[2025] KEBPRT 152 (KLR)

Muhia & another v Baringo United Co Limited (Tribunal Case E205 of 2023) [2025] KEBPRT 152 (KLR) (Civ) (28 February 2025) (Judgment)

Neutral citation: [2025] KEBPRT 152 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E205 of 2023

Gakuhi Chege, Chair & J Osodo, Member

February 28, 2025

Between

Isaac Kuria Muhia

1st Tenant

Bina Wholesalers

2nd Tenant

and

Baringo United Co Limited

Landlord

Judgment

A. Dispute Background 1. The tenant moved this Tribunal vide a Reference dated 24th November 2023 pursuant to Section 6(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap 301, Laws of Kenya objecting to the Landlord’s notice to terminate his tenancy dated 26th October 2023. The said notice was expressed to take effect on 1st January 2024.

2. The tenancy notice is based on the grounds of demolition of the old building, development/construction of new and modern building and general improvement of architectural and structural designs.

3. On 11th April 2024, this matter was ordered to be consolidated with Nakuru BPRT No. E217 Of 2023 for purposes of hearing and determination. The said directions were reaffirmed on 9th April 2024.

4. However, at the hearing of the case on 18th November 2024, only the tenant in Nakuru BPRT No. E205 Of 2023 appeared. Nothing was said about the case for the second tenant by both advocates.

5. The matter begun with the evidence of Laremasubet Kipkemei Micah Kiptuiwho relied on his witness statements dated 3rd April 2024 and 11th April 2024 as his evidence in chief. He also relied on the exhibits attached to his lists of documents of the respective dates.

6. According to the witness, the landlord issued a notice of termination of tenancies on 26th October 2023 which was to take effect on 1st January 2024. It is the landlord’s case that it wishes to demolish and rebuild the suit premises and that there are no other tenants therein. The property is located on L.R No. Nakuru Municpality Block 5/114. The designs were drawn in the year 2014 but the tenants refused to move out.

7. It was the landlord’s evidence that the drawings had not expired and that there were no improvements done on the property by the tenant. The landlord’s witness stated that there was no intention to bring in new tenants into the suit premises and required vacant possession of the premises to start the renovations.

8. In cross examination, the witness stated that the landlord had not availed evidence of availability of funds as it was not necessary. The landlord did not also provide the Bill of Quantities. The landlord’s witness stated that the resolution to construct was passed in the year 2014 and that the 1st tenant became a tenant without the Company’s knowledge.

9. The witness confirmed that the landlord had not obtained a compliance certificate under the Physical Planning Act as the plot was not vacant. However, a development permission had been issued by the County Government of Nakuru and the same was renewed in the year 2024. The witness stated that the landlord renews the building plans every year.

10. The 1st tenant on the other hand relied on his witness statement dated 10th April 2024 as his evidence in chief. He stated that he became the landlord’s tenant in April 2015. He was never informed about the intention to construct. He stated that there are more than five (5) tenants in the building housing the suit premises. The termination notice was not accompanied by any other documents.

11. In his witness statement, the tenant states that he became a tenant after the purported resolution to demolish and reconstruct the building housing the suit premises and that he was not informed of any such resolution.

12. He also relies on letters dated 8th April 2014 and 22nd April 2015 from the Public Health Department which showed that the building was structurally sound and only required minimum repairs and that there was no need for demolition. He therefore undertook the repairs at a cost of Kshs 48,000/=.

13. It is the tenant’s case that the landlord had not terminated the tenancy of Safaricom Company which has a network booster/mast on the roof top which was still standing and functional at the date of the witness statement.

14. In cross examination, the tenant stated that the landlord intended to partition the shops and although some of the shops were closed, the tenants were still inside. He stated that he did not produce rent payment receipts as the termination notice was not based on non-payment of rent.

15. In his further witness statement, the landlord’s witness states that the persons still in occupation of the suit premises were not tenants but trespassers whose leases were terminated vide termination notices issued on 26th June 2019 and expressed to take effect on 1st November 2019. There was a live suit at the Nakuru Chief Magistrate’s Court ELC NO. 196 OF 2021 in which the 1st tenant was not a party. As such, the pendency of the said suit did not render the grounds of termination insincere.

16. The landlord’s witness in his further statement avers that the implementation of the Board resolution was dependent upon the approval of Architectural drawings, structural designs and approvals of various statutory bodies and availability of funds.

17. It is the landlord’s case that the tenant acquired his tenancy through the backdoor and that he had no written tenancy agreement with it. The landlord however seeks to terminate the tenancy by use of due legal process.

18. The landlord’s witness stated that the decision to demolish and construct a new building with new designs was not on the basis of unsoundness of the old building but the shareholders’ urge for a new high-rise structure, which is modern in nature to accommodate many tenants and earn them more income/dividends.

19. It is the landlord’s position that the tenancy of Safaricom was terminated in 2019 and the allegation by the tenant that it was still a tenant were unfounded and baseless. The landlord also denies that it intends to partition the premises and let it out to new tenants. According to the landlord’s witness, the extract of minutes cited as No. 4/02/2024 was erroneous as the correct minute is Min. 5/02/2024 on the status of demolition and construction of building at Nakuru Municipality Block 5/114.

20. We have noted that the 2nd tenant was a party in Nakuru CMELC Case No. E196 Of 2021 in which t was sued as the 1st defendant. From the materials on record, judgement in the said case was delivered on 25th July 2024 in favour of the landlord herein which was plaintiff therein. We have also noted that an appeal was preferred against the said judgement vide Nakuru ELCA No. E051 Of 2024.

21. It is therefore apparent that the directions of this Tribunal given on 11th April 2024 and reaffirmed on 9th May 2024 were issued in error and pursuant to Section 12(1)(i) of Cap 301, Laws of Kenya are hereby set aside to allow the matter to be canvassed in the appeal case aforesaid.

22. Both parties herein filed submissions after close of their respective cases. The landlord’s submissions are dated 15th January 2025 while the 1st tenant’s submissions are dated 25th January 2025.

B. Issues for determination 23. The following issues arise for determination; -a.Whether the tenancy notice served upon the 1st tenant by the landlord ought to be approved or dismissed.b.Whether the tenant’s reference ought to be allowed or dismissed.c.Who shall bear the costs of the reference?

24. We shall deal with issue (a) & (b) together and issue (c) shall be dealt with separately.

25. As observed above, the tenant moved this Tribunal vide a Reference dated 24th November 2023 pursuant to Section 6(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act Cap 301, Laws of Kenya objecting to the Landlord’s notice to terminate his tenancy dated 26th October 2023. The said notice was expressed to take effect on 1st January 2024.

26. The tenancy notice is based on the grounds of demolition of the old building, development/construction of new and modern building and general improvement of architectural and structural designs.

27. It is not contested that the tenancy herein is controlled within the meaning and interpretation of Section 2(1) of Cap 301, Laws of Kenya. Sections 4(1) & (2) of the said statute provides as follows;“(1)Notwithstanding the provisions of any other written law or anything contained in the terms and conditions of a controlled tenancy, no such tenancy shall terminate or be terminated, and no term or condition in, or right or service enjoyed by the tenant of, any such tenancy shall be altered, otherwise than in accordance with the following provisions of this Act.(2)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.”

28. We have looked at the tenancy notice served upon the 1st tenant and confirmed that the same is in tandem with the foregoing legal provisions.

29. Section 6(1) of the same statute provides as follows;“6. Reference to Tribunal1. A receiving party who wishes to oppose a tenancy notice, and who has notified the requesting party under section 4(5) of this Act that he does not agree to comply with the tenancy notice, may, before the date upon which such notice is to take effect, refer the matter to a Tribunal, whereupon such notice shall be of no effect until, and subject to, the determination of the reference by the Tribunal:Provided that a Tribunal may, for sufficient reason and on such conditions as it may think fit, permit such a reference notwithstanding that the receiving party has not complied with any of the requirements of this section.”

30. In compliance with the foregoing legal provision, the 1st tenant filed the instant reference objecting to the notice. This Tribunal is therefore required to inquire into the said notice and decide whether or not, the reasons set out therein have been proved by the landlord in line with Section 9(1) of the said statute.

31. The ground for termination of tenancy set out in the tenancy notice is provided for under Section 7(1)(f) of the said statute which stipulates as follows;“(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.”

32. The landlord in an attempt to prove the termination notice produced among other documents a letter of building plans approval dated 21st July 2016 which attached several conditions for the development. Among the conditions is the requirement for the landlord to undertake the construction within 24 months subject to renewal. There is no evidence of renewal provided by the landlord.

33. The landlord was also required to provide structural details of the construction and a Geotechnical report for the project. No such documents have been exhibited before this Tribunal.

34. We note that the minutes attached to the landlord’s list of documents relate to the demolition and reconstruction of Borut House which in the further witness statement is indicated to have been erroneous. However, no similar minutes are annexed in the further list of the landlord’s documents proving that a resolution was passed to demolish and reconstruct the building in occupation of the 1st tenant. The minute No. 5/02/2024 annexed to the further list of documents relate to the status of demolition and construction of Nakuru Municipality Block 5/114- kabarnet House. It is not a resolution to demolish and reconstruct the said building.

35. It is instructive to note that the minute extract of 3/1/2014 in respect of Borut House shows that the project was to be undertaken by Phelma Ventures which would be awarded the construction tender on the basis of “Build-Operate and Transfer” (BOT) for a period of 25 years.

36. It is therefore right to conclude that as at 2014 when the landlord purports to have resolved to demolish and reconstruct the suit premises, it did not have the requisite funds to undertake such a major project as there would have been no basis for seeking to do a similar project on “BOT” basis on its other property aforesaid. There is no reason for us to believe that the landlord had a settled intention to undertake the said project when it served the termination notice upon the 1st tenant herein.

37. The landlord gave out the suit premises to the 1st tenant in the year 2015 which is one year after the purported resolution to demolish the building and reconstruct it. It is inconceivable that a landlord who wishes to undertake such a major construction would enter into fresh tenancies for vacant premises within the same building.

38. It is therefore not established that the landlord has a genuine and settled intention to demolish and reconstruct the suit premises as to require the tenant to deliver vacant possession. It is trite law that he who alleges must proof.

39. In the case of Auto Engineering Ltd v Gonella & Co. Ltd [1978] eKLR the Superior court held as follows;“The first authority to which Mr Esmail referred us in connection with this part of his appeal was Fisher v Taylors Furnishing Stores Ltd [1956] 2 All ER 78, and he referred us to a passage from the judgment of Morris LJ at page 81, in reference to section 30(1)(f) of the Landlord and Tenant Act 1954, which is as follows:‘There must, therefore, be an intention and it must be an intention which in point of time is related to the termination of the current tenancy. It seems to me that the intention must be to do one of the following things: (i) to demolish the premises comprised in the holding; or (ii) to reconstruct the premises comprised in the holding; or (iii) to demolish a substantial part of the premises comprised in the holding; or (iv) to reconstruct a substantial part of the premises comprised in the holding; or (v) to carry out substantial work of construction on the holding; or (vi) to carry out substantial work of construction on a part of the holding.” Emphasis added)

40. By parity of reasoning, the landlord was obligated to provide evidence on a balance of probabilities that it intended to do what it stated in the tenancy notice. In view of the many gaping loopholes in the landlord’s case, it will amount to a travesty of justice if we approve the notice. We decline this invitation.

41. In view of the foregoing, the tenants’ reference dated 24th November 2023 is hereby allowed and the tenancy notice served upon the tenant by the landlord is consequently disapproved in line with Section 9(1) of Cap 301.

Issue (c) Who shall bear the costs of the reference? 42. As regards costs, the same are in the Tribunal’s discretion under Section 12(1)(k) of Cap. 301, but always follow the event unless for good reasons otherwise ordered. We shall award costs of the reference to the 1st tenant.

C. Orders 43. In view of the above analysis, the final orders which commend to us are;a.The 1st tenant’s reference dated 24th November 2023 is allowed and the notice of termination of tenancy dated 26th October 2023 is hereby disapproved.b.The landlord shall not issue any other notice based on the same grounds in the next Twelve (12) months in line with Section 9(3) of Cap 301, Laws of Kenya.c.The 2nd tenant’s Complaint dated 7th December 2023 is struck out with costs to the landlord for being offensive to the doctrine of Res Sub Judice in view of Nakuru CMELC Case No. E196 OF 2021in which it was the 1st defendant.d.The landlord’s costs against the 2nd tenant is assessed at Kshs 50,000/=.e.The landlord shall pay costs of Kshs 50,000/= to the 1st tenant which shall be defrayed against the rent account.It is so ordered.

JUDGEMENT DATED, SIGNED AND DELIVERED VIRTUALLY THIS 28TH DAY OF FEBRUARY 2025. HON. GAKUHI CHEGE(PANEL CHAIRPERSON)BUSINESS PREMISES RENT TRIBUNALHON. JOYCE AKINYI OSODO(MEMBER)In the presence of: -Kiptoon for the Respondent/LandlordOwuor for the Applicants/Tenants