Cottage Limited v KCB Staff Pension Fund & another [2024] KEELC 6632 (KLR)

Cottage Limited v KCB Staff Pension Fund & another (Environment & Land Case E050 of 2023) [2024] KEELC 6632 (KLR) (17 September 2024) (Judgment)

Neutral citation: [2024] KEELC 6632 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Environment & Land Case E050 of 2023

MD Mwangi, J

September 17, 2024

Between

The Cottage Limited

Appellant

and

KCB Staff Pension Fund

1st Respondent

Fantasy Auctioneers

2nd Respondent

Judgment

1. This appeal arises from the decision of the Business Premises Rent Tribunal (herein after referred to as the Tribunal) made by the Honourable P. Kitur delivered on the 24th November, 2023.

2. The Appellant is the Tenant who had rented out premises from the Landlord, the 1st Respondent herein. The Appellant moved the Tribunal through a Reference and a Notice of Motion Application dated 8th August, 2023. In the application, the Appellant sought for an injunction to restrain the Respondents from interfering with its quiet possession of the suit premises or its goods. The Appellant also sought that the Tribunal determines and varies the rent payable to the 1st Respondent for the period between 1st November, 2019 and 1st July, 2020.

3. On 24th November 2023, the Honourable P. Kitur made the following orders; -a.The upshot is that the Tenant’s Application dated 8th August, 2023 is hereby dismissed in the following term:b.The Tenant shall clear the arrears of Kshs. 11, 358,164/= as at 28th July, 2023 in addition to any rent and incidental costs accrued to date no later than 30th November, 2023. c.In default, the Landlord is at liberty to proceed to levy for distress of the rent.d.The Tenant shall additionally hand over vacant possession of the premises to the Landlord on or before 30th November, 2023, failure to which the Landlord shall be at liberty to break in and enter with the assistance of O.C.S. Gigiri Police Station or any other Police Station close by.e.This Ruling settles the Reference dated 8th August, 2023. f.Costs are awarded to the Landlord.

4. The Appellant dissatisfied with the said orders of the Tribunal filed this appeal by way of the Memorandum of Appeal dated 27th November, 2023.

5. In the Memorandum of Appeal, the Appellant amongst other grounds asserts that the Tribunal failed to appreciate that it was only seized with the determination of an interlocutory application and therefore proceeded to summarily dismiss the Reference by the Appellant thereby condemning it unheard violating its right to a fair hearing provided under Article 50 of the Constitution. The Appellant further faults the Tribunal for issuing orders of vacant possession by 30th November, 2023 yet there was no application for vacant possession.

6. The Tribunal is further faulted for acting beyond its jurisdiction by purporting to unilaterally truncate the Appellant’s tenancy yet the Appellant continues to be a protected Tenant and without hearing it out. Further the Appellant alleges that the disputed rent arrears in the sum of Kshs. 11,358,164/= had been compromised and were therefore not payable as the same were impliedly and directly waived on account of the onset of the Covid 19 pandemic.

7. The Appellant contends that since there was no application for leave to levy distress, the right to levy distress had not arisen. Therefore, the 1st Respondent’s instructions to the 2nd Respondent to levy distress were unlawful. The Tribunal is equally faulted for granting an order to levy distress for rent yet there was no application pending before it for such orders.

8. For the above reasons, the Appellant prays that;a.This Appeal be allowed with Costs to the Appellant.b.The Ruling of the Business Premises Rent Tribunal delivered on 24th November, 2023 in Nairobi BPRT Case No. E746 of 2023; The Cottage Limited v KCB Staff Pension Fund and Fantasy Auctioneers be set aside in its entirety.c.The Appellants Notice of Motion Application dated 8th August, 2023 in Nairobi BPRT Case No. E746 of 2023; The Cottage Limited –vs- KCB Staff Pension Fund and Fantasy Auctioneers be allowed with costs.

Court’s Directions 9. On 29th February, 2024, with the consent of the parties, this court directed that the appeal be canvassed by way of written submissions. The Appellant and the 1st Respondent complied and filed their written submissions.

10. The 2nd Respondent did not participate in the appeal.

The Appellant’s Submissions 11. The Appellant’s filed written submissions dated 21st June, 2024. Counsel for the Appellant outlined three issues for consideration by the court: -a.Whether the Honourable Tribunal exceeded the scope of its powers and Jurisdiction.b.Whether the Appellant’s Right to be heard was infringed upon.c.Whether the 1st Respondent’s instructions to the 2nd Respondent’s to levy distress were lawful.

12. On the first issue, the Appellant submits that the Tribunal exceeded its mandate and Jurisdiction by issuing an Order of vacant possession of the demised premises by the Appellant whereas there was no application before the Tribunal for the issuance of an order of vacant possession. It is submitted that the Appellant had occupied and carried on business within the premises since 2015 and the 1st Respondent did not seek an order for vacant possession. Further, CAP 301 does not give power to the Tribunal to issue an order of vacant possession.

13. As to whether the Appellant’s right to be heard was infringed upon; the Appellant submits that it was denied its Constitutional right to a fair hearing when the Tribunal proceeded to summarily dismiss the reference without the benefit of a hearing. Counsel avers that the Tribunal summarily determined the Reference without giving the Appellant a chance to prosecute it thus condemning it unheard by issuing final orders in an interlocutory application.

14. On the last issue on whether the 1st Respondent’s instructions to the 2nd Respondent to levy distress were lawful, the Appellant avers that the instructions were unlawful since the process of levying distress for controlled tenancies requires one to obtain the consent of the Tribunal. It is asserted that the suit premises being a controlled tenancy, the Landlord was obligated to obtain the consent of the Tribunal before levying distress. Counsel cites the case of Laxmishanker Kanji Vyas -vs- Firdaus Salim & Another [2014] eKLR, where the court held that;“Permission to levy distress for rent is an express power of the tribunal. The Landlord in a controlled tenancy is duty bound to seek the tribunal's permission before levying distress for rent…. Section 29 of the Act provides that a Landlord and any agent or servant of a Landlord who evicts a Tenant without the authority of a tribunal or willfully subjects a Tenant to any annoyance with the intention of inducing or compelling the Tenant to vacate the premises or to pay, directly or indirectly, a higher rent for the premises shall be guilty of an offence…”

15. The Appellant urged the Court to allow the appeal as prayed.

1st Respondent’s Submissions 16. The 1st Respondent’s submissions are dated 17th April, 2024. Counsel for the 1st Respondent identifies four main issues for determination. The first issue is whether the Tribunal summarily dismissed the Reference. It is submitted that the issues raised in both the Reference and the Application were the same. Parties were granted the opportunity to submit on the issues. Counsel argues that the 1st Respondent submitted extensively. The Appellant on the other hand did not sufficiently submit. It is after the said submissions and evaluation of the evidence adduced that the Tribunal made its determination. The Tribunal cannot therefore be accused of overlooking the Appellant’s application. The assertion that the Appellant’s right to a fair hearing was infringed lacks any basis.

17. The second issue is whether the Tribunal correctly exercised its discretion to grant vacant possession and police assistance. The 1st Respondent submits that the Tribunal had the right to frame issues that were pertinent towards advancement of justice and therefore, the Ruling delivered was just. The decision was made after evaluating the evidence before it. The Appellant was bound to pay the of rent arrears amounting to Kshs. 11,358,164/= as at 28th July, 2023. The Tenancy Agreement between them expired on the 20th January, 2023 and the Landlord had since executed a tenancy agreement with a different Tenant dated 1st December, 2023. Therefore, pursuant to Section 12 (1) (e) of the Land and Tenants (Shop, Hotel and Catering Establishments) Act Cap.30, the Tribunal right had the right to grant vacant possession and Police assistance orders.

18. The third issue for determination according to the 1st Respondent is whether the 2nd Respondent with the instructions of the 1st Respondent unlawfully levied distress for failure to seek leave form the Tribunal. Counsel submits that it is not a mandatory requirement for a Landlord in a controlled tenancy. The 1st Respondent had the right to distress for rent in an attempt to recover the rent arrears under Section 3 (1) of the Distress for Rent Act, Cap. 293 Laws of Kenya. Reliance is placed on the case of John Nthumbi Kamwithi –vs- Asha Akumu Juma (2018) eKLR, where the court held that the Landlord has no obligation to seek permission from the Tribunal. It is optional to apply for leave or not.

19. The fourth issue is whether the disputed rent arrears were waived on account of Covid 19 pandemic. The 1st Respondent avers that it granted all its Tenants on the suit premises a 50 % rebate of rent, between the month of April, 2020 and December, 2020. A fact that the Appellant has not opposed. Further, that during the period of repairs, the 1st Respondent avers that the Appellant was granted a 10 % waiver for the entire month of January when the repairs were undertaken. The Appellant was also granted 11 days rent waiver on one of the Units for the month of December, 2019 when the repairs commenced. The 1st Respondent argues that default in payment of rent by the Appellant started in early 2019 and not during the Covid 19 pandemic as alleged.

20. The 1st Respondent submits that the Appellant was in huge rental arrears but made no attempts to settle the rent arrears until when its goods were proclaimed. The Appellant has therefore not come to court with clean hands. The Appellant’s actions are occasioning huge financial loss of rental proceeds to the Pensioners to whom the 1st Respondent is obligated to. The 1st Respondent therefore prays that the appeal be dismissed with costs.

Issues for Determination 21. Upon consideration of the materials presented in respect of the Appeal herein, the court is of the opinion that the following are the issues for determination:a.Whether the Tribunal condemned the Appellant unheard when it dismissed the Reference.b.Whether the Appeal is merited.c.What orders should issue in regard to the costs of the appeal.

Analysis and Determination A. Whether the Tribunal condemned the Appellant unheard when it dismissed the Reference 22. As a first appellate court, this court’s role is to subject the whole of the evidence to a fresh and exhaustive scrutiny and make its own conclusions about it. This duty was well spelt out in Selle & Another v Associated Motor Boat Co. Ltd. & Others [1968] EA 123 in the following terms:“I accept counsel for the Respondent’s proposition that this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court from a trial by the High Court is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanour of a witness is inconsistent with the evidence in the case generally (Abdul Hammed Saif v Ali Mohamed Sholan [1955], 22 E.A.C.A. 270).

23. The right of appeal from the decision of the Tribunal is provided for under Section 15(1) of the Landlord & Tenants (Shops, Hotels and Catering Establishment) Act, which provides that ‘any party to a reference aggrieved by any determination or order of a Tribunal made therein may within 30 days after the date of such determination or order appeal to the High Court.’ Undoubtedly, the Appellant has the right to appeal to this court.

24. Turning to the first issue for determination, the 1st Respondent submitted that the Appellant was given an opportunity by the Tribunal to canvass its case through the submissions. Further, that the issues raised in the Reference were similar to those raised in the Notice of Motion. The Appellant on the other hand faults the Tribunal for granting the orders which are final in nature.

25. Opportunity to be heard is a fundamental Constitutional right of any litigant in Kenya. Article 50 of the Constitution provides for the right to be heard. Article 50(1) provides:“Every person has a right to have any dispute that can be resolved by the application of law decided in a fair and public hearing before a court or, if appropriate, amounting independent and impartial tribunal or body.”

26. A right or opportunity to be heard as concerns a Plaintiff in civil proceedings would comprise the liberty to file all his/her pleadings and documents as he/she may wish to file and rely on in the case, a right to information concerning the dates when he/she needs to attend court, a right to understand the court proceedings and freedom to present his/her case before the court and participate in the proceedings generally, all in accordance with the law that governs prosecution of civil cases.

27. I have perused the record herein. The Appellant in its Reference dated 8th August, 2023 sought for orders;a.That the Landlord has without cause unlawfully distressed for rent and directed its agents Fantasy Auctioneers to proclaim the Tenant’s goods and assets in the suit premises.b.The Landlord has contrary to the express provisions of the Act and the terms of the contract between the parties unlawfully levied distress for rent against the Tenant without first moving and procuring a permit from this Honourable Tribunal.c.That despite several requests the Landlord has failed, neglected and/or refused to waive and or offer the Tenant a rebate on the rent for the period in which the business was closed due to the extensive and substantial renovations being undertaken by the Landlord on the suit premises.d.That despite several requests by the Tenant the Landlord has failed, neglected and/or refused to waive and/or offer the Tenant a rebate on the rent for the period between 1st March, 2020 and 1st July, 2020 in which the business was closed due to the government directives during the Covid-19 pandemic. That the Landlord’s refusal is inherently discriminatory against the Tenant as such waivers/ or rebates were offered to other Tenants in the suit premises during the afore-stated period in the pandemic.

28. This issue is critical for the administration of justice and must be addressed with the seriousness that it deserves. The Supreme Court of Kenya in the case of Githiga & 5 others v Kiru Tea Factory Company Ltd (Petition 13 of 2019) (2023) KESC, while addressing the import of the provisions of Article 50 (2) of the Constitution stated that: -“... article 50 (2) of the Constitution on the right to a fair trial imposes a duty on the court to guarantee the parties..........procedural justice.Procedural fairness in the administration of justice involves the fair hearing rule and the rule against bias. The fair hearing rules require a decision maker to inter alia afford a person an opportunity to be heard before making any decision affecting his/her interests. Likewise, procedural fairness in his decision making requires courts not to deprive any person of their right without due process of the law, a fundamental precept that implies that the right of a person affected by any adverse decision or action is present before a tribunal that pronounces judgment upon the question of life, liberty or property in its most comprehensive sense, to be heard by testimony or otherwise and to have the right of controverting by proof every material fact which bears on the question of right in the matter involved.”

29. It is common ground that what was due for hearing before the tribunal was the Appellant’s interlocutory application dated 8th August, 2023. The Tribunal however decided on both the interlocutory application and the reference. The Appellant in its submissions asserts that the tribunal issued directions on the hearing of the application only on 10th August, 2023.

30. The Appellant therefore opines that the tribunal erred in its ruling delivered on 24th November, 2023 by failing to appreciate that it was only seized with the adjudication of the interlocutory application yet proceeded to summarily dismiss the Appellants’ reference dated 8th August, 2023. It further issued an order of vacant possession of the demised premises whereas there was no application before it for the issuance of such an order.

31. I have had the opportunity to peruse the impugned ruling by the tribunal. At paragraph 19 of the said ruling the tribunal identified 2 issues for determination as follows: -a.Whether this Honourable Tribunal should determine and vary the rent payable to the 1st Respondent/Landlord between 1st November, 2019 and 1st July, 2019. b.Whether it is mandatory to seek permission of the Tribunal prior to levying distress on a controlled tenancy.

32. The Tribunal framed the above issues pursuant to the Appellant’s application dated 8th August, 2023 seeking orders: -I. That pending the hearing and determination of this application, this Honourabole Tribunal be pleased to issue an order of injunction directed at the Respondents by themselves, their employees, and or agents, restraining them from interfering with the applicant’s quiet possession of the suit premises and its goods.II. That the Honourable Court be pleased to determine and vary the rent payable to the 1st Respondent for the period between 1st November, 2019 and 1st July, 2020.

33. It is clear from the proceedings that what was before the Tribunal, even from the issues framed by the Tribunal itself was the interlocutory application. The main reference was not due for hearing yet.

34. The 1st Respondent in its submissions defends the decision of the Tribunal. It submits that the issues raised in both the reference dated 8th August, 2023 and the application were similar therefore justifying the determination of both at the same time.

35. The Landlord and Tenant (shops, hotels and catering establishments) (Tribunal) (Forms and Procedure) Regulations, contemplate a full hearing for every reference filed before the Tribunal. Rule 18 (1) requires the Chairman to record the decision of the Tribunal and the following particulars;a.The date of the reference;b.Names of the applicant and the Respondent;c.A record of the evidence;d.Date of hearing and whether premises were viewed or not;e.The composition of the Tribunal andf.The application and any documentary exhibits shall be attached to the record.

36. From the record of appeal filed before the court, there is nothing to indicate that the Tribunal gave directions on the hearing of the reference at any one time or that it ever directed the parties to submit on both the application and the reference.

37. It is trite that in determining an interlocutory application a court is not called upon to make any conclusive or definitive findings of law or fact. The court, as expressed in the case of Nguruman Ltd v Jan Bonde Nielsen & 2 others [2014] eKLR, does not hold a mini trial and must not examine the merits of the case closely.“Positions of the parties are not to be proved in such a manner as to give a final decision in discharging a prima facie case.”

38. Ringera, J (as he then was) in Airland Tours & Travel Ltd v National Industrial Credit Bank, had also stated that in an interlocutory application, the court is not required to make any conclusive or definitive findings of fact or law.

39. In as far as the Tribunal made a determination on the reference in its ruling of 24th November, 2023, the Hon. Tribunal acted in error.

40. I too will address the orders issued by the Tribunal beyond the prayers sought by the Appellant in its interlocutory application.

41. In the case of the Independent Boundaries Commission and Another v Stephen Mutinda Mule & 3 others [2014] eKLR, the Court of Appeal cited with approval the decision of the Malawi Supreme Court of Appeal in Malawi Railways Ltd v Nyasulu[1998] MWSC 3 in which the learned Judges quoted with approval from an article by Sir Jack Jacob entitled “the present importance of pleadings” whereof the author stated that,“As the parties are adversaries, it is left to each one of them to formulate his case in his own way, subject to the basis rules of pleadings and cannot be allowed to raise a different or fresh case without due amendment property made. Each party knows the case he has to meet and cannot be taken by surprise at the trial. The court itself is as bound by the pleadings of the parties as they are themselves. It is no part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings. Indeed, the court would be acting contrary to its own character and natural as it were to pronounce any claim or defence not made by the parties. To do so would be to enter into the realm of speculation. Moreover, in such event, the parties themselves, or any rate one of them might well feel aggrieved; for a decision given on a claim or defence not made or raised by or against a party is equivalent to not hearing him at all and this be a denial of justice..........In the adversarial system of litigation therefore, it is the parties themselves who set the agenda for the trial by their pleadings and neither party can complain if the agenda is strictly adhered to. In such an agenda, there is no agenda for an item called “any other business” in the sense that points other than those specific may be raised without notice.”

42. In my view, the above quote answers on the issues raised in the appeal. With respect to the Honourable Tribunal, it went beyond its duty and acted contrary to its own character and nature by purporting to pronounce itself on a claim not made by the parties. It went beyond the agenda set by the parties in the pleadings. No wonder the Appellant who was the Applicant before it feels aggrieved by the decision. It was equivalent to not hearing it at all.

43. I would agree with the dictum of Lord Denning in Jones v National Coal Board [1957] 2 QB 55 as cited in the Ugandan Case of Libyan Arab Uganda Bank for Foreign Trade and Development & Another v Addam Vassiliadis [1986] UG CA 6, where he had stated as follows: -“In the system of trial which we have evolved in this country, the judge sits to hear and determine the issues raised by the parties, not to conduct an investigation or examination on behalf of society at large, as happens, we believe, in some foreign countries.”

44. The Tribunal should merely have pronounced itself on the prayers in the application on 8th August, 2023, and set down the reference for hearing. It was uncalled for, for the Tribunal to make a determination on the arrears due and owing and how the Landlord was to recover them as well as on the handing over of vacant possession. The 1st Respondent had not lodged a counter or cross-claim against the Appellant to justify the issuance of such orders in any event.

45. Regarding the merits of the dismissal of the application dated 8th August, 2023, I agree with the finding of the Tribunal. At the interim stage, the material presented before the Tribunal were inadequate to enable the Tribunal make a decision on the prayer for variation of rent. The Appellant too had not followed the prescribed procedure for variation of rent.

46. I conclude by pointing out that Article 159 of the Constitution calls upon the courts and tribunals established by or under the Constitution, in exercising their judicial authority to inter alia, do justice to all and ensure that justice is not delayed. Courts and tribunals must not sacrifice justice (procedural and substantive) on the altar of expediency.

47. The Supreme Court in the case of Githiga & 5 others v Kiru Tea Factory Co. Ltd (Supra) emphasized that the right to a fair trial was a non-derogable right.

48. Failure by the Tribunal to expressly inform the parties that the Appellant’s reference was to be heard contemporaneously with the interlocutory application and by way of written submissions was detrimental to the Appellant. It denied the Appellant a fair opportunity to prosecute its reference.

49. Consequently, the appeal succeeds with costs to the Appellant against the 1st Respondent. The court sets aside the orders (b), (c), (d), (e) and (f) in the ruling of the Tribunal dated 24th November, 2023 and directs that the reference by the Appellant dated 8th August, 2023 be heard afresh in accordance with the provisions of the applicable law and regulations by a panel or in any other manner lawfully provided for.It is so ordered.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 17TH DAY OF SEPTEMBER, 2024. M.D. MWANGIJUDGEIn the virtual presence of:*Ms. Ochola for the 1st RespondentMs. Lumumba for the Appellant (h/b for Mr. Marete)N/A by the 2nd – 6th RespondentsCourt Assistant: YvetteM.D. MWANGIJUDGE