Barot v Valji and Sons (Civil Appeal No. 28 of 1955) [1955] EACA 168 (1 January 1955)

## APPELLATE CIVIL

Before SIR KENNETH O'CONNOR, C. J.

## RAMJI RANMAL BAROT, Appellant $\boldsymbol{\nu}_i =$

## JUDAVJI VALJI & SONS, Respondents • Civil Appeal No. 28 of 1955

Landlord and Tenant-Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, 1954, Part II-Sections 10 and 11 (2)-Order for retroactive tenancy ultra vires-Necessity to find whether premises shop or store-Necessity to apply subjective and not objective test to discover quantum of rent-Whether current market rent "reasonable" rent-Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Rules, 1954—Rule 11 -Functions of assessor.

A tenant, carrying on business as a shoemaker, had the lease of a shop on Bazaar Road, Nairobi, with rear premises, in Bazaar Lane, the rear premises being described as a shop, but registered and used as a store. The landlord carried on business as a retail provision merchant in a shop which he owned, next door to the store, but chiefly employed himself as a piece-goods hawker. For reasons of advancing age, uncertainty of reissue of hawker's licence and because he wished to open a piece-goods shop in the leased premises the landlord determined his tenant's lease. The tenant applied to a subordinate court of the first class for an order to grant a new tenancy under the provisions of Part II of the Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, 1954. The magistrate made an order, dated 15th June, 1955, granting to the tenant a tenancy of both shop and store from 24th December, 1954, until 31st May, 1955, at a monthly rental of Sh. 1,350 for both premises, inclusive of improved site value tax, and further ordered that the tenancy of the shop in Bazaar Road should continue until 23rd December, 1956 (the maximum period allowed by the Ordinance) at a monthly rental of Sh. 900 inclusive of site value tax. The landlord appealed against the whole of the order except that part thereof refusing tenancy of the store. Both appellant and respondent agreed that the magistrate had no power to make an order directing a retroactive tenancy from 24th December, 1954. The tenant cross-appealed against the order refusing a tenancy of the store coterminous with the tenancy of the shop and against the term of Sh. 900 per month rent for the shop.

Held (30-7-55).-(1) The order made on 15th June, 1955, directing a retroactive tenancy from 24th December, 1954, was contrary to the provisions of sections 10 and 11 (2) of the Ordinance and was ultra vires the powers of the magistrate and could not stand.

(2) The magistrate had not applied his mind, as he should have done, to the question of whether the rear premises were or were not a shop within the meaning of the Ordinance and whether or not he had power to make an order with regard to these premises.

(3) Although there had been some evidence of rent, it was scanty and went only to the question of what would be a market rent. The magistrate had to apply the subjective test of what he thought right and fair as distinct from the test he had applied, which was the objective test of what the evidence had shown to be the rent of the premises obtainable in the open market. The assessment of rent therefore could not stand.

(4) The magistrate had invited the assessor's advice as to whether greater hardshipwould be caused by ordering than by refusing the grant of a new tenancy and whether

he considered it reasonable to grant a new tenancy. In so doing the magistrate had misconceived the functions of an assessor. These are questions to be answered by the<br>court and not by an assessor. It was clear from rule 11 of the Landlord and Tenant. (Shops and Hotels) (Temporary Provisions) Rules, 1954, that the function of the assessors<br>is to give to the court the benefit of his special skill or knowledge in relation to any<br>matter to be determined in regard to the pr the rental value of such premises, or other matters where expert knowledge is necessary, and it is not to advise the court upon issues such as that of the reasonableness of granting a tenancy which the Ordinance requires the court to decide. If the court treats. the assessors as a jury and takes his verdict at the end of the evidence, it is clear that the proviso to rule 14 will become nugatory, for the party against whom the assessor gives the opinion cannot at that stage exercise his right to an opportunity to-<br>controvert that opinion. In the instant application no opportunity had been given to<br>the landlord of controverting the assessor's opi of the shop and no opportunity was given to the tenant of controverting the assessor's. opinion that he should be refused possession of the store.

(5) The question of reasonableness and the quantum of rent and the conditions of the new tenancy are matters which the legislature has confided to the lower court and the Appellate Court was unable to say how these questions would have been dealt with had the approach to these questions been in accordance with the Ordinance and Rules,<br>a proper one. Accordingly, the matter must be remitted for retrial.

Appeal allowed with costs.

Case cited: John Kay Ltd. v. Another, (1952) 1 A. E. R. 813, C. A.

Mrs. Kean for appellant.

Gautama for respondent.

JUDGMENT.—This is an appeal from a judgment of the Landlord and Tenant Court, dated 19th May, 1955. The present respondents, J. Valji and Sons, were tenants of premises in Bazaar Road and Bazaar Lane, Nairobi, of which the present appellant was the landlord. The tenants applied for the grant of a new tenancy under Part II of the Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Ordinance, 1954 (hereinafter called "the Ordinance"). The premises. were shown on a plan, exhibited in the lower court, as two shops, the larger being situated on Bazaar Road, Nairobi, and the smaller situated on Bazaar Lane. There is a small open courtyard between the two shops. It is a question whether the Bazaar Lane premises would not be more correctly referred to asa store. They were, at the time of the application, used as a store and were registered as a store with the City Council.

The tenant carries on the business of a shoemaker on the premises. The landlord owns a business of a retail provision shop which is next door to the Bazaar Lane store and is separated from it by a narrow passage. The landlord is a piece-goods hawker, 58 years old. He said in evidence that he was unable to continue his hawking because he had not enough physical strength; and that his hawker's licence might be withdrawn after about six months. He desired toobtain possession of the suit premises in order to establish a shop for piece-goods. in addition to his provision shop. He owns three other properties, none of which, he says, is suitable for a piece-goods business. He says that he has to maintain a family of twenty members and that he wishes to start the piece-goods business. as a provision for his old age and for his sons. The position, therefore, was, at the date of the applications, that the tenant was occupying two shops, the rear one in Bazaar Lane, being used as a store, and the front one in Bazaar Road, being used as a shoe shop; the landlord was occupying a small shop adjacent to the rear shop as a provision store and required more space to extend his provision business and to start a piece-goods business.

The magistrate, having heard the evidence, made an order dated 15th June, granting to the tenant a tenancy of both shops (i.e. the Bazaar Road shop and the Bazaar Lane store) from the 24th December, 1954, until the 31st May, 1955, at.

a monthly rental of Sh. 1,350 for both shops, inclusive of improved site value tax. He further ordered that the tenant was to continue in occupation of the Bazaar Road shop until the 23rd December, 1956 (the maximum period allowed for a tenancy under the Ordinance) at a monthly rental of Sh. 900, inclusive of site value tax, subject to the conditions set out in the order. The landlord has appealed against the whole of this order except that part thereof which refused the tenancy of the store.

Both parties are agreed that the magistrate had no power to make an order directing a retroactive tenancy from the 24th December, 1954. This order was contrary to the provisions of section 10 and section 11 (2) of the Ordinance and cannot stand. In answer to the cross-appeal, the landlord says that the magistrate erred in law in making an order with regard to the Bazaar Lane store, as the Ordinance does not apply to stores but only to shops and hotels. It would appear that the court below did not (as it should have done) apply its mind to the question of whether the rear premises were or were not a shop within the meaning of the Ordinance, and whether or not the court had power to make an order with regard to those premises. A further ground of appeal of the landlord is that the learned magistrate was wrong in law in his approach to the matter of rent. The landlord says that the usual practice in the Landlord and Tenant Court is to postpone consideration of the *quantum* of rent until it has been decided whether or not a tenancy should be granted and that, thinking that this practice would be followed, counsel for the landlord did not produce the evidence which could have been produced on the question of the proper rent to be fixed and that, in fact, the rent was fixed by the magistrate as the result of one answer by a witness to the assessor regarding the rent paid for adjacent premises. It would appear that, though there was some evidence of rent, that evidence was extremely scanty and so far as it went, went only to the question of what would be a market rent. It has been laid down in John Kay Ltd. v. Kay and Another, (1952) 1 A. E. R. 813 C. A. (a case under the corresponding legislation in England) that "the rent to be paid under the new tenancy is rent arrived at by applying the subjective test of what the Judge thinks is right and fair, as distinct, for example, from the objective test of what the evidence shows is the rent of the premises obtainable in the open market. When all the evidence has been given and attention has been directed to the right considerations, the exact qualification must be arrived at in the same way, for example, as that in which a jury fixes a figure when it comes to assess damages". This procedure does not appear to have been followed in this case. Accordingly, the assessment of rent cannot stand.

The landlord's main ground of appeal is that the magistrate misdirected himself in failing to consider the personal circumstances of the landlord, e.g. his age, feebleness, the fact that his licence was in jeopardy, his wish to expand his business, and his financial circumstances. The passage in the magistrate's judgment to which exception is taken reads as follows: -

"I have asked Mr. Kirpal Singh, the assessor, if he is satisfied, on the question of hardship, that having regard to all the circumstances of the case, greater hardship would be caused by ordering the grant of a new tenancy than by refusing to do so. His opinion is that greater hardship would be caused by refusing a tenancy as then an existing business would be destroyed. whereas the landlord wants the premises to expand an existing business or start a new business. I agree with this opinion. I then asked the assessor if he considered that in all the circumstances of the case, it appeared reasonable to grant a tenancy of these two shops and if so, for what period and at what rent.

Mr. Kirpal Singh gave his opinion that it would be unreasonable to give the applicant a tenancy of both shops and that a tenancy should be granted of the Bazaar Road shop only to the applicant, thereby preserving the existing business of the applicant and at the same time releasing for the use of the landlord the Bazaar Lane shop (now used as a store by the tenant) to which the landlord can expand his existing provision store lying adjacent, or start a piece-goods shop. Thus the applicant will in fact be losing the use of a 'store' (and here I may say that the applicant's advocate in his final address emphasized that 'stores can easily be found') and the respondent will be gaining a 'shop' for which he asked in his answer."

The magistrate agreed with the advice of the assessor and made the order already mentioned. Counsel for the appellant objected that the sole reason given in granting a tenancy of the Bazaar shop was that greater hardship would be -caused by refusing a tenancy as an existing business would be destroyed, whereas the landlord wanted the premises to expand an existing business or start a new business. Counsel argued that the assessor and the magistrate had accepted this reason as decisive and given no proper consideration to all the other reasons advanced why the landlord would be given possession of his premises. I do not so interpret the judgment. The other reasons were put forcibly before the court and the assessor by learned counsel, in counsel's final address and I see no reason to suppose that the Court did not take them fully into consideration.

Looking at the whole of the record and the judgment. I am of opinion that it did consider these reasons. I observe, however, that the magistrate asked the assessor's advice as to-

- (a) whether greater hardship would be caused by ordering the grant of $a$ new tenancy than by refusing to do so; and - (b) whether he considered that in all the circumstances of the case, it appeared reasonable to grant a tenancy for those two shops and, if so, for what period and at what rate.

The magistrate has misconceived the functions of an assessor. These two questions are questions to be answered by the court, not by the assessor. Rule 11 of the Landlord and Tenant (Shops and Hotels) (Temporary Provisions) Rules, 1954, is as follows: $-$

"11. In any case in which the court deems it necessary or desirable, the court may sit with one or more assessors of special skill of knowledge of or in relation to any matter to be determined in regard to the premises the subject of the proceedings or the rental value of such premises."

Rule 14 states as follows: —

"14. The court may take and act upon the opinion of the assessors or any assessor either in addition or in preference to, or in the absence of, evidence adduced by the parties:

Provided that—

- (i) the opinion of an assessor shall not be accepted in preference to the evidence adduced by any party unless that party has been given an opportunity of controverting that opinion or any part of it prejudicial to his view; - (ii) the court shall not be bound to accept or act upon the opinion of the assessors or any assessor."

It is clear from rule 11 that the assessors are to give the court the benefit of their special skill or knowledge of, or in relation to, any matter to be determined in regard to the premises the subject of the proceedings or the rental

value of such premises. The assessors are not there to advise the court upon, e.g. the question of the reasonableness of granting a tenancy which the Ordinance requires the court to decide, but to advise with regard to the suit premises or their rental value, or other matters where expert knowledge is necessary. If the court treats the assessors as a jury and takes their verdict on e.g. the question of reasonableness, it is clear that the proviso to rule 14 will become nugatory The party against whom the assessor gives the opinion cannot at that stage be given an opportunity of controverting that opinion and in fact, in this case, no opportunity was given to the landlord of controverting the assessor's opinion that he should be refused possession of the shop, and no opportunity was given to the tenant of controverting the assessor's opinion that he should be refused possession of the store.

Having regard to all these matters, the trial has been unsatisfactory. I have been asked by counsel for the appellant not to send the case back for retrial but to deal with the matter here. The question of reasonableness and of the quantum of rent and the conditions are, however, matters which the legislature has confided to the lower court and not to this Court, and I am unable to say how they would have been dealt with had the approach to the various questions been a proper one. I am, by no means, saying that the solution arrived at by the lower court does not do substantial justice, but the approach has not been in accordance with the Ordinance and the Rules. The matter must go back for a retrial.

The appellant must have the costs of this appeal.