[2022] KEBPRT 829 (KLR)

Jaki Wholesalers Limited v Omari (Tribunal Case E683 of 2022) [2022] KEBPRT 829 (KLR) (Civ) (14 November 2022) (Ruling)

Neutral citation: [2022] KEBPRT 829 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E683 of 2022

Gakuhi Chege, Vice Chair

November 14, 2022

Between

Jaki Wholesalers Limited

Applicant

and

Twaha Kuria Omari

Respondent

Ruling

1. The tenant filed a reference dated July 28, 2022 under section 12(4) of Cap 301, laws of Kenya complaining that the landlord purported to alter terms of the lease by increasing the rent payable arbitrarily from Kshs 30,000/- to Kshs250,000/- without leave of the tribunal.

2. The tenant further complains that the landlord purported to issue a notice to vacate in a form not recognized by Cap 301 of the laws of Kenya and further purported to evict it from the rental premises even after receiving advance rent for more than one month after the period the lease lapsed.

3. The tenant further complains that the landlord owes it a sum of Kshs 1,288,260/- on account of renovations undertaken on the rental premises with his consent and had refused to keep a rent book as required by law.

4. Through a motion of even date, the tenant moved this tribunal seeking for temporary restraining orders of injunction against the landlord from evicting or interfering with its use of the business premises located on plot no 329, Naivasha road, Kawangware pending hearing and determination of the application and assessment of rent by this Tribunal.

5. Similar orders are sought pending hearing of the reference and determination thereof. The application is supported by the affidavit of Joseph Mwangi who is a director of the tenant on the authority marked ‘JM-1’.

6. The parties entered into a lease agreement dated August 4, 2017 for a period of 5 years in respect of the suit premises with effect from August 1, 2017 at a monthly rent of Kshs30,000/-.

7. The tenant was allowed to recover the cost of constructing extensions on the demised premises from the monthly rent at a rate of Kshs 10,000/- per month until payment in full.

8. The tenant deposes that it was mutually agreed that if the tenant will not have recovered the cost of improvement when the lease lapses, the lease would be renewed automatically pending full recovery of the renovation costs.

9. According to the tenant, there was an implied term that the lease agreement will stand extended automatically until the tenant recovers full cost of the improvements.

10. It is deposed that the tenant incurred a total of Kshs2,068,260/- to undertake renovations and extensions of the rental premises and that it had routinely paid the agreed monthly rent for the entire period and deducted Kshs10,000/- as provided in the lease to be applied towards the cost of the renovations. As a result, the tenant had recovered Kshs 780,000/- leaving a balance of Kshs 1,288,260/-.

11. It is the tenant’s case that the lease cannot terminate until it fully recovers the total cost of renovations and if the landlord intends to prematurely terminate the same, he should refund the amount owed on account thereof.

12. The landlord wrote to the tenant on July 2, 2022 advising it to move out of the premises on or before July 31, 2022 in relaiance on the lease vide annexure ‘JM-3’. In the said letter, the landlord reviews the rent payable from Kshs 30,000/- to Kshs 150,000/- which is unreasonable and outrageous according to the tenant.

13. The landlord also wrote a letter dated July 26, 2022 through his advocates demanding that the tenant vacates the suit premises before July 31, 2022. The letter is marked ‘JM-4’.

14. The tenant deposes that the landlord has already collected rent for the months of August 2022 and part of rent for the month of September 2022 which was an admission that the lease did not lapse on July 31, 2022.

15. The rent payable according to the tenant cannot be altered without the landlord obtaining leave of the tribunal and was unconscionable at the very least.

16. The tenant deposes that he has invested heavily in the business and stood to suffer massive losses if it was evicted from the premises having obtained trading licenses for the entire year at high costs.

17. It was therefore in the greater interest of justice that the orders sought be granted as the landlord will not suffer any prejudice that cannot be remedied by way of damages.

18. Interim orders were given in favour of the tenant on August 1, 2022 pending hearing of the application inter-partes on September 2, 2022.

19. The application is opposed through the replying affidavit of the respondent sworn on August 29, 2022 wherein it is admitted that the two parties herein entered into a lease agreement marked ‘TK01’.

20. According to clause 3. 1.1 of the lease agreement, the lessee was given consent for extensions and the agreement expressly stated as follows:-“The parties further agree that the lessee shall recover the cost of constructing the extensions to the property from the monthly rent at a rate ofKshs 10,000/- until payment in full”.

21. The landlord therefore deposes that the lessee cannot purport to recover the cost for renovation of the premises as it was not in the agreement.

22. The lease agreement did not indicate the amount to be used for extension of the premises and it is deposed that the applicant ought to have known and done his calculations to ensure that he would recover its costs by the end of the leasehold.

23. The respondent denies that he prematurely terminated the lease which was for 5 years and deposes that he issued the applicant 30 days notice before expiry thereof marked ‘TK0-2’ dated July 2, 2022.

24. The tenant agreed to vacate the premises subject to payment of Kshs 1,300,000/- being the balance on building the extension and renovations.

25. The landlord deposes that he and members of his family were denied access to the premises and he could not confirm existence of the extension. He also states that the lease agreement was signed in a bar when he was fully intoxicated.

26. The landlord denies receiving rent for August and September 2022 which does not reflect on the book kept by his wife as per annexure marked ‘TK05’.

27. The respondent contends that he stands to suffer prejudice given that the suit premises is family property under active succession and he risks being termed as an intermeddler if he does not deliver vacant possession.

28. The tenant filed a supplementary affidavit sworn on October 3, 2022 stating that his claim is limited to the cost of the extensions on the rental premise and not any other improvements and any eviction shall breach the lease agreement which allowed full recovery of cost of extension from monthly rent.

29. According to the tenant, the cost of extension at the current valuation stands at Kshs 2,200,000/- as per valuation report marked ‘JM-1’.

30. It is suggested by the applicant that the respondent does his own independent assessment of cost of extension or that this tribunal does so. The applicant states that it was ready to move out of the premises subject to reimbursement of extension costs.

31. The tenant denies having blocked the respondent from visiting the premises for inspection with prior notice. He denies that the lease was signed in a bar and deposes that it was executed at an advocates office. The respondent was not drunk when he did so.

32. In any event, the respondent has never questioned the lease for the last five (5) years and has routinely collected rent from the applicant for the entire period without raising any issue.

33. On the issue of rent, the applicant contends that the landlord has failed to keep a rent book for the rent paid to challenge his averment of rent paid after expiry of lease.

34. The matter was directed to be canvased by way of written submissions and both the applicant’s and the Respondent’s counsel complied. I shall refer to the submissions later in this ruling.

35. The issues for determination herein are:-a.Whether the tenant/applicant is entitled to the reliefs sought in the reference and application dated July 28, 2022. b.Who is liable to pay costs of the suit?

36. The relationship between the two parties herein is based on the lease dated August 4, 2017 which was for a period of 5 years from August 1, 2017 to July 31, 2022 or the date on which the leasee’s rights under clause 2 are determined under clause 2 in accordance with clause 4. 1.

37. Clause 3. 1.1 of the lease provides as follows:-“The lease charges of Kenya shillings thirty thousand (30,000/-) per month, the first payment to be made on or before the 5th day of each month. At the inception of this lease period, the lease shall pay a sum ofKshs 30,000/- being the rent for the first month. The parties further agree that the lessee shall recover the cost of constructing the extensions to the property from the monthly rent at a rate of Kshs 10,000/- until payment in full”.

38. The dispute herein emanates from the foregoing clause as the tenant claims to have constructed the extensions alluded to therein at a cost of Kshs 2,200,000/- as per annexure ‘JM-1’ being valuation report by adept Realtors Ltd dated September 16, 2022. The improvements comprise of is a warehouse with a total gross built up area of approximately 802sq ft and is an extension to the rear of a front shop block.

39. Although the lease agreement provides for the said extension, no value of the proposed construction is assigned therein and the landlord has not availed any independent valuation report in respect thereof.

40. According to the landlord, the tenant has not established the principles for the grant of an injunction. It is to be noted that the lease agreement does not state what was to happen in the event that the amount used by the tenant in building the extension was not fully recovered by the end of the lease.

41. The application before me is for temporary injunction against the landlord from evicting or interfering with the tenant’s use and occupation of its business premises located on plot no 329 along Naivasha road, Kawangware. The applicant further seeks for temporary injunction pending assessment of rent by the tribunal or further orders.

42. It is important to note that the tenant’s lease expired on July 31, 2022 having been for five (5) years from August 1, 2017. No extension of the said lease has been agreed upon by the parties and there is no specific prayer seeking for compensation for improvements effected by the tenant on the suit premises. This tribunal cannot extend the lease through issuance of a temporary injunction.

43. In that regard, I wish to rely on the decision of the court of appeal in Kasturi Limited v Nyeri Wholesalers Limited(2014) eKLR at page 4/5 where it was held as follows:-“It is plain that the tenancy agreement between the parties expired on April 14, 2009 and has never been renewed’ it is also plain that the appellant received a notice for non-renewal of the tenancy. We concur with the learned judge that the appellant has no triable issue in the counter-claim for vacant possession. It is the duty of the courts to ensure that no individual is prevented from taking possession and or enjoying their property. A tenant cannot impose or force him/herself/itself on a landlord. In the instant case, when the lease between the parties expired, it was incumbent upon the appellant to give vacant possession”.

44. The tenant contends that it has not fully recovered a sum of Kshs 1,300,000/- as balance of the cost of improvement of the suit premises. The lease agreement does not provide that in the event of the tenant not recovering such costs by the date of expiry of the lease, the same would be paid by the landlord directly or through extension of the lease. By seeking for an order of injunction to force the said payment which is not covered by the agreement, the tenant is seeking that this tribunal makes a new contract between it and the landlord. The duty for this court is to interpreter contracts made by parties and not to make new contracts for them (see National Bank of Kenya Ltd v Pipeplastic Samkolit (k) Ltd & Another (2001) eKLR at page 4/5).

45. In this regard, I also rely on the time honoured decision in the case of Jiwaji& others v Jiwaji &another(1968) EA 547 at page 554 wherein Sir Charles Newbold ) P had the following to state on the same issue:-“But where there is no ambiguity in an agreement it must be construed according to the clear words actually used by parties, and it would be quite wrong to adopt a different construction or to imply a term to the contrary effect. As lord Halsbury, LC said in Smith v cooke (1891) AC at p 299):-.“I must say I for one have always protested against endeavoring to construe an instrument contrary to what the parties would or might have intended when they began to frame their instrument.“I think I am not entitled to put into the instrument something which I do not find there in order to satisfy an intention which is only reasonable if I presume what their intentions were. I must find out their intentions by the instrument they have executed, and if I cannot find a suggested intention by the terms of the instrument which they have executed, I must assume that their intentions were only such as their deed discloses”.

46. Guided by the said decision, I am unable to find that the tenant is entitled to compensation for any extra amount apart from what was agreed upon in the lease agreement as the parties could have agreed so if they so desired at the point of executing the agreement. As such, the claim cannot be the basis of an order for injunction.

47. In regard to the prayer for assessment of rent, I have no notice before me for reassessment of rent issued under section 4(3) of Cap 301, laws of Kenya by the tenant in respect of the expired lease. This court cannot therefore undertake the exercise without its jurisdiction being properly invoked. In any case, I doubt that such an issue can arise after expiry of the lease subject matter of the case. I therefore decline such invitation.

48. It should by now be clear that I am not convinced that the tenant is entitled to the injunction sought herein or to compensation claimed in the reference under section 12(4) of Cap 301, laws of Kenya. It has miserably failed to bring itself within the principles of granting a temporary injunction settled in the case of Giella v Cassman Brown & Co Ltd (1973) EA 358. The interim orders earlier given in this matter are therefore subject to being set aside on account of the foregoing reasoning.

49. Costs of any action before the tribunal are discretionary under section 12(k) of Cap 301, laws of Kenya and unless for good reasons otherwise ordered always follow the event. I have no reason to deny the respondent costs.

50. In conclusion, the final orders which commend to me based on section 12(1) (4) of Cap 301, are as follows:-a.The tenant’s application dated July 28, 2022 and the reference of even date are dismissed with costs to the landlord.b.The tenant is not entitled to the sum of Kshs1,288,260/- claimed in the reference on account of renovations and improvements undertaken on the rental premises in view of the lease agreement dated August 4, 2017. c.The landlord’s costs of the case are assessed at Kshs 30,000/- against the tenant.It is so ordered.

RULING DATED, SIGNED & DELIVERED VIRTUALLY THIS 14TH DAY OF NOVEMBER 2022. HON. GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALIn the absence of the parties: