Acorn Limited v Gold Rock Development Ltd & 2 others [2024] KEBPRT 230 (KLR)

Acorn Limited v Gold Rock Development Ltd & 2 others (Tribunal Case E808 of 2023) [2024] KEBPRT 230 (KLR) (11 March 2024) (Ruling)

Neutral citation: [2024] KEBPRT 230 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E808 of 2023

P May, Member

March 11, 2024

Between

Acorn Limited

Tenant

and

Gold Rock Development Ltd

1st Respondent

Lloyd Masika Limited

2nd Respondent

Valley Auctioneers

3rd Respondent

Ruling

1. The tenant approached the Tribunal by filing the reference dated 17th August, 2023 seeking the intervention of the Tribunal after the landlord had commenced the process of levying distress. Contemporaneously, the tenant filed an application under certificate on an even date. The application sought to stop the respondents from selling the proclaimed goods.

2. The application was placed before the Tribunal on 18th August, 2023 whereby the tenant was granted orders of temporary injunction pending the inter- partes hearing. The respondents entered appearance and filed a notice of preliminary objection dated 8th September, 2023 in opposition to the application and the reference in its entirety. The respondents challenged the jurisdiction of the Honourable Tribunal stating that the term of the lease exceeded 5 years. It was the respondents’ assertion therefore that the jurisdiction of the Tribunal was therefore ousted on such grounds.

3. The preliminary objection was canvassed by way of written submissions. I have considered the same and would proceed as follows:

4. The jurisdiction of the Tribunal having been challenged, it is only prudent that the Tribunal makes a determination on the said question.

5. The jurisdiction of this Honorable Tribunal is confined to controlled tenancies within the meaning of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, cap 301 Laws of Kenya, (hereinafter “the Act”).

6. Pursuant to section 2 of the Act, a controlled tenancy is defined as follows:“controlled tenancy” means a tenancy of a shop, hotel or catering establishment—(a)which has not been reduced into writing; or(b)which has been reduced into writing and which—(i)is for a period not exceeding five years; or(ii)contains provision for termination, otherwise than for breach of covenant, within five years from the commencement thereof; or(iii)relates to premises of a class specified under subsection (2) of this section.”

7. In addition to the above definition, the High Court at Mombasa in Al-Riaz International Limited v Ganjoni Properties Limited [2015] eKLR in expounding on the requirements of section 2 of the Act stated as follows:“In my view, the provisions of section 2 of cap 301 are clear. Thus, if a tenancy satisfies any of the conditions provided at section 2, the tenancy automatically becomes a controlled one and subject to the provisions of cap 301 and it does not matter whether the parties had agreed that the provisions of cap 301 shall not apply to their relationship. Whether the tenancy relationship between the parties herein was a controlled one, which is subject to the provisions of cap 301, is a matter of law and cannot be ousted by agreement between parties because that would amount to contracting outside the law.”

8. In the present case, the main issue is whether or not the tenancy between the Landlord and the Tenant gave rise to a controlled tenancy relationship and therefore subject to the jurisdiction of this Honourable Court. Indeed, section 12 of the Act empowers this Honourable Court to determine whether or not any tenancy is a controlled tenancy falling within its jurisdiction.

9. The tenant has stated that the tenancy agreement contained a termination clause for termination other than for breach. The said agreement has not been annexed by either of the parties thus the Tribunal cannot proceed to make a determination on the same. The determination of the preliminary objection required the Tribunal to assess more facts beyond the pleadings filed.

10. In view of the foregoing, the preliminary objection is dismissed with no orders as to costs. Parties to take appropriate steps to fix the reference for hearing.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY THIS 11TH DAY OF MARCH 2024. HON. PATRICIA MAYMEMBER11. 03. 2024In the presence of;Onchagwa for the 1st RespondentOketch for the TenantFurther orders:1. Parties have 14 days to respond to the Reference2. Parties to file compliance documents within 30 days.3. Mention for compliance on the 22. 4.2024.