Supreme Court orders JKUAT to pay former landlord Sh53m for breach of contract
The building where Jomo Kenyatta University of Agriculture and Technology Nakuru campus was located before its closure in January 2021.
What you need to know:
- The university shut down its Nakuru campus in January 2021 following a decline in students’ enrolment.
- Kwanza Estates Limited sued Jkuat for breach of contract in terminating the lease 14 months before expiry.
Jomo Kenyatta University of Agriculture and Technology (JKUAT) will pay its former landlord three months’ rent on top of footing costs of renovating the building amounting to Sh53.8 million after closing its Nakuru Campus in January 2021.
The Supreme Court awarded Kwanza Estates Limited three months’ rent amounting to Sh13.8 million and upheld an earlier payment of Sh40 million the company spent on renovating the premises in Nakuru.
The university shut down the campus in January 2021 after giving a three-month notice following the decline in students’ enrolment and effects of Covid-19 pandemic.
The firm associated with businessman Geoffrey Asanyo, sued JKUAT for breach of contract for terminating the lease 14 months before the expiry.
A five-bench judge of the Supreme Court presided by Justice Mohamed Ibrahim ruled that where the parties are compelled to disengage without mutual agreement, either voluntarily or by eviction, it shall be deemed as breach of contract.
The judges also added that notwithstanding the absence of a termination clause, it would be unconscionable to compel a tenant to remain in premises they no longer wish to occupy.
“Equally, it would be unreasonable to claim rent for the unexpired lease term after the tenant has vacated. Therefore, the remedy for such termination is rent due up to the date of vacating and damages for breach of contract. In such a case, the remedy is for the party responsible for the breach to be liable to pay damages,” the judges said.
The Court of Appeal had in June last year spared JKUAT from paying the rent, saying the impact of Covid-19 was beyond the control of the university.
The court, however, directed JKUAT to pay the costs of Sh40 million incurred by the landlord for renovating the premises.
The appellate court had held that the pandemic was no secret, and the landlord was aware of the government directive to close schools and universities.
Court documents showed that the university and Kwanza Estates entered an agreement in 2016 to lease the building for a period of six years beginning in 2016.
JKUAT said it started experiencing dire financial constraints occasioned by reduced government support and a decline in the uptake of programmes.
The Nakuru CBD Campus, the court heard, made severe losses and was unable to financially sustain itself, leading to its eventual shutdown.
The lower court judge said the agreement signed by the university and Kwanza Estates was binding and the parties were under obligation to discharge their duties until the end of its term. The High Court had ordered Jkuat to pay Sh110 million.
On appeal, JKUAT was directed to pay only Sh40 million for the renovation but not satisfied, Kwanza Estates moved to the Supreme Court.
“We therefore award the petitioner three months’ rent, totaling Sh13,839,449, minus the security deposit of Sh11,385,750, with the final amount awarded being Sh2,453,699,” Justices Ibrahim, Smokin Wanjala, Njoki Ndung’u, Isaac Lenaola and William Ouko said.
