[2022] KEBPRT 46 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. 120 OF 2019 (NAKURU)

ALICE WANJIRU KURIA....................................................APPLICANT/LANDLADY

VERSUS

SAMUEL KIPLANGAT CHELULE.................................................. 1ST RESPONDENT

AGNES GACHAGO............................................................................ 2ND RESPONDENT

SAMUEL KURIA MUREU..................................................................3RD RESPONDENT

JUDGMENT

1. The proceedings herein were instituted through a reference dated 17th September 2019 wherein the applicant complained against the Respondents trading as Harmony school -Narok for failure to pay rent for 18 years since the year 2001 accumulating to Kshs.18 million.

2. The applicant contemporaneously filed a motion dated 17th September 2019 seeking an order that the Respondents do pay rent amounting to Kshs.18,000,000/- and that leave be granted to levy distress in default of such payment.

3. The application is supported by the affidavit of the applicant sworn on the 17th September 2019 and the grounds on the face of the application.

4. The 2nd Respondent filed a replying affidavit sworn on 27th September 2019 and a further replying affidavit sworn on 2nd December 2019. The affidavit of 27th September 2019 was expressed to have been sworn on behalf of all the three (3) Respondents but the 3rd Respondent disowned it stating that he had not given any authority for the same. He swore his affidavit in reply on 28th November 2019.

5. The applicant swore a further affidavit on 20th November 2019 in response to the replying affidavit of the 2nd Respondent sworn on 27th September 2019 and filed in court on 30th September 2019.

6. The tribunal directed that the issues in dispute be disposed of by way of viva voce evidence and although the matter had previously proceeded before the former chairman Hon. Mbichi Mboroki it was agreed by consent on 2nd June 2021 that the matter proceeded de novo before me.

7. Hearing proceed de novo on 9th September 2021 with the applicant starting as pw1. Her evidence was that she was the allottee of plot no. 9 Block 8 (New no. Plot no. 20, block 8, Narok Town vide a letter of allotment produced as P. Exhibit 1 dated 18/6/99.

8. She also produced a letter dated 14/10/99 by the D.C to physical planner as P. exhibit 2 and a letter by Town Council of Narok to P.S Local Government as P. Exhibit 3.

9. The applicant referred to 2 payment receipts for plot rates indicating subletting fee of Kshs.600/- made on 25th April 2002 and a similar amount paid on 19th June 2003.

10. She confirmed that the plot was occupied by Harmony School whose directors are the 3 Respondents. One of the directors (Sammy Kuria Mureu) is her husband.

11. The applicant claims rent as the school’s directors were not making rent payments. She testified that in 2019, she wanted to pay rates and found out that the school had changed the plot from her name to its name.

12. As a result, the applicant wrote letters dated 12th April 2019, 6th June, 2019 and a second letter dated 6th June 2019 produced as P. Exhibits 4(a), (b) & ( c ). On 23rd July 2019, CECM of Lands, Housing, Physical Planning and Urban Development summoned directors of Harmony School to produce documents. She went with her own documents but the directors did not appear.

13. As a result, the applicant commissioned a valuer to undertake a valuation for rental income which was produced as P. exhibit 6. A certificate of registration of the school was produced as P. Exhibit 7. The reference form filed herein was produced as P. Exhibit 8.

14. The applicant denied having negotiated sale of the suit property with the school. She denied executing the transfer in favour of the school marked ‘AG-1’ attached to the 2nd Respondent’s affidavit.

15. She also stated that no sale agreement was drawn neither was consideration paid to her. There was also no exchange of documents. She denied knowledge of the clearance to pay rent marked ‘AG-2’. She stated that she was never called to the Council to do transfer.

16. The applicant stated that her husband used to receive rent. She claims Kshs.18 million in default of which she seeks to be allowed to levy distress.

17. In cross examination by the 1st and 2nd Respondent’s counsel, she denied that the suit plot had changed hands to Harmony school although she had complained to the County Government over alleged fraud in ownership records of the suit property.

18. On being shown a letter dated 6/6/2019, she confirmed having complained that her land had illegally been transferred to the school. She had not filed a case to challenge the sale. She however insisted that Harmony School was her tenant.

19. She further stated that she had given the suit land to her husband to build a school without any written agreement. She has never been paid a share of the school business profit. She denied ever sitting down with the school management to discuss sale of land.

20. Although she stated that the transfer of school land was illegal, no report had been made to the CID about the transfer neither had she filed any case to challenge the transfer.

21. A receipt dated 25/4/2002 was in the name of the applicant but indicates that the payment was made by Chelule Harmony. An invoice dated 3/9/2010 was in the name of Harmony School.

22. The applicant further states that for 2 years the school paid Kshs.42,000/- per month as rent although she had not demanded for rent in writing thereafter upon stoppage of payment by the school.

23. No terms of tenancy had been agreed upon with the school. She denied ever signing any transfer document. She denied knowledge of the award made on 28/6/2019 by the County Government of Narok Committee on plot disputes.

24. She denied participating in any school board meeting where the issue of sale of land was discussed on 15th June 2002. She denied having been aware of a debt owed to her husband by the school.

25. Although there was no agreement on how rent would escalate, the applicant testified that her claim for Kshs.18 million was based on the valuation report produced as an exhibit.

26. Cross-examined by the 3rd Respondent’s counsel, the applicant stated that there was no sale agreement nor agreed sale price for the school land.

27. According to the applicant, the respondents had objected on the Tribunal’s jurisdiction and they were overruled. It was held that there was a landlord/tenant relationship.

28. The applicant stated that whenever she demanded for rent, her husband intervened.

29. Although the letter by Narok County Government dated 23/7/2019 directed her to appear on 31/7/2019, it is contradicted by the one dated 4/10/2019 showing that the verdict had already been reached on 28th June 2019 vide annexure ‘Ag-1’.

30. In re-examination, the applicant stated that she waited for so long before demanding for rent as it is her husband who requested her for permission to develop a school.

31. He also paid rent for 2 years. The property is owned solely by her.

32. On the part of the Respondents, only the 2nd Respondent testified as a director of Harmony School, Narok. The school has 3 directors who are the Respondents in this case.

33. She denied that they were tenants on the suit property asserting that they were owners of both the land and buildings on the suit land.

34. She relied on the transfer form marked ‘AG-01’ attached to her replying affidavit. The transfer is dated 16/9/2008. She stated that the property was bought at Kshs.500,000/- in the year 2002 and the school started paying in 2003.

35. The 3rd Respondent gave a loan of Kshs.1,789,226/- to the school for phase II. He had previously loaned the school Kshs.235,000/- for phase 1. The total loan was Kshs.2,524,311/- plus Kshs.500,000/- being the price of the suit property. The latter was also a loan to the school.

36. The total loan was repayable in 6 years with an interest of 22% of the total amount to make altogether Kshs.3,079,659. 40 payable by monthly instalments of Kshs.42,773/-. The same was paid between 2003 and 2008 to the 3rd Respondent.

37. The issue was discussed in a board meeting held on 15/6/2002 attended by the 3 Respondents. The minutes were signed by all the three directors.

38. After completing the loan, the transfer was signed on 16/9/2008 and the property transferred to Harmony School, Narok. The transfer was effected by Narok Town Council and the plot was thereafter in the name of Harmony School. The school applied for a letter of allotment to be issued vide D. exhibit 2 dated 20/9/2010.

39. An invoice to pay land rates of Kshs.99,888/- was issued by Narok Town Council upon the school. The same was produced as D. Exhibit 3. It is dated 3/9/2010. Another invoice for Kshs.188,628/- was produced as D. exhibit 4 which was settled by the school vide a receipt produced as D. exhibit 5 dated 11/1/2016.

40. On 18/10/2016, the school applied for exemption from payment of land rates vide D. exhibit 6. A sum of Kshs.15,000/- was paid as transfer fees vide D. Exhibit 7. Additional amount was also paid to make altogether Kshs.29,400/-. The witness did not understand what subletting fee of Kshs.2400/- meant.

41. The minutes of the school’s board of directors held on 15/6/2002 were produced as D. exhibit 8.

42. A dispute over ownership of the school land arose and the parties were called by CECM lands on 28/6/2019 and it was held that the County council acted on the request of Alice Wanjiru Kuria in transferring the land to Harmony School.

43. The decision was communicated vide a letter dated 4/10/2019 produced as D. exhibit 9. The witness stated that she has never been summoned to any police station over alleged forgery of the transfer form.

44. The witness testified that they have never been tenants. No demand have ever been made or application to levy distress.

45. She denied that any ruling had ever been made in this matter on any issue.

46. The witness confirmed that valuers visited the school to undertake valuation on 11/9/2019.

47. In cross-examination by counsel for the applicant, the witness confirmed that there was no sale agreement attached to the transfer form marked D. Exhibit 1 neither is the form completed on the “official use section”. The date of approval was not known to the witness.

48. No minutes of the Town Council approving the transfer were produced. The plot had no lease but land rent is collected by the county government.

49. Although the Respondents applied for a fresh letter of allotment, the old letter of allotment was still held by the applicant. She confirmed that the applicant was not invited to the school board meeting of 15/6/2002.

50. Upon cross-examination by counsel for the 3rd Respondent, the witness confirmed that she had no sale agreement before court. She also confirmed that the Respondents had not paid any money to the applicant for the suit land.

51. A valuation report (p.exhibit 6) was done by the school’s valuer (RubyLand Limited). The report shows that the registered owner of the land was the applicant.

52. The witness testified that the Respondents came together in 2001 and that she and the 2nd Respondent were taken to the suit land by the 3rd Respondent. Each contributed Kshs.300,000/- for the partnership capital.

53. Kshs. 1. 7 million was advanced to the partnership by the 3rd Respondent in form of building materials. A further sum of Kshs.235,000/- was paid by the 3rd Respondent. The applicant did not make any contribution. The repayment was done to the 3rd Respondent without distinguishing any of the repayment as purchase price.

54. In re-examination, the witness stated that there was no sale agreement and the parties relied on mutual understanding, trust and friendship.

55. After close of the case, all the counsel filed submissions which I shall consider together with the issues for determination.

56. Going by the pleadings, evidence and submissions, the following issues arise for determination:-

(a) Whether this Tribunal has jurisdiction to determine the instant dispute.

(b) Whether there exists a landlord/tenant relationship between the applicant on the one hand and the Respondents on the other.

(c) Whether the Respondents owe the sum of Kshs.18 million in rent arrears.

(d) Who is liable to pay costs?

57. The jurisdiction of this Tribunal is conferred by the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301, Laws of Kenya and Articles 10(1) (b) and 169 (1) (d) and (2) of the constitution of Kenya, 2010.

58. The 1st and 2nd Respondents have submitted that this Tribunal has no jurisdiction to entertain the instant proceedings as their occupation of the suit premises was pursuant to a sale agreement and what is in issue before the Tribunal is ownership of the premises.

59. On the other hand, the applicant submits that what is before the Tribunal is recovery of rent arrears amounting to Kshs.180,0000/- which is within the Tribunal’s jurisdiction. She cites the valuation report by Rubyland which was procured by the Respondents which shows that the suit plot belongs to her. She also cites the minutes of board of directors meeting held on 21st September 2018 where the Respondent confirm that they do not own the suit property. It is contended that there was no sale agreement evidencing how the suit property was acquired by the Respondents neither is there an allotment letter in the name of Harmony School, Narok despite the allegation of transfer.

60. The only allotment letter before court is that in the name of the applicant issued on 18th June 1999 and the Respondents it is submitted cannot purport to own the property.

61. Under Article 10(1)(b) of the Constitution of Kenya, 2010, I am required to uphold the national values and principles of governance in interpreting any law which under Article 10(2) (a) thereof includes the rule of law. This Tribunal exercises delegated sovereign power under Article 1(3) (c ) of the constitution.

62. Whereas I appreciate that I am not entitled to deal with disputes involving ownership of land, I am alive to the fact that what is before me is a question as to whether the Respondents are obligated to pay rent or not to the applicant.

63. I have looked at the documents presented before me and note that the only document of ownership presented is a letter of allotment in the name of the applicant. No corresponding ownership document has been presented by the Respondents who rely on a transfer document which is disputed by the applicant. No agreement for sale to support such transfer has been presented before me and I am of the firm view that the applicant has ably demonstrated that she remains the allotee and owner of the suit plot.

64. Section 3(3) of the Law of Contract Act, Cap. 23 Laws of Kenya provides as follows:-

“3(1) No suit shall be brought upon a contract for the disposition of an interest in and unless:-

(a) The contract upon which the suit is founded:-

(i) Is in writing

(ii) Is signed by all the parties thereto and

(iii) The signature of each party signed has been attested by a witness who is present when the contract was signed by such party”.

65. This provision binds the respondents who claim to have acquired the suit property by way of purchase without producing any written agreement.

66. This Tribunal under Section 12(1) of Cap. 301 is entitled to determine whether or not any tenancy is a controlled tenancy. Under section 12(4) of the Act, in addition to any other powers specifically conferred on it by or under the Act, “a Tribunal may investigate any complaint relating to a controlled tenancy made to it by the landlord or the tenant and may make such order thereon as it deems fit”.

67. According to the 1st and 2nd Respondents, they entered upon the suit land on invitation by the 3rd Respondent who is the husband of the applicant to join hands in partnership to run a school business. According to the replying affidavit of the 3rd Respondent sworn on 28th November 2019 at paragraphs 9, 13 and 14 he deposes as follows:-

“9. That the applicant is my wife and has been the landlady of the suit premises from the time the business started”.

“13. That the 1st and 2nd Respondents also suggested that I talk to my wife to lease land, the subject of this suit, at a calculated amount of around Kshs.42,000/-.

“14. That the said amount was to be paid quarterly in advance though the payment was suspended due to the leniency of my wife in a bid to support me and the same was agreed among us to be paid when the business became stable”.

68. Although, the 3rd Respondent was not cross-examined on the contents of the said affidavit during the hearing, the same was made on oath and is as such admissible in evidence. As the applicant is not a partner in the said paid school business and there being no consideration paid to her for alleged purchase of the land, I hold that she is a landlord in respect of the suit premises.

69. The applicant was not involved in any alleged negotiations for sale and any such negotiations done on her behalf by the 3rd Respondent amounts to nothing as he could not pass any interest to the school.

70. In the premises, I am satisfied that I have jurisdiction to hear and determine the case. I am also satisfied that the relationship between the applicant and the Respondent is that of Landlord/tenant.

71. Having entered into the suit land as tenants and having paid rent without any written tenancy agreement for a period of two (2) years and there having been no evidence of sale of the land by the applicant to the school, the tenancy is controlled and thus within this courts Jurisdiction.

72. I have looked at the valuation report dated 11th September 2019 by RubyLand Limited which sets the annual rent at Kshs.1,440,000/- inclusive of government charges and monthly rent at Kshs.120,000/- exclusive of government charges and the comparables set out therein and I am satisfied that it presents a fair estimate of rent in respect of the suit premises.

73. In the premises, I am satisfied that the claim for Kshs.18,000,000/- set out in the reference and application by the applicant is proved. The applicant shall be entitled to levy for distress upon expiry of Ninety (90) days hereof unless the Respondents shall have settled the said amount together with further accrued rent at the rate of Kshs.120,000/- per month thereafter or made acceptable arrangements with the applicant for settlement thereof.

74. In conclusion therefore, the following final orders commend to me:-

(i) The reference dated 17/9/2019 and the application of even date is hereby allowed with costs to the applicant.

(ii) The applicant is entitled to the sum of Kshs.18 million claimed in rent arrears together with further accrued rent at the rate of Kshs.120,000/- per month with effect from October 2019.

(iii) The applicant is entitled to levy distress for the said amount upon expiry of Ninety (90) days hereof if the Respondents shall not have settled the said amount together with further accrued rent at the rate of Kshs.120,000/- per month with effect from October 2019 or shall have made acceptable arrangements with the applicant for settlement thereof.

(iv) The applicant’s costs shall be assessed in the normal manner upon filing of a party and party bill of costs.

It is so ordered.

JUDGMENT DATED, SIGNED AND DELIVERED VIRTUALLY THIS 11TH DAY OF MARCH 2022.

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:-

Ms Kiaritha holding brief for Karoki for the landlord

Mr. Kamwaro for the 1st and 2nd Respondents

Ms. Sarange holding brief for Odero for 3rd Respondent