JURISDICTION OF THE SMALL CLAIMS COURT TO ENTERTAIN DISPUTES BETWEEN LANDLORDS AND TENANTS OVER RENT DEPOSIT: ANALYSING THE CASE OF MUHANDA V LP HOLDINGS LTD [2025] KEHC 393 (KLR)

JURISDICTION OF THE SMALL CLAIMS COURT TO ENTERTAIN DISPUTES BETWEEN LANDLORDS AND TENANTS OVER RENT DEPOSIT: ANALYSING THE CASE OF MUHANDA V LP HOLDINGS LTD [2025] KEHC 393 (KLR)

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BackgroundofthecaseintheSmallClaimsCourt The Appellant, Michelle Muhanda, had sued her landlord, the respondent, in the Small Claims Court seeking, inter alia, her rent deposit of Kshs. 230,000. She contended that the tenancy had commenced on February 2015 until October 2022 when she vacated the premises. She had invited her landlord for an inspection of the property prior to vacating the premises but he failed to show up. When she demanded her deposit, her landlord responded via letter with a bill of quantities for proposed dilapidation amounting to 271,857.60, being the purported repair costs. After instituting the suit, the landlord filed a response to claim and counterclaim for Ksh. 224,000 being two month rent in lieu of notice Kshs. 74,760.60 being refund for payments for repairs and utilities. Further, the landlord filed a notice of preliminary objection on grounds that: i.the claim relates to rental deposit by tenant and is outside the jurisdiction of the Court as contemplated under section 12 of the Small Claims Court Act; ii.contrary to section 12 (3) of the Small Claims Court Act, the Claimant seeks a refund of rent deposit of Kshs 230,000/= together with punitive and exemplary damages to the sum of Kshs 800,000/=, all totaling Kshs 1,030,000/= which exceed the pecuniary jurisdiction of the Court limited to Kshs 1,000,000/=; iii.The suit is incompetent, an abuse of court process and ought to be dismissed with costs to the Respondent. The Appellant filed her grounds of opposition in response confirming that the matter arose out of a contract and as such under section 12 of the Small Claims Court Act, the court has jurisdiction to entertain the matter. Also she argued that any award above one million would be forfeited as stated in her statement of claim.  In its ruling, the trial court found that a claim for rent and rent arrears is outside the jurisdiction of the Small Claims Court and ought not to be entertained. HighCourt`sanalysisanddetermination Aggrieved by the above decision, the appellant appealed to the High Court. The court acknowledged section 38 of the Small Claims Court Act which states that: 1. A person aggrieved by the decision or an order of the Court may appeal against that decision or an order to the High Court on matters of law; 2. An appeal from any decision or order referred to in sub section (1) shall be final. The court noted that the appeal was solely on the issue of the jurisdiction of the Small Claims Court. This being a question of law it fell within the ambit of section 38 of the Small Claims Court Act which clothed the High Court with the jurisdiction to entertain the appeal. The court addressed the issue of jurisdiction by relying on section 12 of the Small Claims Court Act which states that: 1.Subject to this Act, the Rules and any other law, the Court has jurisdiction to determine any civil claim relating to— a.a contract for sale and supply of goods or services; b.a contract relating to money held and received; c.liability in tort in respect of loss or damage caused to any property or for the delivery or recovery of movable property; d.compensation for personal injuries; and e.set-off and counterclaim under any contract. 2.Without prejudice to the generality of subsection (1), the Court may exercise any other civil jurisdiction as may be conferred under any other written law. 3.The pecuniary jurisdiction of the Court shall be limited to one million shillings. The court stated that the Appellant’s claim was for breach of contract, relating to the rent deposit paid by the Appellant to the Respondent. In the court`s view, the Appellant’s claim fell squarely within the provisions of section 12 (1) (b) of the Act, being a contract for money held and received. On the issue of the pecuniary jurisdiction raised by the Respondent, the court stated that the provisions of section 12 (3) of the Act couldn’t be any clearer. It also stated that the statutory form for lodging a claim binds the claimant to waive and forfeit the recovery of all sums in excess of Kshs 1 million. The court stated that: ``In this instance, the Appellant’s specific claim was for (i) punitive and exemplary damages under the Consumer Protection Act; and (ii) damages under contract for the oppressive, high handed, outrageous, insolent and vindictive conduct. No specific amount is quoted in the prayers. It is only in the description of the nature of the claim that the Appellant quotes the figure of Kshs 800,000/=. It is settled law that an award of damages is discretionary. Therefore, the Appellant’s mere suggestion or argument that it is entitled to an award of Kshs 800,000/= does not bind the court to award the same. That being the case, this point of the preliminary objection is moot.’’ On that basis, the court found the decision of the trial court to be marred by incorrect exposition of the law and proceeded to set it aside. It also set the matter to be heard and determined on merit before a different adjudicator. Implicationsofthejudgement The decision by Justice Helene Namisi paves way for tenants to sue their landlords, who withhold rent deposits, at the small claims court. This will provide an avenue for tenants to demand accountability from landlords. This decision is therefore progressive jurisprudence that guarantees expedited justice because disputes in the Small Claims Court are settled within 60 days. This is guaranteed under section 34(1) of the Act which states that: ``All proceedings before the Court on any particular day so far as is practicable shall be heard and determined on the same day or on a day to day basis until final determination of the matter which shall be within sixty days from the date of filing the claim.’’ Further, the judgement reinforces the consumer rights that are guaranteed under Article 46 of the Constitution of Kenya 2010. Under this Article, consumers have a right to fair treatment, including access to services of reasonable quality, economic rights protection and compensation for losses or injuries caused by defective services.