By TWV Court Reporter
In a decision that could empower thousands of Kenyan tenants locked in disputes with their landlords, the High Court in Nairobi has overturned a Small Claims Court ruling, affirming jurisdiction over a contentious rent deposit refund case.
The judgment, first delivered on 23 January 2025 by Justice H. Namisi, marks a significant victory for a tenant, Michelle Muhanda, in her legal tussle against her former landlord, LP Holdings Ltd. The saga began when Ms Muhanda, a former tenant, vacated premises she had rented from LP Holdings Ltd between February 2015 and October 2022.
At the heart of the dispute was a KShs 230,000 security deposit that the landlord refused to refund, claiming inflated repair costs amounting to KShs 271,857.60. Not content with merely reclaiming her deposit, Ms Muhanda escalated her claim, seeking punitive and exemplary damages under the Consumer Protection Act, No. 46 of 2012, as well as compensation for what she described as the landloads’s “oppressive, high-handed, outrageous, insolent, and vindictive” conduct.
Her total demands ballooned to KShs 800,000, plus interest from 31 October 2022, the date of default, and costs of the suit. Initially filed in the Nairobi Small Claims Court under case number SCCOMM/No. 534 of 2023, the matter hit a snag when the adjudicator dismissed it on preliminary objections raised by the landlord, LP Holdings Ltd. The small claims court ruled that the claim by Ms Muhanda fell outside its subject matter jurisdiction and exceeded its pecuniary limits, effectively slamming the door on Ms Muhanda’s pursuit of justice in that forum.
Undeterred, Ms Muhanda appealed to the High Court at Nairobi’s Milimani Commercial Courts (Civil Appeal E256 of 2023). In a meticulously reasoned judgment, Justice Namisi dissected the provisions of the Small Claims Court Act. The court found that the dispute squarely fit under Section 12(1)(b), which grants the Small Claims Court authority over civil claims relating to contracts for money held and received. “This is precisely the nature of a rent deposit refund,” the judge emphasised, setting aside the trial court’s ruling.
The High Court not only allowed the appeal but also awarded Ms Muhanda costs of KShs 40,000, to be paid by the landlord. In a move to ensure impartiality, the matter has been remitted back to the Small Claims Court for a full hearing on its merits before a different adjudicator.
This directive underscores the judiciary’s commitment to fair process, potentially sparing Ms Muhanda from any perceived bias. For tenants across Kenya, where rent deposit disputes are rife amid rising living costs, this ruling is a beacon of hope. It clarifies that the Small Claims Court, designed for swift, accessible resolution of minor disputes, can indeed handle such cases, provided they align with statutory criteria.
Legal experts suggest this could deter unscrupulous landlords from withholding deposits under spurious pretexts, knowing that the low-cost avenue of small claims remains open. As the case heads back for a substantive hearing, all eyes will be on whether LP Holdings Ltd can substantiate its repair claims or if Ms Muhanda will finally secure her refund and the additional damages she seeks. In the corridors of Milimani, this appeal is already being hailed as a reminder that even in the face of corporate might, individual rights can prevail.
