High Court Clears Tenants to Sue Landlords Over Withheld Deposits

Last Updated on January 27, 2025 by NewsTurkana

In a landmark ruling, the High Court has paved the way for tenants to take legal action against landlords withholding rent deposits. Justice Helene Namisi of the Milimani Commercial and Tax Division delivered the judgment on January 23, 2025, overturning an earlier decision by the Small Claims Court, which had dismissed such cases on jurisdictional grounds.

The case in question was filed by Dr. Michelle Muhanda, a former tenant of Woodlands Grove Villas in Nairobi, who rented the property for seven years. Upon vacating the house in October 2022, Muhanda sought a refund of her Sh230,000 deposit from LP Holdings Ltd, the property’s management company. Instead, the company presented her with a bill of Sh271,857 for alleged repair costs in a letter dated May 10, 2023.

Muhanda disputed the claim, asserting that the house was in good condition upon her departure and accused the company of ignoring her request for a joint inspection to assess damages. After her demands for a refund were ignored, she filed a case with the Small Claims Court, seeking her deposit’s return, punitive damages under the Consumer Protection Act, and compensation for breach of contract.

The Small Claims Court dismissed her case, citing a lack of jurisdiction. Unwilling to back down, Muhanda, represented by Advocate Joseph Mwai, appealed to the High Court.

Justice Namisi ruled that disputes involving rent deposits fall under Section 12(1)(b) of the Small Claims Court Act, which covers “contracts relating to money held and received.” The court dismissed LP Holdings Ltd’s argument that the case exceeded the court’s jurisdiction.

“The Appellant’s claim was for breach of contract relating to the rent deposit paid by the Appellant to the Respondent. In my view, the Appellant’s claim falls squarely within the provisions of Section 12(1)(b) of the Act, being a contract for money held and received. It is, therefore, the finding of this Court that the trial court has requisite jurisdiction,” Justice Namisi stated.

LP Holdings had also argued that Muhanda’s claims, totaling Sh1,030,000, exceeded the Sh1,000,000 monetary limit of the Small Claims Court. However, the High Court clarified that post-tenancy disputes, including deposit refund claims, fall squarely under the court’s jurisdiction, provided they adhere to the legal framework.

The ruling is a game-changer for Kenya’s rental sector, as tenants can now pursue cases against landlords in the Small Claims Court, where such disputes must be resolved within 60 days of filing.

Advocate Mwai lauded the judgment as a significant victory for tenants, emphasizing its role in enforcing consumer rights. “This ruling highlights the importance of consumer protection, a right guaranteed under Article 46 of the Constitution of Kenya. Tenants have the right to fair treatment, access to services of reasonable quality, and economic rights protection,” he said.

The decision is expected to foster greater accountability, transparency, and fairness in landlord-tenant relationships, encouraging tenants to stand up against unfair treatment and assert their legal rights.