[2018] KEHC 4891 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KAKAMEGA

CIVIL SUIT NO. 10 OF 2018

ROYAL GARDENS HOSPITAL............................................PLAINTIFF

VERSUS

EBRAHIM OMENYI AMBWERE.............................1ST DEFENDANT

BG NJUGUNA t/a FEMFA AUCTIONEERS...........2ND DEFENDANT

RULING

1. The suit herein commenced by way of a plaint dated 31st May 2018 and filed herein on even date. The plaintiff company runs a hospital on premises standing on Kakamega Municipality/ Plot 111/197, a property belonging to the 1st defendant. The plaintiff is therefore a tenant of the 1st defendant. The plaintiff is in arrears of rent and the 1st defendant instructed the 2nd defendant to distrain for rent. The plaintiff seeks in the plaint an order of injunction to restrain the defendants from carrying out the distress for rent on its business, an order of accounts on its alleged indebtedness and a declaration that the planned distress for rent was illegal.

2. Contemporaneously filed with the plaint was a Motion of even date seeking an interlocutory injunctive order to restrain the defendants from carrying out the proposed distress for rent on the plaintiff’s business premises. The Motion is based on the grounds set out on the face of the application and the facts deposed in the affidavit of one of the directors of the plaintiff, Charles Solomon Godwin Wasike. It is deposed that the plaintiff is an unprotected tenant for a period of 5½ years from June 2013. The instructions to levy distress on the plaintiff’s premises is said to be unlawful as it was not founded on a court order. It is argued that there is a prima facie case in view of the unlawfulness of the planned action. It is conceded that the plaintiff had received the 1st defendant’s demand notices, to which it responded by making proposals on payment. It is asserted, however, that the 1st defendant had not provided accounts of what was allegedly owing. Attached to the affidavit in support of the Motion are copies of the lease agreement, notice of distress and correspondence exchanged between the plaintiff and the 1st defendant’s lawyers on the subject matter of the suit.

3. The response to the Motion is by the 1st defendant through his affidavit sworn on 13th June 2018. He concedes the lease but says the same is for five years and one month, with rent payable monthly. He states that there was a variation of the lease agreement in 2016 which reduced the amount of the monthly rent payable. He asserts that the plaintiff had acknowledged indebtedness to a sum of Kshs. 18, 504, 000. 00 and had undertaken to settle the same by monthly instalments of Kshs 500, 000. 00 effective from 30th November 2016. The 1st defendant avers that the plaintiff is still in default and rent outstanding now stands at Kshs. 20, 544, 000. 00. He decries the fact that the plaintiff is in possession of the suit premises and is in debt. It was on account of that that he instructed the 2nd defendant to levy distress. He asserts that he followed the law as laid down. The 1st defendant has attached to his affidavit copies of the lease agreement of 1st June 2013, the variation of the said lease dated 1st November 2016, an acknowledgement of debt and an undertaking to pay signed by the plaintiff on 1st November 2018, a ledger account of the rents owing up to October 2017, a ledger account of the rents received from the plaintiff up to 5th December 2017, a demand note from his advocates addressed to the plaintiff and a reply from the plaintiff.

4. There is no rejoinder on record, from the plaintiff, to the matters deposed in the affidavit of the 1st defendant.

5. The Motion was placed before Njagi J on 5th June 2018 under certificate of urgency. Interim orders were granted in terms of prayer 2 thereof awaiting hearing of the application inter partes. The inter partes hearing happened on 21st June 2018. The Motion was urged orally by Mr. Shifwoka for the plaintiff and Ms. Emeke for the defendants.

6. Mr. Shifwoka submitted that the distress process that had been set in motion was illegal as it had not been sanctioned by a court of law. He asserted that giving notice was not enough, court action was necessary to giving notice was not enough, court action was necessary to provide opportunity for provision of accounts on amounts due He cited the decision in the case of Laxmishanker Kanji Vyas vs. Firdaus Salim & another (2014) eKLR to support his contention that distress cannot be levied without a court order. On whether there was prima facie case, it was submitted that the plaintiff would suffer loss as the premises were used as a hospital, and patients were likely to be affected and equipment mishandled in the process of distress. He argued that a disruption of the hospital business would be irreversible. It was also argued that the balance of convenience favoured the plaintiff as he was in occupation of the premises. On the issue of process being irregular, Mr. Shifwoka cited Olympic Sports House Limited vs. School Equipment Centre Limited (2012) eKLR, where the court held that an injunction issues to arrest an illegality, and that where the law stood to be infringed it would issue to protect the parties and the law itself. He also cited the decision in Julius Mogaka Gekonde t/an E-Smart Technical College vs. Ouru Power Limited & another (2016) eKLR, on third parties who derive interest from the subject premises, even where indebtedness is acknowledged, the orders arresting that distress would be available conditionally. He urged the court to affirm the interim orders and arrest the irregular process of distress.

7. Ms. Emeke argued that distress for rent is an inherent right of a landlord under the Distress for Rent Act, Cap 293, Laws of Kenya. She cited sections 3 and 4 thereof, saying that they are intended to protect the landlord from cunning tenants who rush to court to be shielded from the duty to pay rent. She asserted that the duty to pay rent is a cardinal duty in the tenancy agreement. She further submitted that the applicant had not met the conditions for grant of temporary injunctions. She submitted that the applicant had not established a prima facie case, by demonstrating that it had suffered a right breached by the respondent. She stated that the applicant had admitted that it was in arrears of rent, apologized on that account and said it was disposing of a property to raise money to settle the debt. She submitted that the issue of accounts was not raised at all at the time the admission was being made. On irreparable damage, that patients would be inconvenienced, she stated that the same had not been raised in the affidavit sworn in support of the application. She further submitted that the balance of probability tilted in favour of the 1st defendant who has a right to be paid rent for the premises occupied by the plaintiff. On the issue of necessity of a court order, she submitted that the same was not a requirement for unprotected tenancies, urging that the right to levy distress was statutory, and cannot be taken away by court order. She submitted that the debt had been acknowledged, proposals to settle it made, but nothing was done to settle it. She cited several cases to support the defendant’s case. One of them was Julius Mogaka Gekonde t/a E-Smart Technical College vs. Ouru Power Limited & another, where it had been argued that students would suffer upon a distress for rent, the application to distress for rent was allowed but the defendant was given fifteen days to settle the rents or vacate the premises. She submitted that in a controlled tenancy the hands of the court were tied. She also cited Biwott Pius Kiprotich vs. Taguma Agencies Ltd (2009) eKLR, where the court had held that a dispute as to the amount payable was not a ground upon which an injunction can issue. She submitted that an injunction was an equitable remedy, the party seeking it ought to come to court with clean hands.

8. The tenancy relationship between the principal parties hereto is not in dispute. Neither is it disputed that the plaintiff is in rent arrears. The only contention, from my understanding of the material before me, is that the manner in which the 1st defendant has gone about recovering the amount due. The issue is as to whether a landlord requires a court order before levying distress for rent.

9. The law applicable to the subject of the suit and the Motion is the Distress for Rent Act, Cap 293, Laws of Kenya. Section 3 is critical, it says –

’(1). Subject to the provisions of this Act, any person having any rent or rent service in arrear and due upon a grant, lease , demise or contract shall have the same remedy by distress for the recovery of rent or rent service as is given by the common law of England in a similar case.

(2) …’

10. The Kenyan statute is rather skeletal in its provisions on the subject, and therefore guidance is to be had from the English common law. The general position in law is that a landlord is given a right to seize and remove certain goods from the possession of the tenant in order to compel him to pay rent due. If thereafter the tenant fails to pay the rent due after seizure the same is sold by auction. There are two prerequisites for the right to distrain for rent. One, there must exist a landlord and tenant relationship, at the time when the rent falls due as well as when distress is levied. Secondly, the rent must be in arrears. Being in arrear means that the amount due is ascertained, due and unpaid. The rent payable by the tenant must be certain, otherwise the right to distrain would not be available.

11. The principal issue before me is under whose authority distress should be carried out. The Distress for Rent Act and the common law do not require that the same be founded on a court order. Indeed, according to the Halsbury’s Laws of England, Third Edition Vol. 12 page 115, leave of court to distrain must be obtained before the right to distrain can be exercised only where the tenancy is controlled and where the tenant is a serviceman not serving under regular engagement or dependents of such as service man. All what is required is that the same be carried out by a certified bailiff. Certification of bailiffs, according to section 18, is by the court, but that should not be read to mean the bailiff acts upon the court having decreed the levy of distress. All what the bailiff, in Kenyan lingo that would a court broker or auctioneer, would need are instructions or a warrant from the landlord to carry out the exercise. The warrant or instructions is necessary as it gives the bailiff the right which accrues to a landlord, or the person employing or instructing him, to enter the premises for the purpose of levying distress for rent. Where entry is resisted there may be need to obtain court orders to access the premises and to seize the chattels. It should be emphasized that court action should only be necessary in such circumstances. The only other requirement is that the bailiff serves a notice on tenant of the amounts for which distress is being levied, and the notice should include a computation of authorized fees, charges and expenses. At common law no such notice was necessary as the tenant was presumed to know what was in arrear regarding the property he occupied.

12. I have not come across Kenyan case law that is squarely on the subject. Reported local cases turned on other points. But the decision in Gusii Mwalimu Investment Company Ltd and others vs. Mwalimu Hotel Kisii Ltd, civil appeal number 160 of 1995, is the most relevant. The Court of Appeal found that the Chairman of the Business Premises Tribunal acted correctly when he dismissed an application brought by a landlord for leave to levy distress on the mistaken notion that the lease in question, not being registered, created a tenancy controlled or protected under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301, Laws of Kenya. The landlord then went ahead to levy distress, which was challenged on other grounds that are of no relevance to the matters at hand.

13. In Owayo vs. George Hannington Zephaniah Aduda t/a Aduda Auctioneers and another (2007) 2 KLR 140, (2008) EA 287, the Court of Appeal considered section 3(1) of the Distress for Rent Act and the English common law in dealing with the question of what constitutes illegality for distress for rent. It was stated that an illegal distress is one where there was no right to distrain or where a wrongful act was committed at the beginning of the levy thereby invalidating all subsequent proceedings. The instances of illegal distress were cited as: where distress is by a landlord who has parted with his reversion, distress by a person in whom the reversion has not vested, a distress when no rent is in arrears, a distress for a claim or debt which is not rent, distress after a valid tender of rent has been made, a second distress for the same rent, distress off the premises or on a highway, distress at night and a distress carried out contrary to the law relating to Distress.

14. The decision in the case of Laxmishanker Kanji Vyas vs. Firdaus Salim & another was cited by the plaintiff to support the contention that distress for rent can only be levied with the authority of the court. With respect, i find the decision in Laxmishanker Kanji Vyas vs. Firdaus Salim & anotherdistinguishable. It turned on the Rent Restriction Act, Cap 296, Laws of Kenya, and not on the Distress for Rent Act. The issue before court was not about recovery of rent but termination of a tenancy; or put differently, not about distress for rent but about eviction of the tenant from the premises. The court found that the teannacy in question was controlled or protected under the Rent Restriction Act, and that that being the case distress for rent could not be levied without an order of the Rent Restriction Tribunal. My understanding of that is that not every distress for rent will require an order of either the tribunal or court, but only that which relates to a controlled tenancy.

15. It is common ground that there was a tenant and landlord relationship between the parties hereto. There is also no dispute that the rent was in arrears. The plaintiff has attempted to raise the issue that an account has not been given of what he owes as rent, and on that ground asserts that distress for rent ought not to be levied. To my mind that is an idle argument. The tenancy agreement is in writing. The plaintiff, being a firm ran by competent men and women of high education, should know or be expected to know the amount of rent that it is owing to the 1st defendant, or they have the capacity and ability to work out what is due. The plaintiff should be in a position to tell how much it has paid so far as rent since entering into the tenancy relationship. I find it curious that though the landlord has stated what he claims to be owing, after giving an account of what the plaintiff has paid so far, and the plaintiff has made no comment on the same. The plaintiff has not stated that it disputes the accounts given by the landlord, or what it disputes in them. What is owing as rent is a matter of facts and figures, the 1st defendant has given his; the plaintiff has not countered them with its own. It is not enough for a party to admit that rent is owing and that distress should not be levied as it has not been furnished with accounts, without the said party stating what it believes to be the correct amount owing.

16. The question of the relationship between the amount owing and distress for rent was dealt with in the case of JK Chatrath and another vs. Shah Cedar Mart (1967) EA 93. In that case, the tenant had admitted owing one month’s rent before distress was levied. The former Court of Appeal for Eastern Africa stated that the position in England, which applied to Kenya then as now, by virtue of section 3 of the Distress for Rent Act, was that a landlord was entitled to exercise his right to distrain for rent if any rent was in arrears and the distress did not become illegal merely because it was carried out for more rent than was due. It was stated that the mere taking of more goods in distress on a claim of more rent being in arrears than was in fact in arrears, and selling them on such claim, was not actionable. It was stated that the distrainer for rent was not bound by the amount for which he claimed to distrain, he could sell afterwards only for what was due.

17. The next question should be whether the 1st defendant embarked on the exercise in a manner that was contrary to the law on Distress. The plaintiff says that he did for he had no court order to do so. The law is clear, the tenancy in question was not a protected tenancy, and the court order was therefore not a legal requirement. The plaintiff has not demonstrated that its case fell within the exceptions where court action was necessary before the levy. The argument that no accounts were furnished falls flat for the reasons that I have given in the foregoing paragraphs of this ruling. It has not been demonstrated to me that there was anything illegal or untoward in the steps that the landlord herein had taken to levy distress.

18. The application is for the equitable remedy of injunction. The principles upon which interlocutory injunctions are granted are notorious. They were stated in Giella vs. Cassman Brown & Co, Ltd (1973) EA 358. It should be established that the applicant has a prima facie case with probability of success, an injunction would not normally issue unless the applicant might otherwise suffer irreparable loss, and, when in in doubt, the court decides the matter on the balance of convenience.

19. With regard to the first limb of the principles in Giella vs. Cassman Brown & Co, Ltd, prima facie case with probability, i must say that in my analysis applicable law, I have touched on aspects thereof. The question then is whether the plaintiff has established a prima facie case that it has a case that could in all probability be successful in view of the said law. As stated above, it would appear that on the issue as to whether the 1st defendant needed a court order before levying distress, the law is not on the side of the plaintiff. I doubt that it has established a prima facie case with probability of success in that regard. On the question that it has not been furnished with an account of what is owing, again the law and the facts do not favour it, in view of what I have analyzed previously. The 1st defendant has furnished accounts in his response to the application, the plaintiff has not responded to the said accounts, and it has equally not provided its own version of the accounts to show what it admits to have paid and what it believes is the rent owing. I am not therefore satisfied that a prima facie case with probability of success has been established.

20. The second limb is the question of irreparable injury to the applicant. I was urged that there would be irreparable loss. Firstly, the plaintiff runs a hospital and there are patients involved. A distrainer would inconvenience them. Implied in there is the argument that levying distress for rent on hospital premises would be inhumane. The decision in Julius Mogaka Gekonde t/an E-Smart Technical College vs. Ouru Power Limited & another was cited to support this contention. It was argued that the plaintiff had delicate and expensive medical equipment in the premises which stood to be mishandled during distress and thereby exposing the same to damage. The issue about the patients does not, in my humble view, affect the plaintiff. It is true that the patients would suffer inconvenience and embarrassment in the event of a distress, but I do not see how that amounts to an injury to the plaintiff. It would also be inhumane to have them subjected to the chaos of a distress, but then the 1st defendant has nothing to do with it. It is the plaintiff who should be held responsible for exposing its patients to the inconvenience and embarrassment by putting them in the premises while knowing that it has not paid rent therefor. I believe that the plaintiff is using the patients as a shield. I do not think the law would be fair to owners of premises if it were to allow rent defaulters to continue occupying premises without paying rent just because they are running businesses where a large number of third parties, such as patients and students, are deriving benefit. It is not lost to me that the plaintiff is still receiving patients, meaning that it is making money from the medical fees that it is charging and collecting from them, and it should therefore not have any excuse for failing to pay rent. The same argument would apply to the equipment. The plaintiff is the one exposing its sophisticated equipment to damage by failing to pay rent. In any event should the equipment be destroyed or damaged in the process of distress, should the bailiff be found responsible for the damage he should be made to pay damages therefor.

21. The third limb is on the balance of convenience. According to Giella vs. Cassman Brown & Co, Ltd, this comes into play only where the court is in doubt regarding the first two limbs. I have no doubt at all in my mind with the regard to the first two, and therefore I need not consider who, between the plaintiff and the defendants, the balance of convenience favours.

22. I will end this ruling by pointing out that the remedy sought in the instant application is equitable. Equity requires that whoever comes to a court of equity must do so with clean hands. It is also required that he who seeks equity must do equity. The plaintiff herein is obliged under the written tenancy agreement between it and the 1st defendant to pay rent for the premises as and when required under the said contract. There is documentation on record, which has not been challenged by the plaintiff, wherein the plaintiff acknowledged the indebtedness and undertook to settle the debt, some of the documents contain an information that the plaintiff planned to sell some asset in Nairobi to clear the indebtedness. The plaintiff no doubt does not have clean hands even as it comes to court to beg for injunctive relief. It has not done equity, and it should not expect the same of the other party.

23. In view of everything that I have said I have come to the conclusion that the Motion dated 31st May 2018 is not merited. I shall accordingly dismiss the same, with costs to the defendants. Consequently, the interim orders made on 5th June 2018, and formally extracted on 6th June 2018, are hereby discharged. Should the plaintiff be dissatisfied with the orders that I have made herein there is a right of appeal to the Court of Appeal within twenty-eight (28) days.

DATED, SIGNED and DELIVERED at KAKAMEGA this 8TH DAY OF AUGUST, 2018

W. MUSYOKA

JUDGE