[2021] KEBPRT 161 (KLR)

REPUBLIC OF KENYA

IN THE BUSINESS PREMISES RENT TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 991 OF 2020

DIANA MAISIE OSANO ODERO T/A

ODERO AND ASSOCIATES ADVOCATES.....................................TENANT/APPLICANT

-VERSUS-

NATIONAL HOUSING CORPORTION.........................LANDLORD/ 1ST RESPONDENT

KEYSIAN AUCTIONEERS..........................................AUCTIONEER/2ND RESPONDENT

RULING

A. Parties and Their Representatives

1. The Tenant/Applicant, Diana Maisie Osano Odero T/A Odero and Associates Advocates(hereinafter referred to as the “Tenant”)

2. The Firm of Odero & Associates Advocates represent the Tenant/Applicant. (odero.associates@gmail.com )

3. The Landlord/ 1st Respondent, NATIONAL HOUSING CORPORATION (hereinafter referred to as the “Landlord”) is the registered owner and Landlord of the Premises rented out to the Tenant/Applicant.

4. The 2nd RespondentKEYSIAN AUCTIONEERS (hereinafter referred to as “Auctioneer”) was authorized by the Landlord/1st Respondent to act for them in distressing for rent from the Tenant/Applicant.

5. The Firm of Kariuki & Kayika Advocates represent the Landlord.

( info@kariyukikayika.co.ke)

B. The Background of The Dispute

6. The Tenant has been in occupation of the Landlord’s premises located at NHC House on 2nd Floor along Aga Khan Walk in Nairobi since the year 2014. The Tenancy offer was made through a letter of offer dated 31st March 2014, and which was executed by the Tenant. The commencement date of the tenancy in the letter of offer was 15th April 2014. The Tenant avers that on the commencement date, the premises were not tenantable for use, and that the Landlord failed/ neglected to repair the premises after the Tenant made several written requests to the Landlord. The Tenant through its own undertaking made some repairs to the premises and entered the premises on16th June 2014.

7. Subsequently, the Landlord issued the Tenant with demand for rent for the quarter commencing in July 2014. The Tenant in response to the demand stated that they entered the premises two months after the commencement date, and incurred their own expenses in repairing the premises, and therefore rent from the previous quarter had been partially used, and ought to be carried forward to the next quarter. The Tenant also averred that during the tenancy period, the Landlord increased the service charge unlawfully.

8. On 4th December 2020, the Landlord authorized the 2nd Defendant, Keysian Auctioneers to proclaim properties belonging to the Tenant in satisfaction of a total amount of KShs. 965, 051. 40which was claimed by the Landlord as rent arrears that accrued for the entire period of the tenancy, sinceApril 2014. The proclamation notice was to expire on18th December 2020.

9. On the14th December 2020the tenant moved this tribunal by way of reference dated14th December 2020and notice of motion under certificate of urgency filed on14th December 2020undersection 12(4) of the Landlords and Tenants (Shops, Hotels and Catering) Establishments Act Cap 301. The tenant was seeking amongst other orders that the Tribunal be pleased to restrain the respondents from either by themselves, or by their servants, employees, agents and/or assigns from removing , attaching, impounding and/or selling the plaintiff’s goods pending the hearing and determination of the application.

10. On 14th December 2020 the Tribunal gave orders restraining the respondents from either by themselves, or by their servants, employees, agents and/or assigns from removing, attaching, impounding and/or selling the plaintiff’s goods pending the hearing and determination of the application.

11. On 24th February 2021 The Landlord filed a Notice of Preliminary Objection dated 24th February 2021 on grounds that this Honourable Tribunal lacks the jurisdiction to hear and determine this matter based on the provisions of section 2(1) (a) of the Landlord Tenants (Shops, Hotels and Catering Establishments) Act Cap 301 Laws of Kenya.The Court directed that the same be dispensed with by way of submissions.

12. On 13th August 2021 the Tribunal issued a ruling on the Preliminary objection and gave orders that dismissed the same and ordered that the reference and notice of motion application be set down for hearing together.

C. Jurisdiction

13. The jurisdiction of this Tribunal is not in dispute

D. The Tenant’s Claim

14. The tenant filed a reference dated 14th December 2020 together with a Notice of Motion application under certificate of urgency and supporting affidavit dated 14th December 2020 which pleadings form the basis of this claim.

15. The Tenant also annexed several correspondences between them and the Landlord where they had raised complaints on the physical condition of the premises, the date of commencement of the tenancy relationship and error in the rent arrears claimed by the Landlord, and which correspondences were not responded to by the Landlord, and therefore this Honourable Tribunal had the jurisdiction to hear and determine the matter.

16. The tenant obtained restraining orders as against the landlord on 14th December 2020 and to date the Landlord is still restrained from either by themselves, or by their servants, employees, agents and/or assigns from removing, attaching, impounding and/or selling the plaintiff’s goods pending the hearing and determination of the application

E. Landlord’s Claim

17. The 1st Respondent filed a replying affidavit dated 6th January 2021 and sworn by the General Manager of the 1st Respondent’s Corporation as well as a further affidavit dated 24th February 2021.

18. The Respondent filed a preliminary objection on 24th February 2021 to which the Tribunal delivered a ruling on 13th August 2021.

19. Parties filed written submissions and the matter was fixed for ruling on 29th October 2021.

F. List of Issues for Determination

It is the contention of this Tribunal that the issue raised for determination is as follows;

a) Determination of the commencement date of the tenancy between the landlord and the tenant

b) Whether there are rent arrears owed to the landlord and if so how much?

G. Analysis and Determination

Determination of the commencement date of the tenancy between the landlord and the tenant

20. Having established as per the ruling delivered on13th August 2021with regards to the respondent’s preliminary objection that this Tribunal is clothed with jurisdiction, it is not in question that the relationship that exists between the landlord and the tenant is a controlled tenancy as per the provisions ofSection 2(a) of the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act CAP 301 Laws of Kenya.

21. The Tribunal also established in its ruling dated 13th August 2021 that the respondents in their replying had only annexed one letter of offer dated 31st March 2014 which had lapsed. Further the letter dated 1st April 2020 was not duly executed and could not be deemed a valid contract due to this. As a result, there was no valid written agreement between the parties.

22. In Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act CAP 301 Laws of Kenya, a tenancy is defined as:

“tenancy” means a tenancy created by a lease or underlease, by an agreement for a lease or underlease by a tenancy agreement or by operation of law, and includes a sub-tenancy but does not include any relationship between a mortgagor and mortgagee as such

23. In the case of Rogan-Kamper v Robert Grosvenor No. 2 [1977] eKLRit was stated that

“The actual tenancy created by possession and payment of rent is an unwritten tenancy, and is therefore controlled, because the definition of tenancy includes “tenancy agreements” and tenancies created by “operation of law”.

24. In this case the relationship between the landlord and the tenant qualifies as a tenancy created by operation of the law. This is by virtue of the fact that the nature and terms of the relationship have not been reduced into writing but have been provided for in law under section 2(1) (a) of the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act CAP 301 Laws of Kenya

25. From the case above it is also stated that this kind of a tenancy is created through the conduct of the parties by creating possession as well as payment of rent.

26. From the lapsed letter of offer dated 31st March 2014 the respondents had provided the date of commencement of the agreement as 15th April 2014 however the tenant in their supporting affidavit stated that at that time the premises were not tenantable and it was upon the 1st respondent to carry out the necessary repairs to make the premises tenantable

27. From the correspondences attached by the tenant in their application it is noteworthy that the tenant made efforts to inform the 1st respondent of the condition of the premises and the need for repairs of the same which the respondents have not disputed

28. The 1st respondent avers that the tenancy commenced on 15th April 2014 as per the letter of offer while the Tenant contends that the tenancy commenced when they took possession of the premises on 16th June 2014after conducting repairs to make the premises tenantable.

29. The element of possession and payment of rent are both essential in determining the commencement date of the tenancy. In this case the two requirements occurred at different times whereby the tenant made payment for the first quarter’s rent and service charge as well as security deposit legal cost deposit and VAT on 2nd April 2014 but did not move into the premises until 16th June 2014.

30. The tenant alleges that the aspect of the premises not being tenantable is what prevented them from taking possession of the premises on the agreed commencement date. The tenant in their letter to the 1st respondent dated 21st October 2014 informed the Respondent of the necessary repairs to the floor as well as requested for authority to undertake the repairs after which the amounts that they would incur would be offset from the rent.

31. It is evident that failure by the landlord to carry out the necessary repairs is what delayed the entry of the tenant into the premises.as a result it is the contention of this Tribunal that the commencement should be from the time when the tenant took possession of the premises which was 16th June 2014.

32. Any rental obligations owed to the landlord should be deemed to have started accruing from the said date and not from the commencement date provided in the letter of offer, 15th April 2014.

Whether the service charge and rent by the landlord was lawful?

33. On18th June 2020the 1st Respondent wrote a letter to the tenant informing them that they had conducted an audit of the service charge for the years ended30th June 2016and30th June 2017and from the report the tenant had to payKshs. 88,241which amount was debited to the account of each tenant. The amount was to be paid with effect from1st July 2020.

34. In the tenants written submissions they also state that they received an invoice in August 2020 with the words,“Gross Additional Rent 200,202/20 VAT on Add Rent 24,850/20”to which they responded to through the annexed letter dated 26th August 2020 and informed the landlord that the increase had no basis in law.

35. Section 4 (2) of the Landlords and Tenants (Shops, Hotels and Catering) Establishments Act Cap 301 Laws of Kenyaprovides that

A landlord who wishes to terminate a controlled tenancy, or to alter, to the detriment of the tenant, any term or condition in, or right or service enjoyed by the tenant under, such a tenancy, shall give notice in that behalf to the tenant in the prescribed form.

36. By requiring the tenant to pay an increased amount on the usual service charge as well as increasing the rent the landlord was altering the terms of the tenancy to the detriment of the tenantas per the provisions of section 4(2) of the Landlords and Tenants (Shops, Hotels and Catering) Establishments Act Cap 301 Laws of Kenya. The Act requires that the landlord send a notice to the tenant before making such alterations.

37. Based on the foregoing, I find that the alterations in the rent and service charge amountsdid not meet the requirements under the Act since they required the tenant to comply within less than the stipulated period of two months.

H.Orders

a) The upshot is that the tenant’s reference dated14th December 2020and application dated14th December 2020are upheld under the following terms;

b) Landlord to prepare a revised statement of accounts from the month ofJune 2014and notApril 2014up to the current quarter for any arrears owed at the normal agreed rent and service charge rates and issue the same to the tenant within 14 days.

c) Tenant to make a proposal in 7 days after receipt of the revised statement of accounts on how they intend to offset the arrears and landlord to respond in 7 days.

d) Matter to be mentioned in the next 30 days to make a finding on rent arrears and Instalments amount per month.

e) Tenant to keep paying rent at the rate ofKshs 131,040/-and service charge ofKshs. 40,320/-payable quarterly as per the agreement.in default of which the landlord is at liberty to distress.

f) Each party shall bear their own costs.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

RULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON P. MAY THIS 29TH DAY OF OCTOBER, 2021 IN THE ABSENCE OF THE PARTIES.

HON P. MAY

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL