Section 4 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap. 301): Structure, Purpose, and Legal Analysis

1. Paraphrased Summary of the Provision

Subsection (1):

Regardless of any other law or any clause in a lease agreement, a controlled tenancy cannot be ended, altered, or varied unless the process set out under the Act is followed. This section overrides any inconsistent terms in the tenancy agreement.

Subsection (2):

If a landlord wishes to terminate a controlled tenancy or change its terms to the tenant’s disadvantage (for example, increasing rent or removing a service), the landlord must issue a formal notice to the tenant, using the prescribed statutory form.

Subsection (3):

Similarly, if a tenant wants a rent reassessment or changes to the tenancy terms, he or she must serve the landlord with a notice in the prescribed form.

Subsection (4):

A tenancy notice does not take effect until a minimum of two months after the receiving party gets it. However:

• (i) Termination cannot take effect before the earliest date the tenancy could otherwise have ended under the contract.
• (ii) If the lease provides for a longer notice period than two months, that longer period applies.
• (iii) The landlord and tenant can agree in writing to a shorter notice period.

Subsection (5):

For a tenancy notice to be valid, it must:

1. State the grounds or reasons for the proposed termination or change; and
2. Require the recipient to respond in writing within one month, indicating whether they agree or disagree.

Subsection (6):

A notice is properly served if delivered personally to the other party, to a responsible adult at the premises, to a servant residing or employed there, or by registered post to the last known address. Service is deemed effected on the date of personal delivery or the postal receipt date.

2. Analytical Commentary

2.1 Introduction and Legislative Intent

Section 4 of Cap. 301 lies at the heart of Kenya’s regime for the protection of commercial tenants in “controlled tenancies.” Enacted in the early 1960s, the Act sought to correct the historical imbalance between landlords—often wielding superior bargaining power—and small business tenants dependent on leased premises for livelihood.

This section operationalises that protective purpose by regulating how and when a controlled tenancy can be terminated or altered, thereby ensuring predictability, fairness, and due process in landlord–tenant relations. It effectively transforms the landlord’s proprietary rights into rights subject to statutory procedural safeguards.

2.2 The Principle of Statutory Control and Contractual Override

Subsection (1) is peremptory: it nullifies any contractual or statutory provision inconsistent with the Act’s requirements. In effect, parties cannot “contract out” of Cap. 301 protections. The provision thus embodies a public-law limitation on freedom of contract, justified by the legislature’s intention to protect tenants who occupy commercial premises as a source of income or business continuity.

Kenyan courts have consistently upheld this principle. In Karanja v Savings & Loan (K) Ltd [1986] KLR 78, the High Court noted that once a tenancy falls within the definition of “controlled tenancy,” the landlord’s rights are curtailed by statute, and termination must strictly comply with Section 4.

2.3 The Prescribed Notice: Procedure and Purpose

Subsections (2) and (3) establish reciprocal rights and obligations of notice for both landlords and tenants. The requirement that the notice be in the prescribed form (Form A or B in the Schedule to the Act) ensures uniformity and legal certainty.

This procedural formalism is not mere technicality—it guarantees transparency, allowing the tenant to understand precisely why termination or alteration is sought, and to invoke statutory dispute mechanisms under Section 6, which permits referral to the Business Premises Rent Tribunal (BPRT).

Failure to issue the prescribed notice renders any attempted termination null and void ab initio, as held in Caledonia Supermarket Ltd v Kenya National Examinations Council [2017] eKLR, where the landlord’s informal notice was declared invalid.

2.4 Time Frames and Protection against Abrupt Termination

Subsection (4) prescribes a minimum two-month notice period before any notice takes effect. The policy rationale is to protect tenants from sudden eviction or disruption to their business operations. The provisos balance flexibility and fairness:

• Clause (i) ensures that landlords cannot use the Act to shorten the original contractual term.
• Clause (ii) respects longer notice periods already agreed by the parties, reinforcing the principle that the Act provides minimum protections, not ceilings.
• Clause (iii) allows for consensual waiver, reflecting a limited retention of party autonomy within the statutory framework.

In Shah v Aggarwal [1983] KLR 100, the court underscored that failure to observe the statutory notice period invalidates termination and that any premature action amounts to unlawful eviction.

2.5 Substantive Content of the Notice: Grounds and Right to Respond

Subsection (5) introduces two vital substantive requirements:

1. The notice must state specific grounds (for instance, rent increase, breach, redevelopment, or personal occupation); and
2. It must invite a written response within one month.

This provision embeds a quasi-procedural fairness principle within the tenancy framework, mirroring administrative law values of notice, hearing, and reasoned decision-making. It ensures that neither party can act arbitrarily and provides a record for BPRT adjudication if a dispute arises.

Courts have treated the omission of reasons as fatal to the validity of the notice. In Patel v Rent Restriction Tribunal [1972] EA 446, it was held that the landlord’s notice lacking reasons for termination could not be enforced.

2.6 Service and Proof of Delivery

Subsection (6) prescribes modes of service—personal delivery, delivery to an adult member of the household, to a servant, to the employer, or by registered post. The detailed service provisions reflect the legislature’s intent to avoid disputes over whether notice was received.

The deeming clause, which makes service effective on delivery or postal receipt, simplifies proof while protecting both parties’ procedural rights. Nonetheless, Kenyan courts have required strict proof of service, especially where the landlord relies on termination to commence eviction proceedings (Gachanja v Commercial Bank of Africa [2019] eKLR).

2.7 Interaction with the Business Premises Rent Tribunal

Section 4 operates in tandem with Section 6 of the Act, which allows a party receiving a notice to refer the matter to the BPRT within one month. The Tribunal’s supervisory role ensures judicial oversight of any intended termination or variation, embodying the legislature’s vision of a controlled rather than a laissez-faire tenancy environment.

3. Doctrinal and Constitutional Significance

3.1 Balancing Property Rights and Socio-Economic Rights

The Act, through Section 4, mediates the tension between Article 40 of the Constitution (protection of property rights) and Article 43(1)(c) (right to economic and social security, including work and livelihood). It constrains landlords’ proprietary autonomy to secure the tenant’s livelihood interest in continuity of business premises—a recognition that tenancy relationships have social as well as economic dimensions.

3.2 The Public–Private Divide and Regulatory Justice

Section 4 exemplifies how private law relationships can be constitutionalised through legislative intervention. By mandating procedural fairness and reason-giving, the statute introduces principles characteristic of administrative justice into the private sphere. It reflects Kenya’s broader movement towards transformative constitutionalism, where fairness and due process extend beyond public administration to private economic relations.

4. Comparative and Policy Perspectives

Kenya’s Cap. 301 aligns with global trends in landlord–tenant regulation, akin to the UK Landlord and Tenant Act 1954, which similarly restricts termination of business tenancies without statutory notice and grounds. The underlying policy rationale—to protect the continuity of businesses and prevent economic displacement—remains consistent.

However, the Kenyan framework is unique in providing an adjudicative tribunal (the BPRT) with quasi-judicial powers. This institutional design ensures speedy, accessible, and specialised dispute resolution, reflecting a commitment to social justice within commercial regulation.

5. Conclusion

Section 4 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act stands as the procedural cornerstone of Kenya’s commercial tenancy regime. It embodies a deliberate legislative effort to subordinate contractual formalism to fairness, predictability, and accountability.

By mandating prescribed notice, sufficient lead time, stated grounds, and proof of service, the section ensures that neither party—especially the economically weaker tenant—is subjected to arbitrary eviction or unilateral alteration of terms.

In the modern context, as Kenya urbanises and small enterprises depend increasingly on leased premises, Section 4 continues to serve as a statutory expression of fair dealing and constitutional justice in private economic relations.

References

1. Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap. 301, Laws of Kenya.
2. Karanja v Savings & Loan (K) Ltd [1986] KLR 78.
3. Caledonia Supermarket Ltd v Kenya National Examinations Council [2017] eKLR.
4. Shah v Aggarwal [1983] KLR 100.
5. Patel v Rent Restriction Tribunal [1972] EA 446.
6. Gachanja v Commercial Bank of Africa [2019] eKLR.

Legitimate Expectation and Fairness in Successive Fixed-Term Contracts: The Case of Changalwa v Unga Limited [2025] KEELRC 1389 (KLR)

Legitimate Expectation and Fairness in Successive Fixed-Term Contracts: The Case of Changalwa v Unga Limited [2025] KEELRC 1389 (KLR)

Factual Summary

In Changalwa v Unga Limited, the Employment and Labour Relations Court (ELRC) considered whether an employee engaged on consecutive fixed-term contracts over a long period could claim a legitimate expectation of renewal or prior notice of non-renewal.

The claimant had worked for Unga Limited for thirteen consecutive years under successive fixed-term contracts. Despite being formally a fixed-term employee, he was included in a gratuity scheme available only to permanent staff. When the employer allowed the last contract to lapse without renewal or advance notice, the employee contended that this violated his legitimate expectation and amounted to an unfair labour practice.

The employer countered that the contract had expired by effluxion of time, and that fixed-term employment does not create an automatic right or expectation of renewal.

The court disagreed with the employer. It found that the claimant’s continuous service, combined with treatment identical to permanent employees, created a legitimate expectation that the contract would either be renewed or that he would receive prior notice of non-renewal. The court held that the respondent’s conduct violated the constitutional right to fair labour practices under Article 41 of the Constitution of Kenya, 2010 and Section 45 of the Employment Act, 2007.

Accordingly, the non-renewal was declared unfair, and the court awarded appropriate compensation.

Analytical Legal Commentary

1. Introduction

The Changalwa decision marks an important addition to Kenyan jurisprudence on the treatment of long-serving employees under fixed-term arrangements. It underscores the judiciary’s continued expansion of the doctrine of legitimate expectation into the employment law sphere, ensuring that the letter of contractual terms does not override the spirit of fairness guaranteed by the Constitution.

The case reflects the delicate balance courts must strike between contractual autonomy—allowing parties to define the duration of employment—and equitable fairness—ensuring employers do not exploit fixed-term contracts to deny employees rights normally associated with permanent employment.

2. Legal Issue

The central issue before the court was whether prolonged employment through successive fixed-term contracts, coupled with benefits afforded to permanent staff, can generate a legitimate expectation of continued employment or notice of termination.

3. The Court’s Findings

The ELRC held that the combination of the claimant’s 13 years of uninterrupted service and his participation in a permanent employee gratuity scheme created a legitimate expectation of renewal or prior notice. The employer’s failure to provide either amounted to procedural and substantive unfairness.

The court drew on the doctrine of legitimate expectation—traditionally rooted in administrative law—and affirmed its applicability in employment relations. By doing so, the court extended constitutional protection to employees facing abrupt or arbitrary non-renewals of fixed-term contracts.

4. Analytical Discussion

(a) Fixed-Term Contracts and Their Legal Nature

Under general employment law, fixed-term contracts terminate automatically upon expiry, without the need for notice, unless renewal is explicitly agreed upon. This principle was reiterated in several prior decisions, including Registered Trustees of the PCEA & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR.

However, Kenyan courts have increasingly recognised that strict adherence to this principle may produce inequitable outcomes, particularly where employers repeatedly renew fixed-term contracts for extended periods—effectively creating permanent relationships in substance, though not in form.

(b) Legitimate Expectation in Employment Law

The doctrine of legitimate expectation, borrowed from administrative law, protects individuals from arbitrary deviation from an established pattern of conduct by an authority or employer. In employment relations, it prevents employers from using fixed-term contracts to disguise ongoing employment relationships.

In Changalwa, the court reaffirmed that legitimate expectation may arise where:

1. There is consistent renewal of contracts over time;
2. The employer’s conduct suggests continuity (e.g., inclusion in permanent staff benefits); and
3. The employee reasonably relies on such conduct to expect renewal or advance notice.

This reasoning aligns with Elizabeth Washeke & Others v Airtel Networks (K) Ltd [2013] eKLR and Transparency International Kenya v Sheila M. M’Mbijjewe & Others [2022] eKLR, where the ELRC held that fairness and good faith must guide decisions regarding non-renewal.

(c) Fair Labour Practices under Article 41

Article 41(1) of the Constitution guarantees every worker the right to fair labour practices, while Section 45(2) of the Employment Act prohibits unfair termination. Although non-renewal of a fixed-term contract is not, strictly speaking, a “termination,” courts have interpreted these provisions purposively to protect employees from arbitrary discontinuation of employment.

In Changalwa, the court emphasised that employers who maintain employees on long, rolling fixed-term contracts cannot rely solely on the technical expiry of time to defeat constitutional obligations of fairness and transparency. This constitutionalisation of employment fairness represents a progressive reading of Article 41, ensuring that employment relationships are governed not only by contractual form but also by substantive justice.

(d) Practical Implications for Employers

The judgment sends a clear warning to employers who habitually engage employees under consecutive fixed-term contracts. Where such arrangements extend for several years and mirror the conditions of permanent employment, employers risk creating implied legitimate expectations.

To mitigate liability, employers should:

• Clearly define the temporary nature of fixed-term engagements;
• Communicate renewal or non-renewal decisions in advance;
• Avoid extending permanent benefits (such as pension or gratuity) to fixed-term employees unless expressly warranted; and
• Consider converting long-serving fixed-term employees to indefinite contracts where the employment need is continuous.

5. Ratio Decidendi

Where an employee serves under successive fixed-term contracts for an extended period and is treated similarly to permanent staff, a legitimate expectation of renewal or prior notice arises. Failure to meet that expectation amounts to unfair labour practice, contrary to Article 41 of the Constitution and Section 45 of the Employment Act.

6. Significance of the Decision

Mabonga (typo: Changalwa) contributes to the growing jurisprudential shift from formal contractualism to substantive fairness in Kenyan labour law. It builds upon earlier rulings recognising legitimate expectation as a shield against arbitrary employment decisions.

The case underscores the courts’ willingness to scrutinise the substance of employment relationships—not merely their contractual labels—and to enforce fairness consistent with the Constitution’s transformative ethos.

By extending administrative law principles into employment relations, the court affirms that employment, as a social and constitutional relationship, cannot be governed solely by rigid contract law doctrines.

7. Conclusion

Changalwa v Unga Limited reaffirms that fairness in employment extends beyond the written contract to the conduct and expectations arising from a long-standing employment relationship. It represents a commitment to equity, good faith, and respect for employees’ constitutional rights to fair labour practices.

For employers, it serves as a cautionary precedent: repeated renewals and inclusion of fixed-term employees in permanent benefit schemes may blur the line between fixed and permanent employment—creating enforceable legitimate expectations and potential liability for unfair labour practices.

Key Authorities:

• Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR
• Transparency International Kenya v Sheila M. M’Mbijjewe & 2 Others [2022] eKLR
• Elizabeth Washeke & Others v Airtel Networks (K) Ltd [2013] eKLR

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Impartiality as a Component of Procedural Fairness: The Case of Mabonga v Agricultural Finance Corporation [2025] KEELRC 2851 (KLR)

Case Commentary: Mabonga v Agricultural Finance Corporation [2025] KEELRC 2851 (KLR)

1. Introduction

The decision in Mabonga v Agricultural Finance Corporation adds important judicial clarity to the doctrine of procedural fairness within Kenyan employment law. The court reaffirmed that disciplinary proceedings must not only be substantively justified but must also meet the threshold of impartiality and fairness as required under the Employment Act, 2007.

2. Factual Background

The claimant, an employee of the Agricultural Finance Corporation (AFC), was dismissed on allegations of negligence and misconduct. During the internal process, it emerged that one of the panel members who sat in the disciplinary hearing had earlier been directly involved in the investigations—specifically, by extracting data from the claimant’s computer and compiling evidence against him.

Despite the presence of substantive grounds for dismissal, the claimant challenged the fairness of the process, asserting that the participation of an investigator in the disciplinary panel compromised the neutrality of the hearing.

3. The Court’s Holding

The Employment and Labour Relations Court held that the disciplinary process was procedurally tainted. The court reasoned that an individual who investigates alleged misconduct cannot simultaneously sit in judgment over the same matter. This dual role erodes the impartiality required in disciplinary proceedings and undermines the employee’s right to a fair hearing under Section 41 of the Employment Act and Article 47 of the Constitution of Kenya, 2010.

Although the court accepted that the employer had valid and justifiable reasons for terminating the claimant, it concluded that the process was procedurally unfair due to the conflict of interest arising from the panel’s composition.

4. Legal Analysis

(a) Impartiality as a Component of Procedural Fairness

The ruling underscores that fair hearing principles in employment law extend beyond merely giving an employee an opportunity to respond. They also encompass the neutrality of the decision-maker. The presence of an investigator on the disciplinary panel introduces bias—or at least the perception of it—which is enough to vitiate the fairness of the process.

This principle echoes the natural justice maxim nemo judex in causa sua (no one should be a judge in their own cause). The court’s reasoning aligns with both administrative law standards and labour jurisprudence, which emphasize that impartiality is not optional but intrinsic to due process.

(b) Substantive vs. Procedural Fairness

The decision draws a clear line between substantive justification (valid reasons for dismissal under Section 43) and procedural propriety (fair process under Section 41). Even when the employer can demonstrate genuine misconduct or negligence, failure to ensure an impartial process renders the termination unfair under Section 45(2).

This approach maintains consistency with precedents such as Walter Ogal Anuro v Teachers Service Commission [2013] eKLR and Loice Otieno v Kenya Commercial Bank Ltd [2013] eKLR, where courts held that a fair process is an independent requirement from the validity of reasons.

(c) Institutional Implications for Employers

Employers are reminded that disciplinary architecture must reflect the principle of separation of roles:

• Investigators gather facts and evidence.
• Disciplinary panels assess evidence and determine culpability.
• Appeal panels, if any, provide independent review.

Mixing these roles compromises procedural integrity and exposes the employer to liability even where the underlying misconduct is proven.

5. Broader Implications

This ruling reinforces the trajectory of Kenyan labour jurisprudence toward strengthening procedural safeguards in the workplace. It also serves as a caution to HR departments and disciplinary committees to adhere to the rule against bias and to document distinct stages of investigation and adjudication.

Moreover, the judgment resonates with comparative principles found in international labour standards, particularly ILO Convention No. 158 (Article 7), which stresses the right to a fair and impartial hearing before termination.

6. Conclusion

Mabonga v Agricultural Finance Corporation is a timely reaffirmation that justice in employment relations must not only be done but be seen to be done. Even where misconduct is substantiated, a flawed procedure—especially one tainted by bias—renders a termination legally untenable.

The case stands as a strong precedent for ensuring impartiality, transparency, and procedural fairness in disciplinary processes across both public and private sector employment in Kenya.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

 

Filing a Suit to Recover an Unpaid Loan in Kenya

Filing a suit to recover an unpaid loan in Kenya involves several procedural and substantive steps governed by the Civil Procedure Act (Cap 21), the Civil Procedure Rules, 2010, and relevant contractual laws. Below is a structured outline of the process.

1. Establishing the Legal Basis of the Claim

Before filing a suit, ensure that:

• There is a valid loan agreement (written or oral, though written is easier to prove).
• The amount owed is certain and ascertainable.
• There has been a default in repayment.
• You have made a formal demand for payment (usually via a demand letter).

Supporting documents may include:

• Loan agreement or acknowledgment of debt.
• Bank or mobile money statements.
• Correspondence showing reminders and default.
• Promissory notes or cheques, if any.

2. Sending a Demand Letter

Before instituting a suit, your advocate (or you, if self-represented) should issue a demand letter to the borrower.

• The letter formally demands repayment within a specified period (typically 7–14 days).
• It should warn that failure to comply will lead to legal proceedings.

Purpose:
To demonstrate good faith and give the debtor a fair chance to settle before litigation. It also serves as evidence of compliance with the pre-action protocol recognized by Kenyan courts.

3. Choosing the Appropriate Court

The choice of court depends on the monetary jurisdiction (pecuniary limits):

Court	Monetary Jurisdiction (Approx.)
Small Claims Court	Up to KSh 1,000,000
Magistrates’ Court	Up to KSh 20,000,000 (depending on rank of magistrate)
High Court	Above KSh 20,000,000

(Always confirm the latest limits through Gazette Notices or court updates.)

Also consider territorial jurisdiction — typically where the defendant resides, carries on business, or where the transaction occurred (see Section 15 of the Civil Procedure Act).

4. Drafting and Filing the Plaint

A plaint initiates the civil suit. It must include:

• The name of the court.
• Particulars of the parties (plaintiff and defendant).
• The cause of action — facts establishing the existence of the loan and default.
• The amount claimed and any applicable interest.
• The prayer or relief sought (e.g., payment of KSh X, interest, and costs).

Attach supporting documents, such as:

• Loan agreement or proof of the loan.
• Demand letter and evidence of delivery.
• Any other relevant documents.

Additional documents filed with the plaint:

• Verifying affidavit.
• List of documents.
• List of witnesses.
• Witness statements.
• Statement of the plaintiff.

Filing is conducted electronically via the Kenya Judiciary e-filing system: https://efiling.court.go.ke.

5. Service of Summons

Once filed, the court issues summons to enter appearance, which must be personally served on the defendant in accordance with Order 5 of the Civil Procedure Rules.

The defendant has 14 days from the date of service to:

• Enter appearance (indicating intention to defend), and
• File a defence (within 14 days after entering appearance).

6. Default Judgment (If No Defence Is Filed)

If the defendant fails to respond within the prescribed time:

• The plaintiff may apply for a default judgment under Order 10 of the Civil Procedure Rules.
• For a liquidated claim (a fixed sum), the court may enter judgment immediately.

7. Hearing and Determination (If Defended)

If the defendant files a defence:

• The matter proceeds to pre-trial directions and then to hearing.
• Both parties present evidence and call witnesses.
• The court then delivers its judgment based on the evidence presented.

8. Enforcement of Judgment

If judgment is entered in your favour but the debtor still fails to pay, you may enforce it through:

• Warrants of attachment and sale (executed by a licensed auctioneer).
• Garnishee proceedings (to recover funds from the debtor’s bank or employer).
• Committal to civil jail (only after due process and as a last resort).
• Charging orders or other execution against property.

9. Recovery of Costs and Interest

The court may award:

• Interest — as per the loan agreement or at the court’s discretion (typically 12% p.a.).
• Costs of the suit, including filing fees, legal fees, and disbursements.

10. Alternative Dispute Resolution (Optional)

Before or during proceedings, parties may opt for settlement through:

• Negotiation or mediation, as encouraged under Article 159 of the Constitution.
• The court may also refer the matter to court-annexed mediation prior to hearing.

 

Summary Table

Step	Action
1	Gather and verify loan evidence
2	Send a formal demand letter
3	Determine the appropriate court
4	File the plaint and supporting documents
5	Serve summons on the defendant
6	Seek default judgment (if undefended)
7	Proceed to hearing (if defended)
8	Enforce the court’s judgment
9	Recover interest and legal costs

 

Insurers need not charge or remit VAT on proceeds from salvage sales - The Case of Commissioner of Domestic Taxes v ICEA Lion General Insurance Company Limited

Full Case: Commissioner of Domestic Taxes v ICEA Lion General Insurance Company Limited
Income Tax Appeal E105 of 2023 [2025] KEHC 14865 (KLR)

Brief Facts:

ICEA Lion General Insurance Company Limited (“the Respondent”) is a general insurance company licensed under the Insurance Act, Cap 487, Laws of Kenya.
When an insured motor vehicle or motorcycle is involved in an accident and declared a total loss, the insurer indemnifies the insured by paying compensation equivalent to the insured value.

Upon such settlement, ownership of the wreck (salvage) transfers to the insurer by operation of law — under the doctrine of subrogation — or through express policy terms. The insurer subsequently disposes of the salvage through sale to recover part of the claim cost.

The Commissioner of Domestic Taxes (KRA) issued VAT assessments on these salvage sales, arguing that the disposals constituted taxable supplies of goods under the Value Added Tax Act, 2013. ICEA Lion objected, maintaining that such disposals form part of the insurance service, which is VAT-exempt under the First Schedule, Part II, Paragraph 1 of the VAT Act.

The Tax Appeals Tribunal (TAT) ruled in favour of the insurer. KRA appealed to the High Court.

Issues for Determination:

1. Whether the sale of salvage vehicles by an insurance company constitutes a taxable supply of goods under the Value Added Tax Act, 2013.
2. Whether such disposal forms part of the insurer’s exempt insurance service under the VAT Act.

Court’s Holding:

The High Court dismissed the appeal, upholding the Tribunal’s finding that VAT is not chargeable on the sale of salvage vehicles by insurance companies.

Court’s Reasoning:

• The court held that the sale of salvage is incidental and ancillary to the insurance company’s core business of providing indemnity to policyholders.
• Upon settlement of a total loss claim, the insurer acquires the salvage not as a trader in goods, but as part of the indemnification process.
• The subsequent sale of the salvage serves merely to mitigate the insurer’s loss — it is not a distinct or independent commercial activity for profit.
• Under Paragraph 1, Part II, First Schedule to the VAT Act, 2013, insurance and reinsurance services are expressly exempt from VAT. The court found that this exemption extends to activities inherently connected to the insurance service.
• Taxing the disposal of salvage would, therefore, amount to taxing part of the indemnification process, which contradicts the legislative intent of the VAT exemptions for insurance services.

Ratio Decidendi (Legal Principle):

The disposal of salvage vehicles by an insurance company following indemnification of a total loss is not a taxable supply under the VAT Act. Such disposal is ancillary to insurance services, which are expressly VAT-exempt under Part II of the First Schedule to the Value Added Tax Act, 2013.

Significance of the Decision:

• Establishes that insurers need not charge or remit VAT on proceeds from salvage sales.
• Affirms the principle that activities integral to or arising from the provision of insurance cover remain VAT-exempt, even if they generate monetary value.
• Provides clarity and tax certainty to the insurance industry, preventing double taxation or misclassification of insurance-related recoveries.

Commentary and Practical Implications:

1. For Insurance Companies:

• This decision offers welcome certainty in tax treatment of salvage recoveries. Insurers can confidently exclude salvage proceeds from VAT computation and reporting.
• It reinforces that VAT exemption applies not only to the insurance premium itself but also to transactions incidental to claim settlement.
• Insurers, however, must ensure proper documentation to demonstrate that such salvage arises strictly from indemnified claims and not from independent commercial trading in vehicles.

2. For the Kenya Revenue Authority (KRA):

• The ruling narrows KRA’s scope of assessment regarding VAT in the insurance sector.
• KRA must respect the distinction between commercial sales of goods and recoveries linked to indemnification.
• The decision emphasizes the need for tax authorities to interpret exemptions in light of the economic substance of transactions rather than their form.

3. For Policyholders and the Market:

• The decision supports stability in the insurance market by preventing unnecessary tax burdens that might otherwise be passed on to policyholders through higher premiums.
• It ensures that claim settlement remains efficient, as insurers can dispose of salvage without complex VAT compliance requirements.

4. Broader Legal Implication:

• The case strengthens jurisprudence on the scope of VAT exemptions under Kenyan law, confirming that ancillary or consequential acts forming part of an exempt service retain the exemption.
• It aligns with international VAT principles under OECD guidelines, which also recognize the “incidental to the main supply” doctrine.

Conclusion:

The High Court’s decision in Commissioner of Domestic Taxes v ICEA Lion General Insurance Company Limited affirms that the sale of salvage by insurers is not a taxable supply, but an activity incidental to VAT-exempt insurance services. This ruling provides much-needed clarity for insurers and ensures consistent application of VAT law within Kenya’s insurance sector.

Commentary on Family and Succession Law in Kenya: Statutory Framework, Judicial Interpretation, and Emerging Trends

1. Introduction

Family and Succession Law occupies a central position within Kenya’s legal system. It governs personal and property relations within the family unit — encompassing marriage, divorce, maintenance, custody of children, and the devolution of property upon death. The area is anchored in Kenya’s Constitution of 2010, which emphasizes equality, human dignity, and protection of the family as the fundamental unit of society (Article 45).

The legal regime is not only statutory but also constitutional and, in some instances, customary and religious. Historically, Kenya operated under plural systems of family law derived from English common law, African customary law, Islamic law, and Hindu personal law. The Marriage Act, 2014, the Matrimonial Property Act, 2013, and the Law of Succession Act (Cap 160) were enacted to harmonize these systems and promote legal uniformity.

2. The Law of Succession Act (Cap 160): The Cornerstone of Succession Jurisprudence

The Law of Succession Act, enacted in 1981, remains the principal legislation governing the devolution of property after death in Kenya. It applies universally to all persons domiciled in Kenya at the time of death, except where the deceased professed the Islamic faith, in which case Sharia law applies (s. 2(3)).

2.1 Testate Succession

Under sections 5–11, any person of sound mind may make a will to determine how their estate shall devolve upon death. A valid will must be made voluntarily and duly executed in accordance with section 11. The process of implementing a will involves obtaining a Grant of Probate, which confirms the executor’s authority to administer the estate.

The courts have consistently emphasized testamentary freedom while upholding statutory protections for dependants. In In re Estate of Solomon Ngatia Kariuki (Deceased) [2013] eKLR, the High Court reaffirmed that a will cannot completely disinherit a dependant who was maintained by the deceased; such a person may apply for reasonable provision under section 26 of the Act.

2.2 Intestate Succession

Intestate succession arises where a person dies without a valid will. The applicable rules are set out under Part V (sections 32–42). The Act classifies beneficiaries hierarchically — beginning with the surviving spouse and children, followed by parents, siblings, and other relatives.

For instance, under section 35, where a deceased leaves a surviving spouse and children, the spouse acquires a life interest in the estate, which determines upon remarriage or death, whereupon the property passes absolutely to the children. The principle of equitable distribution was affirmed in Rono v Rono & Another [2005] eKLR, where the Court of Appeal held that while equality is desirable, equity — based on the needs and circumstances of each beneficiary — should guide the court.

3. Marriage and Matrimonial Property: Equality and Autonomy under the 2010 Constitution

The Marriage Act, 2014 unified diverse marriage systems into a single statutory framework. Section 6 recognizes five types of marriage: Christian, civil, customary, Hindu, and Islamic. The Act underscores that marriage is a voluntary union between a man and a woman, entered into with free consent (s. 3(1)).

3.1 Dissolution of Marriage

The Act provides distinct procedures for dissolution depending on the form of marriage. For example, Christian and civil marriages may be dissolved on grounds of adultery, cruelty, desertion, or irretrievable breakdown (ss. 65–70). The courts exercise discretion to ensure fairness, especially where children and property are involved.

3.2 Matrimonial Property and Gender Equality

The Matrimonial Property Act, 2013 complements the Marriage Act by defining matrimonial property (s. 6) and establishing principles of ownership (s. 7). It provides that property acquired during marriage vests in both spouses according to their contribution, whether direct (financial) or indirect (non-financial).

In Echaria v Echaria [2007] eKLR, the Court of Appeal initially adopted a restrictive view, requiring proof of monetary contribution. However, post-2010 jurisprudence — guided by Article 45(3) of the Constitution — has broadened the concept of contribution to include domestic work, childcare, and emotional support. This approach was reaffirmed in P.N.N v Z.W.N [2017] eKLR, where the court recognized homemaking as a substantial contribution warranting equal property rights.

The evolving interpretation reflects Kenya’s constitutional commitment to substantive gender equality and the equal dignity of spouses during and after marriage.

4. The Children Act, 2001 (Revised 2022): Upholding the Best Interests of the Child

The Children Act operationalizes the rights of the child under Article 53 of the Constitution, which guarantees every child the right to parental care, education, and protection from abuse or neglect. The 2022 revision strengthened provisions on adoption, guardianship, and child welfare in line with international instruments such as the Convention on the Rights of the Child (CRC) and the African Charter on the Rights and Welfare of the Child (ACRWC).

4.1 Parental Responsibility and Custody

Sections 23 and 24 of the Act impose joint parental responsibility on both parents, regardless of marital status. Custody decisions are guided by the best interests of the child (s. 83). In J.O v S.A.O [2016] eKLR, the court emphasized that the welfare of the child overrides parental conflict, and custody should be awarded to the parent most capable of meeting the child’s needs.

4.2 Maintenance and Guardianship

Parents and guardians are legally obligated to provide maintenance under section 94. The Act also introduces clear procedures for guardianship orders, ensuring continuity of care in the event of parental incapacity or death.

5. Administration of Estates: Probate, Letters of Administration, and Judicial Supervision

The probate and administration process ensures that a deceased person’s property is lawfully distributed to rightful beneficiaries.

5.1 Probate and Letters of Administration

Where there is a valid will, executors apply for a Grant of Probate; where there is no will, administrators seek Letters of Administration Intestate under section 54. The court, upon verifying the petition, issues the grant, which must later be confirmed (s. 71) before distribution.

In In re Estate of L.N.W (Deceased) [2016] eKLR, the High Court underscored the importance of transparency and procedural fairness in the confirmation process, holding that all beneficiaries must be notified and heard.

5.2 Role of the Family Division of the High Court

The Family Division of the High Court, established under Article 165(3) of the Constitution and the Judicature Act, has jurisdiction to handle succession disputes, adoption applications, and matrimonial property cases. It also supervises subordinate courts in matters of limited monetary or geographical jurisdiction.

6. Dependant’s Relief and Equitable Distribution

A hallmark of Kenya’s succession regime is the protection of dependants. Under section 26 of the Law of Succession Act, any person maintained by the deceased who has not been adequately provided for may apply for reasonable provision from the estate.

In In re Estate of Solomon Ngatia Kariuki (Deceased) [2013] eKLR, the court affirmed that dependency is a question of fact and that the law intends to prevent hardship to those who relied on the deceased during their lifetime. This principle aligns with the constitutional value of human dignity (Article 28) and the duty to protect vulnerable family members.

7. Emerging Trends and Constitutional Dimensions

Kenya’s 2010 Constitution has profoundly reshaped the interpretation of Family and Succession Law. Courts increasingly apply constitutional values to ensure that family relations are governed by equality, fairness, and social justice.

7.1 Equality and Non-Discrimination

Article 27 prohibits discrimination on grounds of gender, marital status, or culture. Consequently, courts have struck down discriminatory customary practices that disadvantage women and children. In Rono v Rono (supra), the Court of Appeal held that daughters have equal inheritance rights with sons, a principle now firmly entrenched in law.

7.2 Recognition of Non-Monetary Contribution

Recent jurisprudence acknowledges unpaid domestic labour as a form of contribution to matrimonial property, consistent with global trends in gender justice.

7.3 Intersection with Customary and Religious Law

Although statutory law prevails, customary law continues to influence succession — particularly in rural areas and among certain communities. The courts balance these customs with constitutional standards, ensuring that traditional practices conform to the Bill of Rights (Article 2(4)).

8. Conclusion

Family and Succession Law in Kenya represents a synthesis of statutory precision, constitutional vision, and judicial innovation. The combined effect of the Law of Succession Act, the Marriage Act, the Matrimonial Property Act, and the Children Act is a coherent framework that upholds both individual rights and family solidarity.

However, persistent challenges — such as delays in succession proceedings, patriarchal resistance to gender equality, and limited public awareness — continue to impede full realization of these rights. Future reforms should focus on procedural efficiency, access to justice, and integration of customary law within the constitutional order.

Ultimately, Kenya’s Family and Succession Law exemplifies the legal system’s evolving attempt to balance personal autonomy with family responsibility, ensuring that justice within the family remains both accessible and equitable.

Select Bibliography

• Constitution of Kenya, 2010.
• Law of Succession Act (Cap 160, Laws of Kenya).
• Marriage Act, No. 4 of 2014.
• Matrimonial Property Act, No. 49 of 2013.
• Children Act, No. 8 of 2001 (Revised 2022).
• Echaria v Echaria [2007] eKLR.
• Rono v Rono & Another [2005] eKLR.
• In re Estate of Solomon Ngatia Kariuki (Deceased) [2013] eKLR.
• P.N.N v Z.W.N [2017] eKLR.
• J.O v S.A.O [2016] eKLR.
• In re Estate of L.N.W (Deceased) [2016] eKLR.