[2021] KEBPRT 91 (KLR)

REPUBLIC OF KENYA

IN THE BUSINESS PREMISES RENT TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO. E492 OF 2021 (NAIROBI)

JULIUS WAINAINA MIIRA .................1ST RESPONDENT/TENANT

FLORENCE MWERU NDUNGU.........2ND RESPONDENT/TENANT

-VERSUS-

CHARLES MUNENE GATIMU...........1ST APPLICANT/LANDLORD

BEALINE AUCTIONEERS..........2ND APPLICANT/AUCTIONEERS

RULING

This matter coming up for ruling on the notice of preliminary objection filed by the applicants and dated 16th September 2021.

Parties and their Representatives

1. The 1st Applicant/Landlord CHARLES MUNENE GATIMU(hereinafter the “Landlord”) is the registered proprietor of all that piece of land known as L.R.NO. 209/2761/2 I.R. 6541/2 situate in Nairobi. Vide a lease dated 1st April 2017, the Landlord agreed to lease part of the property measuring approximately 4796 square feet (hereinafter the (“suit premises”) to the Tenants/Respondents.

2. The 2nd Applicant, BEALINE AUCTIONEERS(hereinafter the “Auctioneer”) is an Auctioneering firm which was authorized and instructed by the Landlord to act for him in distressing for rent from the Tenants/Respondents.

3. The Firm of H.T & Associates Advocates is on record for the Applicants. (Email:hnthim@gmail.com).

4. The Tenants/Respondents, JULIUS WAINAINA MIIRAandFLORENCE MWERU NDUNGU(hereinafter the “Tenants”) acquired possession and occupation of the suit premises after entering into a lease agreement dated 1st April 2017 with the 1st Applicant for a period of 5 years and 3 months. The Respondents carried the business of operating namely Club Hotspot.

5. The Firm of Wanja & Kirimi Advocates LLP is on record for the Tenants. (Email:kirimigituma@gmail.com)

The Background of the Dispute

6. On 1st April 2017, the Landlord and the Tenants entered into lease agreement in respect of the suit premises. The terms of the agreement were that the Tenant would occupy the suit premises for a period of 5 years and 3 months, commencing on 1st April 2017 to 1st July 2022, and an agreed rent as provided in the lease. The Tenants took possession of the suit premises and established their business.

7. On13th September 2021, the Tenants filed a reference before this Honourable Court on grounds that the Landlord had instructed Bealine Auctioneers, who broke into the suit premises and took away furniture and merchandise belonging to the Tenants. Further, that the Auctioneer has issued a notification of sale of the goods through a public auction scheduled for 16th September 2021. Lastly, that the Landlord had locked out the Tenants from accessing the premises with the intent of terminating the tenancy without any form of notice.

8. The aforementioned reference was accompanied by a notice of motion application brought under certificate of urgency and supported by an affidavit sworn by Florence Mweru Ndungu,the 2nd Applicant, and contained similar terms as specified in the Reference. On 14th September 2021, the Tenants’ application was considered and this Honourable Court issued the following orders inter alia:

i. A temporary injunction is hereby issued restraining the 2nd Respondent either by himself, their agents, servants and/or employees from seizing, disposing, selling, alienating and/or in any way interfering with the Tenant’s goods including offering them for sale or selling them by way of public auction scheduled for 16th September 2021 at Startruck investment pending hearing and determination of this application inter-partes.

ii. The Respondent/Landlord be and is hereby ordered to re-open the premises being Club Hotspot on the building erected on L.R.NO. 209/2761/2 I.R. 6541/2 in Nairobi and to allow the Tenants, their employees and/or agents unlimited access thereto and not to interfere with the Tenant’s business operations in any manner whatsoever pending hearing and determination of the application inter-partes.

9. Subsequently, on 16th September 2021, the Landlord filed an application under certificate of urgency, supported by an affidavit sworn by Charles Munene Gatimu. The Landlord averred that the Tenant had been in rent arrears and had refused and/or neglected to settle the outstanding rent.

10. In addition, the Landlord filed a notice of preliminary objection on the even date challenging the jurisdiction of this Honourable Court on grounds that the lease agreement between the parties was for a period of 5 years and 3 months and therefore ousted the jurisdiction of this Honourable Court.

11. This Honourable Court directed the parties file and serve written submissions in respect of the Landlord’s notice of preliminary objection and the matter was scheduled for ruling on 14th December 2021.

Jurisdiction

12. The jurisdiction of this Tribunal is disputed by the Landlord.

Issue for Determination

13. Having considered the parties’ pleadings, affidavits and submissions and having considered the relevant legal framework, the sole issue that falls for determination is: Whether this Honourable Court has jurisdiction to hear and determine this matter?

Landlord’s Submissions

14. In supporting the notice of preliminary objection, the Landlord placed reliance on the application and the supporting affidavit and further affidavit both sworn by the Charles Munene Gatimu and dated 16th September 2021 and 13th October 2021 respectively and written submissions dated 2nd November 2021.

15. The Landlord submitted that the lease agreement dated 1st April 2017 expressly provided that the tenancy shall be for a period of 5 years and 3 months, which term was binding upon the parties, and which provision ousted the jurisdiction of this Honourable Court.

16. The Landlord placed reliance on Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301 Laws of Kenya, and submitted that the tenancy relationship between the parties did not meet the threshold of a controlled tenancy as provided for in the Act.

Tenant’s Submissions

17. In opposing the notice of preliminary objection, the Tenant placed reliance on the supporting affidavit sworn by Florence Mweru Ndungu and dated 13th September 2021and written submissions dated 8th November 2021.

18. The Tenants opposed the notice of preliminary objection on grounds that it does not raise a pure point of law. According to the Tenants, a pure point of law cannot be raised if any fact in the pleadings has to be ascertained.

19. The Tenants further submitted that the Landlord unilaterally, through his conduct and actions determined the period of the Lease to a period of four years and six months when he invoked clause BB of the lease agreement which permitted the Landlord to put up a notice of re-letting the premises in the last three months of the tenancy. Therefore, according to the Tenants, the Landlord terminated the tenancy on 30th November 2021 which was within five years from the date of commencement of the tenancy.

20. In addition, the Tenants submitted that the Landlord did not follow the statutory requirements as provided for under the Land Act 2012 and the Auctioneers Rules, 1997 in exercising its right of re-entry and re-possession of the suit premises.

21. Lastly, at paragraph 12 of the Tenants’ submissions, the Tenants submitted that the tenancy relationship between themselves and the Landlord is still subsisting. The Tenants assert that they have not been evicted from the suit premises and that their personal effects and stock are still within the suit premises and further, that the sub-tenant of the Tenants are still within the suit premises.

Analysis and Determination

Whether this Honourable Court has jurisdiction to hear and determine this matter?

22. The jurisdiction of this Honorable Court is confined to controlled tenancies within the meaning of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301 Laws of Kenya, (hereinafter “the Act”).

23. Pursuant to Section 2 of the Act,a controlled tenancy is defined as follows:

“controlled tenancy” means 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.”

24. In addition to the above definition, the High Court at Mombasa inAl-Riaz International Limited v Ganjoni Properties Limited [2015] eKLRin expounding on the requirements of section 2 of the Act stated as follows:

“In my view, the provisions of section 2 of Cap. 301 are clear. Thus, if a tenancy satisfies any of the conditions provided at section 2, the tenancy automatically becomes a controlled one and subject to the provisions of Cap. 301 and it does not matter whether the parties had agreed that the provisions of Cap. 301 shall not apply to their relationship. Whether the tenancy relationship between the parties herein was a controlled one, which is subject to the provisions of Cap. 301, is a matter of law and cannot be ousted by agreement between parties because that would amount to contracting outside the law.

25. In the present case, the main issue is whether or not the tenancy between the Landlord and the Tenant gave rise to a controlled tenancy relationship and therefore subject to the jurisdiction of this Honourable Court. Indeed, Section12 of the Act empowers this Honourable Court to determine whether or not any tenancy is a controlled tenancy falling within its jurisdiction.

26. From the perusal of the lease agreement dated 1st April 2017, which was annexed by both the Tenant and the Landlord, I make the following observations:

i. The Landlord is Charles Munene Gatimuand the Tenants areJulius Wainaina Miira and Florence Mweru Ndungu, the parties herein.

ii. The Lease was for a period of 5 years and 3 months commencing on 1st April 2017 and expiring on 1st July 2022;

iii. The Lease does not contain a provision for termination of the tenancy otherwise than for breach of terms and conditions of the Lease, within five years from the commencement date; and

iv. The Landlord proceeded to terminate the tenancy prior to the intended expiry period.

27. Upon consideration of the above features of the lease, it is evident that the parties clearly intended to remove the tenancy relationship from the realm of controlled tenancies. The lease agreement dated 1st April 2017, which was duly executed by both parties, did not create a controlled tenancy within the meaning of Section 2 of the Act.

28. Based on the foregoing, it is therefore my finding that this Honorable Court is not clothed with jurisdiction to hear and determine the dispute between the parties herein. Accordingly, I hereby make the following orders:

i. The Landlord’s notice of preliminary objection dated 16th September 2021be and is hereby allowed.

ii. The Tenant’s reference and application dated 13th September 2021 be and are hereby dismissed with costs.

iii. The orders issued by this Honourable Court on 13th September 2021 together with all consequential orders be and are hereby set aside.

iv. The Landlords application dated 16th September 2021 succeeds by dint of the preliminary objection as all consequential orders stand discharged and or set aside.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

Ruling dated, signed and delivered virtually by Hon A. Muma this 14thday ofDecember, 2021 in the presence of Kirimi for the Tenants and in the absence of the Landlord.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL