be varied by allowing the Respondent's counterclaim in its entirety, including the prayer for loss of rental income in the sum of USD 84,000. That costs of the suit, counterclaim, and the appeal should also be awarded to the Respondent. 5. The appeals have been canvassed by way of written submissions by the parties’ respective counsel and since they mirror the arguments I have already highlighted above, I will not rehash the same but make relevant references to the same in my analysis and determination below. **Analysis and Determination** 1. As submitted by the Appellant, since this is the first appeal, this court is enjoined by the provisions of **section 78** of the ***Civil Procedure Act(Chapter 21 of the Laws of Kenya)*** to evaluate and examine the subordinate court record and the evidence presented before it in order to arrive at its own conclusion. This principle of law was well settled in the case of Selle ***v Associated Motor Boat Co. Ltd* (1968) EA 123** where the Court of Appeal outlined the duties of a first appellate court as follows:- *[****An appellate court] is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect****...* 1. From the parties’ submissions, I find that the following issues emerge for the court’s determination:- 2. *Whether the Court erred in finding that the Appellant had not undertaken any renovations and instead the Respondent had?* 3. *Whether the Court erred in not finding the Appellant had proved its case?* 4. *Whether the Expert evidence presented by the Respondent should be relied upon?* 5. *Whether the Respondent proved its case on a balance of probabilities* 6. *Whether the cross-appeal dated 3rd November 2023 is merited?* 7. *What orders should this Honourable Court make?* **Renovations undertaken on the premises** 1. The Appellant submits that the subordinate court misapprehended the evidence and the terms of the lease when the Appellant’s consistent and corroborated evidence of PW1, PW2 and PW3 and the evidence produced showed that renovations and repairs were carried out at the Appellant’s cost to restore the premises to the state in which they were found and PW3 confirmed he was paid for the work. That the Respondent itself acknowledged that repairs/renovations were done but claimed they were not to their satisfaction which is a deviation from the express contractual obligation, which required only restoration to the original state, not approval or satisfaction by the Respondent. 2. The Appellant contends there was common ground that renovations and repairs were undertaken by the Appellant and no evidence was led to show that the premises were not restored to their original condition. That the learned magistrate erred by relying almost exclusively on photographs produced by the Respondent while ignoring the rest of the evidence including the Appellant’s witnesses and the initial approval by the Respondent after inspection. The Appellant submits that the court impermissibly re-wrote the contract by implying a requirement for the Respondent’s approval or that the works had to meet a higher standard than restore to original state and that the subordinate court also made an unreasonable assumption about the pre-tenancy state of the premises to which it was not privy. 3. The Appellant submits that after the Appellant vacated, the Respondent, as the owner, had full liberty to carry out any further works or improvements at its own cost and these cannot be visited on a former tenant. For these reasons, the Appellant submits that the subordinate court erred in finding that the Appellant had not undertaken renovations or repairs and that the Respondent had done so instead and yet the evidence overwhelmingly showed the opposite. 4. In response, the Respondent submits that the Appellant’s claim was essentially for refund of the security deposit which was conditional on the Appellant discharging its strict contractual obligation under Clauses 8 & 16) of the Lease to restore the premises to the condition in which they were handed over with normal wear and tear excepted. That the Appellant bore the burden of proof under **sections 107, 108 and 109** of the ***Evidence Act*** and the trial court correctly found that the Appellant failed to discharge this burden. 5. The Respondent submits that it is undisputed that the Respondent expressed dissatisfaction with the repairs and the Appellant acknowledged this and promised, via email of 1st January 2021 to finalize the repairs, but produced no evidence of any further works after that date. That the invoices/receipts produced were defective as one purported invoice from “*Mammoth Imperial Ventures*” was on the Appellant’s own letterhead, undated and unsigned and the payment receipt was dated 22nd December 2020 which was around or before the subject period. That PW2 confirmed his work was limited in scope and that there was no evidence of additional repairs after the Respondent’s dissatisfaction. 6. The Respondent submits that it produced contemporaneous photographs showing extensive damage of broken tiles, cracked or soiled walls, dismantled fittings, water leakage, damaged ceilings, defective plumbing and electrical faults and that these were not impeached in cross-examination. It contends that documentary evidence carries higher probative value than uncorroborated oral testimony and that the Appellant “comes to equity with unclean hands” by asserting compliance while in clear breach. 7. The Respondent further presents that the Appellant’s purported expert, PW3, was unqualified and could not prove his credentials and as such, it is more probable than not that the Appellant failed to restore the premises and the deposit was therefore not refundable and the Appellant did not prove its case. 8. The Respondent submits that it proved both the fact of damage/breach and the quantum of restoration costs of Kshs.3,509,455.00/- by producing photographs of the dilapidated state of the premises and DW2 produced a bill of quantities supported by his professional certificate, which evidence was unrebutted. That the Appellant’s attempt to challenge it through PW3 failed because PW3 was unqualified as no certificate produced and he could not prepare a counter bill of quantities. 9. The Respondent submits that for special damages in restoration claims, a Quantity Surveyor/Assessor’s report estimating the cost to restore the premises is sufficient proof even in the absence of actual receipts or proof that repairs were carried out. 10. As submitted by the Respondent, the Appellant had the burden to prove its case but it should also be understood that the Respondent had a duty to controvert the evidence produced by the Appellant. Once the Appellant laid ground enough for the subordinate court to find it more probable than not that renovations were done as per the lease and the deposit was due, the onus to disprove that shifted to the Respondent. 11. **Sections 108 and 109** of the ***Evidence Act*** provides that:- ***108. The burden of proof in a suit or proceedings lies on that person who would fail if no evidence at all were given on either side.*** ***109The burden of proof as to any particular fact lies on the person who*** ***wishes the court to believe in its existence, unless it is provided for bylaw*** ***that the proof of that fact shall lie on any particular person***.” 1. The subordinate court also had the advantage of having taken the evidence of the parties first hand and this being the first appellate court on this matter, it must give due allowance to the fact that the trial court took first hand evidence of the parties and observed the demeanour of the witnesses. When the Court of Appeal was faced with similar circumstances where it found itself unable to determine which of the parties it would believe in **Pius Machafu Isindu v Lavington Security Guards Limited [2017] KECA 225 (KLR),** it held as follows:- *“****The evidence of those officers was not seriously challenged and it remained a matter of credibility of the witnesses. The trial court chose to believe the respondent's******witnesses and on that it was the better judge as it saw and heard them”*** 1. Having carefully reviewed of the judgment of the subordinate court, I find that the court did not find that the Appellant did no work, but rather, that the Appellant failed to restore the premises to the required condition as per the lease agreement, thereby breaching the contract. PW1 confirmed in cross-examination that the Respondent was dissatisfied with the repairs, and emails on the record show she promising to “…do the corrections” which is crucial because it proves the Respondent did not approve the work as complete. 2. The Appellant produced no evidence, neither photographs, receipts, nor invoices, to show that it carried out the promised final repairs after the Respondent complained on 31st December 2020 and 1st January 2021 and the receipts it produced were dated before this period. While the Appellant claimed it was denied access to take photographs, no evidence was produced to prove this claim. The Respondent, on the other hand, produced photographs showing extensive damage and the trial court was entitled to rely on this tangible photographic evidence over the Appellant's uncorroborated oral testimony. 3. I am in agreement with the Respondent’s submission that the deposit was not an unconditional payment but was security for the performance of the lease covenants. The Appellant's failure to prove it had restored the premises meant the condition for the refund was not met and the trial court's conclusion that the Appellant had not proved its case is therefore sound. **DW 2’s Evidence** 1. The Appellant heavily criticized the Respondent's quantity surveyor's report, arguing it was a replica of another report, lacked supporting documents such as receipts and photos and was unreliable. However, I find that his report was prepared by a qualified quantity surveyor who produced his practicing certificate and the mere fact that another quantity surveyor prepared a similar report does not, by itself, render it inadmissible. I agree that the law on special damages in restoration cases is settled. As held in **Nkuene Dairy Farmers Co-op Society Ltd & another v Ngacha Ndeiya [2010] KECA 20 (KLR)**:- ***In our view special damages in a material damages claim need not be*** ***shown to have been incurred. The claimant is only required to show the extent of the damage and what it would cost to restore the damage item to as near as possible the condition it was in before the damage complained of. An accident assessor gave details of the parts of the respondent’s vehicle which were damaged. Against each item he assigned a value. We think the particulars of damage and the value of the repairs were given with some degree of certainty****.* 1. Therefore, an assessor's or quantity surveyor's report estimating the cost of restoration is sufficient proof of special damages, even in the absence of actual receipts, provided the damage is pleaded and proved. The Appellant attempted to counter the report with its own quantity surveyor (PW3), however, as the Respondent correctly points out, the Appellant's expert failed to produce his certificate of qualification and the trial court was therefore entitled to reject the Appellant's expert evidence as unreliable and to accept the Respondent's expert evidence, which had been properly introduced. **Proof of the Respondent’s counterclaim** 1. Going through the record, I find that the Respondent proved its counterclaim on a balance of probabilities. The Respondent established through emails and photographs that the Appellant failed to restore the premises and that it had communicated this dissatisfaction. The Respondent produced a quantity surveyor's report estimating the cost of restoration at Kshs.3,509,455/-. This report was admissible and sufficient to prove the quantum of special damages. It is also notable that the subordinate court deducted the USD 18,000 deposit from this amount, leaving the Respondent to only recover the balance. Therefore, the subordinate court’s finding that the Respondent's case was more probable than the Appellant's is well supported by the evidence. 2. On the loss of rental income, I find that the subordinate court's decision to decline this prayer was correct for the reasons that the claim for loss of rental income is a claim for special damages and must be strictly proved. The Respondent provided a lease agreement with a new tenant dated 1st March 2022 that shows the property was let out. However, the Respondent did not provide sufficient evidence to prove that the loss of rental income for the 14-month period was a direct and sole consequence of the Appellant's breach. The Respondent, as the landlord, has a duty to mitigate its loss. The court did not have evidence of an attempt to secure a tenant sooner or of a specific period the house was unlettable. The claim for a loss of income over 14 months based on the repair estimate was speculative and the subordinate court was correct to disallow the claim for loss of rental income as it was not strictly proved. **Conclusion and Disposition** 1. Having re-evaluated the evidence, I find that the subordinate court's judgment was well reasoned and based on the evidence. The Appellant failed to prove it had restored the premises as required by the lease, and its claim for the refund of the deposit was rightly dismissed. The Respondent proved, through its expert witness, the cost of restoring the premises to its original condition. The trial court's award of Kshs.3,509,455/-, less the deposit, was justified. The subordinate court's refusal to award loss of rental income was also correct, as that claim was not strictly proved. 2. The subordinate court's conclusion is therefore not faulted. The appeal is dismissed for lack of merit, and the cross-appeal is also dismissed. The judgment of the subordinate court delivered on 18th August 2023 is hereby upheld. Each party shall bear its own costs of this appeal. **DATED SIGNED and DELIVERED virtually at NAIROBI this 17TH DAY OF JULY 2026** **............................................................................** **J.W.W. MONGARE** **JUDGE** **IN THE PRESENCE OF** 1. Mr. Mafumbo holding brief for Mr. Okello for the Appellant. 2. Ms. Munjogu holding brief for Ms. Kendi for the Respondent. 3. Amos - Court Assistant