[2022] KEBPRT 78 (KLR)

REPUBLIC OF KENYA

IN THE BUSINESS PREMISES RENT TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO 1363 OF 2019 (NAIROBI)

NEW PORT LIMITED.............................................................. TENANT/APPLICANT

AND

KENYA INSTITUTE FOR THE BLIND........................RESPONDENT/LANDLORD

RULING

Parties and Their Representative

1. The Tenant/Applicant, New Port Limited, rented space on the Landlord’s premises situate at Nairobi L.R. 209/9339, comprising an office measuring 140ft by 140ft where the Club Building is erected and another 1000sqft and another 154ft by 55ft to be used as parking, for the business known as Deep West Resort (herein after referred to as the ‘Tenant’)

2. Learned Counsel Onesmus Githinji & Co. Advocates represents the Tenant in this reference ogithinjiadv@gmail.com

3. The Respondent Kenya Institute for the Blind is the Landlord of the suit premises on LR. No 209/9339, comprising an office measuring 140ft by 140ft where the Club Building is erected and another 1000sqft and another 154ft by 55ft to be used as parking, rented out to the tenant (herein after referred to as the ‘Landlord’).

4. The Hon. Attorney General represents the Respondent.

The Dispute Background

5. On or about 2nd January 2018 the Landlord and Tenant entered into a lease wherein the Landlord agreed to lease out the premises from the 1st January 2015 for a term of five (5) years.

6. The Tenant filed a reference dated 23rd December, 2019 at the Tribunal on the ground that the Landlord had illegally issued a notice terminated the five (5) year lease.

Jurisdiction

7. The jurisdiction of this Tribunal is not in dispute.

The Tenant’s Claim

8. The Tenant filed a reference dated 23rd December 2019 together with a notice of motion application under certificate of urgency and supporting affidavit dated 23rd December 2019 these pleadings form the basis of this claim. The Tenant obtained restraining orders as against the Landlord on 24th December 2019 before Hon. Mbichi Mboroki, Chairman (as he then was) and to date the Landlord is still restrained from interfering with quite possession of the suit premises by the Tenant through eviction or any other means.

9. The Tenant filed written submission on 24th September 2021 and supplementary submissions on 22nd October 2021.

The Landlord’s Claim

10. The Respondent on the other hand have filed a replying affidavit on 6th February 2020 sworn by the principal of the Respondent and a further affidavit sworn by an investigator of the Directorate of Criminal Investigations on 12th August 2021.

11. The Landlord filed written submission on 31st August 2021.

12. The matter was fixed for ruling on 16th February 2022.

13. I have had occasion to peruse the pleadings above-mentioned of both the Respondent and Tenant and I will not rehearse the same again as they are brief and to the point.

Matters Not in Dispute

14. There is no dispute that there was an existing lease dated 2nd January 2015 at the time of filing the reference dated 23rd December 2021.

List of Issue for Determination:

15. The Respondent and the Tenant raised certain issues for determination in their submissions and affidavits, therefore, the Tribunal shall proceed to distill the issues discussed by parties and their counsels who submitted in writing as below:

a) Whether the lease agreement dated 2nd January, 2015 has expired thereby terminating the tenancy?

b) Whether the principles of granting injunctions have been met?

Analysis and Findings

Whether the lease agreement dated 2nd January, 2015 has expired thereby terminating the tenancy?

16. The Landlord and the Tenant entered into lease dated 2nd January, 2015 for a term of 5 years ending on 1st January, 2020. The lease at paragraph 1 recognizes there exists a club building which has been erected. I have perused the said lease and find as follows;

17. Clause 2 (h) states that at the expiration of the said term the tenant shall be entitled without being compelled so to do to remove any or all of its fixtures PROVIDED THAT the Landlord may with the consent of the Tenant take over from the Tenant fixtures or any of them at such price being the then market value thereof as shall be fixed by a valuer appointed by the Landlord and the Tenant and such price so determined as aforesaid shall be paid by the Landlord to the Tenant within 30 days of the date upon which the amount thereof shall have been communicated to the Landlord and the Tenant by such valuer as aforesaid.

18. Clause 2 (i) stipulates that in the event that the Tenant is desirous of renewing the lease then the Tenant should express this desire in writing to the Landlord two months before expiration of the lease and the Landlord may renew the lease under such rent to be mutually agreed by the Landlord and the Tenant provided that it they are unable to agree on the rent, the rent or correct market value of the premises shall be assessed by an independent valuer appointed by the Landlord and Tenant. As such the lease does not accord the landlord an opportunity to reject a request for renewal of the lease.

19. On 7th May, 2019 the Landlord received a letter from the tenant requesting renewal of the lease upon expiry. The Landlord responded vide a letter dated 29th November, 2019 stating that the Landlord will not renew the tenancy and as a result issued a two months’ notice for the Tenant to vacate the premises.

20. In light of clause 2(g) and clause 6 of the lease the same entitles the tenant to a 6 months’ notice of termination of the lease this clause not only makes the tenancy a controlled tenancy under the Landlord and Tenants (shops, hotels and catering establishments,) Act, Cap 301 thereby making the tenant protected and any notice issued by the Landlord ought to comply with the Act. It also stipulates a time frame, it is my considered view that the termination notice dated 29th November, 2019issued by the Landlord was therefore in breach of the lease and the Act.

21. Further the lease has provided for an elaborate process for termination upon expiry more particularly as set out in paragraph 17 and 18 above the same appears to have not been actioned. I am clear in my mind that the Landlord had 3 option provided for above either issue a 6 months notice of termination or exercise the options provided for in paragraph 17 and 18 above.

22. Section 4 of the Landlord and Tenants (shops, hotels and catering establishments) Act, Cap 301 provides that a Landlord who wishes to terminate a controlled tenancy shall give notice in the prescribed form and specifies the grounds upon which the Landlord terminates the tenancy.

4. Termination of, and alteration of terms and conditions in, controlled tenancy

(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.

(5) A tenancy notice shall not be effective for any of the purposes of this Act unless it specifies the grounds upon which the requesting party seeks the termination, alteration or reassessment concerned and requires the receiving party to notify the requesting party in writing, within one month after the date of receipt of the notice, whether or not he agrees to comply with the notice.

23. The Landlord alleges that the reason for rejecting the Tenant’s application for renewal of the lease was because it intends to use the premises for expansion of services provided by the Landlord. However, the Landlord has failed to tender any evidence i.e. structural plans, proof of funds or drawings in support its intended expansion of the Landlord’s services. Consequently, this Tribunal is not satisfied that the Landlord has effectively discharged its duty to specify the ground upon which it has declined renewal of the lease.

24. In view of the above, the notice dated 29th November 2019 does not comply with section 4 of the Act as it is not in the prescribed form and does not specify the ground for termination of the lease. As a result, the notice is defective and illegal.

Whether the principles of granting injunctions have been met?

25. This Tribunal is guided by the principles in the case of Giella vs Cassman Brown and Co. Ltd in determining whether the Tenant is entitled to the injunctive orders sought. The case sets out the principles of interlocutory injunctions as follows;

“The conditions for the grant of an interlocutory injunction are now, I think well settled in East Africa. First, an applicant must show a prima facie case with a probability of success. Secondly, an interlocutory injunction will not be normally granted unless the applicant might otherwise suffer irreparable injury in which would not adequately be compensated by an award of damages, if the court is in doubt, it will decide an application on the balance of convenience.”

26. In the locus clasicus case of Mrao Ltd vs First American Bank of Kenya Ltd & 2 Others [2003] KLR 125, the court in timeless words reiterated the above principles for interlocutory injunctions as it provided:

“…first an applicant must show prima faciecase with a probability of success. Secondly, an interlocutory injunction will not normally be granted unless an applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the court is in doubt, it will decide an application on the balance of convenience.

27. For this Tribunal to grant the Tenant the interlocutory injunction sought in the application, the Tenant must show that:

a. They have a prima facie case with a probability of success;

b. They might otherwise suffer irreparable injury; and

c. That the balance of convenience tilts in their favour.

d. Prima facie case with a probability of success.

i. Prima facie case with a probability of success.

28. The Court of appeal defined the permutations of a prima facie case in the case of Mrao Ltd Vs First American Bank of Kenya Ltd & 2 others [2003] eKLR as follows:

“A prima facie case in a civil application includes but is not confined to a “genuine and arguable case”. It is a case which, on the material presented to the court, a tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter.”

29. Having found that the landlord is in breach of clause 2 (g) and clause 6 of the lease dated 1st January 2015 which provides that either party may terminate the Lease by giving six (6) months’ notice in writing. The Landlord breached this provisions when it issued a two months’ notice dated 29th November, 2019 terminating the lease and requiring the Tenant to vacate the premises. Having also found that the procedure provided for in clause 2 (h) and (i) were yet to be complied with, I find that the Tenants have established a prima facie case against the Landlord and thus established the first requirement for granting the injunctive orders.

ii. Irreparable damage

30. The Court in the case of Pius Kipchirchir vs Frank Kimeli Tenai [2018] eKLR defined irreparable harm as follows;

“irreparable injury means that the injury must be one that cannot be adequately compensated for in damages and that the existence of a prima facie case is not itself sufficient. The applicant should further show that irreparable injury will occur to him if the injunction is not granted and there is no other remedy open to him by which he will protect himself from the consequences of the apprehended injury.”

31. Additionally, in the case of Paul Gitonga Wanjau vs Gathuthi Tea Factory Co. Ltd & 2 others, Nyeri HCC No. 28 of 2015,the Court defines irreparable harm as “simply injury or harm that cannot be compensated by damaged and would be continuous.”

32. Similarly, in the case before this Tribunal the Tenants will lose their business premises if the injunctive orders are not granted. The Landlords have shown their intentions of interfering with the Tenants investment by not renewing the lease and evicting them from the premises. This Court under the powers granted to it under Section 12 of the Landlord and Tenant (shops. hotels and Catering establishments) Act Cap 301 cannot stand idle as the investment of the Tenant is being threatened by the Landlord.

33. Further the Tenant has invested in the premises and carried out several renovations especially within the period of May 2019 to November 2019. Clause 2 (h) of the lease stipulates that the Tenant is entitled to compensation for the renovations and structures put up at the time of terminating the lease and that upon valuating by a Valuer appointed by both the landlord and the tenant, the Landlord shall pay the Tenant as per the valuation report.

34. If the Tenant is evicted, it will lose customer goodwill that it has built for the past 18 years while operating at the premises, additionally it will lose the investment made to the business operated at the Landlord’s premises. I find that the Tenants have established the second requirement for granting them the injunctive orders as they might suffer irreparable injury if the Landlords are not barred from interfering with their tenancy.

35. Having established that the Tenant has established that they have a prima facie case and are likely to suffer irreparable injury, the balance of convenience automatically shifts in favour of the Tenant.

36. I find that the Tenants have established all the thresholds set out to warrant this Court to grant them the injunctive orders pending hearing of their reference. However I have also noted that the tenant is in arrears. They cannot enjoy interim relief whilst not paying rent I appreciate the challenges that came with Covid 19 especially in the hospitality industry but that is now behind us and rent must be paid especially considering the nature of the Landlord institution and the service it offers to the public.

Orders

For the reasons given above I ORDER as follows;

a) The Landlord shall prepare a statement of accounts for arrears owed from March 2020 to February 2022 within 7 days and issue the same to the Tenant.

b) The Tenant shall have 6 months within which to defray the arrears either lump sum or in equal monthly instalments.

c) Pursuant to clause 2(h) of the Lease the landlord and the tenant shall file a joint fixtures valuation report of the structures put up within 30 days, failure to which each party is at liberty to file a separate fixtures valuation report.

d) Pursuant to clause 2(i) of the lease the Tenant and Landlord shall file a joint independent rent valuation report on correct rental value of the premises, failure to which each party is at liberty to file a separate rent valuation report also within 30 days.

e) Landlord is at liberty to file additional affidavit evidence and approved plans or drawings of the intended self-use of the premises plus proof of funds within 30 days.

f) In light of the perceived bias communicated to the undersigned I will recuse/disqualify myself from this matter going forward and set it for mention for compliance and direction on hearing before BPRT Chairman/Vice Chairpersons other than myself on a date to be taken at the registry.

g) Existing order of 24th December, 2019 in respect of the application dated 23rd December, 2019 be maintained pending hearing and determination of the Reference.

h) Costs in cause.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

RULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON A. MUMA THIS 16TH DAY OF FEBRUARY, 2022in the presence of Kerubofor theLandlordand in the absence of theTenant.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL