A court battle over a hotel in Kericho County has cast fresh light on the risks of investing significant sums in renovating a leased property without a comprehensive and binding agreement with the asset owner.

The dispute pits Majani Hotels Group against Tea Hotel Limited over a long-term lease signed in August 2023 for a hotel and swimming pool complex.

At the centre is a claim by the tenant (Majani) that it invested up to Sh10 million in renovations to revive a dilapidated facility. The lease was for a period of 20 years.

Majani moved to court in August last year seeking to block termination of the lease, arguing that the investment transformed the property into a viable, high-value hospitality venture. It also sought reconciliation of rent accounts to reflect renovation costs.

Lease dispute

Tea Hotel, the landlord, opposed the move and sought court orders to evict the tenant, accusing it of failing to pay rent for over two years and illegally subletting the premises.

“The renovations that were to be carried out by the plaintiff were not an investment as they were to make the premises suitable to run the hotel business,” Musa Koech, Tea Hotel director, stated in court filings.

The Environment and Land Court declined to grant either side interim relief, instead directing that the core dispute proceed to a full hearing.

In its ruling, the court underscored the limits of judicial intervention in commercial contracts at an early stage. “A court of law cannot rewrite a contract between the parties,” the judge said, adding that parties “are bound by the terms of their contract.”

Tenant claims

The tenant argued that it discovered undisclosed water and electricity arrears after taking possession of the premises, which led to disconnection of essential services. It said this crippled operations and justified withholding rent while undertaking repairs.

Majani further claimed that the parties had agreed to offset renovation costs against rent and adjust revenue-sharing terms in its favour for five years. It contended that the rent ratio was to be revised to 60:40 in favour of the tenant over the same period to reflect the investment.

It warned that termination would result in “irreparable loss, including forfeiture of its investment”, disclosing that the landlord had engaged an auctioneer.

“The purported termination notice treats the lease as a simple tenancy arrangement rather than a registered long-term lease, thereby undermining the Plaintiff’s rights and protections under the lease and the applicable laws,” said Majani’s director, Fredrick Ochieng’ Amayo.

Landlord pushback

But the landlord dismissed the claims, insisting no such agreement existed and that the tenant had breached key lease terms, including failure to pay rent and unauthorised subletting.

Tea Hotel told the court the tenant had accumulated rent arrears of Sh3.9 million and continued to occupy the premises while generating income.

The court found that the contested issues - including the validity of the termination notice, rent obligations and the extent of renovations - required a full trial.

“It is my view that its validity or otherwise is an issue for determination during the hearing,” the judge said of the termination notice.

On the tenant’s request for rent reconciliation, the court was firm. “The plaintiff is calling upon the court to rewrite the terms of the lease agreement,” the ruling stated, declining to compel accounting adjustments.

The court also rejected the tenant’s proposal to deposit Sh1 million in court pending reconciliation, noting it was tied to a prayer already declined.

Equally, the landlord’s push for eviction orders failed. The court ruled that granting vacant possession at this stage of litigation would effectively determine the entire dispute without a full hearing.

“Such orders would have the effect of determining the counterclaim at the interlocutory stage,” the court said, leaving the tenant in occupation and the landlord unable to enforce eviction until the main case is heard.

→jwangui@ke.nationmedia.com

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