Bains v Chogley (Civil Appeal No. 1 of 1949) [1949] EACA 6 (1 January 1949)

### COURT OF APPEAL FOR EASTERN AFRICA

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

#### JAGAT SINGH BAINS. Appellant (Original Plaintiff)

$\mathbf{v}$

## ISHMAEL MOHAMED CHOGLEY, Respondent (Original Defendant No. 2) Civil Appeal No. 1 of 1949

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

Landlord and tenant—Lease of business premises for five years—Respondent lawfully in charge of premises during absence of tenant-Sale by tenant to respondent before expiry of lease—After expiry claim by landlord for possession-Order for possession against tenant and respondent-Appeal by respondent—Retrial—Further order for possession—Further appeal—Original lease not registered—Effect thereof—Evidence—Status of original tenant— Status of respondent—Indian Transfer of Property Act, 1882, sections 105, 106, 107—Crown Lands Ordinance (Cap. 140, Laws of Kenya), sections 101 and 102 (1)—Application of Article 2, Eastern Africa Court of Appeal Order in Council, 1921—Power of Court of Appeal—"Doing justice in the cause".

The appellant owned certain premises (a bakery and a shop) in Nairobi which by a written agreement of the 10th June, 1941, he purported to lease to Sidi Bilal (original defendant No. 1) for a period of five years from the 1st July, 1941, at a monthly rent of Sh. 300.

In 1942 Sidi Bilal went to India leaving the respondent in charge of the premises and business under a power of attorney.

In April, 1946, Sidi Bilal sold the business to the respondent. The rent was paid and accepted up to June, 1946, in which month the respondent closed the banking account of Sidi Bilal and opened an account for the business in his own name.

In June, 1946, the appellant without giving any notice to quit claimed possession of the premises from the respondent on the ground that the original lease to Sidi Bilal had expired by effluxion of time. The respondent refused to vacate so the appellant instituted proceedings for possession in the Resident Magistrate's Court against Sidi Bilal and the respondent as Defendants Nos. 1 and 2. Sidi Bilal failed to enter appearance and the suit was proceeded with against the respondent on the basis that the original lease was valid. The appellant obtained an order for possession against Sidi Bilal and the respondent. The latter appealed unsuccessfully to the Supreme Court and then appealed to the Court of Appeal. It had emerged that the original lease was void for want of registration under section 107 of the Indian Transfer of Property Act, 1882.

The Court of Appeal ordered the case to be sent back to the Resident Magistrate's Court for retrial in order that the real issues between the appellant and respondent could be pleaded and tried for the first time. On the rehearing of the case the appellant again succeeded, the Magistrate finding that Sidi Bilal had been no more than a tenant at will and that a notice to quit was therefore unnecessary.

For a second time the respondent appealed, and successfully, to the Supreme Court where it was held that Sidi Bilal was in fact a yearly tenant whose tenancy was determinable only by six months' notice to quit and that the respondent was in lawful possession of the premises as licensee of Sidi Bilal.

The appellant then appealed to the Court of Appeal where it was submitted that the learned Judge on appeal had failed to take into account that the original lease, although void, could be considered in relation to the intention of the parties to create a five-year term and therefore it was impossible to deduce the creation of a monthly or yearly tenancy, and, that since Sidi Bilal had never appealed to the Court of Appeal against the order made against him at the first Magisterial hearing the effect of the previous judgment of the Court of Appeal could not have been to set aside that order.

Held (11-4-49) (1) That under section 102 (1) of the Crown Lands Ordinance (Cap. 140, Laws of Kenya), which Ordinance applied to the land and premises in question, no Court could be entitled to receive any evidence touching the unregistered agreement executed in 1941 for any purpose relevant to the consideration of the status of the parties as landlord and tenant.

(2) That Sidi Bilal was a tenant, as distinguished from a tenant-at-will and that applying the provisions of section 106 of the Indian Transfer of Property Act, taking into account the fact that the main use the premises were put to was the manufacture of bread, the lease, in the absence of any contract, must be deemed to have been a lease from year to year, requiring from either party six months' notice of determination.

(3) (a) That the order of the Court of Appeal setting aside the order made by the Magistrate on the first hearing applied to Sidi Bilal as well as to the respondent, and that it was within the jurisdiction of the Court to make such order under the provisions of Article 2 of the Eastern Africa Court of Appeal Order in Council, 1921.

(b) That for the purpose of doing justice in the cause before the Court it was necessary since the requirements of a statute had been overlooked, to set aside in toto an order made on a wrong basis.

Dictum of Scrutton, L. J., in Phillips v. Copping (1935) 1 K. B., 15 cited; Ariff v. Jadu<br>Nath (1928) 55 Cal. 1090, and Sheikh Akloo v. Sheikh Emaman (1917) 44 Cal. 403 referred to.

#### Nazareth for the appellant.

#### D. N. Khanna for the respondent.

SIR BARCLAY NIHILL, C. J.—This is an appeal from a judgment of the Supreme Court of Kenya which allowed an appeal from the judgment of the Resident Magistrate's Court, Nairobi.

The subject of this litigation is the determination of the question whether the landlord of certain premises used as a bakery situated in Racecourse Road, Nairobi, is entitled to an order for possession. These premises are at present in the occupation of the respondent who is carrying on business there as a baker. The course that this litigation has taken has been so devious that to understand the nature of the issues which now remain to be determined I will recount its various stages.

In December, 1946, the landlord, who is the present appellant, filed suit against his tenant Sidi Bilal as first defendant and the present respondent, Chogley, as second defendant. The first defendant who was in India did not defend the suit and he has never subsequently taken any part in this litigation. Judgment was given for the plaintiff and an order made for possession, the learned Magistrate finding that Chogley was not a statutory tenant protected by the provisions of the Increase of Rent and of Mortgage Interest (Restrictions) Ordinance, 1940, and that the tenancy held by the first defendant had expired by effluxion of time, being dependent on a five-year lease entered into between the parties on 10th July, 1941. The second defendant, Chogley, appealed to the Supreme Court of Kenya, the appeal being heard by a single Judge (Bourke, J.) who upheld the decision of the learned Magistrate. During the hearing of the appeal the point was taken for the first time that the lease relied on by the plaintiff in the Court below was void for lack of registration and that this made the status of the first defendant that of a monthly tenant whose tenancy had not been determined. The learned Judge was doubtful whether as an appeal court he should entertain a point taken so late which was at variance with the defence filed by the second defendant but in any event he upheld the decision of the learned Magistrate on the ground that there was not sufficient evidence to show that Chogley had ever become a tenant and that therefore he was not entitled to the protection of the Rent Restriction. legislation.

Against this judgment the tenant appealed to this Court which on 20th August, 1947, in Civil Appeal No. 15 of 1947 ordered the case to be sent back to the Resident Magistrate's Court for retrial in order that the real issues between the appellant and respondent (i.e. the second defendant) could for the first time be pleaded and tried. It is evident from the judgment that this Court felt that as both parties had proceeded on a false assumption, namely that the lease of July, 1941, was a valid document, it was essential that the case should be reheard on a proper basis which was by this time conceded that the lease was void for lack of registration. It is important to bear in mind at this stage in connexion with the appellant's second ground of appeal in this appeal that the first defendant did not appeal against the order for possession made against him.

The case was reheard on amended pleadings before another Magistrate in April, 1948. This time the plaintiff again succeeded; the learned Magistrate finding that, in the absence of any lease, the first defendant had never been anything better than a tenant-at-will and that a notice to quit was therefore redundant. He found that Chogley was a trespasser.

Again the second defendant (Chogley) went to the Kenya Court of Appeal. Again the appeal was heard by a single Judge, this time de Lestang, J. It is against the judgment of this learned Judge that the matter now comes before this Court for the second time. For the first time in these proceedings the plaintiff has failed because the learned Judge came to the conclusion that the correct status in law of Sidi Bilal, the first defendant, was that of a yearly tenant whose tenancy was determinable only by six months' notice to quit which has not been given, and that Chogley the second defendant is in lawful possession of the premises as the licensee of Sidi Bilal.

It is argued that the learned Judge erred in holding that the tenancy of Sidi Bilal was a tenancy from month to month or from year to year and it is submitted that this error arises because the learned Judge has failed to take into account that the lease although admittedly void can be considered in relation to the intention of the parties to create a five-year term and that in the face of this it is impossible to deduce the creation of a monthly or yearly tenancy. In support of this argument Mr. Nazareth has relied on the fact that in Kenya unlike India an unregistered lease can be registered at any time during its currency, so that between 1941 and 1946 it was in the power of either party to give effect to the document unilaterally. Although there is much to be said for the equity behind this argument I find it untenable in the face of sections 105 to 107 of the Indian Transfer of Property Act which with amendments made up to 1907 only is applicable to this Colony. There is also section 102 (1) of the Crown Lands Ordinance and it is conceded by Mr. Nazareth that this section applies to the land and premises in question. This section could not be more mandatory in form than it is, "No evidence shall be receivable in any civil Court".

"(1) Of the sale, lease or other transfer *inter vivos* of land registered under this part, unless such sale, lease or other transfer is effected by an instrument in writing and such instrument has been registered under this part."

In the face of this I cannot see how any Court is entitled to receive any evidence touching the unregistered document executed in 1941 for any purpose relevant to the consideration of the parties as landlord and tenant. Without this evidence the position as established by the admissible evidence can be summarized in one sentence.

In 1941, the second defendant Sidi Bilal entered into possession of the premises and received by him from month to month. No notice to quit has ever been served on Sidi Bilal. If these facts are sufficient to establish an implied lease between the appellant and Sidi Bilal section 106 of the Indian Transfer of Property Act must be applied. By section 105 of the Act a lease of immovable property is defined as the right to enjoy property, for a certain time, express or implicit. I agree with the learned Judge in the Court below that in the circumstances of this case it is manifest that the relationship of landlord and tenant was created between the appellant and Sidi Bilal. The learned Judge put the matter thus in this passage of his judgment with which I am in entire agreement: -

"It really boils down to this that in order to create a tenancy there must be a consensus, which in a proper case may be inferred from payment and acceptance of rent between the parties giving rise to the relation of landlord and tenant (Ladies Hosiery and Underwear Ltd. v. Parker (1930) 1 Ch. D. 304). In the present case the respondent always intended that Sidi Bilal should be his tenant and he accepted rent from him in that capacity. It is true that the parties intended a particular kind of tenancy but it is equally clear that they were *ad idem* that Sidi Bilal should occupy as a tenant distinguished from a mere licensee at will."

In my opinion then the learned Judge was right in his view that the Magis-, trate was wrong in finding that Sidi Bilal was only a tenant at will and that applying the provisions of section 106 of the Transfer of Property Act he was bound to come to the conclusion that he did, that taking into account the fact that the main use the premises in this litigation are put to is the manufacture of bread, the lease, in the absence of any contract, must be deemed to be a lease from year to year, requiring on the part of either the lessor or the lessee six months' notice of determination.

In my opinion therefore the first ground of appeal fails.

The second and final ground of appeal is an ingenious one. It is contended that as the first defendant (Sidi Bilal) never appealed to this Court against the order for possession made against him at the first magisterial hearing the effect of the judgment of this Court in Civil Appeal No. 15 of 1947 could not be to set aside that order. On this point I have no hesitation in saying that it was the intention of this Court that the judgment of the learned Magistrate as against both defendants should be set aside. Quite apart from the question of personal knowledge I consider that no other reasonable inference could be drawn from the words which appeared in our order: —

"In all the circumstances, we think that this case should be retried on a proper basis in the Magistrate's Court."

Neither have I any doubts that it was within our jurisdiction to make our order applicable to both defendants under the provisions of Article 2 of the Eastern Africa Court of Appeal Order in Council, 1921. The basis of the order made by this Court was that the Courts below had overlooked the requirements of section 101 of the Crown Lands Ordinance. As was said by Scrutton, L. J., in Phillips v. Copping (1935) 1 K. B. $15:$ —

"It is the duty of the Court when asked to give a judgment which is contrary to a statute to take the point although the litigants may not take it."

For the purpose of doing justice in the cause or matter before the Court it was necessary in view of the fact that the requirements of a statute had been overlooked to set aside in toto an order made on a wrong basis. A retention of the order in so far as it affected the first defendant would have been to deny justice to the second defendant.

I concede that in the result the peculiar position is arrived at that the first defendant may become liable for payment of rent in respect of premises which he has long since vacated but the situation is one which has arisen as a result of his own laches and his failure to comply with the law as regards registration. Furthermore the second defendant is in possession and he has always been anxious and ready to pay rent. It is quite unreal therefore to suppose that the final result of this litigation is in some way or other going to work disadvantage to the first defendant who at all times has shown a complete indifference to its outcome. Finally therefore I would uphold the judgment of the Court below which set aside the order for possession made against the second defendant by the learned Magistrate and dismiss this appeal with costs.

EDWARDS, C. J.—This is an appeal from a judgment of the Supreme Court of Kenya in its appellate jurisdiction allowing an appeal from a judgment of the Resident Magistrate's Court which Court had ordered the present respondent and one Sidi Bilal to give up possession of certain premises belonging to the present appellant. The following history and summary of facts of the case is taken from the judgment of the Supreme Court: -

"Bains was the owner of certain premises in Racecourse Road, Nairobi, part of which he used as a public bar. By an agreement in writing dated 10-6-41 he purported to lease to one Sidi Bilal another part of his premises consisting of a bakery and a shop for a period of five years from $1-7-41$ at a monthly rental of Sh. 300. Sidi Bilal went into possession and paid the rent regularly when due which was accepted by Bains. In October, 1942, Sidi Bilal went to India leaving Chogley in charge of the bakery and shop under a duly constituted power of attorney. At all times Sidi Bilal carried on his business under the style of 'The Muslim Bakery' and Chogley continued to carry on the business under that name on behalf of Sidi Bilal, operating the banking account of the business, paying the rent by cheques drawn from that account and so forth. After his departure for India, however, Sidi Bilal never returned to Kenya and in April, 1946, sold his business to Chogley. In June, 1946, Chogley closed the banking account of Sidi Bilal and opened an account for the Muslim Bakery in his own name. Until May, 1946, the rent of the premises was always paid by cheques drawn by Chogley as 'p.p. The Muslim Bakery'. Rent for May and June, 1946, was, however, paid by cheques drawn by Chogley as 'Proprietor of the Muslim Bakery'. Bains accepted all the payments of rent. In June, 1946, he claimed possession of the premises from Chogley on the ground that the alleged lease for five years had expired by effluxion of time. No notice to quit had been given. Chogley, however, refused to vacate and Bains instituted proceedings against both Sidi Bilal and Chogley for possession. Sidi Bilal did not enter appearance and the suit was fought by Chogley and Bains on the basis that the lease was valid. In fact, it was void for want of registration as required by section 107 of the Indian, Transfer of Property Act, 1882. Bains obtained an order of possession against both Sidi Bilal and Chogley against which Chogley unsuccessfully appealed to the Supreme Court. He appealed a second time to the Court of Appeal for Eastern Africa. The Appellate Court allowed the appeal and ordered 'that the judgments of the Supreme Court and the Resident Magistrate's Court be set aside' but ordered a retrial. Sidi Bilal again did not enter appearance at the retrial and the result was the same as in the original trial."

The learned Magistrate who presided at the retrial which had been ordered by this Court gave judgment against Chogley holding that Sidi Bilal was a tenant at will whose tenancy had been effectively determined and rejecting Chogley's contention that he was entitled to remain in possession as attorney or licensee of Sidi Bilal. He further held that Sidi Bilal had not sub-let or assigned his tenancy rights to Chogley. He also found that there was no letting direct to Chogley by Bains either expressly or by acceptance of rent and he also held that he had jurisdiction to try the suit by virtue of the Increase of Rent and of Mortgage Interest (Restrictions) Ordinance. Chogley appealed to the Supreme Court of Kenya which Court set aside the judgment of the Resident Magistrate. The learned Judge of the Supreme Court held that Sidi Bilal was a yearly tenant whose tenancy was determinable by a six months' notice to quit and that the tenancy had not been determined and also that Chogley is in possession by the lease and licence of Sidi Bilal. Against that judgment Bains now appeals to this Court.

Although the hearing of this appeal occupied several days, only two grounds were set out in the Memorandum of Appeal, namely (first) that the learned Judge erred in holding that the tenancy of Sidi Bilal was a tenancy from month to month or from year to year and (secondly) that the Judge erred in holding that the judgment of the Resident Magistrate of 14th May, 1947, had been set aside by the order of this Court of 20th August, 1947. I shall deal first with the latter ground. I was a member of the Court which made the order of 20th August, 1947. $\overline{I}$ would certainly not care, at this lapse of time, to rely on my memory for the reasons which actuated me, or the intention I had when I signed that order. I have, however, no doubt as to the effect of that order. It was to set aside in toto, as regards all parties, the judgment of 14th May, 1947. Apart from the clear words of Order 39 Rule 27, Civil Procedure Rules, 1927, the position in law of Chogley was so bound up with and dependent on that of Sidi Bilal that it is unthinkable that this Court ever intended anything other than to direct a complete fresh inquiry into and trial of the case, having regard to the fact that it had just newly transpired that the agreement of lease of 10th June, 1941, had not been registered and, being for over a year (in fact for five years) contravened section 107, Indian Transfer of Property Act. In my view this ground of appeal fails.

I now turn to the only other ground of appeal, namely, that the Supreme Court of Kenya erred in holding that the tenancy was from month to month or from year to year. Mr. Nazareth argues that the combined effect of sections 105, 106 and 107, Indian Transfer of Property Act, is merely to raise a presumption of a tenancy (assuming that a person has been allowed into possession under an unregistered lease which is void according to the rule in Ariff v. Jadu Nath (1928) 55 Cal. 1090) but that that presumption can be rebutted, and it has in this case been rebutted because it is common ground that there was no other lease since the parties all along thought that Sidi Bilal was a tenant for five years, and that, since that was the only tenancy ever alleged, it ousts the suggestion that there can be any other kind of tenancy. Now, speaking for myself, I am not prepared to hold that, because the lease of 10th June, 1941, is altogether void, one must ignore the fact, which is common ground, that such a lease did exist. No question of admissibility or otherwise of evidence need arise or trouble one. But if, as in the instant case, the tenant was in possession under an unregistered lease and the landlord recognized his right by acceptance of rent, then the position is not, as Mr. Nazareth contends, that there is no lease other than the unregistered one but that the statute law by section 106 sets up presumption of a lease and a notice to quit is accordingly necessary (Mulla's Indian Transfer of Property Act, 2nd edition (1936), page 593). I am quite unable to accept the proposition that that presumption can be rebutted by merely saying, "Oh well, all the defendant can show was the void lease". To accept such an argument would entirely defeat the statutory provision. I fail to understand how the learned Judge of the Supreme Court can be said to have erred in relying on the judgment of Sir L. Sanderson, Chief Justice of Bengal in Sheikh Akloo v. Sheikh Emaman (1917) 44 Cal. 403 at 410 which seems to fit exactly the facts of the case now before us. I agree with the finding of the Supreme Court of Kenya that Sidi Bilal must be deemed, under section 106, to have been-a tenant of premises used for "manufacturing purposes" since I suppose that a baker can be said to "manufacture" bread and that a notice to quit was necessary and has not been given. While Sidi Bilal could terminate Chogley's licence at any time I agree with the learned Judge that, as Chogley is in possession by the leave and licence of Sidi Bilal whose tenancy has not been terminated, no order of eviction against Chogley should have been made by the Resident Magistrate on 29th April, 1948.

I would dismiss this appeal with costs.

THACKER, J.—I have had the advantage of reading the judgment of the learned President. I concur and have nothing useful to add.