https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/12225

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT THIKA** **CIVIL APPEAL NO. E103 OF 2024** **ROY PROPERTIES LTD. …………………………............ APPELLANT** **VERSUS** **GOAL ESTATES LTD. …………………………..………… RESPONDENT** ***(Being an Appeal from the Judgment/ Decree of Hon. P. Mutua (SPM) delivered on 24th April 2024 in Thika MCCC No. 449 of 2020)*** **J U D G M E N T** **Introduction** 1. This appeal arises from the judgment of the Magistrate’s Court at Thika (***Hon. P. Mutua, SPM***) delivered on 24th April 2024 in Thika MCCC No. E449 of 2020. **Factual History** 1. The appellant, the proprietor/ legal administrator of Blocks D & G Flame Tree Apartments (the property), entered a management contract (contract) with the respondent on 1st February 2018 for a period of 2 years. The salient terms of the contract were that the respondent would manage the property including collecting rent, service charge (where applicable) and other payments from the tenants on a monthly basis, deduct the management fee (5% of gross monthly rent plus rent arrears and any other payments due) and letting commission (50% of one month’s rent for any letting upto one year), and remit the balance to the appellant on the 6th day of each month. 2. As at 23rd May 2018, the appellant claimed arrears of Kshs. 394,117/- from the respondent for the period February- May 2018. The respondent failed to send its computation prompting the appellant to lodge a complaint with Ruaraka Police Station for the offence of stealing by agent. The appellant later terminated the contract with the respondent on 8th June 2018. The appellant claimed that as at the date of terminating the contract, the respondent had failed to remit rent totaling Kshs. 627,173/-. 3. By a plaint dated 2nd August 2020, the appellant filed Thika MCCC No. E449 of 2020 claiming Kshs. 627,173/-, interest thereon and costs of the suit. 4. In its defence dated 12th March 2021, the respondent admitted owing the appellant Kshs. 327,745/-, adding that it forwarded its computation to the appellant. This computation, it pleaded, was accepted by the appellant who averred to its correctness. 5. Subsequently, parties recorded a consent dated 16th June 2021 where the respondent admitted the sum claimed of Kshs. 327,745/-, proposing to pay the same in two instalments of Kshs. 50,000/- payable upon execution of the consent and Kshs. 277,745/- payable on 9th September 2021. It was further agreed that the parties would reconcile the accounts on 23rd June 2021 to ascertain the balance of Kshs. 299,428/-. However, looking at the subsequent correspondence, the balance was indicated to be Kshs. 239,328/-, which signals the absence of a coherent and mutually verified reconciliation. 6. It would appear that parties were unable to agree on the outstanding arrears. Accordingly, the matter proceeded for hearing. **PW1, John Gichohi**, the appellant’s accountant, testified that the outstanding amount stood at Kshs. 299,823/- after receipt of Kshs. 230,000/- from the respondent in 2021 pursuant to the consent. He stated that the consent was not signed by the respondent or any of its representatives. He also stated that the notice period in the contract was undefined and that the monies outstanding differed at different times depending on whether payments were made and after reconciliation. He added that in the tabulations done in the presence of the respondent’s director, they included deductions of 5% management fee but failed to include the VAT. Further, the rent was not specific, but that under the contract, the respondent could determine rent but communicate the same to the appellant for approval. However, he admitted that the claim for approval was missing. Be that as it may, he maintained that the appellant was aware of all rent paid by the tenants, the contest being the tabulation of what the respondent owed the appellant. Furthermore, the respondent was required to cater for loss of advertisement and the contract catered for suitable leaves for advertisement, but ultimately account for all monies received. 7. **DW1, Geoffrey Ouma Opiyo**, denied participating in the appellant’s tabulation and conceded that he executed the consent without undertaking a final reconciliation. It was only after such tabulation that he discovered that the respondent overpaid the appellant by Kshs. 37,736.35/- which, in his view, justified ignoring the consent. It was his evidence that in their computation that led to the discovery of the overpayment, they included security expenses, rent that had not reflected in their bank accounts, the empty units and unpaid rent. He stated that the respondent collected Kshs. 1,506,400/- and remitted Kshs. 1,298,641.35/-, i.e. less management fees of Kshs. 83,270/-, letting fees Kshs. 23,850/- and repairs among other deductions. In his view, the respondent was not required to conduct a tabulation, which in any event, was a summary of the bank statement and banking slips. He, however, clarified that he did not have a list of the unoccupied units, a list of the tenants who did not pay rent, nor an itemized list of expenses. 8. By a Judgment delivered on 24th April 2024, the trial Magistrate (*P. Mutua, SRM*) acknowledged the consent for the sum of Kshs. 327,745/- leaving a balance of Kshs. 299,428/-. However, since the parties did not reconcile the accounts, the trial court stated that the appellant failed to prove that the respondent received the said money and thereby creating an obligation to remit to the appellant. In the court’s opinion, the appellant merely calculated the expected monthly rent against the number of units less the amount remitted by the respondent. However, the trial court found this to be an incorrect approach as there was no evidence that all units were occupied and that all tenants paid rent. 9. In the end, the trial Magistrate dismissed the claim. On the issue of costs, the trial court stated that the respondent proved overpayment which was more than half of the appellant’s claim and since the appellant’s claim for the unadmitted amount had failed, each party was ordered to meet their costs. **The Appeal** 1. Disgruntled, the appellants filed a Memorandum of Appeal dated 24th May 2024 raising various grounds of appeal, that the Learned Trial Magistrate erred: 2. *In law and fact in failing to appreciate the respondent’s suit (sic) as framed in the plaint dated 2nd August 2020.* 3. *In law and in fact in his failure to take into consideration and appreciating the magnitude of the entire dispute and only selectively dealt with some of the issues before the court.* 4. *Failed to adequately evaluate the evidence and exhibits and thereby arrived at a decision unsustainable in law.* 5. *In law and in fact by failing to acknowledge the principal-agent relationship between the appellant and the respondent concerning the management of Flame Tree Apartment Blocks D and G. The respondent was tasked with collecting rent, service charges and other payables from the tenants and remitting the same to the appellant, less management fees and let fee charges.* 6. *In law and fact by failing to record the proceedings and submissions of the appellant and submissions of the correspondences requesting the respondent to confirm the amounts owed, to which the respondent remained silent. Consequently, the reconciliation should have been considered approved by virtue of the respondent’s silence being construed as acceptance.* 7. *In law and in fact by failing to recognize the remaining balance of Kshs 97,745/- from the admitted amount of Kshs. 327,745/-. This error occurred despite clear evidence presented during the trial showing that the respondent had made two payments of Kshs. 50,000/- and Kshs. 180,000/-.* 8. *In law and fact by determining that the appellant made presumptions in calculating the claimed amount of Kshs. 627,745/- (sic) in the plaint. Specifically, the Magistrate erroneously concluded that the appellant’s calculations, which were based on the expected monthly rent and the number of units, were presumptive. This was incorrect because the occupation of the said units was not contested or at issue in the proceedings.* 9. *In law by construing the statements of account evidence produced in court as payments made to the appellant. These statements were not specific to the appellant’s property and also included transactions related to other properties managed by the respondent.* 10. *In law and fact by accepting the produced blanket statements as proof of payment to the appellant. These statements were merely general documents and did not constitute issued receipts from the appellant.* 11. *In law and fact in not taking into account entirely the submissions of the appellant.* 12. Accordingly, it sought that the appeal be allowed, the trial court’s Judgment be set aside and costs of the appeal. **The Appellants’ Submissions** 1. In support of their appeal, the appellant filed their submissions dated 26th March 2026. They faulted the trial court for finding that the appellant ought to have proved that all the units were occupied and that rent was paid, despite the occupancy of the units being an uncontested issue, and neither was it raised in the respondent’s defence. 2. In any case, the appellant held that given the principal-agent relationship, the respondent bore a duty to render accounts, the relevant records being within its exclusive custody. Its failure to produce such records, argued the appellant, warranted the drawing of an adverse inference under Section 112 of the Evidence Act. In this regard, they relied on ***Mwangi vs Mambo (2025) KEHC 8438 (KLR)***. 3. With respect to the appellant’s reconciliation, it challenged that the consent was evidence of the outstanding arrears of Kshs. 299,428/-, the respondent’s deliberate absence during the planned joint reconciliation notwithstanding. In its view, its reconciliation was uncontroverted evidence that ought to have been upheld by the trial court as has been held in a long line of authorities. 4. In addition, added the appellant, the respondent failed to adduce a tenant-by-tenant account and did not demonstrate any errors in the appellant’s tabulation. As to the admitted sum of Kshs. 327,745/-, they asserted that the respondent only paid Kshs. 230,000/- leaving a balance of Kshs. 97,745/- for which they claimed. **The Respondent’s Submissions** 1. The respondent opposed the appeal vide its submissions dated 11th May 2026, maintaining that it complied with the terms of the contract and contended that the appellant’s unilateral termination was unwarranted. It further asserted that its own reconciliation revealed an overpayment of Kshs. 37,736.35/-. 2. In addition, they argued that the contract did not prescribe any particular mode of accounting for the rental income, not to mention the other alleged ambiguous terms of the contract, for which they asserted should be construed in their favour as per the contra-preferentum rule. It was argued that the respondent did not open any account for the various tenants, opting to open a single account for all clients. In their view, therefore, they found no reason for a joint reconciliation with the appellant and no joint reconciliation took place. 3. The respondent also submitted that the appellant did not prove how many units were occupied and therefore had no basis for claiming Kshs. 627,173/-, neither did the appellant rebut the respondent’s reconciliation of accounts. As such, they averred that the appellant failed to discharge the legal burden of proof and the evidential burden of proof did not at any point shift to the respondent. **Analysis and Determination** 1. As this is a first appeal, it is this court’s duty to analyze and re-assess the evidence on record and reach its own conclusions in the matter. As put more succinctly in ***Selle v. Associated Motor Boat Co. [1968] EA 123***: ***“An appeal to this Court from a trial by the High 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. In particular this Court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif –vs- Ali Mohamed Sholan (1955), 22 E. A. C. A. 270).”*** 1. I have considered the appeal in light of the evidence on record and written submissions filed on behalf of the parties herein. I find that the appeal turns on *whether the appellant proved the outstanding arrears, including the balance of Kshs.97,745/- arising from the admitted sum of Kshs.327,745/-*. 2. The appellant argued that it engaged the respondent to, *inter alia*, collect rent from the property. The appellant alleged that the respondent was required to render accounts for the property while the respondent submitted that it had no such obligation. The respondent added that it performed its obligations under the contract and that the appellant’s tabulation did not factor in expenses, VAT, or the units that were occupied or not. 3. Upon filing the claim, the parties drew a consent where the respondent admitted owing the appellant Kshs.327,745/-. The respondent’s admission of Kshs.327,745/- constitutes clear evidence that this amount was due and owing to the appellant. The parties were subsequently required to jointly reconcile the balance of Kshs. 299,498/-. However, the appellant claimed that the respondent was present during the preparation of the joint reconciliation account while the respondent testified that it blatantly declined to attend the session, instead choosing to reconcile the accounts privately. 4. Following this private reconciliation, the respondent came up with an alleged overpayment of Kshs. 37,736.35/-. However, while the respondent alluded to its reconciliation, I have perused the record of appeal and it discloses no reconciliation supporting the alleged overpayment as disclosed. The only documents adduced by the respondent were payment slips and a bank statement, and there is no indication that the appellant accepted or acknowledged any overpayment. Therefore, there was simply no evidentiary basis upon which the trial court could properly accept the alleged overpayment by the respondent. As such, the trial court fell into error. 5. The respondent testified that there was no evidence as to the number of occupied vis-à-vis vacant units. Further, they claimed that the appellant failed to take into account the deductions the respondent was required to make in tabulating what was due. However, in the appellant’s documents was a rent collections report prepared by the respondent for the property indicating the number of occupied units, vacant units and uncollected rent from some of the units as at February 2018. According to this document, the occupied units (including those with uncollected rent) were 17, while 14 units were vacant. 6. However, for the subsequent months, some units were let while others fell vacant. The records for the appellant and respondent differ in this regard. In the absence of a joint reconciliation, the determinative question is which party’s records are more reliable. To answer this, the Court revert to the contract between the parties. The respondent was charged with accounting for rental payments less any deductions as agreed upon in the contract and remitting the net income on the 6th of every month in such manner as instructed by the appellant and submitting an income/ expenditure report to the appellant monthly. Additionally, the respondent was charged with maintaining appropriate records of the property. As an agent, the respondent bore a contractual and fiduciary duty, together with a corresponding obligation to render full and accurate accounts. The material placed before the trial court demonstrates a clear failure by the respondent to discharge this obligation. 7. The respondent further asserted security expenses that were not factored in, and that some units fell vacant or that some tenants failed to pay rent. However, it failed to adduce evidence in this regard. Further, despite claiming that the contract was silent on the amount of service charge payable (which in any case appears not to have been compulsory as per the contract), the contract explicitly provided for rendering of accounts, which the respondent failed to do. In this regard, it is a settled principle of evidence that where a party fails to adduce evidence within their control or custody, the court will infer that had the same been introduced, it would have been adverse to that party’s case. ***See Kimotho vs KCB (2003) 1 A 108 and Charterhouse Bank Ltd. (Under Statutory Management) vs Kamau (Civil Appeal 87 of 2014) [2016] KECA 153 (KLR)*** 8. In contrast, the appellant placed before the court a rent collection report, which appears to have originated from the respondent itself, indicating the status of occupied and vacant units. In the absence of a joint reconciliation, and given that the relevant records were within the exclusive possession of the respondent, the evidential burden shifted to the respondent to provide a credible account. Its failure to do so entitled the court to draw an adverse inference. Moreover, the respondent’s director was present during reconciliation but declined to sign the statement. Consequently, I find that the appellant’s tabulation is the more credible and reliable account of the sums due. 1. In these circumstances, the trial court erred in rejecting the appellant’s tabulation on the basis that occupancy and payment had not been proved. That approach failed to appreciate the evidentiary consequences of the respondent’s position as an accounting party. I therefore find that the appellant’s account was more credible and that the respondent did not rebut it. 2. In light of the foregoing, I find that the appellant proved its claim. The admitted sum of Kshs. 327,745/-, having been partially settled, the outstanding balance of Kshs. 97,745/- is hereby awarded to the appellant. As regards the remaining sums arising from the reconciliation, I find that these are subject to only VAT deductions at 16%. I find no basis for further deduction on account of management fees as it was already factored in the tabulation. Upon applying the VAT deductions, the sum payable is Kshs. 251,519.52/-. **ORDERS** 1. In the end, I make the following orders: 1. ***The Judgment dated 24th April 2024 is hereby set aside.*** 2. ***The respondent shall pay the appellant the sum of Kshs. 349,264.52/- being the outstanding arrears from the contract.*** 3. ***The appellant shall have the costs of this appeal.*** It is so ordered. ***Dated, Signed and Delivered virtually*** *at* ***Nairobi this 30th day of July 2026.*** **DAVID MBURU** **JUDGE** **In the presence of:** *Mr. Kimani holding brief for M/s Nyabuto for the Appellant* *No appearance for the Respondent* *Kalondu - Court Assistant*