The document governing a commercial tenancy can change what a landlord is entitled to recover from the tenant. An invoice used for years may need examination when the written arrangement expires.
That was the narrow issue in Speedman Commercial Agencies Ltd v Nahoco Housing Co-operative Society Limited & another [2026] KEELC 2810 (KLR). The tenant succeeded on the allocation of VAT after its written agreement expired, but remained liable for lawful rent and service charges.
The Environment and Land Court at Nairobi delivered the judgment on 13 May 2026, in Environment and Land Appeal E002 of 2024.
The written arrangement had ended
The premises were on the third floor of Nacico Chambers, Moi Avenue, Nairobi. The last written offer ran until 31 May 2021. No further agreement was executed, and the parties accepted that a controlled tenancy existed from 1 June 2021.
The tenant later disputed a demand incorporating rent, service charges and VAT. It also alleged that it had been locked out.
The 5 December 2023 tribunal ruling, [2023] KEBPRT 1155 (KLR), in Tribunal Case E702 of 2023, doubted the lockout account, found arrears and dismissed the application with costs to the landlord.
By the appeal, the tenant had abandoned other grounds and accepted liability for service charges. The surviving dispute concerned VAT.
A taxable supply and recovery from a tenant were different questions
The 2026 appeal judgment's paragraphs 17-26 explain the distinction.
The court accepted that the supply of the commercial premises was taxable. It did not create a VAT exemption for this business or for controlled tenancies generally.
Instead, it considered who bore the tax's economic burden as between landlord and tenant. Under the implied tenancy terms it applied, taxes and similar outgoings fell on the lessor unless a written agreement made the lessee responsible.
The expired offer had expressly allocated VAT to the tenant. The court held that, after its expiry without a replacement agreement, that basis no longer supported charging VAT to this tenant.
Previous payments did not preserve the expired clause indefinitely
The landlord argued that the tenant had paid VAT for years and could not now dispute liability.
In paragraphs 27-30, the court rejected that argument. Earlier payments had been made under written arrangements requiring them. They did not, in its reasoning, replace the written agreement required for allocating the tax after those arrangements ended.
For investors reviewing rental income, this illustrates why historical invoices should be considered alongside the instrument currently governing occupation. A familiar billing practice may not answer whether each component remains recoverable.
It is not advice to stop paying a particular charge. The contract, tenancy status and current tax and property law need professional assessment.
The arrears still needed to be calculated
The court did not determine an exact revised debt. Paragraphs 41-44 explained that the invoices bundled different components and required an accounting exercise.
The final orders in paragraph 46 partially allowed the appeal. Demands from 1 June 2021 were to exclude VAT in the absence of a written agreement expressly allocating it to the tenant. Lawful rent and service charges remained payable.
The matter was remitted to the Business Premises Rent Tribunal to determine the correct arrears as at the date of judgment and make further orders consistent with it. Each party was to bear its own appeal costs.
There was no finding that the tenant owed nothing, no quantified refund award and no general permission to occupy commercial premises without paying rent.
Questions for a commercial-property enquiry
Identify the latest operative agreement and any renewal, holding-over or replacement arrangement. Do not rely only on the earliest signed offer.
Separate base rent, service charges, taxes and other outgoings. Ask which document or legal provision supports each component and whether the actual services and billing records match.
Where litigation has changed the basis of calculation, obtain the subsequent account or tribunal determination. An appellate legal ruling may leave the amount payable unresolved.
ArdhiScore can help retain the document history
ArdhiScore can help organise available parcel references, dated lease evidence, source citations and unresolved questions. It cannot replace the parties' accounting exercise or professional review of the operative agreement.
Explore ArdhiScore screening and its limits. Screening does not provide tax clearance or guarantee rental income. Both decisions and scoped later-history searches were read on 11 September 2026; no later arrears assessment or changing order was verified.