1. This judgment determines an appeal and a cross-appeal arising from the judgment and decree of the Chief Magistrate’s Court at Nairobi (Milimani Commercial Courts), Hon. Pamela Achieng’ (CM), delivered on 23rd January 2025 in CMELC Suit No. E311 of 2023.
2. By that judgment the trial court entered judgment for the Appellant, who was the Plaintiff below, against the Respondent, who was the Defendant below, in the sum of Kshs. 253,640.00 together with costs of the suit and interest at court rates from the date of filing suit until payment in full. The balance of the claim was disallowed.
3. The Appellant, being dissatisfied with that part of the judgment disallowing two heads of his claim, filed a memorandum of appeal dated 31st January 2025. The Respondent, being dissatisfied with the finding that it had breached the lease, filed a memorandum of cross-appeal dated 5th November 2025.
The case before the trial court
4. The Appellant is the registered proprietor, by virtue of an Assignment of Lease dated 21st May 2012 registered in Volume N89, Folio 37/2, File 26081 executed between Talent Plex Holdings Company Limited and himself with the express consent of the Respondent, of all the rights, title and interest arising under a Lease dated 31st May 2010 in respect of all that property known as Penthouse Number 9, Flat B, Riara Downs Apartments, being part of the development erected on Land Reference Number 330/350, Nairobi, situate on Riara Road behind The Junction Mall, Lavington (“the suit premises”).
5. The Respondent is a limited liability company incorporated for the purpose of managing the estate erected on Land Reference Number 330/350. It is described in the Lease as the Manager and is the entity entitled to the benefit of the reversionary interest in the land upon which the estate stands. It is common ground that the Appellant is a member and shareholder of the Respondent, holding fifteen shares as an inseparable incident of his lease.
6. By a plaint dated 4th August 2023 the Appellant sued the Respondent for Kshs. 1,286,745.00, particularised as follows: loss of short-term rental income Kshs. 730,000.00; cost of repairs Kshs. 223,640.00; forced furniture and household disposal loss Kshs. 303,105.00; and valuation fees Kshs. 30,000.00. He also sought interest and costs.
7. The Appellant’s case, as pleaded and as deposed to in his witness statement dated 4th August 2023, was that under Clauses 1 and 2 of the Lease the Respondent had covenanted, subject to payment of the monthly service charge, to keep in tenantable repair the main structure of the buildings and in particular the roof and outside walls, and to keep the common water pipes, drains, gutters and sewers in good repair and condition. He averred that between December 2021 and February 2022 water emanating from ruptured water storage tanks and leaking water pipes situated in the common area directly above the suit premises seeped into the suit premises and caused extensive damage to its walls, floor and internal fixtures, including the ceiling, wardrobes and cabinets.
8. He further averred that despite repeated requests the Respondent declined or delayed to carry out the necessary repairs; that in order to mitigate his continuing loss he mobilised the owners of the other units in Block B, each of whom contributed Kshs. 15,000.00 towards a total of Kshs. 150,000.00 applied to the repair of the common area; that the Respondent thereafter expressly permitted the netting off of his Kshs. 15,000.00 contribution against his monthly service charge obligation; and that he himself expended Kshs. 223,640.00 in repairing and restoring the suit premises.
9. As to the balance of the claim, the Appellant averred that prior to the water damage the suit premises were let as a furnished apartment on the Airbnb platform, enjoying consistent bookings and generating substantial rental income; that following the damage the listing attracted negative reviews, bookings were cancelled and the listing was eventually delisted; that the suit premises lay unoccupied between February and March 2022 and thereafter had to be converted into a long-term rental unit at a reduced rent, occasioning a loss of short-term rental income of Kshs. 730,000.00; and that the furniture and household appliances previously used to furnish the unit had to be disposed of at prices below their open market value, occasioning an asset disposal loss of Kshs. 303,105.00. He relied on a loss valuation report dated 27th February 2023 prepared by Gimco Limited at a cost of Kshs. 30,000.00.
10. By a statement of defence dated 6th May 2024 the Respondent admitted the Appellant’s proprietorship and its own role as Manager. It pleaded that its obligation to maintain, repair, redecorate, light, clean or renew extended only to the main structural components and the common areas, and that the obligation was contingent upon all members paying the agreed monthly service charge. It denied the cause and extent of the damage and pleaded that any such damage may have resulted from factors beyond its control or from other sources. It pleaded that repairs were ordinarily undertaken within a reasonable time, and that urgent repairs necessitated by factors beyond its control were ordinarily addressed through collective contribution by lessees. It further pleaded that under Clause 1.3 of the Lease the Appellant was obliged to insure the premises; that under Clause 1.10 the premises were to be used as a single private residence for the accommodation of one family and not otherwise; that the Appellant was not to part with possession or assign without its consent, which consent was neither sought nor obtained; and that the disposal of the furniture was the Appellant’s own commercial decision. No counterclaim was filed.
11. The Appellant filed a reply to defence dated 13th May 2024 joining issue and denying any breach of the Lease on his part.
12. A notice of preliminary objection dated 20th September 2023, by which the Respondent contended that the trial court lacked jurisdiction by dint of section 6 of the Arbitration Act, was dismissed by Hon. S. A. Opande (PM) by a ruling delivered on 9th April 2024. That ruling has not been appealed and nothing turns on it in these proceedings.
13. The suit proceeded to hearing on 23rd October 2024 before Hon. Pamela Achieng’ (CM).
14. PW1, Kiragu Maina , the Appellant, described himself as an investor in real estate. He adopted his witness statement dated 4th August 2023 as his evidence in chief and produced the documents in his list and bundle of documents as Plaintiff’s Exhibits 1 to 10. In cross-examination he stated that the lease did not require him to seek permission to use the property as he did; that the lease indicated that the premises were to be used as a single residential property; that he had insured the residential premises but was never asked for the policy; that the other occupants took part in the repair of the common areas; that the Respondent was not involved in the negotiations for the sale of the furniture; and that he had tried to get the management to address the leakage but it declined. In re-examination he stated that the tenant who took up the premises was not using them for business; that he sold the furniture because the premises had become uninhabitable and the tenants cancelled; that he sold the goods as second-hand and would not obtain full value for them; that the leakage began in December 2021; and that the repairs to the common area were undertaken in 2022 by the property owners and not by the management company, while he sourced his own contractor for his apartment in March 2022.
15. The Respondent called four witnesses. DW1, Kuiyaki Gacanja , DW2, Victoria Mutheu Kivuva and DW3, Gad Ndegwa Kamau , all directors of the Respondent, adopted their witness statements dated 18th June 2024, 19th June 2024 and 13th June 2024 respectively. DW1 produced the documents in the Defendant’s list and bundle of documents dated 4th June 2024 as Defendant’s Exhibits 1 to 3. DW4, Meshack Odunga , an employee of One Stop Property Management Limited, the company contracted by the Respondent to manage the common areas, adopted his witness statement as his evidence in chief.
16. DW1 testified that the Respondent’s role is limited to the common areas and not individual units, and that the leakage was addressed on time. In cross-examination he admitted that the management company was made aware of the leakage in December 2021; that the storage tanks and pipes are in the common area; that it was the responsibility of the management company to maintain the common areas; that he had no proof of the communication by which owners were asked to pool resources; and that by February 2022 no action had been taken. DW3 testified that where there is damage to a unit it is the owner’s responsibility to repair. DW4 testified in cross-examination that the leak arose from the tanks in the common area; that he received the report of the leakage in December 2021; that the inlets of the leaking tanks were turned off in December 2021, which mitigated but did not resolve the problem; that repairs were done in February 2022; and that there were insufficient funds to carry out the repairs.
The judgment of the trial court
17. The trial court framed three issues: whether the Respondent breached the terms of the contract; whether the Appellant suffered damage as a result of that breach; and whether the Appellant was entitled to the reliefs sought.
18. On the first issue the trial court found that the damage began in December 2021; that several email exchanges established that the Respondent had been made aware of it but did not act to ensure repairs were undertaken; that by his email of February 2022 the Appellant had reported that the damage was worsening; and that DW4 had confirmed receiving reports of a significant leak from the rooftop water tanks and pipes of Block B in late December 2021 and effecting only a temporary arrest of the leak. The court found that the Respondent was under an obligation to carry out the repairs but, in breach of the contract, failed to do so within a reasonable time, the repairs having been effected only in February 2022. It found no evidence that the Appellant was in arrears of service charge and held that the plea of want of funds was not valid.
19. On the second issue the trial court noted the loss valuation report of Gimco Limited dated 27th February 2023, which assessed repair costs at Kshs. 241,930.00, and noted the further claims of Kshs. 730,000.00 for lost Airbnb income and Kshs. 303,105.00 for the disposal of the furniture and household items.
20. The trial court then set out Clause 1.10 of the Lease and concurred with the defence that in using the property to operate an Airbnb business the Appellant was in breach of that clause, which required the property to be used as a single private residence accommodating one family and not for any other purpose. It held that the Appellant could not therefore claim loss suffered as a result of that use. The court rejected the defence founded on Clause 1.3, holding that there was no evidence that insurance would have covered the damage and that in any event the contract was clear that the repairs were the Respondent’s obligation.
21. On reliefs the trial court held that the Appellant was entitled only to the cost of repairing his apartment, which at paragraph 15 of the plaint was pleaded at Kshs. 223,640.00, together with valuation fees of Kshs. 30,000.00. It entered judgment for Kshs. 253,640.00 plus costs and interest at court rates from the date of filing suit until payment in full. A decree issued on 3rd February 2025.
The appeal, the cross-appeal and the interlocutory proceedings
22. The memorandum of appeal dated 31st January 2025 raises two grounds, namely that the learned trial magistrate erred in fact and in law: first, in finding that the Appellant was in breach of Clause 1.10 of the Lease dated 31st May 2010 by letting the suit premises on short-term tenancies through the Airbnb platform; and second, that as a consequence of that erroneous finding she erred in dismissing the Appellant’s claim for Kshs. 730,000.00 on account of loss of short-term rental income and Kshs. 303,105.00 on account of the loss occasioned by the disposal of his furniture and household items below market value. The Appellant seeks that the appeal be allowed, that judgment be entered for him in the further sum of Kshs. 1,033,105.00, and that he be awarded the costs of the appeal.
23. The memorandum of cross-appeal dated 5th November 2025 raises five grounds, namely that the learned trial magistrate erred in law and in fact: first, in failing to find that the only water tanks operated by the Respondent are those located within the common areas, at the guard house and adjacent to the pool area, and that the Respondent is responsible only for paying the Nairobi City Water and Sewerage Company bills for those tanks; second, in failing to find that the water tanks situated within the apartment blocks are privately owned by individual unit owners, lie beyond the Nairobi City Water and Sewerage Company metering point, and are the sole responsibility of the respective owners to clean, maintain and pay for; third, in finding that the Respondent was in breach of contract when it delayed the repair process, despite a lack of supporting evidence; fourth, in failing to find that there was no credible evidence on record to support the conclusion that the Respondent had breached the contract; and fifth, in disregarding the totality of the Respondent’s pleadings, submissions and cited authorities and thereby arriving at findings of fact and law that were materially unsupported. The Respondent seeks that the appeal be dismissed with costs and that the cross-appeal be allowed with costs.
24. The progress of this appeal has been attended by interlocutory proceedings which it is convenient to record, both because they explain the manner in which the cross-appeal came to be lodged and because they bear directly upon the consequential orders which this judgment must make.
25. Judgment having been delivered on 23rd January 2025 and a decree having issued on 3rd February 2025, the trial court issued an ex parte garnishee order nisi on 7th April 2025 against two of the Respondent’s bank accounts, held at Diamond Trust Bank of Kenya Limited and NCBA Bank Kenya PLC, by which a total of Kshs. 996,304.00 was frozen.
26. By an application dated 15th April 2025 the Respondent moved this court for a stay of execution, for extension of time within which to lodge a cross-appeal and for security. By a ruling delivered on 28th October 2025 this court (Kemei J) allowed the application and ordered a stay of execution pending the hearing and determination of the appeal and the intended cross-appeal; granted leave to lodge the cross-appeal within seven days; directed the deposit of Kshs. 253,640.00 into a joint interest-earning account held in the names of the parties’ respective advocates within fourteen days; and directed the filing of the record of appeal within fourteen days of the filing of the memorandum of cross-appeal, in default of which the orders would lapse automatically.
27. The Respondent complied with those conditions. The memorandum of cross-appeal was filed on 5th November 2025; the sum of Kshs. 253,640.00 was deposited on 10th November 2025 into an account at I&M Bank (CIF – 0805750) held in the names of the parties’ respective advocates; and the Respondent’s record of appeal was filed and served on 10th November 2025.
28. The competence of the cross-appeal is therefore not in issue. It was lodged with the leave of this court, its compliance with the conditions upon which that leave was granted has been the subject of an express finding by this court, and no objection has been taken to it by the Appellant, whether in his written submissions or otherwise. I have accordingly considered the cross-appeal on its merits.
29. Finally, by a ruling delivered on 18th June 2026 this court discharged the ex parte garnishee order nisi of 7th April 2025, directed the release of the frozen funds save for the sum of Kshs. 253,640.00, and preserved that sum in the joint interest-earning account as security for the judgment debt pending the hearing, determination and final disposition of the appeal and the cross-appeal. That deposit remains in place and falls to be dealt with in the disposition of this judgment. On the same day the court gave directions for the filing of written submissions.
Submissions
30. Pursuant to those directions the Appellant filed written submissions dated 6th July 2026 through the firm of Mutua Waweru Advocates LLP, with copies of the authorities relied upon annexed. The Respondent filed written submissions dated 29th July 2026 through the firm of Njoroge Regeru & Company Advocates, together with a list and bundle of authorities of even date. I have considered both sets of submissions and the authorities cited in them, and I summarise them below.
(a) The Appellant’s submissions
31. On the duty of this court, counsel submitted that this being a first appeal the court sits in effect as a court of retrial, bound to reconsider and re-evaluate the evidence and draw its own conclusions, bearing in mind only that it did not see or hear the witnesses, relying on Selle & another v Associated Motor Boat Company Limited [1968] EA 123 .
32. On the first ground, counsel invoked Jiwaji v Jiwaji [1968] EA 547 for the proposition that where there is no ambiguity in an agreement it must be construed according to the clear words used by the parties. He submitted that on its clear wording Clause 1.10 is directed at the purpose and manner of use, and not at the identity of the occupant or the medium through which an occupant is sourced; that both limbs of the clause turn on the character of the actual use and its effect; and that the clause nowhere prohibits letting, short-term letting, or the use of any letting platform, including Airbnb. Provided the occupants sourced through the platform occupied the suit premises for residential purposes only and caused no nuisance, annoyance or injury to the reputation of the Estate, there was no breach.
33. Counsel submitted that the learned trial magistrate’s entire finding on the issue is contained in a single conclusory sentence, and that it treated the mere fact of listing and letting the suit premises on Airbnb as automatic and self-proving evidence of breach, without any inquiry into whether the actual use to which the premises were put by those who occupied them fell outside the permitted purpose, or whether that use caused any nuisance, annoyance or injury. He emphasised that the characterisation of Airbnb as a global online marketplace operating as a commercial hospitality platform, involving frequent turnover of occupants and public reviews and ratings, upon which the finding appears to rest, was advanced only in the Respondent’s written submissions at trial; it was not evidence adduced by any witness, and no witness testified as to the actual manner in which any short-term occupant used the suit premises. A finding of breach of a specific contractual covenant, he submitted, cannot properly rest on submissions of counsel as to the general business model of a third-party platform.
34. By treating the use of the platform as synonymous with breach, counsel submitted, the trial court in effect read into Clause 1.10 a restriction against short-term or platform-based letting that the parties never agreed upon, and thereby rewrote the contract between them, contrary to National Bank of Kenya Limited v Pipeplastic Samkolit (K) Limited & another [2001] KECA 362 (KLR) , in which the Court of Appeal held that a court of law cannot re-write a contract between the parties and that the parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.
35. Counsel further submitted that Clause 1.10 itself recognises that persons other than the Appellant may lawfully occupy the suit premises. It prohibits the Lessee from using the premises “or permitting them to be used” for a purpose other than as a single private residence, and refers throughout to the “owners or occupiers” of flats within the Estate. Those words would be rendered otiose if the clause were read as confining occupation strictly to the Appellant himself. The proper inquiry, which the trial court did not undertake, was whether the persons who occupied the premises used them otherwise than as a single private residence for the accommodation of one family at a time, or whether their occupation caused nuisance, annoyance or injury of the kind the clause proscribes; and the burden of proving breach lay on the Respondent as the party asserting it.
36. On the second ground, counsel relied on Dormakaba Limited v Architectural Supplies Kenya Limited [2021] KEHC 210 (KLR) for the elements of a claim in damages for breach of contract, namely the existence of a contract, its breach by the defendant, and loss suffered by the plaintiff in consequence. He submitted that the existence of the Lease and the Respondent’s breach of its repair obligations are not in issue in this appeal, and that the sole basis upon which the trial court declined to award the two disputed heads was its finding of breach of Clause 1.10 on the part of the Appellant. Once that finding is shown to be erroneous, he submitted, the causal foundation for dismissing the claim falls away with it.
37. On the measure of damages counsel cited Consolata Anyango Ouma v South Nyanza Sugar Company Limited [2015] eKLR , which restates the principle of restitutio in integrum and the rule in Hadley v Baxendale (1854) 9 Exch 341 , and confirms that damages of this character are in the nature of special damages which must be pleaded and proved. He submitted that loss of short-term rental income from a property let for that very purpose, and loss occasioned by the forced disposal of furniture below market value following delisting, flow naturally from a lessor’s failure to repair a leak which renders a short-stay rental property unfit for its purpose, and were within the reasonable contemplation of both parties at the time the Lease was entered into, the Respondent as Manager having been aware of and not having objected to the letting arrangement for a considerable period before the leak. He submitted that both sums were pleaded, and were supported by the loss valuation report and by the platform correspondence evidencing the delisting; that the trial court dismissed neither head for want of pleading or want of proof; and that the judgment does not impugn the report, the correspondence or any other item of evidence going to quantum.
38. On the cross-appeal, counsel submitted that grounds 1 and 2 are not properly before the court because they raise factual issues that were neither pleaded, canvassed nor proved below. He relied on Kenya Revenue Authority v MAN Diesel & Turbo SE, Kenya [2021] KEHC 13347 (KLR) , in which the court, following Girdhari Lal Vidyarthi v Ram Rakha [1957] EA 527 and Tanganyika Farmers Association Limited v Unyamwezi Development Corporation Limited [1960] EA 620 , held that although an appellate court has a discretion to allow a new point to be taken on appeal, it will not do so where the matter was not properly pleaded or where the facts bearing on the new point were not elicited in the court below, and that an appellant cannot reconstruct its case at that late hour by introducing new matters. He submitted that the distinction now drawn between common-area tanks and block-level tanks was never pleaded in the statement of defence, never put to the Appellant in cross-examination and never canvassed in the evidence of any of the Respondent’s four witnesses, and that the witness responsible for managing the common areas instead described the leaking rooftop tanks and pipes at Block B as forming part of the development’s common areas and facilities which the Respondent is responsible for maintaining.
39. On grounds 3, 4 and 5, counsel submitted that the Respondent’s obligation to maintain the common areas was expressly admitted at paragraph 5 of the statement of defence; that the leakage was reported in December 2021 and only temporarily arrested; that on the Respondent’s own witness’s account nothing effective was done until unit owners themselves mobilised funds in January 2022, with repairs completed only in February 2022; that the Appellant’s contemporaneous email and his advocates’ letter of 17th February 2022 confirm that position; and that the plea of insufficient funds was rejected by the trial court and was in any event unsupported by any account statement or communication calling for contributions. A bare assertion of impecuniosity, he submitted, cannot excuse a two-month delay in attending to a known and continuing leak.
40. The Appellant accordingly prays that the appeal be allowed, that the part of the judgment dismissing the claims for Kshs. 730,000.00 and Kshs. 303,105.00 be set aside, that judgment be entered for him in the additional sum of Kshs. 1,033,105.00, that he be awarded the costs of the appeal, and that the cross-appeal be dismissed with costs.
(b) The Respondent’s submissions
41. Counsel for the Respondent began by describing the nature of his client. The Respondent is a management company incorporated solely for the purpose of managing the common areas of sixty-eight apartment units on behalf of the owners and residents, who are the beneficial stakeholders in the subject matter of the appeal. Its mandate is not commercial; its directors are themselves homeowners within the estate; and its sole source of funds is the service charge contributions of the residents, which are reserved for security, cleaning, utilities and the maintenance of the common areas.
42. Counsel accepted the principle in Selle but submitted that on a proper re-evaluation of the evidence and a correct construction of Clause 1.10 the finding of the trial court was right. On the approach to construction he relied on Twiga Chemicals Industries Limited v Allan Stephen Reynolds [2014] eKLR , citing Savings and Loan Kenya Limited v Mayfair Holdings Limited [2012] eKLR and Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 , for the proposition that the intention of the parties is to be ascertained objectively from the document, the question being not what either party meant or understood by the words used but the meaning the clause would convey to a reasonable person having all the background information available to the parties at the time of the contract; and on Euromec International Limited v Shandong Taikai Power Engineering Company Limited (Civil Case E527 of 2020) [2021] KEHC 93 (KLR) to the same effect.
43. Counsel submitted that Clause 1.10 comprises two distinct and independently operative limbs: a positive covenant restricting the permitted use of the premises to use as a single private residence for the accommodation of one family, and a separate covenant prohibiting any use which is or becomes a nuisance or annoyance to neighbouring owners or occupiers or which is injurious or detrimental to the reputation of the Estate. The trial court’s finding, he submitted, rested on the first limb, and the Respondent was accordingly not required to establish nuisance, annoyance or reputational harm in order to prove a breach. He submitted that the Appellant’s argument is directed exclusively at the second limb and therefore proceeds on a misapprehension of the covenant.
44. Analysing the first limb element by element, counsel submitted that “single” contemplates occupation as one residential unit, whereas Airbnb operations involve a succession of unrelated bookings by different paying guests; that “private” is negatived by listing the premises to members of the public for reward, thereby opening them to an indefinite class of paying guests; that “residence” imports permanence, continuity and settled occupation, which short stays measured in days lack; that “accommodation of one family” contemplates occupation by one identifiable family unit, whereas Airbnb accommodation is offered to unrelated individuals or groups whose identities change with every booking; and that the use is commercial in character, fundamentally altering the character of the premises from a private residence to a short-stay commercial letting enterprise. He invited the court to take judicial notice of the fact that Airbnb is an internationally recognised online marketplace for short-term accommodation through which owners list accommodation as hosts and members of the public book as guests, and submitted that Kenyan law itself recognises the distinction between private residential occupation and accommodation offered to paying guests, the Tourism Act and the framework established thereunder empowering the Tourism Regulatory Authority to register, license and regulate private residences engaged in guest house services.
45. Counsel submitted that, in any event, if proof of the character of the use were required, the Appellant’s own pleaded case and the documents upon which he relies establish it: he relies upon a loss valuation report, upon Airbnb correspondence evidencing the delisting of the suit property, and upon a claim for loss of Airbnb income occasioned by negative reviews. Those documents demonstrate, on the Appellant’s own case, that the premises were being commercially offered to successive paying guests. The Appellant cannot rely on those facts to advance a claim for damages while simultaneously denying the very cha
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2. By that judgment the trial court entered judgment for the Appellant, who was the Plaintiff below, against the Respondent, who was the Defendant below, in the sum of Kshs. 253,640.00 together with costs of the suit and interest at court rates from the date of filing suit until payment in full. The balance of the claim was disallowed.
3. The Appellant, being dissatisfied with that part of the judgment disallowing two heads of his claim, filed a memorandum of appeal dated 31st January 2025. The Respondent, being dissatisfied with the finding that it had breached the lease, filed a memorandum of cross-appeal dated 5th November 2025.
The case before the trial court
4. The Appellant is the registered proprietor, by virtue of an Assignment of Lease dated 21st May 2012 registered in Volume N89, Folio 37/2, File 26081 executed between Talent Plex Holdings Company Limited and himself with the express consent of the Respondent, of all the rights, title and interest arising under a Lease dated 31st May 2010 in respect of all that property known as Penthouse Number 9, Flat B, Riara Downs Apartments, being part of the development erected on Land Reference Number 330/350, Nairobi, situate on Riara Road behind The Junction Mall, Lavington (“the suit premises”).
5. The Respondent is a limited liability company incorporated for the purpose of managing the estate erected on Land Reference Number 330/350. It is described in the Lease as the Manager and is the entity entitled to the benefit of the reversionary interest in the land upon which the estate stands. It is common ground that the Appellant is a member and shareholder of the Respondent, holding fifteen shares as an inseparable incident of his lease.
6. By a plaint dated 4th August 2023 the Appellant sued the Respondent for Kshs. 1,286,745.00, particularised as follows: loss of short-term rental income Kshs. 730,000.00; cost of repairs Kshs. 223,640.00; forced furniture and household disposal loss Kshs. 303,105.00; and valuation fees Kshs. 30,000.00. He also sought interest and costs.
7. The Appellant’s case, as pleaded and as deposed to in his witness statement dated 4th August 2023, was that under Clauses 1 and 2 of the Lease the Respondent had covenanted, subject to payment of the monthly service charge, to keep in tenantable repair the main structure of the buildings and in particular the roof and outside walls, and to keep the common water pipes, drains, gutters and sewers in good repair and condition. He averred that between December 2021 and February 2022 water emanating from ruptured water storage tanks and leaking water pipes situated in the common area directly above the suit premises seeped into the suit premises and caused extensive damage to its walls, floor and internal fixtures, including the ceiling, wardrobes and cabinets.
8. He further averred that despite repeated requests the Respondent declined or delayed to carry out the necessary repairs; that in order to mitigate his continuing loss he mobilised the owners of the other units in Block B, each of whom contributed Kshs. 15,000.00 towards a total of Kshs. 150,000.00 applied to the repair of the common area; that the Respondent thereafter expressly permitted the netting off of his Kshs. 15,000.00 contribution against his monthly service charge obligation; and that he himself expended Kshs. 223,640.00 in repairing and restoring the suit premises.
9. As to the balance of the claim, the Appellant averred that prior to the water damage the suit premises were let as a furnished apartment on the Airbnb platform, enjoying consistent bookings and generating substantial rental income; that following the damage the listing attracted negative reviews, bookings were cancelled and the listing was eventually delisted; that the suit premises lay unoccupied between February and March 2022 and thereafter had to be converted into a long-term rental unit at a reduced rent, occasioning a loss of short-term rental income of Kshs. 730,000.00; and that the furniture and household appliances previously used to furnish the unit had to be disposed of at prices below their open market value, occasioning an asset disposal loss of Kshs. 303,105.00. He relied on a loss valuation report dated 27th February 2023 prepared by Gimco Limited at a cost of Kshs. 30,000.00.
10. By a statement of defence dated 6th May 2024 the Respondent admitted the Appellant’s proprietorship and its own role as Manager. It pleaded that its obligation to maintain, repair, redecorate, light, clean or renew extended only to the main structural components and the common areas, and that the obligation was contingent upon all members paying the agreed monthly service charge. It denied the cause and extent of the damage and pleaded that any such damage may have resulted from factors beyond its control or from other sources. It pleaded that repairs were ordinarily undertaken within a reasonable time, and that urgent repairs necessitated by factors beyond its control were ordinarily addressed through collective contribution by lessees. It further pleaded that under Clause 1.3 of the Lease the Appellant was obliged to insure the premises; that under Clause 1.10 the premises were to be used as a single private residence for the accommodation of one family and not otherwise; that the Appellant was not to part with possession or assign without its consent, which consent was neither sought nor obtained; and that the disposal of the furniture was the Appellant’s own commercial decision. No counterclaim was filed.
11. The Appellant filed a reply to defence dated 13th May 2024 joining issue and denying any breach of the Lease on his part.
12. A notice of preliminary objection dated 20th September 2023, by which the Respondent contended that the trial court lacked jurisdiction by dint of section 6 of the Arbitration Act, was dismissed by Hon. S. A. Opande (PM) by a ruling delivered on 9th April 2024. That ruling has not been appealed and nothing turns on it in these proceedings.
13. The suit proceeded to hearing on 23rd October 2024 before Hon. Pamela Achieng’ (CM).
14. PW1, Kiragu Maina , the Appellant, described himself as an investor in real estate. He adopted his witness statement dated 4th August 2023 as his evidence in chief and produced the documents in his list and bundle of documents as Plaintiff’s Exhibits 1 to 10. In cross-examination he stated that the lease did not require him to seek permission to use the property as he did; that the lease indicated that the premises were to be used as a single residential property; that he had insured the residential premises but was never asked for the policy; that the other occupants took part in the repair of the common areas; that the Respondent was not involved in the negotiations for the sale of the furniture; and that he had tried to get the management to address the leakage but it declined. In re-examination he stated that the tenant who took up the premises was not using them for business; that he sold the furniture because the premises had become uninhabitable and the tenants cancelled; that he sold the goods as second-hand and would not obtain full value for them; that the leakage began in December 2021; and that the repairs to the common area were undertaken in 2022 by the property owners and not by the management company, while he sourced his own contractor for his apartment in March 2022.
15. The Respondent called four witnesses. DW1, Kuiyaki Gacanja , DW2, Victoria Mutheu Kivuva and DW3, Gad Ndegwa Kamau , all directors of the Respondent, adopted their witness statements dated 18th June 2024, 19th June 2024 and 13th June 2024 respectively. DW1 produced the documents in the Defendant’s list and bundle of documents dated 4th June 2024 as Defendant’s Exhibits 1 to 3. DW4, Meshack Odunga , an employee of One Stop Property Management Limited, the company contracted by the Respondent to manage the common areas, adopted his witness statement as his evidence in chief.
16. DW1 testified that the Respondent’s role is limited to the common areas and not individual units, and that the leakage was addressed on time. In cross-examination he admitted that the management company was made aware of the leakage in December 2021; that the storage tanks and pipes are in the common area; that it was the responsibility of the management company to maintain the common areas; that he had no proof of the communication by which owners were asked to pool resources; and that by February 2022 no action had been taken. DW3 testified that where there is damage to a unit it is the owner’s responsibility to repair. DW4 testified in cross-examination that the leak arose from the tanks in the common area; that he received the report of the leakage in December 2021; that the inlets of the leaking tanks were turned off in December 2021, which mitigated but did not resolve the problem; that repairs were done in February 2022; and that there were insufficient funds to carry out the repairs.
The judgment of the trial court
17. The trial court framed three issues: whether the Respondent breached the terms of the contract; whether the Appellant suffered damage as a result of that breach; and whether the Appellant was entitled to the reliefs sought.
18. On the first issue the trial court found that the damage began in December 2021; that several email exchanges established that the Respondent had been made aware of it but did not act to ensure repairs were undertaken; that by his email of February 2022 the Appellant had reported that the damage was worsening; and that DW4 had confirmed receiving reports of a significant leak from the rooftop water tanks and pipes of Block B in late December 2021 and effecting only a temporary arrest of the leak. The court found that the Respondent was under an obligation to carry out the repairs but, in breach of the contract, failed to do so within a reasonable time, the repairs having been effected only in February 2022. It found no evidence that the Appellant was in arrears of service charge and held that the plea of want of funds was not valid.
19. On the second issue the trial court noted the loss valuation report of Gimco Limited dated 27th February 2023, which assessed repair costs at Kshs. 241,930.00, and noted the further claims of Kshs. 730,000.00 for lost Airbnb income and Kshs. 303,105.00 for the disposal of the furniture and household items.
20. The trial court then set out Clause 1.10 of the Lease and concurred with the defence that in using the property to operate an Airbnb business the Appellant was in breach of that clause, which required the property to be used as a single private residence accommodating one family and not for any other purpose. It held that the Appellant could not therefore claim loss suffered as a result of that use. The court rejected the defence founded on Clause 1.3, holding that there was no evidence that insurance would have covered the damage and that in any event the contract was clear that the repairs were the Respondent’s obligation.
21. On reliefs the trial court held that the Appellant was entitled only to the cost of repairing his apartment, which at paragraph 15 of the plaint was pleaded at Kshs. 223,640.00, together with valuation fees of Kshs. 30,000.00. It entered judgment for Kshs. 253,640.00 plus costs and interest at court rates from the date of filing suit until payment in full. A decree issued on 3rd February 2025.
The appeal, the cross-appeal and the interlocutory proceedings
22. The memorandum of appeal dated 31st January 2025 raises two grounds, namely that the learned trial magistrate erred in fact and in law: first, in finding that the Appellant was in breach of Clause 1.10 of the Lease dated 31st May 2010 by letting the suit premises on short-term tenancies through the Airbnb platform; and second, that as a consequence of that erroneous finding she erred in dismissing the Appellant’s claim for Kshs. 730,000.00 on account of loss of short-term rental income and Kshs. 303,105.00 on account of the loss occasioned by the disposal of his furniture and household items below market value. The Appellant seeks that the appeal be allowed, that judgment be entered for him in the further sum of Kshs. 1,033,105.00, and that he be awarded the costs of the appeal.
23. The memorandum of cross-appeal dated 5th November 2025 raises five grounds, namely that the learned trial magistrate erred in law and in fact: first, in failing to find that the only water tanks operated by the Respondent are those located within the common areas, at the guard house and adjacent to the pool area, and that the Respondent is responsible only for paying the Nairobi City Water and Sewerage Company bills for those tanks; second, in failing to find that the water tanks situated within the apartment blocks are privately owned by individual unit owners, lie beyond the Nairobi City Water and Sewerage Company metering point, and are the sole responsibility of the respective owners to clean, maintain and pay for; third, in finding that the Respondent was in breach of contract when it delayed the repair process, despite a lack of supporting evidence; fourth, in failing to find that there was no credible evidence on record to support the conclusion that the Respondent had breached the contract; and fifth, in disregarding the totality of the Respondent’s pleadings, submissions and cited authorities and thereby arriving at findings of fact and law that were materially unsupported. The Respondent seeks that the appeal be dismissed with costs and that the cross-appeal be allowed with costs.
24. The progress of this appeal has been attended by interlocutory proceedings which it is convenient to record, both because they explain the manner in which the cross-appeal came to be lodged and because they bear directly upon the consequential orders which this judgment must make.
25. Judgment having been delivered on 23rd January 2025 and a decree having issued on 3rd February 2025, the trial court issued an ex parte garnishee order nisi on 7th April 2025 against two of the Respondent’s bank accounts, held at Diamond Trust Bank of Kenya Limited and NCBA Bank Kenya PLC, by which a total of Kshs. 996,304.00 was frozen.
26. By an application dated 15th April 2025 the Respondent moved this court for a stay of execution, for extension of time within which to lodge a cross-appeal and for security. By a ruling delivered on 28th October 2025 this court (Kemei J) allowed the application and ordered a stay of execution pending the hearing and determination of the appeal and the intended cross-appeal; granted leave to lodge the cross-appeal within seven days; directed the deposit of Kshs. 253,640.00 into a joint interest-earning account held in the names of the parties’ respective advocates within fourteen days; and directed the filing of the record of appeal within fourteen days of the filing of the memorandum of cross-appeal, in default of which the orders would lapse automatically.
27. The Respondent complied with those conditions. The memorandum of cross-appeal was filed on 5th November 2025; the sum of Kshs. 253,640.00 was deposited on 10th November 2025 into an account at I&M Bank (CIF – 0805750) held in the names of the parties’ respective advocates; and the Respondent’s record of appeal was filed and served on 10th November 2025.
28. The competence of the cross-appeal is therefore not in issue. It was lodged with the leave of this court, its compliance with the conditions upon which that leave was granted has been the subject of an express finding by this court, and no objection has been taken to it by the Appellant, whether in his written submissions or otherwise. I have accordingly considered the cross-appeal on its merits.
29. Finally, by a ruling delivered on 18th June 2026 this court discharged the ex parte garnishee order nisi of 7th April 2025, directed the release of the frozen funds save for the sum of Kshs. 253,640.00, and preserved that sum in the joint interest-earning account as security for the judgment debt pending the hearing, determination and final disposition of the appeal and the cross-appeal. That deposit remains in place and falls to be dealt with in the disposition of this judgment. On the same day the court gave directions for the filing of written submissions.
Submissions
30. Pursuant to those directions the Appellant filed written submissions dated 6th July 2026 through the firm of Mutua Waweru Advocates LLP, with copies of the authorities relied upon annexed. The Respondent filed written submissions dated 29th July 2026 through the firm of Njoroge Regeru & Company Advocates, together with a list and bundle of authorities of even date. I have considered both sets of submissions and the authorities cited in them, and I summarise them below.
(a) The Appellant’s submissions
31. On the duty of this court, counsel submitted that this being a first appeal the court sits in effect as a court of retrial, bound to reconsider and re-evaluate the evidence and draw its own conclusions, bearing in mind only that it did not see or hear the witnesses, relying on Selle & another v Associated Motor Boat Company Limited [1968] EA 123 .
32. On the first ground, counsel invoked Jiwaji v Jiwaji [1968] EA 547 for the proposition that where there is no ambiguity in an agreement it must be construed according to the clear words used by the parties. He submitted that on its clear wording Clause 1.10 is directed at the purpose and manner of use, and not at the identity of the occupant or the medium through which an occupant is sourced; that both limbs of the clause turn on the character of the actual use and its effect; and that the clause nowhere prohibits letting, short-term letting, or the use of any letting platform, including Airbnb. Provided the occupants sourced through the platform occupied the suit premises for residential purposes only and caused no nuisance, annoyance or injury to the reputation of the Estate, there was no breach.
33. Counsel submitted that the learned trial magistrate’s entire finding on the issue is contained in a single conclusory sentence, and that it treated the mere fact of listing and letting the suit premises on Airbnb as automatic and self-proving evidence of breach, without any inquiry into whether the actual use to which the premises were put by those who occupied them fell outside the permitted purpose, or whether that use caused any nuisance, annoyance or injury. He emphasised that the characterisation of Airbnb as a global online marketplace operating as a commercial hospitality platform, involving frequent turnover of occupants and public reviews and ratings, upon which the finding appears to rest, was advanced only in the Respondent’s written submissions at trial; it was not evidence adduced by any witness, and no witness testified as to the actual manner in which any short-term occupant used the suit premises. A finding of breach of a specific contractual covenant, he submitted, cannot properly rest on submissions of counsel as to the general business model of a third-party platform.
34. By treating the use of the platform as synonymous with breach, counsel submitted, the trial court in effect read into Clause 1.10 a restriction against short-term or platform-based letting that the parties never agreed upon, and thereby rewrote the contract between them, contrary to National Bank of Kenya Limited v Pipeplastic Samkolit (K) Limited & another [2001] KECA 362 (KLR) , in which the Court of Appeal held that a court of law cannot re-write a contract between the parties and that the parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.
35. Counsel further submitted that Clause 1.10 itself recognises that persons other than the Appellant may lawfully occupy the suit premises. It prohibits the Lessee from using the premises “or permitting them to be used” for a purpose other than as a single private residence, and refers throughout to the “owners or occupiers” of flats within the Estate. Those words would be rendered otiose if the clause were read as confining occupation strictly to the Appellant himself. The proper inquiry, which the trial court did not undertake, was whether the persons who occupied the premises used them otherwise than as a single private residence for the accommodation of one family at a time, or whether their occupation caused nuisance, annoyance or injury of the kind the clause proscribes; and the burden of proving breach lay on the Respondent as the party asserting it.
36. On the second ground, counsel relied on Dormakaba Limited v Architectural Supplies Kenya Limited [2021] KEHC 210 (KLR) for the elements of a claim in damages for breach of contract, namely the existence of a contract, its breach by the defendant, and loss suffered by the plaintiff in consequence. He submitted that the existence of the Lease and the Respondent’s breach of its repair obligations are not in issue in this appeal, and that the sole basis upon which the trial court declined to award the two disputed heads was its finding of breach of Clause 1.10 on the part of the Appellant. Once that finding is shown to be erroneous, he submitted, the causal foundation for dismissing the claim falls away with it.
37. On the measure of damages counsel cited Consolata Anyango Ouma v South Nyanza Sugar Company Limited [2015] eKLR , which restates the principle of restitutio in integrum and the rule in Hadley v Baxendale (1854) 9 Exch 341 , and confirms that damages of this character are in the nature of special damages which must be pleaded and proved. He submitted that loss of short-term rental income from a property let for that very purpose, and loss occasioned by the forced disposal of furniture below market value following delisting, flow naturally from a lessor’s failure to repair a leak which renders a short-stay rental property unfit for its purpose, and were within the reasonable contemplation of both parties at the time the Lease was entered into, the Respondent as Manager having been aware of and not having objected to the letting arrangement for a considerable period before the leak. He submitted that both sums were pleaded, and were supported by the loss valuation report and by the platform correspondence evidencing the delisting; that the trial court dismissed neither head for want of pleading or want of proof; and that the judgment does not impugn the report, the correspondence or any other item of evidence going to quantum.
38. On the cross-appeal, counsel submitted that grounds 1 and 2 are not properly before the court because they raise factual issues that were neither pleaded, canvassed nor proved below. He relied on Kenya Revenue Authority v MAN Diesel & Turbo SE, Kenya [2021] KEHC 13347 (KLR) , in which the court, following Girdhari Lal Vidyarthi v Ram Rakha [1957] EA 527 and Tanganyika Farmers Association Limited v Unyamwezi Development Corporation Limited [1960] EA 620 , held that although an appellate court has a discretion to allow a new point to be taken on appeal, it will not do so where the matter was not properly pleaded or where the facts bearing on the new point were not elicited in the court below, and that an appellant cannot reconstruct its case at that late hour by introducing new matters. He submitted that the distinction now drawn between common-area tanks and block-level tanks was never pleaded in the statement of defence, never put to the Appellant in cross-examination and never canvassed in the evidence of any of the Respondent’s four witnesses, and that the witness responsible for managing the common areas instead described the leaking rooftop tanks and pipes at Block B as forming part of the development’s common areas and facilities which the Respondent is responsible for maintaining.
39. On grounds 3, 4 and 5, counsel submitted that the Respondent’s obligation to maintain the common areas was expressly admitted at paragraph 5 of the statement of defence; that the leakage was reported in December 2021 and only temporarily arrested; that on the Respondent’s own witness’s account nothing effective was done until unit owners themselves mobilised funds in January 2022, with repairs completed only in February 2022; that the Appellant’s contemporaneous email and his advocates’ letter of 17th February 2022 confirm that position; and that the plea of insufficient funds was rejected by the trial court and was in any event unsupported by any account statement or communication calling for contributions. A bare assertion of impecuniosity, he submitted, cannot excuse a two-month delay in attending to a known and continuing leak.
40. The Appellant accordingly prays that the appeal be allowed, that the part of the judgment dismissing the claims for Kshs. 730,000.00 and Kshs. 303,105.00 be set aside, that judgment be entered for him in the additional sum of Kshs. 1,033,105.00, that he be awarded the costs of the appeal, and that the cross-appeal be dismissed with costs.
(b) The Respondent’s submissions
41. Counsel for the Respondent began by describing the nature of his client. The Respondent is a management company incorporated solely for the purpose of managing the common areas of sixty-eight apartment units on behalf of the owners and residents, who are the beneficial stakeholders in the subject matter of the appeal. Its mandate is not commercial; its directors are themselves homeowners within the estate; and its sole source of funds is the service charge contributions of the residents, which are reserved for security, cleaning, utilities and the maintenance of the common areas.
42. Counsel accepted the principle in Selle but submitted that on a proper re-evaluation of the evidence and a correct construction of Clause 1.10 the finding of the trial court was right. On the approach to construction he relied on Twiga Chemicals Industries Limited v Allan Stephen Reynolds [2014] eKLR , citing Savings and Loan Kenya Limited v Mayfair Holdings Limited [2012] eKLR and Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 , for the proposition that the intention of the parties is to be ascertained objectively from the document, the question being not what either party meant or understood by the words used but the meaning the clause would convey to a reasonable person having all the background information available to the parties at the time of the contract; and on Euromec International Limited v Shandong Taikai Power Engineering Company Limited (Civil Case E527 of 2020) [2021] KEHC 93 (KLR) to the same effect.
43. Counsel submitted that Clause 1.10 comprises two distinct and independently operative limbs: a positive covenant restricting the permitted use of the premises to use as a single private residence for the accommodation of one family, and a separate covenant prohibiting any use which is or becomes a nuisance or annoyance to neighbouring owners or occupiers or which is injurious or detrimental to the reputation of the Estate. The trial court’s finding, he submitted, rested on the first limb, and the Respondent was accordingly not required to establish nuisance, annoyance or reputational harm in order to prove a breach. He submitted that the Appellant’s argument is directed exclusively at the second limb and therefore proceeds on a misapprehension of the covenant.
44. Analysing the first limb element by element, counsel submitted that “single” contemplates occupation as one residential unit, whereas Airbnb operations involve a succession of unrelated bookings by different paying guests; that “private” is negatived by listing the premises to members of the public for reward, thereby opening them to an indefinite class of paying guests; that “residence” imports permanence, continuity and settled occupation, which short stays measured in days lack; that “accommodation of one family” contemplates occupation by one identifiable family unit, whereas Airbnb accommodation is offered to unrelated individuals or groups whose identities change with every booking; and that the use is commercial in character, fundamentally altering the character of the premises from a private residence to a short-stay commercial letting enterprise. He invited the court to take judicial notice of the fact that Airbnb is an internationally recognised online marketplace for short-term accommodation through which owners list accommodation as hosts and members of the public book as guests, and submitted that Kenyan law itself recognises the distinction between private residential occupation and accommodation offered to paying guests, the Tourism Act and the framework established thereunder empowering the Tourism Regulatory Authority to register, license and regulate private residences engaged in guest house services.
45. Counsel submitted that, in any event, if proof of the character of the use were required, the Appellant’s own pleaded case and the documents upon which he relies establish it: he relies upon a loss valuation report, upon Airbnb correspondence evidencing the delisting of the suit property, and upon a claim for loss of Airbnb income occasioned by negative reviews. Those documents demonstrate, on the Appellant’s own case, that the premises were being commercially offered to successive paying guests. The Appellant cannot rely on those facts to advance a claim for damages while simultaneously denying the very cha
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