Ali v Champion Shoe Company (Civil Appeal No. 26 of 1948) [1949] EACA 4 (1 January 1949)

## COURT OF APPEAL FOR EASTERN AFRICA

## Before SIR BARCLAY NIHILL, C. J. (Kenya), EDWARDS, C. J. (Uganda), and THACKER, J. (Kenya)

## KARAMAT ALI trading as NEW ELECTRIC STORE, Appellant (Original Plaintiff)

$\nu$ .

# CHAMPION SHOE COMPANY, Respondents (Original Defendants) Civil Appeal No. 26 of 1948

### (Appeal from decision of H. M. Supreme Court of Kenya)

Landlord and tenant—Respondents occupying portion of appellant's premises as business premises—No partition—Whether part of a house let as separate business premises—Test to apply—Status of the parties in law—Matter for decision of Court-Increase of Rent and Mortgage Interest (Restrictions) Ordinance, 1940.

The appellant was the tenant of a shop in Kirparam Road, Nairobi, where he carried on the business of electrician, and in 1946 the respondents, with the appellant's consent, took possession, at a monthly rent of Sh. 86, of a portion of the latter's premises which consisted of one large room with a double entrance from the road with two doors. The appellant carried on his business in one portion of the room; in the other portion the respondents carried on the business of shoemakers. On the 3rd February, 1948, having served on the respondents a notice to quit which had duly expired, the appellant (plaintiff) instituted proceedings in the Supreme Court to recover possession of that portion of the premises occupied by the respondents. The appellant (plaintiff) contended that the respondents' occupation amounted to a licence, and not to a tenancy to which the Rent Restrictions Ordinance applied. The suit was dismissed and the appellant appealed to the Court of Appeal.

Held $(7-3-49)$ .—(1) That the fact that an owner or lessee, for valuable consideration, allows the use of a portion of his premises for the carrying on of an independent business, does not uses a position of any promises for the carrying on or an independent summers, you are<br>create the relationship of landlord and tenant so as to constitute a letting of a separate<br>business which would afford the tenant the p

(2) That even though the parties may regard their relationship as one of landlord and tenant it is the function of the Court to declare what their status in law is, and it matters not that both may have held that conception if it is in fact erroneous in law.

(3) (Per Nihill, C. J.).—That a fair test to apply in the present case is whether, had the parties been living in their respective portions as well as doing business there, the respondent could have successfully claimed that he was in occupation of a part of a dwelling-house let as a separate dwelling.

Appeal allowed.

Cases referred to: Daly v. Edwardes (1901) 85 L. T. 650; Kent v. Fittal (1911), 2 L. R. K. B. 1102 cited; Helman v. Horsham and Worthing Assessment Committee (1948), 2 A. E. R. 588 cited.

#### D. N. Khanna and Akram for the Appellant.

Mangat for the Respondents.

SIR BARCLAY NIHILL, C. J.—The point raised by this appeal is one of considerable importance and interest to the owners or lessees of large business premises in Nairobi and elsewhere. Put shortly, it is this. Does the fact that such an owner or lessee who in return for valuable consideration allows the use of a portion of his premises for the carrying on of an independent business create the relationship of landlord and tenant so as to constitute a letting of separate business premises

which would afford the tenant the protection of the Increase of Rent and of Mortgage Interest (Restrictions) Ordinance, 1940? In the case before us the facts on which the answer to this question depends, are very clear and are scarcely in dispute. They are set out in detail by the learned Judge and I prefer to quote from his judgment: —

"The plaintiff is the tenant since October, 1938, of certain premises on the ground floor of a building situate in Kirparam Road, Nairobi. The premises consists of a large room with a toilet in one corner at the back and detached showcase in the opposite corner. For some unspecified time prior to 1946 the plaintiff only occupied part of the premises, the remainder occupied by one Vithalbhai Maganhbai, with the plaintiff's consent. On the 1st January, 1946, with the plaintiff's consent the defendant took over possession of the portion of the premises in the occupation of V. M. for which they agreed to pay and did in fact pay to the plaintiff Sh. 86 per month. It is necessary to describe in some detail the portion of the premises occupied by the parties. As I have said before the whole of the premises is composed of what may be described as one large room with a double entrance from the road. In the centre of the entrance there is a pillar on each side of which is hinged a door. The door on the left-hand side opens into the portion of the room occupied by the plaintiff and the door on the right leads to the portion occupied by the defendants. Each door has its own lock and each party has the key of the door leading to its portion. There is no partition between the two portions but an imaginary line running from the pillar to the entrance to the back wall of the room at right-angles divides the two portions except for a small space taken up by a showcase belonging to the plaintiff and protruding 3 or 4 ft. into defendant's portion. Along the imaginary line the defendants have placed a large and heavy sofa and cupboard in such a way that when either of the entrance doors is fully opened the sofa almost completely blocks the space between the door and the plaintiff's showcase. Thus when either of the doors is opened there is a physical barrier separating the two portions so that it is not possible to move freely from one portion to the other. When both doors are closed or not fully opened there is a space between the edge of the door and the sofa through which one can easily pass from one portion to the other. Both parties have their own showcases facing the road. There is also a small showcase adjacent to the portion occupied by the defendants. This showcase is at present shared by the plaintiff and defendants to expose their wares. The defendants have the use in common with the plaintiff of the toilet which is at the back of the portion occupied by the plaintiff. Access to the toilet is had through the plaintiff's portion."

No serious criticism has been made before us at the above findings of fact except that Mr. Khanna has submitted that on the evidence, the learned Judge was scarcely justified in saying that when either of the entrance doors is fully opened there is a physical barrier separating the two portions. Impediment would have, perhaps, been a safer word as the evidence does seem to establish that even with the doors fully opened there is just room for a person to pass.

On these facts the learned Judge in the Court below found that each party had the exclusive use of a portion of the premises for the carrying on of their business so as to create a tenancy under the Rent Restrictions Ordinance, and he regarded the sharing of certain incidental accommodation as not affecting the position.

Mr. Mangat has argued that one of the best indications that a tenancy had been created is the fact that from both the pleadings and correspondence it is evident that the parties regarded their relationship as one of landlord and tenant. In fact Mr. Mangat goes further by his submission that, because the appellant did not file a reply to the "Written Statement of Defence", where in paragraph 4

it was pleaded that the suit was barred by reason of the fact the written consent of the Rent Control Board had not been obtained for its institution, he should not now be heard when he states that his grant to the respondent was a merelicence and not a tenancy. I am unable to accept either of these submissions for the following reasons. It seems to me that it is the function of this Court to declare what the status of the parties is in law, and the fact that they may both have held the same conception, matters not at all, if that conception is in fact erroneous, in law. No doubt it is a factor which should be taken into account when reviewing the *indicia* does not in law establish a tenancy, or rather a tenancy protected by the Ordinance, the opinions or indeed the intentions of the parties are immaterial. In Woodfall's "Landlord and Tenant" (18th Edition at $\dot{p}$ , 145) a case is quoted where a theatre refreshment contract was held to be a licence only although by the contract the grantor was termed "landlord" and the grantees "tenants" and the grantor covenanted for quiet enjoyment—(Daly $v$ . Edwardes, 1900, 83 L. T. 548 and affirmed by the House of Lords, 1901, 85 L. T. 650)

On Mr. Mangat's second point it must not be forgotten that because of the nature of the defence entered it was necessary at the beginning of the hearing for the learned Judge to decide the question of jurisdiction. It was not in dispute that the written consent to the proceedings has not been obtained by the plaintiff as required by section 4 of the Ordinance so that he would have been non-suited if unable to show that between him and the defendant there did not exist a tenancy to which the Ordinance applied. In these circumstances, in my opinion, he was fully entitled to argue that on the facts as revealed by both the pleadings and the evidence the legal relationship in which the defendant stood to him was not that of a tenant at all but a mere licensee.

Now before I come to a consideration of Mr. Khanna's argument for the appellant it will be best to consider what it is he has to show in order to take this letting out of the protection of the Ordinance. The Increase of Rent and of Mortgage Interest (Restrictions) Ordinance, 1940, was not at first applied to business premises but it became so applicable (if the annual rent of the premises did not exceed five hundred pounds), in the Nairobi Municipality by reason of a proclamation dated 1st January, 1941, made by the Governor in Council under the provisions of section 19. From that date therefore in Nairobi every reference in the Ordinance to the expressions "dwelling-house", "house" and "dwelling", included references to business premises. For the purposes of this appeal therefore the expression "dwelling-house" as defined in section 2 of the Ordinance can be construed conveniently as follows:—

"'Business premises' means any house or part of a house let as separate business premises."

A great many English cases have been cited to us during the hearing of this appeal, some of which I have found helpful, but we have not been favoured by one where the decision resolved around the question of what constitutes "separate" business premises". The reason for this, no doubt, is that the application of the English Act in 1921 survived barely a year's duration. In this Colony in its wisdom the Legislature has ordained otherwise and the Ordinance still remains applicable to business premises below a certain annual value. Nevertheless many of the English cases are in point because they show the *indicia* which the Courts have required in order to establish a separate dwelling, for the same *indicia* are necessary, with such reasonable modification as the circumstances call for, in order to discover what constitutes separate business premises.

Not a few of the cases quoted by Mr. Khanna are what are termed franchise cases. They were decided before the days both of rent restriction and universal suffrage when the question of who was a householder might have important bearings on the fate of a Parliamentary candidate. These cases were accordingly always keenly fought and well argued and they are not out of point as an aid as to what constitutes a separate habitation. It seems to me that the principle of these cases is that even although a man may let off rooms in his house to persons for their exclusive use, if the landlord continues himself to occupy a part of the premises and there is no structural segregation of the other parts, such persons are his lodgers and not occupying tenants. Thus Pickford J. in Kent v. Fittall (on which Mr. Khanna greatly relied) said at p. 1109 of the report $(1911 \ 2 \ L. R. K. B. 1102)$ :

"It has been established in many cases that if a man lets off rooms in a house in which he himself resides, although he may give to other persons exclusive occupation of parts of the house and render no services to those inmates he nevertheless prima facie retains control and the inmates are lodgers and not occupying tenants."

In the same case the Chief Justice Baron Alverstone observed that the mere fact that there was no evidence that the landlord ever had exercised any control did not necessarily destroy the presumption that he possessed it. Thus at p. $1109$ :—

"But it seems to me that something much more must be proved than the fact that the landlord has never in fact exercised control. It may be that there has been no occasion for him to exercise that kind of control which would be necessary in order to establish that he had control of the house, and was there for that purpose. In other words one cannot from the mere absence of the exercise of the right, draw the conclusion that the landlord has given up the right, if there is no evidence showing that occasions had arisen when he ought to have exercised the right."

In the present case all the indications from the evidence are that each party was tolerant and amenable to the propinquity of the other and there was nothing to show that any occasion arose for an exercise of control by the appellant and that he refrained from exercising his right. That there must have been a mutual going and coming and a crossing of each other's territory seems clear bearing in mind the position of the lavatory and the showcase near the stairs which was shared in common. Had something happened on the respondent's side of the room which gravely interfered with the appellant's quiet enjoyment of his half, can it be assumed that he would not have intervened and exercised control in order to abate the nuisance?

Mr. Khanna also cited the recent case of *Helman v. Horsham and Worthing* Assessment Committee (1948 A. E. R. Vol. 2 at p. 588), which 1 think also assists him. The question in that case for decision was whether on certain facts a Rating and Valuation Committee were right in assessing as a separate hereditament certain rooms let to persons in a dwelling-house by the owner who lived on the premises. In holding that the Committee had gone wrong in treating the lettings as separate hereditaments Lord Goddard C. J. said this after reviewing Kent v. Fittall and other cases: -

"As I understand these cases they come to this. The distinction between a lodger and a weekly tenant is often exceedingly difficult to define and it is a matter of very considerable difficulty where one is to draw the line, but one matter has always been treated in the later decisions, not as conclusive, but never as an element to be ignored, namely, whether the landlord remains resident on the premises himself. If a landord has a house which is structurally altered, as many houses are now, and have been since these decisions, so that there is one floor or two floors converted into a separate flat, often having its own door on a landing, the fact that the landlord occupies the lower part of the house as his own flat would certainly not be in any way conclusive that he did not intend the person who was, to use a neutral expression, in the upper part of the house, to be a tenant in the true sense of the word and to have an estate in that upper part. But in a house where no structural alteration is made, so that it remains just as it was built and people can walk up and down the stairs freely and go in and out of the rooms freely from a physical point of view, the fact that the landlord is living on the premises does seem to me to raise the presumption, and has always been treated in these cases as raising a presumption, that he intends to retain control of the whole of the premises. And if the landlord intends to retain control of the whole of the premises, that, I think, prima facie at least negatives the fact that the person who is occupying rooms in the other part of the house than that in which the landlord lives is a tenant in the true sense and not a lodger."

Bearing these cases in mind I suggest that a fair test to apply in the present instance is whether had the parties been living in their respective portions as well as doing business there, the respondent could have successfully claimed that he was in occupation of a part of a dwelling-house let as a separate dwelling. In the absence of a structural partition running the whole length of the imaginary line (although not necessarily ceiling high) I do not see how he could have established this proposition. If for the showcase on the stairs is substituted a cupboard which both parties shared for the storage of their household provisions the weakness of the claim becomes even more apparent.

Now if this test fails when applied to a dwelling-house must it not also fail when applied to business premises bearing in mind the effect of section 19 of the Ordinance on the definition of a dwelling-house in section 2? I think it must. Where I part company with the judgment of the learned Judge who tried this suit is that, I think, he has failed to take into account some of the requisites for a separate letting and that he has overlooked the fact that the appellant was himself carrying on business on the premises. Exclusive use (or possession) by the respondent of a portion of the premises was an important *indicium* but it was not the only one.

Having come to the conclusion that the appellant's letting did not constitute a separate letting of business premises it is not obligatory on me to decide the precise status in law of the relationship established between the parties. Mr. Mangat has argued stoutly that it is absurd to maintain that the respondent's status was no better than a mere licensee and he may be right although I feel bound to say that to my mind the indications point to it being nothing very much higher. Be that as it may, the respondent, whatever his status, had to show in order to succeed that he was entitled to the protection of the Ordinance and this for the reasons given I consider he has failed to do. Whether he be a monthly tenant or a mere licensee he has received either a valid notice to quit or reasonable notice of revocation. The appellant is therefore entitled to an order for ejectment and judgment in terms of the prayer in his amended plaint. The appeal is allowed with costs in this Court and in the Court below.

EDWARDS, C. J.—This is an appeal from a judgment of the Supreme Court of Kenya which had dismissed an action by the appellant (plaintiff) for the eviction of the respondents (defendants) from a portion of certain premises. The learned trial Judge held that, since the defendant had established a tenancy to which the Increase of Rent and of Mortgage Interest (Restrictions) Ordinance, 1940, as amended, applied, and as the written consent of the Rent Control Board had not been obtained as required by section 4 of the Ordinance the plaintiff must fail. The main reason which led the learned trial Judge to hold that there was a tenancy to which the Ordinance applied was that he found as a fact that the parties did not share, or have the use in common of, the premises. He went on to hold further that each party had the exclusive use of a given portion of the premises, namely that portion essential for carrying on its business, and that each party merely shared incidental accommodation. At the trial the plaintiff's advocate argued that his clients had granted only a licence and that there was no tenancy notwithstanding the fact that in paragraph 6 of his amended plaint it was stated that he

had terminated the "tenancy". Because of the view which I take of this case I find it unnecessary to consider the interesting submission of Mr. Mangat, for the respondents, to the effect that the plaintiff must be held bound by his pleadings, and that he ought to have filed a reply to the Written Statement of Defence in paragraph 4 of which the respondents alleged that he was a "tenant" of the appellant. In my view, the appeal can be decided on the short point as to whether there was a lease of a house, or part of a house, let as separate business premises. One must substitute "business premises" for "dwelling-house" in section 2 of the Ordinance as is prescribed by section 19. A lease is defined in the "Pocket Law Lexicon" by Mr. Teague, Barrister-at-Law, Seventh (1945) Edition, p. 209, as a contract by which the right is given to exclusive possession of land "land" includes "building", see definition of "land" at p. 207). So that the real question is whether, by the terms of the oral agreement, the respondent was given the right to exclusive possession of part of building premises let as separate business premises. An architect, Mr. Abdul Hamid, gave evidence for the plaintiff, evidence which the Judge did not say that be disbelieved. This witness testified to making a correct sketch of the premises (Ex. 1) which seems to have been accepted by both parties. Briefly, what the plaintiff allowed the defendant to occupy (to use a neutral term) was a part of one complete hall, namely the space coloured blue on Ex. 1. There is no partition dividing the two spaces. There is a bench 8' long $\times$ 1' 3" high separating the two portions. There are two entrances and three shop windows and one W. C. Between the two shop windows (showcases) there are two entrances from Kirparam Road. These entrances are separated by a pillar. There is no direct access to the water-closet from the blue portion. As one enters the premises one can see that there are two businesses—an electrical shop and a shoe shop. There is nothing between the portions utilized by these two businesses except a heavy sofa facing the shoe shop. The learned trial Judge, on that evidence, held that the respondent had exclusive possession of his part of the premises. The reasons which seem to have led him to this conclusion are the following, namely, $(a)$ there was a sofa dividing the two portions, and $(b)$ that there was no evidence of interference by one occupier with the occupation of the other occupier, $(c)$ it would be obvious to a customer that there were two businesses and two shops in one large room, and $(d)$ each party had his own entrance. It was conceded that each party shared the use of the W. C. and one showcase (shop window). I consider that reasons (b), (c) and (d) are quite insufficient reasons for holding that there was a letting of part of a house let as "separate business premises". Merely to place in the middle of the room a sofa, which, however heavy, could at any time be removed was not, in my view, sufficient to show<br>that there was any "separation". Surely the word "separate" must mean "separate" structurally. Supposing the sofa had been removed could anyone have told, by merely looking at the room, which part was the plaintiff's and which was the defendant's? Surely not. The mere fact that both parties were considerate enough to have regard to each other's convenience and not to use more space than was necessary for his particular business was not, in my view, sufficient to constitute the two portions of the room separate premises. I must not be regarded as considering that the learned trial Judge was necessarily right in holding that there was a lease and not a mere licence.

For these reasons, with all respect to the learned trial Judge, I think that he erred in holding that there was a letting of separate business premises. Assuming that there was a tenancy and not a mere licence, I think that the tenancy was a monthly one and, since due notice to quit was given, there must be an order for eviction. I would, accordingly, allow this appeal with costs here and below and would set aside the judgment and enter the judgment for plaintiff in terms of the prayer in paragraph 8 of the amended plaint.

THACKER, J.—It is not without some hesitation that I say that in my opinion this appeal ought to be allowed.

I find myself unable to disagree with the judgments just delivered by the learned President, and by the learned Chief Justice of Uganda, but my opinion would have been otherwise had there been in the business premises occupied by the appellant and respondent any form of permanent structural partition, even though this did not reach to the ceiling. I am reluctant to hold that a movable sofa or movable low bench can have the effect of dividing the room into two separate business premises.

There are certainly two doors each leading into one part of the room but after consideration I do not regard this physical fact as sufficient to divide the room into two separate business premises.

I do not regard the common showcase as an important factor, nor do I regard as important the existence of a common lavatory. It is in the final analysis the absence of a permanent structural partition which impels me to my opinion that there are not in this case the necessary separate premises so as to come within the Rent Restrictions Ordinance.

As to the other point as to which there was some argument before us, in my opinion, there is no estoppel in the plaintiff by the use of the word "Tenancy" in his plaint.

I would therefore allow the appeal with costs here and in the Court below.