[2022] KEBPRT 737 (KLR)

Ooko v Mairu (Tribunal Case E138 of 2022) [2022] KEBPRT 737 (KLR) (Civ) (28 September 2022) (Ruling)

Neutral citation: [2022] KEBPRT 737 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E138 of 2022

Andrew Muma, Vice Chair

September 28, 2022

Between

Dan Ooko

Applicant

and

Stephen N. Mairu

Respondent

Ruling

Parties and their representative 1. The Applicant/Tenants Dan Ooko (hereinafter referred to as the “Tenants”) has been in occupation of the premises of the Respondent the subject of this suit pursuant to a controlled tenancy arrangement since October 2014.

2. The firm of S.M. Gioche & Company Advocates represents the Tenant.

3. The Respondent/Landlord, Stephen Ndungu Mairu (hereinafter referred to as the “Landlord”) is the owner of the premises rented out to the Tenant.

4. The Firm of Ndemo Mokaya & Company Advocates represents the Landlord.

The dispute background 5. On 4th January 2022, the Tenant filed a reference in this Tribunal contending that the Landlord issued the Tenant with a notice dated 11th November 2021 where the Landlord increased the rent from KShs.13,000. 00 to KShs.25,000. 00 which increase is unreasonable and made in bad faith.

6. He also filed a notice of motion application dated 10th February 2022 under certificate of urgency seeking that the said application be certified urgent, a temporary injunction restraining the Landlord from increasing rent and allowing the tenant to continue with their businesses peacefully without interruption does issue, an order directing the Landlord to stop unlawfully intercepting/harassing, intimidating or evicting the tenant from the business premises, the rent inspector of the Honourable Tribunal be ordered to assess and determine the rent payable (i.e. standard rent) in respect to the suit premises, and that the OCS Kariobangi police station to ensure compliance with these orders, as well as the costs of the suit.

7. The Honourable court certified the said application as urgent and a temporary injunction restraining the Landlord from increasing the rent was issued on 1st March 2022. It also directed that the OCS Kariobangi Police Station to ensure compliance with the said orders as sought in the application filed by the Tenants.

8. The application was then canvassed by way of written submissions. The Landlord filed his submissions dated 26th April 2022. The Tenant also filed his submissions which are undated.

9. The application coming up for ruling therefore is the Tenants’ application dated 10th February 2022.

Claim and response 10. The tenant contends that the Landlord’s sole intention is to evict him. He says that the landlord’s notice of alteration of rent addressed to him raising the rent from KShs.13,000. 00 to KShs.25,000. 00 is illegal. They argue that the said intended increment is unjustified in law.

11. The Tenant’s claim is that the Landlord issued an illegal notice to increase rent. They contend that the purported increase from KShs.13,000. 00 to KShs.25,000. 00 in respect of the demised premises is arbitrary. The tenants are challenging the said notices and argue that the same offend the provisions of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act chapter 301 laws of Kanya.

12. The Landlord in reply to the Tenants’ claim, primarily argues that they indeed issued notices for rent increment because there was significate renovations on the property by the Landlord to warrant the said increment. The Landlord therefore is convinced that the procedure for the intended rent increment was followed. However, the Landlord has not adduced evidence in support of the intended rent increment.

13. Worthy to note, the landlord vehemently contends that there is no tenancy agreement between the Applicant and the Respondent, and claims further that he is entitled to the electricity bill of KShs.332,000. 00 in arrears. He further counter argues that the tenant has sublet the premises without his consent as well as he is in rent arrears to a tune of KShs.36,000. 00. He therefore urged this Tribunal to find that the Tenant’s application is unmerited, and that the same ought to be dismissed.

14. Neither party has produced a copy of the said rent increment notices before this Court unfortunately. This Tribunal has not also been told when the said notice was to take effect.

Jurisdiction 15. The jurisdiction of the Honourable Tribunal is not disputed by the parties.

List of Issues for determination 16. The parties raised certain issues for determination and the Tribunal shall proceed to distill the issues discussed by the parties and their Counsels who submitted in writing as below:a.Whether there is a Tenancy Relationship Between the Partiesb.Whether the intended rent increment is merited.c.Whether the Tenants are entitled to the reliefs Sought.

Analysis and findings Whether there is a Tenancy Relationship Between the Parties 17. The Landlord in his replying affidavit dated 25th April 2022 at paragraph 1, states that he is the Landlord in the matter. However, he contends at paragraph 4 that he has never entered into any agreement either written or oral for the occupation of the demised premises.

18. Additionally, he states at paragraph 5 of the said demised premises were occupied by one Ernest Ngaire who left without notice and sublet the demised premises to the Tenant herein without his consent.

19. At Paragraph 7 of the same affidavit, he depones that Ernest Ngaire left behind electricity bill arrears of Khs.332,000. 00 at the time of his departure. He says, until 2014, he was not aware that the Applicant had become his tenant.

20. Section 2 of the Act defines a Landlord as, “in relation to a tenancy, means the person for the time being entitled, as between himself and the tenant, to the rents and profits of the premises payable under the terms of the tenancy”. It is clear in this case therefore that the Landlord is Mr. Nickson Malima since he was entitled to and by extension, he was receiving rent from the tenant.

21. Furthermore, Section 159 (2) (d) provides that, “In exercising judicial authority, the courts and tribunals shall be guided by the following principles- justice shall be administered without undue regard to procedural technicalities.

22. Having established that there’s a tenancy relationship between the parties, we now have to determine whether the Tenancy was a controlled tenancy.

23. Section 2 of the Act defines a controlled tenancy to mean; a tenancy of a shop, hotel or catering establishment-a.which has not been reduced into writing; orb.which has been reduced into writing and which-i.is for a period not exceeding five years; orii.contains provision for termination, otherwise than for breach of covenant, within five years from the commencement thereof; oriii.relates to premises of a class specified under subsection (2) of this section

24. The parties have not produced a written tenancy agreement executed by both parties; this points to a controlled tenancy being created between the Parties by dint of Section 2(a) of the Act as mentioned above. I therefore find that this Tribunal has the competent jurisdiction to hear this matter. The Landlord having received rent created a tenancy relationship.

25. The Landlord in his replying affidavit dated 6th April 2022 paragraph 1, states that he is the Landlord in the matter. He further states in the said replying affidavit at paragraph 5, that upon his purchase of the suit premises from the previous owner, he became the bonafide registered owner of the suit premises. Additionally, he states at paragraph 6 of the said replying affidavit that he had several meetings with the Tenant herein and even finally on 11th November 2021, he issued to her a termination notice. At paragraph 4 of the same affidavit, he depones that he knew that the applicant was in occupation of the suit property when he was purchasing the said properties.

26. Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act chapter 301 of the Act defines a landlord as,“In relation to a tenancy, means the person for the time being entitled, as between himself and the tenant, to the rents and profits of the premises payable under the terms of the tenancy”.

27. Mr. Stephen Ndungu Mairu has been collecting rent from the Applicant. Evidence of this fact is abounded in the documents before this Tribunal. It is clear therefore that the Landlord is Mr. Stephen Ndungu Mairu. He was entitled to receiving rent from the Tenant. This therefore means that there was a tenancy relationship between the parties herein.

28. Having established that there’s a tenancy relationship between the parties, we now have to determine whether the tenancy was a controlled tenancy. Section 2 of the Act defines a controlled tenancy to mean; a tenancy of a shop, hotel or catering establishment-a.which has not been reduced into writing; orb.which has been reduced into writing and which-i.is for a period not exceeding five years; orii.contains provision for termination, otherwise than for breach of covenant, within five years from the commencement thereof; oriii.relates to premises of a class specified under subsection (2) of this section

29. The parties have not produced a written tenancy agreement executed by both parties; The Tenant has only produced the one dated 10th November 2012 between him and one Earnest Ngaire. This agreement has no effect to this case.

30. Since there is no written contract therefore, a controlled tenancy is being created between the parties by dint of Section 2(a) of the Act as mentioned above. I accordingly so find

b. Whether the Landlord’s rent increase is justified 31. Section 4(4) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act chapter 301 provides that 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 two months after the date of receipt, whether or not he agrees with the notice.

32. The Parties have not provided a copy of the notice for the intended rent increment. This has therefore deprived this Tribunal the benefit of having a look on the said notice. Nevertheless, the major issue that begs this courts intervention is whether the said rent increment is justified.

33. This court has again and again pronounced itself that a notice to increase or vary rent is not sufficient alone. Before the Landlord or any party who wishes to alter or increase rent does so, they ought to file a rent valuation report so that the intended increase comports with the market value of the premises.

34. It is clear that the Landlord has not provided any proof in support of the intended rent increment. Those rates must be backed by a valuation report on the market value of the property. In the absence of this report, although the notices are valid, I find that the intended increment rates are arbitrary.

c. Whether Tenant is entitled to the reliefs sought 35. The Tenant basically seeks to have the Landlord restrained from increasing rent. The Tenant’s reason for this, as per the reference is that the said rent increment is solely motivated by the Plaintiff’s urge to evict him. This is not the first time the Tenant has issued such a notice. Having found that the rent increments were never backed by any evidence of the market value of the premises, I hold that the Tenants’ application dated 10th January 2022 is merited.

36. On the issue about the electricity bill arrears of Kshs. 332,000. 00 as claimed by the Landlord, I hold that the same is not proved. If anything, the landlord claims that the arears we left behind by his former Tenant, one Ernest Ngaire. The Landlord can recover the same from his former Tenant one Ernest Ngaire as a normal civil debt. It cannot be imposed on the Tenant.

Order For the reasons given above I orderthat;1. The Tenants’ application dated 10th January 2022 is allowed in the following terms: -a.That the Tenants to continue paying rent in the current rates.b.The Landlord to file a rent valuation report within 30 daysc.The Tenants to file a rent valuation report within 30 daysd.The main reference to be heard on 4th November 2022 on increament of rent.e.The Officer Commanding Kariobangi Police Station to ensure compliance.f.The costs to abide by the outcome of the reference.

HON A. MUMAVICE CHAIRBUSINESS PREMISES RENT TRIBUNALRULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON A. MUMA THIS 28TH DAY OF SEPTEMBER, 2022 IN THE PRESENCE OF MOKAYA FOR THE LANDLORD AND GACHIE FOR THE TENANT.HON A. MUMAVICE CHAIRBUSINESS PREMISES RENT TRIBUNAL