[2022] KEBPRT 709 (KLR)

Mwangi v Central Memorial Hospital Limited (Tribunal Case E155 of 2021) [2022] KEBPRT 709 (KLR) (Civ) (16 September 2022) (Judgment)

Neutral citation: [2022] KEBPRT 709 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E155 of 2021

Gakuhi Chege, Vice Chair

September 16, 2022

Between

Damaris Nduta Mwangi

Landlord

and

Central Memorial Hospital Limited

Tenant

Judgment

1. The landlord moved this Tribunal vide a reference dated May 13, 2021 under section 12(4) of Cap. 301 complaining that the tenant had ignored, failed, refused and/or threatened not to clear outstanding rent arrears of Kshs.640,000/- and refused to renew and/or execute a new tenancy agreement despite requests to do so.

2. The landlord simultaneously filed a motion dated May 13, 2022 seeking an order to compel the tenant to pay outstanding rent arrears of Kshs.640,000/- and payment of general damages.

3. The application is supported by the affidavit of the landlord of even date and the grounds set out on the face thereof. It is deposed that the Respondent leased out the suit premises in the year 2015 at a monthly rent of Kshs.160,000/- for a period of five (5) years which was renewable on fresh terms to be agreed upon.

4. In May 2020, the Respondent started paying half rent on account of Covid-19 pandemic as evidenced by annexure ‘DNM-1’ being the Respondent’s letter of June 10, 2020 by which it forwarded two (2) cheques in respect of May and June at 50%. The Respondent requested for indulgence and consideration and committed to regularize payments once students reported back to school and business went back to normal.

5. According to the landlord, the balance was payable in future and that the Respondent acted in violation of the Covid-19 concession of 20% on monthly rent offered by her. There was no mutual agreement on the 50% rent rebate which the Respondent accorded itself vide its letter of 5th June 2020 marked ‘DNM2’.

6. The said proposal of 50% rebate on rent had been rejected by the Landlord vide a letter dated September 29, 2020 which had recommended a waiver of 40% up from 30% earlier offered. The letter is marked ‘DNM-3’.

7. The Respondent continued to pay half rent until December 2020 and the landlord allowed it to continue in occupation trusting that it would clear the arrears. However, the tenant failed to clear the amount of Kshs.640,000/- which accrued from May to December 2020 on account of payment of 50% rent by it.

8. A demand letter dated April 26, 2021 for the said amount is attached as annexure ‘DNM-4’. The tenant also failed to sign the tenancy agreement marked ‘DNM-5’. This necessitated the filing of the instant suit.

9. The application is opposed through the replying affidavit of Tarun Revoo sworn on 16th June 2021 in his capacity as a director of the Tenant/Respondent wherein it is deposed that there is no reference on record. However, there is before me a reference dated 13th May 2021 rendering the issue moot.

10. It is deposed that on January 6, 2015, a second tenancy agreement was entered into for a period of 5 years with the agreed monthly rent being Kshs.160,000/- and ending on December 31, 2020. The second tenancy agreement was not signed but superceded the first tenancy agreement.

11. Around March 15, 2020, the country was locked down due to Covid-19 pandemic and all schools and learning institutions were closed and all the tenant’s students went hone. The said closure negatively impacted on the tenant’s income as it solely relies on student fees to sustain operations. On April 17, 2020, the tenant wrote to the landlord seeking for rent rebate due to Covid-19 negative impact as evidenced by annexure “TR4”.

12. On May 20, 2020, the landlord offered a 20% rent rebate from 1/6/2020-31/8/2020 but the tenant made a counter proposal on June 5, 2020 for a 50% rebate which was allegedly verbally agreed upon (see annexures TR5 (a) & (b) respectively.

13. The tenant contends that it is on account of the verbal agreement that it paid Kshs.80,000/- per month from May – December 2020 vide cheques no. 72, 73, 110, 2201 and 2232 respectively. The payments were accepted without objection by the landlord. The tenant therefore denies being in rent arrears.

14. On August 27, 2020, the tenant informed the landlord’s advocates vide annexure ‘TR6’ about the agreement to pay 50% from May-December 2020. This resolved the issue of rent and the tenant deposes that it was surprised to receive demand for Kshs.640,000/- marked “TR7” on April 26, 2021.

15. The tenant responded on the same day vide annexure ‘TR8’ denying owing rent arrears demanded. The second lease expired on December 31, 2020 and pending renewal thereof rent was reduced to Kshs.120,000/- between January 2021 and April 2021 as per annexure ‘TR9’. The tenant resumed payment of Kshs.160,000/- in the month of May 2021 despite continuing Covid-19 pandemic effects.

16. It is the tenant’s contention that parties were still negotiating terms of the new lease as evidenced by annexure “TR10” dated May 3, 2021 and the main point of contest was the increase in rent under the new lease.

17. The landlord filed a further affidavit sworn on June 29, 2021 in response to the issues raised in the tenant’s replying affidavit. It is deposed that the tenant operates a hospital and had not shut business on account of Covid-19 pandemic and had no justification to fall into arrears.

18. The landlord denies entering into any verbal agreement between her and the tenant to reduce rent by 50% per month as contended by the latter. The landlord reiterates that by her letter of September 29, 2020 marked ‘DMM-3’ she reminded the tenant to pay all outstanding rent. There was a dispute on remittance of 50% rent according to the landlord in reference to the tenant’s letter dated August 27, 2020 marked ‘TR-6”.

19. The matter proceeded by way of viva voce evidence and upon closure of their cases, both parties filed submissions. I intend to consider the oral evidence and submissions together with the issues for determination set out below.

20. The following issues arise for determination in this case:-a.Whether there was rebate of monthly rent between May and December 2020 in respect of the suit premises.b.Whether the tenant owes any rent arrears for the said period.c.Who is liable to pay costs?

21. There is no dispute that there were negotiations to rebate rent for the period between May to December 2020 on account of Covid-19 pandemic. The tenant alludes to a verbal agreement to reduce the rent by 50% while the landlord in a letter dated September 29, 2020 recommended a waiver of 40% up from 30% earlier offered. The said letter is annexure ‘DNM-3”. Although the Respondent continued to pay rent until December 2020 and the landlord allowed its continued use of the premises, I have not seen any evidence that the 50% rebate was ever accepted by the landlord.

22. The tenant contended that there was a verbal agreement to reduce rent by 50% on an unspecified date and venue. It would appear to me that the issue of rent rebate was being discussed in writing between the parties and there is a flurry of correspondence exchanged between them. It is also not in dispute that the last offer made by the landlord was for 40% rebate for the said period. That offer was not withdrawn despite the tenant continuing to pay 50% rent during the said period. The landlord’s demand for the full rent payment on April 26, 2021 marked “DNM-4” was not justified having all along accepted to give rebate to the tenant whose percentage had not been agreed upon by both parties.

23. Section 120 of the Evidence Act, Cap. 80 Laws of Kenya provides as follows:-“When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceedings, between himself and such person or his representative to deny the truth of that thing”.

24. In my considered view, the landlord is estopped from demanding full rent from the tenant having agreed to reduce the rent by 40% for the period May-December 2020 and I find and hold that he is only entitled to claim a sum of Kshs.128,000/- for the entire period of eight (8) months being 10% unpaid by the tenant based on annexure “DNM-3” dated 29th September 2020.

25. As regards whether the tenant is liable to execute a lease agreement with the landlord, I find and hold that this Tribunal under section 2(1) of Cap. 301 cannot compel it to do so as a controlled tenancy includes a tenancy of a shop, hotel or catering establishment which has not been reduced into writing. As such, parties should be left free to choose how to relate under the Act.

26. As regards costs, the same are in the Tribunal’s discretion under section 12(1) (k) of Cap. 301 but always follow the event. The landlord instituted the instant proceedings seeking to recover Kshs.640,000/- in rent arrears. I have however found that the only amount due is Kshs.128,000/-. Had the 1st Respondent not opposed the application and reference, it could have been condemned to pay the entire sum. I shall therefore exercise my discretion by ordering each party to bear own costs of the proceedings.

27. In conclusion, the final orders that commend to me are:-i.The landlords reference and application dated May 13, 2021 is allowed and the tenant is hereby compelled to pay Kshs.128,000/- as rent arrears for the period May-December 2020. ii.The landlord is disentitled to general damages as no evidence has been tendered to justify the claim.iii.Each party shall bear own costs of the suit.

It is so ordered.RULING DATED, SIGNED & VIRTUALLY DELIVERED THIS 16TH DAY OF SEPTEMBER 2022. HON. GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALIn the presence of:Miss Murgor holding brief Waithaka for the LandlordThuku for the Tenant