Don't Let It Slip Away: Your Deposit, Your Right!

An analysis into the recent decision by Justice Helene R. Namisi in Michelle Muhanda v LP Holdings Ltd (Milimani HCCOMMA No. E256 of 2023)

The situation of landlords failing to refund deposits to tenants in Kenya has been quite problematic. Many tenants face delays or outright refusal when trying to get their deposits back at the end of their lease. In some cases, landlords may withhold deposits under vague or unjustified claims, such as property damage, even when the tenant has left the premises in good condition. This has resulted in a general sense of unfairness and exploitation, especially in the more informal rental sectors. This article attempts to analyze the decision and its implications on the landlord and tenants in Kenya as well as the existing legal framework.

In the case of Michelle Muhanda v LP Holdings Ltd (Milimani HCCOMMA No. E256 of 2023), a tenant (Appellant) filed a claim in the Small Claims Court after vacating the respondent’s property in October 2022. The tenant had requested a joint inspection of the property before leaving, but the landlord (Respondent) did not attend. Upon demanding her deposit, the tenant received a letter from the landlord detailing proposed repair costs totaling Kshs. 271,857.60, which the tenant argued were excessive and unsupported. The respondent (landlord) raised a Preliminary Objection, claiming that the matter, relating to the rental deposit, fell outside the Small Claims Court's jurisdiction under Section 12 of the Small Claims Court Act.

The court was invited to determine on the whether claims for refund of deposit fall within the jurisdiction of the small claims court as contractual in nature. It was the court’s view that such claims fell squarely within the provisions of section 12 (1) (b) of the Act, being a contract for money held and received. As such, the trial court has requisite jurisdiction. The position advanced was that such claims did not relate to collection of rent or rent arrears, hence there was no subsisting landlord – tenant relationship between the parties. The effect of this judicial pronouncement is that tenants have now the liberty to institute claims of refund of deposits in the small claims court being contractual in nature on the basis of money held or received. This was previously reiterated on the issue; for instance Charles Kakai Mayungu Channan v David Mukwanja [2019] KEHC 4842 (KLR) where the court noted that “In absence of a subsisting Landlord & Tenant relationship, the tribunal ceases to have jurisdiction over the matter. Accordingly, parties are directed to pursue all outstanding claims through normal courts.’’

Equally, the court in Johakim Abayo v Mokua Damacline Nyamoita [2021] KEELC 4254 (KLR) observed that “It is apparent from the Act that the statute was enacted to regulate subsisting tenancy relationships relating to dwelling houses of a particular category. If Parliament wanted to confer upon the Tribunal jurisdiction to deal with post-tenancy disputes, it could have done so. It therefore follows that where a landlord and tenant relationship (tenancy) has ceased to exist, the Tribunal has no jurisdiction to entertain post-tenancy disputes relating to the non-subsisting tenancies. The adjudicatory bodies with authority to deal with post-tenancy disputes are civil courts, not the Rent Restriction Tribunal.”

It is apparent that the Rent Restriction Act was enacted to provide a legal framework for restricting the increase of rent, the right to possession, and the exaction of premiums and for fixing standard rents in relation to dwelling houses, and for other purposes incidental to the relationship of landlord and tenant of a dwelling house, to this extent the rent restriction tribunal jurisdiction is confined to subsisting tenancy relationship.

CONCLUSION

In light of the above, it’s clear that this decision carries major weight for subsisting and post-tenancy disputes. Landlords, take heed as failing to refund deposits could open the door to legal claims. On the other hand, tenants be vigilant and know the right channels to claim what’s yours to avoid the cost of a dismissed lawsuit!