Aston Computers v Kenya Post Office Savings Bank Staff Retirement Benefits Scheme [2024] KEBPRT 66 (KLR) | Controlled Tenancy | Esheria

Aston Computers v Kenya Post Office Savings Bank Staff Retirement Benefits Scheme [2024] KEBPRT 66 (KLR)

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Aston Computers v Kenya Post Office Savings Bank Staff Retirement Benefits Scheme (Tribunal Case E069 of 2023) [2024] KEBPRT 66 (KLR) (15 January 2024) (Ruling)

Neutral citation: [2024] KEBPRT 66 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E069 of 2023

Andrew Muma, Ag. Chair

January 15, 2024

Between

Aston Computers

Applicant

and

Kenya Post Office Savings Bank Staff Retirement Benefits Scheme

Respondent

Ruling

A. Parties And Their Representatives 1. The Applicant, Aston Computers rented the suit premises on the ground floor and the first floor of Soko House erected on all that Property known as Eldoret Municipality/Block 6/13.

2. The Firm of M/S J.M Kimani & Company Advocates represents the Applicant in this matter.

3. The Respondent is the Landlord and the owner of the suit premises.

4. The Firm of M/S AKO Advocates LLP represents the matter in this matter.

B. Background of the Dispute 5. On 5th May 2023, the Tenant moved this Tribunal vide a Reference and Notice of Motion Application evenly dated seeking Orders inter alia:I.That the Application be certified as urgent and service be dispensed with in the first instance;II.That a temporary injunction be issued to the Landlord restraining it from interfering with the Tenant’s quite possession and enjoyment pending the hearing and determination of the Application;III.That a temporary injunction be issued to the Landlord restraining it from interfering with the Tenant’s quite possession and enjoyment pending the hearing and determination of the Reference;IV.Costs of the Application are granted to the Tenant.

6. The Tribunal having considered the Tenant’s Application issued Orders dated 6th June 2023 granted prayers 1, 2 and 3, certifying the Application as urgent, restraining the Landlord from interfering with the Tenant’s quiet possession and enjoyment and ordering the Tenant to serve the Application for inter- partes hearing on 15th June 2023.

7. It is the Tenant’s Application that is the subject of this ruling.

C. Tenant’s Case 8. The Tenant’s Application is based on the grounds that it entered into a tenancy agreement with the Landlord for a term of six (6) years. That upon the lapse of the period on 31st December 2018, the Tenant continued to occupy the suit premises and continued paying rent to the Landlord which converted the tenancy relationship to a controlled tenancy that is not in writing.

9. In its submissions dated 4th November 2023, the Tenant submits that the Landlord issued an illegal notice dated 14th April 2023, which an effective date of 1st June 2023.

10. The Tenant states that the notice is invalid for the reasons that it is not in the prescribed form being Form A and that the notice period is less than two months required for the termination of a controlled tenancy.

D. Landlord’s Case 11. In opposition to the Tenant’s Application, the Landlord filed a Replying Affidavit dated 24th August 2023 stating that the Tenant was in rent arrears which necessitated the issuance of a notice to vacate.

12. Further, in its submissions dated 8th December 2023, the Landlord states that the Notice to terminate dated 14th April 2023 is valid for the reason that the tenancy agreement expired and that the Tenant continued to occupy the premises without the Landlord’s consent.

E. Issues for Determination 13. I have carefully considered all documents filed and evidence adduced before this Court. It is my considered opinion that two issues fall for determination:i.Whether the tenancy relationship between the Parties herein is a controlled tenancy;ii.Whether the notice of termination of tenancy dated 14th April 2023 is valid; andiii.Whether the Tenant is in rent arrear.

F. Analysis and the Law i.Whether the tenancy relationship between the parties herein is a controlled tenancy 14. Section 2 of the Landlord and Tenant (Sops, Hotels and Catering Establishments) Act, Cap 301 Laws of Kenya defines a controlled tenancy as; tenancy of a shop, hotel or catering establishment-b)Which has not been reduced into writing; orc)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.Provided that no tenancy to which the Government, the Community or a local authority is a party, whether as landlord or as tenant, shall be a controlled tenancy;

15. I take note of the fact that upon the lapse of the expiry of the Lease Agreement on 31st December 2018, the Tenant continued to be in occupation of the suit premises and continued to pay rent as evidenced in the copies of bank receipts annexed to the Supporting Affidavit of Stephen Mungai Kamau.

16. I am convinced that the amount paid by the Tenant up to the time of filing the Application that is the subject of this ruling is in excess of the amount of rent arrears that accrued during the validity of the tenancy agreement. It is clear that the Landlord continued to accept rent and carried the arrears forward as demonstrated to its statement of accounts annexed to the Replying Affidavit sworn by Grace Maina.

17. In the circumstances, the tenancy relationship between the parties herein amounts to a controlled tenancy with the Tenant having a right to be protected by this honorable Tribunal.

iv. Whether the notice of termination of tenancy dated 14th April 2023 is valid; 18. Having determined that the tenancy herein is a controlled tenancy, it is trite that the same must be terminated in accordance with Section 4 of Cap 301 which provides for the procedure of terminating a controlled tenancy.

19. I have carefully perused the termination notice dated 14th April 2023. I am convinced that the said notice falls short of the aforementioned requirements. Firstly, the notice is not in the prescribed form, Form A. Secondly, it provides for a notice of less than two months.

20. In light of the foregoing, I find that the notice is illegal. This being a controlled tenancy, the Landlord has no option but to comply with the requirements of section 4(2) of Cap 301.

v. Whether the Tenant is in rent arrears 21. The expired lease agreement dated 5th December 2013 provided for an escalation of rent at a rate of 15% after every two years. Therefore, the rent payable as at 31st December 2023 was KShs. 396,750. 00.

22. The Tenant admits to having rent arrears in a letter to the Landlord dated 1st March 2023. However, in its Further Supporting Affidavit dated 25th September 2023, the Tenant deposes that it cleared all the rent arrears that accrued during the subsistence of the lease agreement. It is noteworthy that nothing has been placed before this Tribunal to prove that the said rent arrears were paid.

23. Additionally, the Tenant claims that there was an agreement to review rent downwards from KShs. 396,750. 00 to KShs. 345,000. 00 which the Tenant has been paying. The said agreement has not been placed before this Tribunal.

24. In the circumstances, this Tribunal is convinced that the amount of rent payable is since 1st January 2019 is KShs. 396,750. 00. I have carefully perused the Landlord’s statement of accounts vis a vis copies of the bank receipts produced by the Tenant. I am convinced that the Tenant is in rent arrears of KShs. 4,313,170. 00.

G. Orders 25. The upshot is that the Tenant’s Reference and Notice of Motion Application dated 25th May 2023 is compromised as follows:a.That the Notice of termination dated 14th April 2023 is invalid;b.The Tenant to pay rent arrears in the sum of KShs. 4,313,170. 00 within 30 days failure to which the Landlord shall distress for rent and take back vacant possession;c.Landlord at liberty to issue a fresh notice to the Tenant; andd.Each party to bear their own costs.e.Leave to appeal .

HON. A. MUMAAG CHAIR/MEMBERHON JACKSON ROPMEMBERBUSINESS PREMISES RENT TRIBUNALRULING DATED, DELIVERED AND SIGNED AT NAIROBI ON THIS 15TH DAY OF JANUARY 2024 IN THE PRESENCE OF KINYANJUI FOR THE TENANT/APPLICANT AND OCHIENG H/B FOR ATAKA FOR THE LANDLORD/RESPONDENT.HON. A. MUMAAG CHAIR/MEMBERHON JACKSON ROPMEMBERBUSINESS PREMISES RENT TRIBUNAL