Brand Strategy & Design (EA) Ltd v Royal Importers & Exporters Ltd, Zohali Holdings Limited & Gladsom Auctioneers Ltd [2021] KEBPRT 437 (KLR) | Landlord Tenant Disputes | Esheria

Brand Strategy & Design (EA) Ltd v Royal Importers & Exporters Ltd, Zohali Holdings Limited & Gladsom Auctioneers Ltd [2021] KEBPRT 437 (KLR)

Full Case Text

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. 114  OF 2019 (NAIROBI)

BRAND STRATEGY & DESIGN (EA) LTD.......................TENANT/APPLICANT

VERSUS

ROYAL IMPORTERS & EXPORTERS LTD....LANDLORD/1ST RESPONDENT

ZOHALI HOLDINGS LIMITED.......................LANDLORD/2ND RESPONDENT

GLADSOM AUCTIONEERS LTD.............................................3RD RESPONDENT

RULING

1. By a motion dated 8th December 2020, the Tenant/applicant is seeking that the deposits made to this honourable Tribunal totaling to Kshs.500,000/- pursuant to the order  of 11th February 2019 be refunded to the Tenant/Applicant.

2. The application is supported by the affidavit of one EVA MURAYA sworn on 13th March 2020 and the grounds on the face of the application.

3. On 11th February 2019, the Tribunal directed both the Tenant and the Landlords to deposit Kshs.250,000/- each.

4. The amount deposited by the Tenant was rental arrears while that by the Landlords was rental security held by them on account of the Tenant.

5. The said deposits were made on 15th February 2019.

6. During the pendency of the matter, the Tenant was allegedly evicted by the interested party (THE PEARL RESIDENCE MANAGEMENT LIMITED/ from the demised premises.

7. The Tenant therefore claims for refund of the total sum of Kshs.500,000/- deposited into the Tribunal’s account pending determination of the instant proceedings.

8. It is the Tenant’s case that the Landlords with whom it contracted were not the registered owners of the business premises and that the same legally belonged to the interested party herein.

9. The Tenant contends that a fraud was committed against it by the Respondents/Landlords  and as such is entitled to the refund of Kshs.500,000/-.

10. The Tenant further contends that the Respondents/Landlords did not have any legal mandate to lease the property to it as they had no right/interest whatsoever to the suit property.

11. In a replying affidavit sworn on 20th July 2021, by one ABDUL KADIR SHABBIR HUSSEIN D HASSAN ALI,  the Respondents oppose the Tenant’s application saying that the application is brought in bad faith.

12. It is the Respondents’ case that the Tenant and 2nd Respondent entered into a binding contract in the form of Heads of Terms agreement over a portion of 1,750 sq feet for office space  on the ground floor at pearl Residency, Nairobi county.  The Agreement is marked A and attached to the replying affidavit.

13. According to the Respondents, a sum of Kshs.250,000/- related to rental arrears of January and February 2019 and Kshs.250,000/- was security deposit held for and on behalf of the Tenant pursuant to the lease agreement.

14. The Tenant through a letter dated 25th January 2019 marked A4 issued a notice of termination of tenancy  and acknowledged non payment of rent for the months of January and February 2019 instructing the Respondents/Landlords to offset the same from the security deposit made in this Tribunal.

15. The Landlords were not amenable to accede to the said request before the Tenant makes good the premises they were occupying.

16. According to the Landlords, rent and the security held ought to be preserved or continue to be held by the Tribunal so as to secure the repair of such damage which may be much  worse and can only be ascertained upon though inspection of the premises and to satisfy the rental arrears.

17. The Landlords are opposed to the orders sought by the Tenant since the Reference is yet to be heard and determined.

18. The Respondent’s contend that the interested party has not made a claim over the demised premises on the ownership thereof and no evidence has been provided to substantiate the allegation.

19. On 13th January 2020, the interested party was removed from the instant proceedings through  dismissal of the application for joinder on account of non-attendance by the Tenant.

20. No evidence of fraud has been adduced by the Tenant and no complaint has been lodged with the various investigative government agencies on the same.

21. The Landlords/Respondents deposes that the Tenant is no longer in the premises and its assets and location are unknown to them.

22. The Respondents insist on the matter proceeding for hearing and final determination despite its averment that the Tenant has moved out of the premises with its assets.

23. The Tenant/Applicant filed submissions in support of the application but the Landlords did not.

24. The only issue for determination is whether or not the Tenant should receive back the amount held by the Tribunal in this case.

25. I have considered the case for both parties and make the following findings:-

i. The Tenant and the 2nd Respondent entered into a Heads of terms agreement subject to lease with effect from 1st October 2018.

ii. No evidence of fraud has been adduced to vitiate the said agreement.

iii. The Tenant issued a notice of termination of tenancy on 25th January 2019 effective end of February 2019.

iv. No evidence of eviction of the Tenant has been adduced.

v. The Tenant vacated the demised premises on unknown date and in unclear circumstances after the termination notice.

vi. There is no longer any Landlord/Tenant relationship between the two parties.

vii. The Tenant admitted arrears for the months of January and February 2019 through its letter of 25th January 2019.

viii. The sum of Kshs.500,000/- was deposited into court with half of it going to cater for rental arrears and the balance as security deposit.

ix. There is no evidence that THE PEARL RESIDENCE MANAGEMENT LIMITED owns the demised premises or had any objection to the tenancy relationship between the Applicant and the Respondents herein.

x. THE PEARL RESIDENCE MANAGEMENT LIMITED are not a party to the instant proceedings as the application for joinder was dismissed for want of attendance.

xi. There is no Reference capable of being  heard and determined in view of the fact that the tenancy relationship came to an end after the Tenant vacated the premises.

xii. The rights and obligations arising from the tenancy agreement are enforceable in law.

xiii. The state of the demised premises as at the date of the Tenant’s vacation ought to be availed to the Tribunal  through a valuation report to enable the costs of  any repairs to be deducted from the security deposit before the balance can be released to the Tenant.

26. In the premises, I order as follows:-

a. The sum of Kshs.250,000/- held on account of rent arrears shall be paid to the 2nd Respondent/Landlord.

b. The 2nd Respondent shall file a valuation report of the state of repair of the demised premises and/or any evidence of amount of expenses incurred for repairs thereof for purposes of offsetting the same against the security deposit held by the Tribunal.

c. Any balance remaining after offsetting the cost of repairs shall be payable to the Tenant/Applicant.

d. There shall be no orders for costs in this matter.

e. The matter shall be mentioned within 30 days hereof for further orders in respect of order (b) above.

RULING READ, SIGNED & DELIVERED THIS 18TH DAY OF JUNE,2021

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:

Mr. Farah for the Respondent

Mr. Muhandick for the Landlord

Further order:  matter to be mentioned on 16th July, 2021 for further orders.  Tenant is at liberty to file its separate report on repairs.

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL