[2022] KEBPRT 824 (KLR)

Daycan Trading Ltd v National Social Security Fund (Tribunal Case E099 of 2022) [2022] KEBPRT 824 (KLR) (12 October 2022) (Ruling)

Neutral citation: [2022] KEBPRT 824 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E099 of 2022

Andrew Muma, Vice Chair

October 12, 2022

Between

Daycan Trading Ltd

Applicant

and

National Social Security Fund

Respondent

Ruling

Parties and Representatives 1. The applicant/tenant Daycan Trading Limited (hereinafter referred to as the “tenant”) has been in occupation of the premises of the respondent the subject of this suit pursuant to a lease agreement dated July 19, 2016.

2. The firm of BW Kenzi & Company Advocates represents the tenant.

3. The respondent/landlord, National Social Security Fund (hereinafter referred to as the “landlord”) is the owner of the premises rented out to the tenant.

4. The firm of Cootow & Associates represent the landlord.

The Dispute Background 5. On May 20, 2022, the tenant filed a reference in this tribunal contending that the landlord has purported to increase the rent from Kshs 15,210. 00 to Kshs 27,560. 00 without any justifiable cause, and that the landlord has also purported to increase the service charge unlawfully and arbitrarily. The tenant thus invites this honourable court to declare the said increases illegal, null and void.

6. The tenant also filed a notice of motion application dated May 20, 2022 under certificate of urgency seeking the said application to be certified urgent, a restraining order does issue against the landlord restraining him from increasing rent from Kshs 15,210. 00 to Kshs 27,560. 00, evicting or in any way interfering with the tenant’s tenancy in NSSF building, 11th Floor Mombasa till the matter is heard and determined. It also sought the said reliefs on interim basis.

7. The honourable court certified the said application as urgent and a temporary injunction restraining the landlord from increasing the rent was issued on 20th May 20221. The matter was then set down for interparte hearing on June 15, 2022.

8. Upon service of the said reference and the application together with the interim order therefrom to the landlord, the landlord raised a preliminary point of law vide a notice of preliminary objection brought pursuant to section 2 (1) (a) (b) of the Rent Restrictions Act. While the court notes that the Rent Restrictions and the Landlord and Tenant (Shops, Hotels, and Catering Establishment) Acts, are two different pieces of legislation, it appears that the landlord’s objection however, is anchored on the latter piece of legislation as evidenced in the body of his application.

9. This court is therefore obliged to determine the preliminary objection before it before this matter can proceed any further.

Claim and Defence 10. The tenant contends that the landlord’s sole intention is to evict him. It argues that the landlord’s intention of raising the rent from KShs 15,210. 00 to KShs 27,560. 00 is illegal. It further contends that the said intended increment is unjustified in law.

11. The tenant’s further claims that it is a protected tenant, and that it has paid constant rent since October 2016. Also, that the tenant has issued no notice in the prescribed form.

12. The landlord has raised a preliminary objection against the tenants claim. The landlord contends that the applicant is neither a protected tenant nor it’s tenant. The landlord argues that there is no existing tenancy agreement between them. It argues further that the lease between them expired on February 28, 2022.

13. The landlord asserts that since the expiry of the said lease, the tenant has not made any rent payments to the landlord and as such, a controlled tenancy has not crystalized. It’s their case, that the reference as filed therefore offends the provisions of the Landlord and Tenant (Shops, Hotels, and Catering Establishment) Act.

Jurisdiction 14. The jurisdiction of the honourable tribunal is in dispute.

List of Issues for Determination 15. The tribunal shall proceed on the sole issue ofa.Whether there is a tenancy relationship between the parties

Analysis and Findings Whether there is a tenancy relationship between the parties 16. The landlord has argued that there is no tenancy agreement between the landlord and the tenant herein. The landlord has explained that vide a lease agreement dated March 1, 2016, the lease was created for a term of 6 years. The terms of the lease would be renewable upon expiry of the lease as espoused in clause 2 of the said lease document.

17. Additionally, the rent payable was to be made quarterly. The tenancy between them, had no termination clause by reason other than by breach. The landlord contends therefore, that the said tenancy expired on February 28, 2022.

18. The landlord further asserts that indeed the tenant refused to renew the lease. When the tenant prompted them to renew the same, the tenant proceeded to invoke the jurisdiction of this tribunal. It is the landlord’s case that the tenants are illegal occupants of the said premises.

19. Based on the forgoing, the landlord argues that the proceedings before the tribunal are erroneously filed, and that the jurisdiction of the honorable tribunal has been improperly invoked. The tribunal therefore is bereft of the jurisdiction.

20. Section 2 of the Landlord and Tenant (Shops, Hotels, and Catering Establishment) Actdefines a controlled tenancy to mean; a tenancy of a shop, hotel or catering establishment-a.which has not been reduced into writing; orb.which has been reduced into writing and which-i.is for a period not exceeding five years; orii.contains provision for termination, otherwise than for breach of covenant, within five years from the commencement thereof; oriii.relates to premises of a class specified under subsection (2) of this section

21. The parties have produced a written lease agreement for a term of six years. The said lease agreement expired sometimes in February 2022. It appears also that the tenant has only paid the last quarterly rent of Ksh 87,097. 44 of November 3, 2011. This is the final rent for the final year of the term of the tenancy. This rent is paid pursuant to a lease agreement that is not under the ambit of theLandlord and Tenant (Shops, Hotels, and Catering Establishment) Act.

22. This tribunal notes that it will not be dragged into determining disputes that are clearly out of its jurisdiction. Indeed, upon the expiry of the six-year lease, the parties were entitled to renew it. It is therefore unacceptable that the tenants sought to move this tribunal to circumvent this provision. A controlled tenancy would only arise if the dictates of section 2 of the Act are met.

23. The dispute before me arose from a written agreement. The agreement was for a period of 6 years. The agreement had no termination clause other than by breach. The agreement therefore did not give rise to a controlled tenancy. Accordingly, the preliminary point of law succeeds.

Order 24For the reasons given above I order as follows that;a.The landlord’s preliminary point of law dated June 9, 2022 is upheld.b.The tenant’s refence dated May 20, 2022 is dismissed with costs assessed at Kenya Shillings 20,000. c.The tenant to pay mesne profits at rent rates from February 2022 to end of October 2022. d.The tenant to vacate on or before October 31, 2022. e.Landlord at liberty to evict the tenant thereafter.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON A. MUMA THIS 12TH DAY OF OCTOBER,2022 IN THE PRESENCE OF KENZI FOR TENANT AND NDAMBUKI FOR THE LANDLORDHON A. MUMAVICE CHAIRBUSINESS PREMISES RENT TRIBUNAL