[2021] KEBPRT 38 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO E001 OF 2021 (THIKA)

AGNES WAMBUI MAINA T/A ANES PHARMACEUTICALS.............LICENSEE/APPLICANT

VERSUS

OLA ENERGY (K) LTD...........................................................................LICENSOR/RESPONDENT

RULING

1. The Respondent’s notice of preliminary objection dated 11th June 2021 is based on the following grounds;

a. That the licence agreement which created the relationship between the parties did not establish a Landlord/Tenant relationship.

b. That the Tribunal therefore lacks the jurisdiction to entertain these proceedings.

2. The issue that arises for determination is therefore whether the licence agreement (SMCC 1) between the parties herein creates a Landlord/Tenant relationship or a licence licencor relationship as between the parties herein.

3. The Respondent’s submissions in support of its preliminary objection may be summarized as follows;

a. That the licence agreement governing the parties is the one annexed to the Respondent’s affidavit as SMMC 1.

b. That the contents of the executed agreement are clear that the parties never intended to create a tenancy relationship, less so, a controlled one. Clause 2, 3, 9, 11. 2 and 11. 3 have been cited by the Respondent in support at this proposition.

c. That the Applicant was never granted exclusive occupation and control of space the subject of the agreement executed between the parties.

d. That the relationship between the parties herein is not governed by Cap 301 of the Laws of Kenya this Tribunal has therefore no jurisdiction to entertain this dispute.

e. That the relationship contemplated was a licence and not a tenancy.

f. That the Tribunal bears the burden of reviewing the agreement between the parties to determine whether the same amounts to a licence or a tenancy, the Tribunal is enjoined by the provision of section 12 (4) of Cap 301 to carry out this mandate.

g. That the Tribunal has no jurisdiction to re-write the contract between the parties.

4. The Applicant’s/Tenant’s submissions in opposing the Respondent’s preliminary objection may be summarized as follows;

a. That the agreement between the Applicant and the Respondent falls under controlled tenancy agreements as provided for underCap 301.

b. That the agreement between the Applicant and the Respondent was reduced into writing and clause 3 thereof provided for term and termination and is for a period of three years.

c. That it is therefore clear that the Applicant is a Tenant contrary to the views of the Respondent.

5. The document that governs the relationship between the parties herein is the one titled “Licence to share occupation of part of the area known as Land Reference Number LR 4953/45 IR 15079 also known as Oilibya Service Station Thika.”In the said document at paragraph 1 and 2, the Respondent and the Applicant are referred to as licensor and licencee respectively.

a. Clause 2. 3 (a) of the licence provides that the sharing of occupation of the property is conducted in a manner that does not establish the relationship of Landlord and Tenant clause 2. 3 (c) provides that nothing in the licence shall be construed to create any right, interest, easement, tenancy or sub-tenancy in favour of the licensee over the property and the licencee shall not be deemed to be in exclusive possession, the agreement herein is understood to be a mere licence. The licensee undertakes under clause 2. 3(c) not to at any one time claim tenancy rights over the property.

b. Under clause 9 of the licence, the licensor is to install signs and determine the type of branding for the property. The licencee cannot erect or maintain any sign without the permission of the licensor. Under this clause, the licensee can only use proprietary marks specifically authorized by the licensor in writing.

c. Under clause 11. 2 of the licence, the licensee is to install pharmacy counters according to approved architectural drawings and shall perform work only during normal business hours or at other hours approved by the licensor.

d. Under clause 11, the licensor has a say in the stocking of the products for sale in the licencees pharmacy and in some instances, the licensor has a say in the stocking of the products for sale in the licencees pharmacy and in some instances, the licencee has to obtain the written consent of the licensor to stock certain products. The licencee also has to notify the licensor at least fifteen days in advance if the pharmacy is to remain closed for any of the reasons provided under that clause.

e. Under clause 13, the licensor has to authorize personnel (in writing) to carry out any repair works at the pharmacy.

6. Under clause 20 of the licence, the licencee employees are not to be permitted to engage in activities which are deemed detrimental to the licensor’s interest. The employees are also subject to the standards of conduct set forth by the licensee.

7. Would it be said in view of the above clauses of the licence (agreement) that the Applicant herein enjoyed exclusive possession and control of the premises? I do not think so. It is clear from the provisions of the licence that the Respondent herein retained substantial control in almost all aspect of the Applicant’s business. The document contains terms which clearly suggest that it intended to create a licence rather than a contractual tenancy.

8. In the case of Nairobi HCCC No 3424 of 1982, BP Nairobi Service Station Ltd Vs BP Kenya Ltd,the Court stated;

“I have carefully examined the transaction the subject of this litigation and the relationship of the parties as it emerges from oral testimony given in court and the documentary evidence submitted and come to the conclusion that the Plaintiff did not enjoy exclusive possession of the premises and that such possession as it enjoyed was limited by the substantial degree of control that the grantor continued to exercise on the operations at the station and on the premises themselves. I have carefully examined the agreement dated 24th June 1968 which I have determined to be the document evidencing the relationship between the parties and governing their conduct terms which clearly suggests that it is intended to create a licence rather than a contractual tenancy.”

9. I am also persuaded from the tenor of the clauses of the licence that I have singled out that the parties intended that their relationship be a licencee-licensor relationship. The parties clearly signed a licence agreement, and the provisions that clearly bound the parties do not grant the Applicant exclusive possession and control of the premises.

10. The pleadings filled by the Applicant have not alluded to the distinction as to whether the relationship is a licence or tenancy and as such I am left with the licence document and the averments of the Respondent in determining this issue.

11. In the final analysis, I therefore do find that the relationship between the parties herein is that of licencee-licensor and not one of a Tenant/Landlord. That being the case, the tribunal has no jurisdiction to hear and determine the dispute between the parties herein. The Applicant’s reference dated 18th May 2021 and the Applicant’s notice of motion dated 18th May 2021 are hereby dismissed with costs to the Respondent.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

Ruling dated, signed and delivered virtually by Hon Cyprian Mugambi Nguthari (Chairman) this 17th day of December 2021 in the presence of the Respondent and Mr Warutere for the Applicant.

HON. CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL