[2021] KEBPRT 370 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 399 & 400 OF 2015 (NAIROBI)

PABARI HARIKRISHNA PREMJI T/A

PRAMUKH SUPPLIES.......................................TENANT/APPLICANT

AND

HITESH MANUBHAI & ANOTHER T/A

SHREEJI CERAMICS.......................................TENANT/APPLICANT

VERSUS

VELJI KHIMJI MAROO........................RESPONDENT/LANDLORD

RULING

A. Parties and Their Representative

1. The Tenants/ Applicants, Pabari Harikrishna Premji T/A Pramukh Supplies and Hitesh Manubhai & Another T/A Shreeji Ceramic rented space on LR. No 209/4583 for the business (hereinafter referred to as the ‘Tenants’)

2. Learned Counsel S.K. Opiyo & Co. Advocates represents the Tenants/Applicants in this Reference. skandere@gmail.com

3. The Respondent Velji Khimji Maroo is the Landlord of the suit premises on LR. No 209/4583 rented out to the Tenants (hereinafter referred to as the ‘Landlord’).

4. The Firm of Kithinji Thuranira & Co. Advocates is on record for the Respondent/Landlord. kithuranira@gmail.com

B. The Dispute Background

5. The genesis of the matter is that on 24th April, 2015 the Landlord served the Tenant/Applicant with a notice, seeking to increase rent from the monthly sum of Kshs. 50,000 to KShs. 120,000 for Pramukh Supplies and from KShs. 70,000 to KShs. 120,000 for Shreeji Ceramics. The Tenants protested the proposed rent increment by filing a “Reference by Tenant” to this Tribunal on 25th June 2015.

6. Before the matter proceeded to hearing, both parties filed separate valuation reports, with their respective experts giving opinion on what ought to be the reasonable rent for the premises. The Landlord engaged Premier Valuers Limited whose report was received and filed by the Tribunal on 24th November 2015. The Tenants’ Valuer, Teja S. Kundhi, filed their report on 1st March 2016.

7. Given the wide discrepancy in the valuations, the Tribunal ordered the two Valuers to visit the premises together and take joint measurement of the lettable areas in respect of the comparables in the independent reports and prepare a joint valuation report. The joint valuation report was then prepared under the auspices of Premier Valuers Limited and was filed with the Tribunal on 12th July 2016.

8. In his Judgement rendered on 14th November 2017, Hon. Mbichi Mboroki (hereinafter referred to as “the Chairman”) considered the valuation reports of the parties on record and on determination, dismissed the Tenants’ References and ordered the increment of rent in accordance to the Landlord’s Notices to the Tenants effective from the date of issuance of the Notices.

9. It is against this decision that the Tenants appealed at the Environment & Land Court Case No. 16 & 17 of 2019 on grounds that the Chairman failed to consider the joint valuation report in arriving at this decision. Upon hearing and final determination, the Court ordered that the two files be returned to this Tribunal for the sole purpose of determining the rent payable based on the joint valuation report dated 12th July 2016, and I therefore proceed to do so.

C. List of Issues For Determination

10. It is the contention of this Tribunal that the sole issue for determination is as follows:

a) What is the rent payable by the Tenants based on the joint valuation report undertaken by the valuers of both parties?

D. Analysis and Findings

What is the rent payable by the tenants based on the joint valuation report undertaken by the valuers of both parties?

11. The Environment & Land Court directed this Tribunal to determine the rent payable by the Tenants based on the joint valuation report. The mandate of this Tribunal now is to evaluate the joint valuation report, taking into account the written submissions of the parties’ Advocates and make determination of the references under S 9 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301 Laws of Kenya.

12. Section 9 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act clothes this Tribunal with wide discretionary powers to determine, vary the rent and/or other terms of a controlled tenancy, or may terminate the tenancy in its entirety, upon a Reference. I shall therefore proceed to exercise this discretionary power in determining the rent payable by the Tenants in this matter.

E. Evaluation of the Joint Valuation Report

13. The Joint Evaluation Report was prepared by both Tenants’ and the Landlord’s valuers under the auspices of Premier Valuers Limited and filed on 12th June 2016. This followed the Chairman’s directions that the valuers visit the premises together and take joint measurement of the lettable areas in respect of the comparables in the individual reports. I shall therefore proceed to give an analysis of this report.

14. This valuation report provides the lettable areas of the following comparables;

Comparable No.1- Shree Arihant General:

Ground Floor- 350 square feet or 32. 52 square meters

Mezzanine- 350 square feet or 32. 52 square meters

Comparable No.2- owner occupied:

This should be disregarded as the space is occupied by the owner

Comparable No.3- Kikomba Supermarket Ltd:

Ground Floor - 2866 square feet or 266. 26 square meters

Mezzanine - 2866 square feet or 266. 26 square meters

Comparable No.4- Elopy Ltd:

Ground Floor- 896 square feet or 83. 24 square meters

Mezzanine - 896 square feet or 83. 24 square meters

15. The joint report focuses only on the measurement of the lettable areas of the comparables provided in the Landlord’s valuation report.

16. As noted in the original judgment rendered by this Tribunal with respect to this matter, the rent payable according to the Tenants’ valuation reports for the comparables are for the year 2014 which is not applicable in respect of the period for which the Landlord’s Notice was issued. In light of the above the Tribunal is satisfied that the Tenant’s valuation report does not assist the Tribunal in determining the open market rent taking into account the parameters set out under Section 9 of the Act.

17. The Landlord’s valuation report, on the other hand, provides the rent payable for 2015, which is the period in which the Notice was issued and is therefore applicable in determining the open market rental value of the premises.

18. What appears to be in contention are the lettable areas of the comparables provided therein. However, both parties achieved consensus in the lettable areas of these comparables as outlined in the joint valuation report. I shall therefore proceed to determine the rent payable by the Tenants by placing reliance on the comparables in the Landlord’s valuation report with reference to the joint valuation report on the lettable areas.

19. Taking into consideration the lettable areas agreeable to both parties as per the joint valuation report, therefore, the Landlord’s Comparables are as follows:

I. Shree Arihant General

Rent Payable: KShs. 60,000. 00 per month exclusive of VAT

Lettable Area:

Ground Floor: 350 Square Feet or 32. 52 Square Meters

Analysis: KShs. 114. 29 per square feet or KShs. 1,230. 00 per square meter

Mezzanine: 350 Square Feet or 16. 26 Square Meters

Analysis: KShs. 57. 14 per square feet or KShs. 615. 00 per square meter

II. Teran Engineering Works

The Joint report confirmed that the space is occupied by the owner and should therefore be disregarded and I disregard the same.

III. Kikomba Mattress Supermarket

Rent Payable: KShs. 360,000. 00 per month exclusive of VAT

Lettable Area:

Ground Floor: 2,866 Square Feet or 266. 26 Square Meters

Analysis: KShs. 83. 74 per square feet or KShs. 901. 37 per square meter

Mezzanine: 2,866 Square Feet or 266. 26 Square Meters

Analysis: KShs. 41. 87 per square feet or KShs. 450. 69 per square meter

IV. Elopy Limited

Rent Payable: KShs. 90,000. 00 per month exclusive of VAT

Lettable Area:

Ground Floor: 896 Square Feet or 83. 24 Square Meters

Analysis: KShs. 66. 96 per square feet or KShs.720. 08 per square meter

Mezzanine: 896 Square Feet or 83. 24 Square Meters

Analysis: KShs. 33. 48 per square feet or KShs. 360. 04 per square meter

20. I therefore considering the time that has lapsed since this matter was filed and considering time value of money increased every passing year I am inclined to choose the highest of the comparables. Thus the open market rental value shall be the rent as stated to be paid by Shree Arihant General. More specifically;

Ground Floor: KShs.114. 29 per square feet or 1,230 per square meter

Mezzanine: KShs. 57. 14 per square feet or KShs. 615. 00 per square meter

F. Determination of The Rent Payable

21. From the foregoing, it is the determination of this Tribunal that the rent payable is as follows:

I. Pramukh Supplies

Lettable Area:

Ground Floor: 548. 25 Square Feet x 114. 29 = 62,659. 50

Mezzanine: 544. 00 Square Feet x 57. 14 = 31,084. 16

Rent Payable: KShs. 93,743. 70 per month exclusive of VAT

II. Shreeji Ceramics

Lettable Area:

Ground Floor: 684. 25 Square Feet x 114. 29 or 63. 57 Square Meters

Rent Payable: KShs. 78,202 per month exclusive of VAT

For the reasons given above I ORDER as follows that:

a) The rent payable by the tenant in BPRT No. 399/2015 Pramukh Supplies is assessed at KShs. 93,743. 70with effect from 1st July 2015 exclusive of service charge and taxes;

b) The rent payable by the tenant in BPRT No. 400/2015 Shreeji Ceramics is assessed at KShs. 78,202 with effect from 1st July 2015 exclusive of service charge and taxes;

c) There be provided for an escalation clause at 10% every 3 years to cover for inflation and time value of money from the date of this judgement.

d) Parties do reconcile their accounts to determine the amount the Landlord is entitled to of the monies now held in the joint account within the next 30 days failure to which they will be at liberty to apply for further direction on the sums.

e) The Landlord shall have costs.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

RULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON A. MUMA THIS 9TH AUGUST, 2021 IN THE PRESENCE OF KANDERE FOR THE APPLICANTS/TENANTS IN 399/400 AND KITHINJI FOR THE LANDLORD IN 399/400.

HON A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL