Tenants can now sue landlords for withholding deposit refunds - court
The ruling paves the way for tenants to file cases against landlords withholding deposits at the Small Claims Court, where such disputes must be resolved within 60 days of filing.
The High Court has cleared the way for a tenant to sue their landlord for withholding a rent deposit, ruling that the Small Claims Court has jurisdiction to hear such disputes.
Justice Helene Namisi of the Milimani Commercial and Tax Division, delivered the ruling on January 23, 2025, overturning an earlier decision by the Small Claims Court that dismissed the case on jurisdictional grounds.
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The case was filed by Dr Michelle Muhanda, a former tenant of Woodlands Grove Villas in Nairobi, who had rented the property for seven years. After vacating the house in October 2022, she sought a refund of her Sh230,000 deposit from the managing company, LP Holdings Ltd.
Instead of a refund, the company presented her with a bill of Sh271,857 for alleged repair costs in a letter dated May 10, 2023.
Muhanda contended that the house was in good condition when she left and accused the company of ignoring her request for a joint inspection to assess damages before her departure.
When her demands for a refund were unsuccessful, she filed a case at the Small Claims Court, seeking the return of her deposit, punitive damages under the Consumer Protection Act, and compensation for breach of contract.
However, the Small Claims Court dismissed the case, citing a lack of jurisdiction. Muhanda, represented by Advocate Joseph Mwai, then moved to the High Court to challenge the decision.
Justice Namisi ruled that disputes over 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 matter 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 said.
LP Holdings had also argued that Muhanda’s claims, which totalled Sh1,030,000, exceeded the Sh1,000,000 pecuniary limit of the Small Claims Court. The High Court, however, clarified that the court is an appropriate forum for post-tenancy disputes, including claims for deposit refunds.
The ruling paves the way for tenants to file cases against landlords withholding deposits at the Small Claims Court, where such disputes must be resolved within 60 days of filing.
Advocate Mwai praised the ruling as a victory for tenants, urging them to demand accountability from landlords and property managers. He emphasised that the judgment reinforces consumer rights guaranteed under Article 46 of the Constitution.
“The judgment underscores the importance of consumer protection, which is a guaranteed right under Article 46 of the Constitution of Kenya. Consumers have the right to fair treatment, including access to services of reasonable quality, economic rights protection, and compensation for losses or injuries caused by defective services,” Mwai said.
The decision is expected to strengthen transparency and fairness in Kenya’s rental sector, encouraging tenants to seek legal redress in cases of unfair treatment.
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