https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/3582

**REPUBLIC OF KENYA** **IN THE ENVIRONMENT AND LAND COURT AT KISII** **ELC LA E019 OF 2024** **TRANSLINE CLASSIC LTD ………………………………..APPELLANT** **VERSUS** **BELCOM AGENCIES LTD …………………………….. RESPONDENT** **JUDGMENT** 1. The case before the business premises Tribunal is summed up in the introductory paragraphs of the impugned judgement thus; the landlord filed a reference dated 19.8.2021 under the provisions of section 12(4) of CAP 301 claiming rent arrears. She heard that parties got into a tenancy relationship which commenced on 1st August, 2023 which was running for a period of 10 years. 2. The Respondent gave an account of the rent payable during the duration of the tenancy as follows; *a. 1st November, 2013 to 31st October, 2015 Kshs 70000pm plus VAT* *b. 1st Nov. 2015 to 31st October 2020- Kshs 100000 pm plus VAT* *c. 1st Nov. 2020 to 31st October, 2023 -Kshs 200000 pm plus VAT.* 1. The Respondent acknowledged that at the time of executing the lease, a deposit of Kshs 4 million had already been paid. However, no further payment was ever made by the Appellant, which necessitated the filing of this suit. 2. On its part, the Appellant affirmed execution of the tenancy agreement. It averred that the Respondent had previously borrowed Kshs 8,050,000/= and had issued cheques that remained unbanked. The Appellant contends that the Respondent failed to pay the agreed rent, as it expected to recover the same from the money advanced. 3. The learned Chair of the BPRT stated that the duty to pay rent is cardinal and there is a plethora of decisions which have affirmed inter alia Samuel Kipkorir Ng’eno and another versus Local Authorities Pension Trust (Registered Trustees) and another (2013)Eklr. 4. The BPRT noted that the parties before it were companies, which are juridical persons, and cited the case of Salomon v Salomon & Co, where Lord Macnaghten affirmed the separation between a corporation and its members. The Chair of the Tribunal went further to state that Courts and Tribunals in Kenya will allow piercing of the corporate veil when two requirements are met; **a)** **First, the company is a mere instrumentality or after ego of the shareholder or director in question such that there is such unity of interest and ownership that one is inseparable from the other; and** **b) Second, the fats must be such that adherence to the fiction of separate entity would, under the circumstances, sanction a fraud or promote injustice.** 1. In the end, she noted that the amount claimed by the Respondent, Kshs 10,080,000, did not take into account the Kshs 4,000,000 advanced. She entered judgment for the Respondent, finding that the Appellant owed rent from December 2018 to the date of her judgment. The Respondent was to send a fresh demand, which the Appellant was to offset within 90 days of receipt of the demand. 2. The Appellant is aggrieved with this finding and lodged the present appeal which lists the following six grounds: ***1. THAT the learned magistrate erred in law and in fact by allowing the Respondent’ reference to the extent that the Appellant owes the Respondent rent arrears from the month of December 2018 to the date of the Judgment.*** ***2. THAT the learned erred in law and in fact by hearing the Respondent’s reference which clearly infringes on /section 8 of the Limitation of Actions Act.*** ***3. THAT the learned magistrate erred in law and in fact by not considering the evidence on record filed and produced by the appellant during the hearing to make a finding that indeed the Appellant had no rent arrears owing to the Respondent from the month of December 2018 to the date of the impugned judgment.*** ***4. THAT the learned magistrate erred in law and in fact by making a finding that the Respondent shall send a demand to the Appellant within 14 days and the Appellant shall settle the arrears within 90 days of receipt of the demand; hence in default, the Respondent shall be at liberty to commence recovery without any further reference to the Tribunal.*** ***5. THAT the learned magistrate erred in law and in fact by looking down upon the mutual agreement between the Tenant and the Landlord that was entered in the month of December 2013 that cascaded into the monies owed to the Tenant by the Landlord to b construed purposively with the lease agreement dated the 1s day of August 2013 thus the said monies was now to crystalize the rent of the demised premises hence rewriting the said lease agreement.*** ***6. THAT the learned magistrate erred in law and in fact by avoiding the payments made by some of the directors of the Appellant to the Respondents but acknowledge the fact that the Respondent was advanced Kshs.4,000,000/= to cater for rent of the demised premises which were equally made by some of the directors of the Appellant***. 1. She urged the court to grant these orders; 2. **An order setting aside the judgment and any consequential orders issued on 18.10.2023 by Hon Patricia May and allow the appeal** 3. **A declaration that the Reference was barred under section 8 of the Limitation of Actions Act.** 4. **An order that the Appellant does not owe the Respondent arrears from the month of December 2018 to the date of the impugned judgment.** 5. **Costs of the appeal.** 6. Directions were given for the filing of written submissions. The Appellant filed submissions dated 5th March, 2026, while the Respondent did not file any submissions within the given timelines. In their submissions, the Appellant raised and discussed the following four issues 7. **Whether or not there is a tenancy agreement between the parties.** 8. **Whether it owes the Respondent rent arrears** 9. **Whether the reference filed by the Respondent was time-barred** 10. **Who bears the costs of the appeal**? **Analysis and determination:** 1. The appellant answered the first question in the affirmative, and even the trial Chairperson of the BPRT found that there was no dispute over the validity of the tenancy agreement between the parties. Therefore, for the purposes of determining the appeal, I will adopt the remaining two questions posed by the appellant, namely, whether there are rent arrears owed and whether the Reference filed was time-barred. ***Whether their rent is owing:*** 1. The Appellant referred to the executory part of the tenancy agreement, in which the Respondent acknowledged receipt of the Kshs 4,000,000 advance payment. The BPRT likewise found that this sum had been paid to the Respondent, but the Respondent did not exclude it from the Kshs 10,080,000 he was claiming. 2. The judgment from my reading was entered for Kshs 10,080,000, less Kshs 4,000,000. The Appellant submitted that one of its directors told the Tribunal that there had been discussions between the Appellant and the Respondent, which led to the Respondent borrowing Kshs 8,050,000, as shown in the documents at page 98 of the record of appeal. The Appellant stated that the cheques were issued by the Respondent's directors to be held until the Respondent had cash to exchange for them. 3. According to the Appellant, because of the existing friendship, the Respondent continued to ask for extension till the time the Reference was filed before the BPRT to recover the non-existent rent arrears. The Appellant urged that the value of the cheques ought to be converted into rent since the Respondent acknowledged receipt of the amounts from the directors of the Appellant. The Appellant proceeded to submit on the import of illegal distress for rent. 4. From the Appellant’s submissions, it is deducible that it concedes it did not pay rent beyond the Kshs 4,000,000 acknowledged in the tenancy agreement. The Appellant then argues that, because its directors were owed money by the Respondent, that debt should be used to offset the rent arrears now claimed. It faults the Chairperson of the BPRT for failing to do the conversion. 5. In her judgment, the Chairperson of the BPRT explained why she dismissed that evidence, stating that the transaction was not with the Respondent, a limited company with its own legal personality. She also noted that the cheques referred to were issued before the execution of the tenancy agreement in 2013. 6. The tenancy agreement is dated 1st August, 2013, while the cheques produced by the Appellant are dated 30.1.2012. There is no reference to the monies advanced to the Respondent, which were to be credited as rent. The Appellant submitted that the Respondent was to replace the cheques with cash and kept asking for an extension of time until the Reference was filed. It presents no evidence of an agreement or a demand seeking that the debt owed by the Respondent be converted to cover the rent of the demised premises. It appears that the issue of conversion and/or set-off was raised only during the hearing of the Reference. 7. My understanding of the Appellant’s argument is that, having advanced money to the Respondent, the Respondent issued cheques as proof that the money had been advanced. The Respondent denied such an arrangement. This then required the question of whether the Respondent owed the Appellant or its directors money to be determined in a forum other than the Reference. Otherwise, how would the Appellant have counter-claimed that it was also owed money, which should set off the rent claimed? 8. It is my considered opinion that the issues raised by the Appellant were contractual obligations between the parties and did not fall within the jurisdiction of the BPRT. Given that there was no admission of the alleged debt and/or no finding by a court, the learned chairperson could not be faulted for not converting these monies to cover any rent arrears claimed. 9. Further, as observed by the learned chairperson, the cheques were made out to individuals, namely Daniel, Evans and Nicholas. She found that these names were not the parties before it and that the threshold for lifting the corporate veil had not been met. The Appellant has not, in its submissions, demonstrated that it had met the threshold for lifting the corporate veil. ***Whether the reference was time barred:*** 1. The Appellant cited section 8 of the Limitation of Actions Act which read thus; Actions to recover rent An action may not be brought, and distress may not be made, to recover arrears of rent, or damages in respect thereof, after the end of six years from the date on which the arrears became due. 2. The Act provides that the claim should not be brought after the end of six years. The arrears is claimed to have run from December, 2018. The Reference was filed on 19th August 2021, counted from December 2018 is a period under three years. 3. The Appellant submitted that the Respondent was claiming rent from 2014 to the date of judgment, a period exceeding 6 years. Even if that were the case, only part of the claim would be statute-barred. The Appellant did not raise the issue of limitation in the court below. The impugned judgment awarded rent for the period that is not statute-barred. 4. In light of the foregoing, I find both answers to the two questions negative, meaning there is no merit in this appeal. ***Who bears the costs:*** 1. Section 27 of the Civil Procedure Act provides that costs follow the event. Even the Appellant urged the court to award costs should its appeal succeed. I find no reason not to grant the Respondent costs now, given that it did not obtain costs before the Tribunal. Hence, costs of the appeal to the Respondent. 2. In conclusion, I dismiss the appeal with costs to the Respondent. **Dated, Signed and Delivered at Kisii this 11th day of June, 2026** 1. **OMOLLO** **JUDGE**