[2021] KEBPRT 428 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 106 OF 2021 (NAIROBI)

ELI TALIB ALI ABDEL CADIR ELAGAB &OMAR MOTORS LIMITED........................TENANT

VERSUS

CATHERINE NJERI NGUNJIRI..........................................................................................LANDLORD

RULING

The Tenant/Applicant by his notice of motion dated 2nd February 2021 seeks the following prayers;

1. Spent.

2. That the Respondent/Landlord, their agents and Chador Auctioneers be and are hereby restrained from levying distress and/or removing the proclaimed goods from the Tenant’s business premises.

3. That the Respondent/Landlord, her servants, agents and/or employees Cash Crop Auctioneers be and are hereby prohibited forthwith by this court from unlawfully intercepting etc, or in any manner whatsoever interfering with the Applicant’s quiet occupation and lawful enjoyment of suit premises at Ruiru.

4. That the OCS Ruiru Police Station does assist in compliance with the court orders.

5. Costs.

The application is based on the grounds;

1. That the Respondent’s actions of sending Chador Auctioneers and threatening the Tenants with attachment and eviction is occasioning untold hardship to the Applicant’s and their clientele.

2. That the distress is a sham and ‘alter’ violation of the provisions of Cap 301 Laws of Kenya and is only meant to harass and evict the Tenants by using ‘othordox’ means.

3. The Applicants are protected Tenants.

The Applicants’ supporting affidavit may be summarized in the following manner.

1. That the Applicant is the Respondent’s Tenant on the premises known as Ruiru East/Block 1/23 at a monthly rent of Kshs 180,000/-. (The lease agreement is annexed to the affidavit of the Applicant).

2. That the Tenant has spent over Kshs 31,000,000/- in constructing the suit premises which was “bare” land when he took up the lease.

3. That the Tenant has ran into arrears of rent due to the covid 19 pandemic and government closure.

4. That the Respondent has contrary to the provisions of Cap 301 sent Chador Auctioneers, who have proclaimed the Applicant’s goods and threatened to levy distress with the sole intention to evict the Applicant.

5. That the proclamation and levy for distress is without notice.

6. That the Respondent has never communicated to the Applicant in the cost of construction and repairs.

7. That the operations of the Applicant will be ground to a halt if the proclaimed goods are removed and carried by auctioneers.

The application is opposed. The Respondent has sworn replying affidavit which I proceed to summarize as follows;

1. That the Applicant/Tenant took possession of the premises on “As is where is” basis and the Respondent was under no obligation to provide the provide the premises in line with the needs of the Applicant.

2. That the payment for rent is as tabulated under paragraph 5 of the Respondent’s affidavit.

3. That other than the first quarter of rent for the period of October 2018 – December 2018, the Applicant has only paid Kshs 990,000/-.

4. That the Applicant is indebted to the Respondent in the sum of Kshs 4,091,000/- (for the period January 2019 to February 2021, the particulars are provided at paragraph 7 of the Respondent’s affidavit).

5. That demand for payment of the rent has been finally made.

6. That a notice to terminate the tenancy has already issued against the Tenant.

7. That the Applicant’s postdated cheques have been previously dishonoured.

8. That indeed the Landlord has instructed Chador Auctioneers to distress for rent against the Applicant.

The Applicant’s further affidavit sworn on 8th March 2021 may also be summarized as follows;

1. That the Tenant/Applicant filed the instant application on the basis of disputed rent arrears.

2. That the Respondent has not compensated the Applicant for the cost of construction and is seeking the Tenant’s eviction before the Tenant can recover his money.

3. That due to the effects of the covid-19 pandemic, the Tenant has fallen in arrears of rent amounting to Kshs 600,000/- which he is making efforts to clear.

4. That due to his improvements, the suit premises now stands on fully serviced land with a high end club and car wash.

The parties herein have filed written submissions which I also summarize here below;

The Tenant’s/Applicant’s submissions are to the effect;

1. That the lease agreement herein contains a termination clause which puts the tenancy within the meaning of a controlled tenancy.

2. That the Landlord’s termination letter does not comply with section 4 of Cap 301.

3. That the Tenant is a protected Tenant by dent of clause 5(d) of the lease agreement entered into between the parties herein.

4. That for the Landlord herein to distress for rent, he must first and foremost seek the permission of the Tribunal as demanded by law.

5. That a distress for rent without the persuasion of the court is a nullity, in support of this contention, the Applicant has quoted the case of Laxmishanker Kanji Vyas Vs Firdaus Salim & Another [2014] eKLR and Section 12(1) (h) of Cap 301.

6. The Applicant has complied with all the terms of the lease agreement and paid his rent timely save for the periods when he has requested for waver of rent owing to the closure of bars and restaurants.

7. That the court ought to take judicial notice of the covid-19 pandemic and of the presidential order on closure of bars and restaurants.

8. That the Respondent cannot purport to terminate the lease by an illegal distress of rent and in contravention of clause 5(d) of the lease agreement dated 16th July 2018.

9. That the procedure for the distress for rent is provided for under section 12(e) and (h) of Cap 301 and the Respondent has disregarded the provisions of the said law.

10. That the Respondent has also contravened section 4(5) of Cap 301 by failing to provide any cogent reasons why he is seeking to terminate the lease.

11. Notably, authorities cited in the Tenant’s submissions at page 4 have not been provided.

The Respondent’s submissions are to the effect;

1. That the Respondent has filed a response to the reference and a replying affidavit whose contents are set out under paragraph 2 of the submissions.

2. That the Applicant has not attached any documentary evidence to back his allegations on the expenditure of Kshs 31,000,000 in developing the premises.

3. Clause 5(e) of the lease agreement contains a provision that empowers either party to terminate the lease under the condition provided thereto. The Landlord/Respondent has invoked the said clause.

4. The Respondent has clearly demonstrated that the Applicant owes rent arrears amounting to Kshs 4,091,000/- and that therefore the only remedy available to her was to distress for rent against the Applicant.

5. That there is no evidence showing any attempts by the Applicant to offset the rent owed; demand letters to that effect have been ignored by the Applicant.

6. That the question the Tribunal showed grapple with is whether the Tenant is entitled to use the Respondent’s premises without paying rent.

7. That the Respondent is entitled to distress for rent under section 3 of the Distress for Rent Act.

8. That a Landlord’s right to receive rent need not be restricted by the sanction of the court. Reliance has been placed on the Law of John Nthumbi Kamwithi Vs Asha Akumu Juma [2015] eKLR for the proposition.

9. That the court sanction is only required where the suit premises are locked.

10. That the Tribunal has to balance the rights of the Tenant against those of the Landlord.

11. That the application has not approached the court with clean hands and is therefore not deserving of any equitable relief.

12. That clause 5(a) and (b) of the lease agreement entered into between the parties waives the sanction of the court. It expressly provides for a right of re-entry by the Landlord. the terms in the lease are mutual and bending upon the parties herein.

13. That the clause 5(b) and (c)only provided for a written notice and not any form of notice. The Applicant has nonetheless been issued with a termination notice dated 18th September 2019 effective 18th December 2019.

14. That the authority cited by the Tenant is not applicable in the circumstances of the instant case; neither does the Rent Restriction Act.

15. The Distress for Rent Act 2012 only provides for the powers of the Tribunal to give authority to distress for rent but does not obligate the Landlord to seek permission of the court.

Following from the above narration of the respective party’s cases and submissions, the following issues, in my humble view, command themselves for resolution;

1. Whether the tenancy between the parties herein is a controlled tenancy and therefore subject to the provisions of Cap 301 of the Laws of Kenya.

2. Whether the Landlord’s “letter” terminating the tenancy between the parties herein is a valid notice under section 4(2) of Cap 301.

3. Whether the Respondent herein required the leave of the Tribunal to distress for rent before commencing the distress.

4. Whether the Applicant is entitled to the orders sought in his application dated 2nd February 2021.

5. In view of the findings/conclusions arrived at above, what is the fate of the Tenant’s reference dated/filed on 2nd February 2021?

On Issue No 1:

The tenancy between the parties herein is based on the lease agreement dated 16th July 2018. The lease is expressed to be for the period of six years commencing 2nd August 2018. It sets out the agreed terms between the parties.

Paragraph 5(d) of the said lease is in the following terms;

‘Either party to this agreement desires to terminate this agreement before the expiry of the term shall give the other party three (3) calendar months’ notice in writing of such intention to do so and shall until the time of such determination perform and observe all covenants and agreements contained herein.”

Section 2(1) of Cap 301 defines a controlled tenancy as a tenancy of a shop, hotel or catering establishment;

a. Which has not been reduced into writing or

b. Which has been reduced into writing and which;

i. Is for a period not exceeding five years or

ii. Contains provision for termination otherwise than for breach of covenant within five years from the commencement thereof or

iii. Relates to premises of a class specified under subsection (2) of this section.

Whereas the lease between the parties herein is for a period of six years and therefore clearly in excess of the five years provided for under section 2(1) (a) above, clause 5(d)of the same lease provides a clause for termination otherwise than for breach of covenant within five years from the date of commencement.

I have no difficulty therefore finding that the tenancy between the parties herein is a controlled tenancy under Cap 301 of the Laws of Kenya, and therefore subject to the provisions of the said Act.

On Issue No 2:

The Applicant is not clear in his affidavit and submissions what letter he is referring to as the termination letter. None is exhibited in his affidavit. I have however noticed that there is a demand letter by counsel for the Respondent dated 18th September 2019. The same demands rent amounting to Kshs 2,096,000/- and threatens auctioneers to levy distress for the outstanding rent. It also enclosed a notice of termination of tenancy dated 18th September 2019. The letter does not of itself seek to terminate the tenancy between the parties.

I have also seen the letter dated 8th October 2019,it makes a demand for the outstanding rent of Kshs 1,946,000 and further reminds the Applicant that the Respondent’s notice to terminate the tenancy dated 18th September 2019 still stands. It requires of the Tenant/Applicant to have vacated the demised premises on or before 17th December 2019.

The notice to terminate or alter terms of tenancy under Cap 301 is the one provided for under section 4(2) of the said Actwhich provides as follows;

“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.”

The prescribed form is the one found in form A of the schedule to the Act. The letters alluded to above, the ones dated 18th September 2019 and 8th October 2019do not therefore amount to the notice to terminate tenancy as envisaged under section 4(2) of Cap 301. I note at this juncture that the application and reference by the Applicant/Tenant do not concern themselves with the notice to terminate tenancy dated 18th September 2019. I have not been invited to determine the validity or otherwise of the notice to terminate and no arguments have been led in that regard. It is up to the parties to determine what to do with the said notice.

On Issue No 3:

The reference by the Tenant to the Tribunal expressed to be brought under section 12(4) of Cap 301is in the following terms;

“That the Landlord has unlawfully sent Chador Auctioneers who have proclaimed my goods of trade on disputed rent arrears contrary to provisions of Cap 301 Laws of Kenya. I pray to this court to interfere and I be given the necessary orders plus costs of the case.”

The thrust of the Tenant’s complaint is therefore the alleged illegal distress for rent by the Respondent. It is the Applicant’s case that the rent due is in dispute and therefore the Respondent cannot distress for rent.

The supporting affidavit sworn by the Applicant on 2nd February 2021 at paragraph 5 states that the proclamation is without any justifiable reason and illegal and without notice. The affidavit makes no mention of the disputed rent nor does it state the nature and extent of the disputed rent.

The Tenant’s further affidavit sworn on 8th March 2021 at paragraph 6 makes an admission that the Tenant is in rent arrears amounting to Kshs 600,000/-. It is instructive to note that the Tenant’s further affidavit was made in response to the Respondent’s replying affidavit sworn on 22nd February 2021. The Respondent’s said affidavit at paragraph 6 gave details of the varying amounts paid as rent to the Respondent, excluding the first quarter running from October 2018 to December 2018. The total sum paid is indicated to be Kshs 990,000/-.

At paragraph 7 of the Respondent’s affidavit, the details of the rent owing as at the date of swearing are provided. The sum indicated as rent outstanding is Kshs 4,091,000/-. The Applicant has not made any comments on these averments by the Landlord/Respondent even as he was granted leave to file a further affidavit. The Tenant has further not disputed the sums demanded in the Landlord’s letters dated 18th September 2019 and 8th October 2019. I do find that even if there is a dispute as to the rent owing and which the Tenant has not clearly established, the sum of Kshs 600,000/- admitted as rent arrears is outstanding.

Other than allegation on disputed rent, the Applicant’s other contention is that the Respondent was bound under section 12(1) (h) and section 12 (e) of Cap 301 to seek the permission/leave of this Tribunal to levy the distress. But is this the legal position?

Section 12(1) (e) of Cap 301 grants the Tribunal power to make orders upon such terms and conditions as it thinks fit for the recovery of possession and for the payment of arrears of rent and mesne profits, which orders may be applicable to any person whether or not he is a Tenant being at any material time in occupation of the premises comprised in a controlled tenancy.

Section 12(1) (h) of Cap 301 grants the Tribunal power to permit the levy of distress for rent.

Clearly none of the two sections of the law cited above requires a Landlord who is owed rent by a Tenant to seek leave of the Tribunal to distress for the owed rent arrears. If the legislative had intended that the Landlords of premises owed rent by their Tenant’s ought to seek the leave of the Tribunal so to do, nothing would have been easier than to expressly state so.

In the case of John Nthungi Kamwithi vs Asha Akumu Juma, exhibit HCCA No 7 of 2016, the court while addressing the issue of whether or not the leave to levy for distress is a requirement under the law delivered itself at paragraph 33 and 34 and 35 as follows;

33. It follows that the Appellant had a right to levy distress for the recovery of the rent owed. The issue arising is whether he was required to seek permission from the Business Tribunal. The provision relied on by the Respondent provides for the various powers of the Tribunal.

34. I have perused the Act but I find no provision to the effect that such permission be sought.

35. I find that the Appellant had no obligation to seek permission from the Tribunal to levy distress. The fact that the tenancy is controlled does not mean that the Landlord applies to the Tribunal to levy distress. Distress is a right the Landlord is entitled to for recovery of rent. If the Tenant chooses, he could file a reference to the Tribunal for orders in objection of the distress.

In answer to this issue, I do find, therefore, that no leave/permission is necessary before a Landlord exercises his right to levy distress for rent.

On Issue No 4

Like I have observed hereinabove, the dispute here concerns the alleged illegal distress for rent by the Respondent. It does not concern termination of the tenancy and therefore the validity of the notice to terminate is not an issue. Consequently, the provisions of section 4 of Cap 301 as far as they relate to the notice to terminate or alter terms of the tenancy are inapplicable. It cannot be said that a distress for rent is the same thing as termination of tenancy.

I have already pointed out that the Respondent did not require the permission of the Tribunal to levy distress for rent. When, then, does the right to levy distress accrue to a Landlord?

Section 3 of the Distress for Rent Act [2012] Cap 293 of the Laws of Kenya provides;

“Subject to the provisions of this Act and any other written law, any person having any rent or rent service in arrear 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.”

In the case of Peter Nthenge Vs Daniel Itumo and Another NBI HCCC No 1242 of 1974 quoted in the case of John Nthumbi Kamwehi (supra), the court held;

“The right of a Landlord to distrain for arrears of rent arises at common law and needs not be expressly reserved. It enables the Landlord to secure the payment of rent by seizing goods and chattls found upon the premises in respect of which the rent or obligations are due. Formerly, the right to distress was a right of some importance to the Landlord and was often exercised but it has not largely fallen into disuse.”

In the John Nthumbi Kamwithi case, the Justice on this respect delivered herself as follows at paragraph 32;

“This right serves the purpose of a remedy for the Landlord to recover rent that may be in arrears. For this right to be enforced, there must be rent in arrears. In this case, the Appellant’s evidence was that at the time he issued the notice dated 22nd January 2009, the Respondent owed Kshs 24,000/- which was not disputed. By the time the distress was levied, the rent owing was over Kshs 40,000/-.”

I had earlier observed in this ruling that the Tenant/Applicant did not specifically dispute the tabulation of rent arrears by the Respondent. The Appliant in his further affidavit admits to be in rent arrears amounting to Kshs 600,000/-. Even going by the stated rent of Kshs 180,000/- per month, the admission by the Tenant would mean that he is in rent arrears for three months. The Landlord’s right to distress for rent in the present situation is therefore ripe and …………….. The right has crystallized and there is therefore nothing illegal in the Landlord’s enforcement of the same.

The Appellant has not established any illegality or irregularity in the proclamation by Chador Auctioneers, he has not demonstrated that he does not have any rent arrears, indeed the contrary is true.

The Applicant, in his further affidavit also seeks to raise the issue of compensation for the construction costs. The Applicant states that the Landlady is making all efforts to evict it before it has recovered money spent on the construction. Again, I hasten to point out that the complaint by the Applicant concerns the alleged, illegal proclamation by the Respondent’s agents. It has nothing to do with eviction. The issue of the compensation to the Applicant for improvements made upon the premises are also not subject to the dispute brought before the Tribunal by the Applicant. Suffice to say that issues of compensation for the developments will have to be dealt with in the context of the lease agreement between the parties.

In the final analysis, I do not find any merit on the Tenant’s application dated 2nd February 2021and the same is hereby dismissed with costs to the Landlord/Respondent.

On issue No 5

Consequently, I do order that the Tenant’s reference be fixed for hearing in the usual manner.

CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

Court:

RULING DATED, SIGNED AND DELIVERED THIS 18TH DAY OF JUNE 2021 in the presence ofIrungu holding brief for Miss Ngunjiri for the Landlord/Respondent and Mr Kariu for the Tenant/Applicant.

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL