[2021] KEBPRT 317 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 252 OF 2021 (NAIROBI)

A.O. BASID LIMITED...................................................................TENANT/APPLICANT

VERSUS

VALUE ZONE LTD.........................................LANDLORD/AGENT/1ST RESPONDENT

MORAN AUCTIONEERS...................................................................2ND RESPONDENT

RULING

The Tenant’s/Applicant’s notice of motion application dated 18th March 2021 seeks the following orders;

a. Spent

b. Spent

c. That pending the determination of this reference, an order be issued restraining the Respondents from locking up the premises described as plot No. LR 209/8383/2 situated at the junction of Lunga Lunga and Rangwe Road, interfering, with the normal operations of the Applicant’s business or distraining/taking actual physical possession of the Applicant’s proclaimed goods.

d. Costs.

The application is supported by the affidavit of Abdi Basid Omar and the grounds on the face of the said application. I summarize the grounds and the contents of the said affidavit as follows;

1. That the Respondents have illegally proclaimed the tools of trade of the Applicant.

2. That the Applicant is a protected Tenant.

3. That the Applicant has never failed to remit its rent on time.

4. That since covid 19 struck, the Applicant has fallen a little behind on rent payment.

5. That the proclamation of the Applicant’s goods contravenes section 16(1)(a) of the Distress for rent Act as the proclaimed properties are the Applicant’s tools of trade.

6. That the Respondents have also threatened to close the suit premises while distraining the Applicant’s tools of trade.

7. That the Respondent’s claim that the rent arrears amount to Kshs 2,860,000/- is untrue as the Applicant has been remitting rent.

8. That the Respondent has failed to avail the record of payments.

9. That even if any money is owed to the Respondents, the demand for such should be accurate and justifiable.

The application is opposed. The Respondents have filed a replying affidavit sworn by Wilson A. Otiato whose contents I summarize as follows;

1. That the Applicant is a serial defaulter who has previously issued bouncing cheques and the Respondent did, in 2019, send auctioneers to levy distress for rent amounting to Kshs 1,940,000/-.

2. That as at 1st March 2021, the Applicant owed rent (arrears) amounting to Kshs 2,860,000/- representing rent for nine months at the rate of Kshs 325,000/- per month.

3. That the Applicant should not use covid 19 as an excuse for having fallen in rent arrears given his previous history of default in paying rent.

4. That the 1st Respondent had every right to send the 2nd Respondent to levy distress, there having been outstanding rent.

5. That the 1st Respondent challenges the Tenant to indicate any rent it has paid and which has not been captured in the statement of account exhibited by the Respondent.

6. That the Applicant has sublet the premises to Moregas at a monthly rent of Kshs 330,000 without the consent of the Landlord/Respondent.

The Applicant’s further affidavit may be summarized as follows;

1. That it is not true that the Applicant has failed to remit rent, the Respondent has always collected Kshs 330,000/- from the Applicant’s company.

2. That the Respondent has entered into a contract with Morgas though some entities referred to as Mohamed Shabezan Butt and Yussar Batt.

3. That in the event any money is owed to the Respondent’s the Applicant is willing to have amicable payment plan.

The Respondents have also sworn a supplementary affidavit whose contents I summarize as follows;

1. That indeed it is the Applicant who dishonestly fraudulently and without the consent of the Respondent, leased the premises to Morgas Limited.

2. That the Respondent/Landlord is opposed to an amicable payment plan as the Applicant has been a serial defaulter and has issued had cheques.

On 4th May 2021, the parties were ordered to file written submissions in support of their respective cases. I summarize the respective submissions as follows;

The Applicant’s Submissions;

1. The Applicant’s submissions have generally reiterated the contents of the affidavits sworn on behalf of the Applicant and reproduced the provisions of section 16(1) of the Distress for Rent Act, Cap 293 of the Laws of Kenya.

2. That the Respondent’s herein as per the annexture marked ABD 1 in the Applicant’s supporting affidavit, have proclaimed machinery which is being used by the Applicant to conduct their business and therefore contrary to the provisions of the Distress for Rent Act.

3. That the Respondent’s failure to avail records of rent payment of receipt contravenes section 3(3) of Cap 301. The Respondent has failed to attach any duplicate receipts or rent book as proof that the Applicant is indebted to the Respondents.

4. That it is clear that it is the Respondent who brought on Moregas and the Applicant is therefore a stranger to any allegations that he leased the space to Moregas.

The Respondent’s submissions are to the effect;

1. That section 3 of the Distress for Rent Act Cap 293 clearly gives the 1st Respondent the right of Distress and indeed the 1st Respondent exercised its right and levied distress for rent though the 2nd Respondent.

2. That an analysis of the Tenant’s statement of accounts with the 1st Respondent clearly indicates that as at 1st March 2021, the Applicant was in arrears of rent in the sum of Kshs 2,860,000/-.

3. That the 1st Respondent had every right to instruct the 2nd Respondent to distress for rent as there was clearly huge accumulated arrears of rent.

4. That section 16(1) of Cap 293, the Distress for Rent Act does not exempt attachment of movable goods which the auctioneers herein attached as per their proclamation. The goods proclaimed cannot be referred to as the Applicant’s tools of trade.

5. That statements of accounts are always sent to the Tenant in accordance with the provisions of section 3(3) of Cap 301 and the Tenant has never raised any issue or sought any clarification.

6. That the Tenant is approaching the Tribunal with unclean hands having sublet the premises to Moregas Ltd without the consent of the 1st Respondent.

7. That the Applicant is, in the premises a very dishonest litigant and undeserving of the order sought in his motion dated 18th March 2021.

The issues that commend themselves for determination and arising from the above summary, are, in my humble view the following;

1. Whether the proclamation of the Tenant’s goods by the 2nd Respondent on the instructions of the 1st Respondent was illegal.

2. Whether the goods proclaimed are exempt from attachment under section 16(1) of the Distress for Rent Act Cap 293 of the Laws of Kenya.

3. Whether the Tenant/Applicant has sub-let the premises to Morgas Limited without the consent of the Landlord.

4. Whether the Applicant is entitled to the orders sought in its application dated 18th March 2021.

On Issue No. 1

The right of distress is provided for under section 3(1) of the Distress for Rent Act Cap 293 which provides as follows;

“Subject to the provisions of the Act and any other written law, any person having any rent or rent service in arrears and due upon a grant, lease, demise or contract shall have the same remedy by distress for the recovery of that rent or rent service as is given by the Common Law of England in a similar case.”

The only requirement for the crystallization of the right to distress by a Landlord therefore is the existence of “rent or rent service in arrears and due.”

The Tenant/Applicant states at paragraph 111 of his supporting affidavit;

“That we have been in cordial relations with the Landlord or his agent since we moved into the premises and never failed to remit rent on time or when we were required to take care of our responsibilities.”

At paragraph iv of the said affidavit, the Tenant states;

“That since covid 19 struck, we had loss of business hence we fell a little behind on rent. Nonetheless we endeavoured to meet our obligations and when we have rent arrears, we have always communicated to the 1st Respondent promptly.”

At paragraph viii, the Tenant states;

“That the Respondent’s claimed that the rent arrears are Kshs 2,860,000/- which is not true as we have been remitting the rent.”

The question that arises for determination therefore, is whether at the time the Respondents proclaimed the goods of the Tenant, the Tenant was in any rent arrears. It is notable that in spite of the Tenant’s protests, it has not shown by way of evidence that it has paid rent or that the rent owing is how much. The Tenant admits to being a little behind in rent on account of the effects of covid 19 but falls short and or shy of telling how much rent is unpaid and for what period of time.

The 1st Respondent on its part has stated that as early as 2019, it had instructed Regent Auctioneers to levy distress for rent against the Tenant herein for the arrears in the sum of Kshs 1,940,000/-.

The Tenant has not disputed this fact. The 1st Respondent has also annexed a statement of account with the Tenant which shows that the rent owing as at 1st March 2021 was Kshs 2,860,000/- at the rate of Kshs 325,000 per month.

At paragraph 9 of the 1st Respondent’s replying affidavit, the Respondent challenged the Tenant to provide evidence of any payment he may have made towards the rent arrears and which is not captured in the statement of account. The statement of account is in the name of Morgas Limited which has a lease agreement with the Tenant herein over the same property wherein the Tenant describes itself as the beneficial owner. This lease is dated 1st September 2020. The 1st Respondent’s ownership of the premises is not disputed.

The Tenant has not pointed out any payment it has made and which is not captured in the statement aforesaid.

As I have observed above, the statement of accounts provided is in the name of Morgas Limited. Morgas Limited is not a party to these proceedings though there exists a lease agreement between it and the Tenant. It has not been explained by the 1st Respondent why no statement belonging to the Tenant was produced in evidence/annexed to the affidavit.

It has also not been explained why the statement of Moregas Limited has been used to prove rent arrears allegedly owed by the Tenant. I also note that the statement of accounts has the issue date of 25th March 2021 but covers the period from 8th September 2020 to 8th September 2020.

The figures in the said statement do not support the figure of 2,860,000/- sought to be distressed for.

At this juncture, it is not possible to state with clarity what amount of money was owing in rent and due to the Landlord from the Tenant at the time of the distress. The Landlord has admitted to the knowledge that the Tenant has illegally and without the consent of the Landlord leased out the suit premises to Moregas Ltd. The Landlord has not stated on what basis it was receiving rent from Moregas Ltd as exhibited in its statement of account, which is as I have observed earlier, is not conclusive on the rent outstanding.

This state of affairs gets muddier with the entry of Mohammed Shalezan Butt and Tassar Butt introduced at paragraph IV of the Tenant’s further affidavit. Under the said paragraph, the Tenant states;

(iv)…The Respondent entered into a contract with Moregas through some entities referred to as Mohammed Shalezan Butt and Yassar Butt while I was still on the premises and failed to disclose this fact to the court with the aim of benefitiing twice. The said Moregas are still in the property too.”

In response to this statement, the Landlord has only stated that the allegations are denied entirely and insists it is the Tenant who illegally rented out the suit premises to Moregas Ltd. The Landlord makes no comment on the licence agreement annexed to the Tenant’s further affidavit and which introduces the Butt Brothers into the suit land.

The records kept by the Landlord in respect of this tenancy are wanting. The statement produced in aid of the Landlord’s case is also wanting, it does not show any record relating to the Tenant herein. The Landlord of a controlled tenancy is obligated under section 3(3) of Cap 301 to keep a proper record of the rent paid and other particulars. This, the Landlord does not seem to have done, at least on the basis of the material placed before the tribunal.

Section (3)(3) of Cap 301 is in the following terms;

“The Landlord of a controlled tenancy shall keep a rent book in the prescribed form of which he shall provide a copy for the Tenant and in which shall be maintained a record, authenticated in the prescribed manner of the particulars of the parties to the tenancy and the premises comprised therein and the details of all payments of rent and of all repairs carried out to the premises.”

The statement relied on by the Landlord in this matter does not amount to a rent book as required under section 3(3) of Cap 301 and falls short thereof in material respects.

The Tribunal is therefore faced with a situation where the Landlord has not established the rent arrears owing from the Tenant and the Tenant has not established the rent already paid to the Landlord and the rent owing if any. It would be unsafe to allow the distress to proceed at this stage owing to the uncertainties observed above. The determination of the rent owing can, in these circumstances, only be established through a full hearing of the reference.

In order to levy distress for rent, the rent owing ought to be clear and free of dispute. This is so because the goods proclaimed must have a bearing on the amount owed to avoid a situation where the value of the goods proclaimed far outweighs or underweighs the amount of rent demanded.

On this issue, I therefore hold that the proclamation of the goods of the Applicant by the landlord was illegal for the reason that the rent claimed is not clear from the material placed before the tribunal.

Having so held, I do not need to make any further findings on the issue number 2 and 3 and on issue No. 4, I do find and hold that the Tenant is entitled to the prayers sought in his application. I allow the Tenant’s application dated 18th March 2021 in terms of prayers (c) and (d) of the said application.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

Ruling read and delivered virtually by Hon Cyprian Mugambi Ngutharithis 30thday August of2021in the presence of Mr Agaya for the Tenant/Applicant and Mr Mukama for the Landlord/Respondent.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

Court:

The reference to be heard on 19th October 2021.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL