You Can Now Sue Your Landlord For Rental Deposits At The Small Claims Court

In a landmark ruling, the High Court of Kenya has affirmed that the Small Claims Court (SCC) has jurisdiction to hear cases involving the refund of rental deposits. This decision, delivered by Justice Helene Namisi on January 23, 2025, marks a significant victory for tenants across the country, providing them with a legal avenue to reclaim their deposits from landlords who unjustly withhold them.

Background of the Case

The ruling stemmed from a case filed by Dr. Michelle Muhanda against LP Holdings Ltd. Dr. Muhanda had rented a property from LP Holdings Ltd from February 2015 until October 2022. Upon vacating the premises, she requested a refund of her KShs. 230,000 rental deposit. However, the management refused, instead presenting her with a bill of KShs. 271,857.60 for alleged repair costs.

Dr. Muhanda argued that the property was in good condition when she left and that the company had ignored her request for a joint inspection. After her attempts to resolve the matter amicably failed, she filed a case at the SCC, seeking a refund, punitive and exemplary damages under the Consumer Protection Act, and damages for breach of contract.

High Court’s Decision

The SCC initially dismissed Dr. Muhanda’s case on jurisdictional grounds, prompting her to appeal to the High Court. In her ruling, Justice Namisi stated that the SCC has the jurisdiction to hear cases involving the refund of rent deposits, as such claims fall under the SCC Act, which covers “contracts relating to money held and received.”

Justice Namisi emphasized that the SCC is an appropriate forum for post-tenancy disputes, including claims for the return of rent deposits and damages against landlords who withhold refunds. She overturned the SCC’s earlier decision, allowing tenants to seek redress through the SCC for rental deposit disputes.

Implications for Tenants and Landlords

This ruling has significant implications for both tenants and landlords. Tenants now have a clear legal pathway to reclaim their deposits if landlords unjustly withhold them. The SCC is designed to handle cases quickly, with proceedings required to be heard and determined on a day-to-day basis, ensuring a resolution within 60 days from the date of filing the claim.

Joseph Mwal, the Human Rights and Consumer Protection Advocate who represented Dr. Muhanda, hailed the decision as a wake-up call for landlords and real estate agents. He emphasized the importance of fair and transparent practices in dealing with tenants, particularly regarding rent deposits.

“The judgment underscores the importance of consumer protection, which is a guaranteed right under Article 46 of the Constitution,” Mwal said. “Tenants should now feel empowered to demand their deposits and take legal action if necessary.”

Consumer Protection and Fair Treatment

The ruling aligns with the constitutional right to fair treatment and consumer protection. Article 46 of the Constitution guarantees consumers the right to goods and services of reasonable quality, the right to information about products and services, and the right to compensation for loss or injury arising from defects in goods or services.

This decision reinforces the need for landlords to adhere to these principles, ensuring that tenants are treated fairly and that their economic rights are protected. It also serves as a reminder that tenants have legal recourse if they feel their rights have been violated.

Justice Namisi’s ruling marks a significant step forward in protecting tenants’ rights and holding landlords accountable for unfair practices. With the SCC now clearly empowered to handle rental deposit disputes, tenants can seek justice more efficiently and effectively.

As the real estate market continues to grow, this decision is expected to promote greater transparency and fairness in landlord-tenant relationships, ensuring that both parties uphold their obligations and respect each other’s rights.

Below is the copy of the judgment. JUDGEMENT - MILIMANI HCCCOMA E256 OF 2023_250127_142308