[2021] KEBPRT 110 (KLR)
The Tribunal found that while the Landlord served a notice as required by Section 4(2) of Cap 301, the notice was for termination and not for rent increment. Any alteration to the detriment of the tenant, such as a rent increase, must also be communicated via a valid statutory notice, not merely by application....
Source-derived case information.
- Citation
- [2021] KEBPRT 110 (KLR)
- Parties
- Respondent: Kenya Credit Traders Ltd; Applicant: Joseph Kipkemoi Chebet
- Court
- Business Premises Rent Tribunal
- Jurisdiction
- Kenya
- Case Number
- Tribunal Case 21 of 2021
- Procedural Posture
- Miscellaneous Application / Ruling on Landlord's Application for Rent Increment and Validity of Notice to Terminate Tenancy
- Outcome
- Application for rent increment allowed; notice to terminate tenancy found invalid for lack of evidential support.
- Legal Topics
- Controlled Tenancy, Rent Increase Dispute, Termination of Tenancy, Notice Requirements
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Kenya Credit Traders Ltd
Respondent
Joseph Kipkemoi Chebet
Applicant
Procedural Posture
Miscellaneous Application / Ruling on Landlord's Application for Rent Increment and Validity of Notice to Terminate Tenancy
Legal Issues
- 1 Whether the Landlord’s application to increase rent is lawful.
- 2 Whether the Landlord’s notice to terminate tenancy is valid.
Ratio Decidendi
The Tribunal found that while the Landlord served a notice as required by Section 4(2) of Cap 301, the notice was for termination and not for rent increment. Any alteration to the detriment of the tenant, such as a rent increase, must also be communicated via a valid statutory notice, not merely by application. However, given the significant disparity between the current rent and market rates, and the Tenant's concession to a rent increase based on the average of two valuation reports, the Tribunal determined that a new rent of Kshs 70,000/- per month was reasonable. Regarding the notice to terminate tenancy, the Tribunal held that although the notice met formal requirements, the Landlord...
Court Disposition
Application for rent increment allowed; notice to terminate tenancy found invalid for lack of evidential support.
Orders
- The landlord shall increase the monthly rent payable by the Tenant with effect from 1st December 2021 to Kshs 70,000/-.
- The Landlord shall be at liberty to issue a notice to terminate tenancy in the prescribed format when ready to do so.
Full Case Text
Judgment text and source record
60 paragraphs
REPUBLIC OF KENYA
BUSINESS PREMISES RENT TRIBUNAL AT NAIROBI
TRIBUNAL CASE NO. 21 OF 2021 (ELDORET)
KENYA CREDIT TRADERS LTD..................................................TENANT/RESPONDENT
VERSUS
JOSEPH KIPKEMOI CHEBET .................................................LANDLORD/ APPLICANT
RULING
A. Parties and Representatives
1. The Tenant Kenya Credit Traders rented space on LR No. 6/69 Eldoret Municipality for the business (hereinafter known as the ‘tenant’).
2. The firm of Muturi Kamande & Co Advocates represent the Tenant/respondent in this matter. info@muturikamande.co.ke
3. The Applicant is the landlord and owner of LR No. LR 6/69 Eldoret Municipality rented out to the tenants (hereinafter the landlord).
4. The firm of Kutto & Kaira Nabasenge. Advocates represent the Landlord/Applicant in this matter.
B. The Dispute Background
5. On 9th February 2021 the Landlord served the tenant with a notice to terminate tenancy on the grounds that the landlord intended to renovate the premises and occupy the premises upon completion of the renovations.
6. The Tenant upon receipt of the notice filed a reference in opposition of the Notice before this Honourable Tribunal on 17th March 2021.
7. On 2nd June 2021 the Landlord moved this tribunal by way of notice of motion under certificate of urgency filed under Section 12(4) of the Landlords and Tenants (Shops, Hotels and Catering) Establishments Act Cap 301. The Landlord was seeking amongst other orders that pending the hearing and determination of the reference filed by the Tenant/Respondent that the tribunal order the Tenant/Respondents to pay rent at the current rates of Kshs. 72,000 per month as per an attached valuation report dated 26th January 2021.
8. The Tenant also carried out a valuation through Pinnacle Valuers Limited and has provided a report from the same dated 22nd December 2020.
9. On 11th June 2021 the Tribunal ordered that the Tenant be served for inter partes hearing on 19th July 2021.
C. The Tenant’s Claim
10. The Tenant filed a reference dated 29th March 2021 in opposition of a notice to terminate tenancy issued by the Landlord/Applicant.
11. The Tenant has filed a replying affidavit dated 13th July 2021 and a further affidavit dated 12th August 2021.
D. The Landlord’s Claim
12. The Landlord issued the Tenant with a notice to terminate tenancy on 9th February 2021which the tenant opposed by way of filing a reference at this Honourable Tribunal.
13. The Landlord filed a notice of motion under certificate of urgency dated 2nd June 2021filed under section 12(4) of the Landlords and Tenants (Shops, Hotels and Catering) Establishments Act Cap 301 for increment of rent.
E. Submissions
14. In their submissions the parties addressed amongst other issues the market value of rent and it is not in dispute that the landlord filed a valuation report with an average rental value of Kshs 72,000/- whilst the Tenants was Kshs 63,580/-. The Tenant urges me to take an average of the two which is Kshs 67,790/-.
F. List of Issues for Determination
a) Whether the Landlord’s application to increase rent is lawful?
b) Whether the Landlord’s notice to terminate tenancy is valid?
G. Analysis and Findings
Whether the application by the Landlord to increase rent is lawful?
15. Section 4(2) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Chapter 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.
16. In this case the Landlord served the tenant with a notice as prescribed by the above provision. The notice was however not to increase rent but to terminate the tenancy between the Landlord and the Tenant it was not until the Tenant filed a reference dated 29th March 2021 that the Landlord filed an application seeking that the Tribunal grant orders increasing the Tenant’s rent.
17. As per the provisions of Section 4(2) of Cap301 as provided above increase of rent qualifies as an alteration of the agreement to the detriment of the Tenant and as such this Tribunal is persuaded to state that such an alteration should be made known to the tenant by way of a valid notice and not through filing of an application.
18. The above not withstanding, based on the two valuation reports provided by the Landlord and the Tenant it is evident that the rent of Kshs. 33,000/- which the Tenant has been paying for the past 30 years is inordinately low as compared to the current market rates. It would be prejudicial to the Landlord for this Tribunal to allow the Tenant to keep paying rent at a rate that is lower that the current market rates.
19. Further, the tenant has stated in their submissions that they are not in opposition of the Landlord increasing rent. What they contended was the value from the valuation report given by the Landlord. The Tenant is however agreeable to an increase in rent at an average rate from the two valuation reports which is Kshs 67,790/-.
20. It is my finding that a figure of Kshs 70,000/- would reflect a reasonable market value of the said premises rent.
Whether the Landlord’s notice to terminate tenancy is valid?
21. The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Chapter 301 Laws of Kenya Act at section 4(2)provides 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.
22. In this case the Landlord issued the Tenant with a notice to terminate tenancy on 9th February 2021 which was to take effect from 1st May 2021. From the above provision, the said notice met all the requirements for it to be deemed valid.
23. The Tenant in their submissions have averred that the main reason for their opposition of the notice is that the notice did not meet the threshold as provided under section 7(f) and (g) of Cap 301.
24. Section 7 (f) and (g) of The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Chapter 301 Laws of Kenya Actprovides that some of the grounds upon which the Landlord may seek to terminate tenancy include;
(f) that on the termination of the tenancy the landlord intends to demolish or reconstruct the premises comprised in the tenancy, or a substantial part thereof, or to carry out substantial work of construction on such premises or part thereof, and that he could not reasonably do so without obtaining possession of such premises
(g) subject as hereinafter provided, that on the termination of the tenancy the landlord himself intends to occupy for a period of not less than one year the premises comprised in the tenancy for the purposes, or partly for the purposes, of a business to be carried on by him therein, or at his residence.
21. From a clear reading of the above provisions, a landlord who wishes to carry out renovations in the premises or one who wishes to occupy the said premises for their own use is allowed to terminate a controlled tenancy through the prescribed format. The Act does not necessarily require that the landlord provide in detail the essentials of the renovations or the purpose for which they wish to use the premises.
22. The Tenant in their submissions has referred the Tribunal to the case of HANNAH WANJIKU T/A GUTHERA PROVISION STORE v JOWELL T. KAMANO [2004] eKLRwhich brings about the issue of a firm and settled intention test which requires that before a Landlord can terminate a tenancy for purposes of occupying the same must discharge the burden of demonstrating that they had a genuine intention of occupying the premises.
23. Discharging a burden means the Landlord ought to produce sufficient evidence to show that they intent to reconstruct the premises which evidence would include plans approved or not, availability of funds whether through negotiation of a joint venture or ability to secure financing by way of a mortgage would suffice the same has not been provided herein. In the circumstances this demand lacks any evidential backing as to its truthfulness and must fail.
H. Orders
a) The landlord shall increase the monthly rent payable by the Tenant with effect from 1st December 2021 to Kshs 70,000/-.
b) The Landlord shall be at liberty to issue a notice to terminate tenancy in the prescribed format when ready to do so which is not the case now.
c) Each party shall bear their own costs.
HON A. MUMA
VICE CHAIR
BUSINESS PREMISES RENT TRIBUNAL
Ruling dated, signed and delivered virtually by Hon A. Muma this 30thday ofNovember, 2021 in the presence of Muturifor theTenantand in theabsenceof theLandlord.
HON A. MUMA
VICE CHAIR
BUSINESS PREMISES RENT TRIBUNAL