Dala Lounge and Grill Ltd v Waas Enterprises Limited [2024] KEBPRT 206 (KLR)

Dala Lounge and Grill Ltd v Waas Enterprises Limited (Tribunal Case E1180 of 2023) [2024] KEBPRT 206 (KLR) (1 March 2024) (Ruling)

Neutral citation: [2024] KEBPRT 206 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E1180 of 2023

N Wahome, Member

March 1, 2024

Between

Dala Lounge And Grill Ltd

Applicant

and

Waas Enterprises Limited

Respondent

Ruling

1. This Ruling is on the notice of Preliminary Objection by the Landlord/Respondent dated December 11, 2023. The grounds of the notice are that;i.The Reference filed herein, the Supporting affidavit and the subsequent Application under certificate of urgency all dated 28. 11. 2023 by the Tenant/Applicant as taken out, drawn and filed is incompetent, fatally defective and unsustainable in law or at all.ii.The Business Premises Rent Tribunal lacks jurisdiction to grant the prayers sought by the Tenant/Applicant’s application dated 28. 11. 2023 in view of Section (sic) 12(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments Act) Cap 301 as the disputed license/lease agreement is for a term of five (5) years and three (3) months thus same falls outside the jurisdiction of the Business Premises Rent Tribunal.iii.That in whole, the Tenant/Applicant herein is vexatious and frivolous, litigant and proceedings herein, an abuse of the court process.

2. Directions were taken on the December 14, 2023 to canvass the Preliminary Objection by written submissions. The landlord filed its submissions dated 18. 1.2024 whereas those for the Tenant are dated February 1, 2024.

Landlord’s submissions 3. The gist of the Landlord’s submissions was that the term of the lease dated August 1, 2021 was for a term of five (5) years and 3 others and therefore ousting the jurisdiction of this court as denoted by sections 2(1), 4, 6 and 12(1) of the Act.

4. In support of the above position, the landlord summoned the support of the decision in; Rapid Communications Ltd v Kanubhai S Patel [2014] eKLR to conclude that this court lacked the wherewithal to preside over these proceedings.

5. Without jurisdiction, the landlord submitted that this court would not make a further step in these proceedings, it had to down its tools. Reliance was provided in the case of; The Owners of Motor Vessel “S” v Caltex Oil (Kenya) Ltd [1989] KLR 1.

6. The landlord’s finally submitted that the continued subsistence of the interim orders on record was oppressive to it and unconstitutional and sought that same be vacated without much ado. Reliance was got from the case of; Esther Wambua v Business Premises Rent Tribunal & 2others [2015] eKLR and the case of; Primrose Management Ltd v Chairman of the Business Premises Rent Tribunal Nairobi &another [2015] eKLR.

Tenant’s submissions 7. The Tenant on its part submitted that, their lease/license dated August 1, 2021 was a controlled tenancy under section 2(1) of the Act. Support for this was said to be provided by clause 6(1) of the said license agreement which provided that;-“The licensor shall reserve the right to terminate this license agreement by giving to the licensee a written notice of termination running for thirty (30) days and the licensor shall be liable to refund to the licensee the license for (if any paid in advance) …to the unexpired period of the license.”

8. Further reliance to support this position was found in the case of; Mathew Gitonga Kihara v Peter Geche Karanja [2021] eKLR where the case of; Mohamed Noor Abdullahi v Al-Sawaw Mohamed Abdulqader &another [2021] eKLR” was cited.

9. I have considered the notice of preliminary objection and submissions by the learned counsels. It is very clear and plain that the notice turns on the critical issue of whether license agreement dated 1. 8.2021 provides/creates a controlled tenancy or not. It is not in dispute that the said license agreement contained a break clause in its clause 6. 1 thereof.Section 2(1) of the Act provides that;-“A controlled Tenancy means a tenancy of a shop, hotel or catering establishment-a.Which has not been reduced into writing and which-(i)is for a period not exceeding five (5) years; or(ii)contains provision for termination, otherwise than for breach of covenant, within five (5) years from the commencement thereof.”

10. The break or drop clause 6. 1 of the license agreement gave the licensor absolute discretion without any condition attached to terminate the license without requirement of breach and at its pleasure. That provision fell squarely within the governance of Section 2(1)(b)(ii) of the Act. It therefore rendered the license agreement dated August 1, 2021 a controlled tenancy under the jurisdiction of this court.

11. In this, I find comfort in Civil Appeal No. 152 of 2019; Khalif Jele Mohamed v Salat W. Hussein & Another where the court of Appeal under very similar circumstances as the present ones held that;-“As reproduced above, section 2(i)(b)(ii) of the Act stipulates that if a tenancy agreement has provision for termination, otherwise than for breach of covenant, within 5 years from the commencement of the term, it is a controlled tenancy. In other words, if such a tenancy has provision for termination, which can be invoked at any time during the term, it is in our view a controlled tenancy.”

12. The said court proceeded to hold that;-“In the present case, the termination clause was a blanket provision that gave liberty to the parties to terminate at any time and for any reason within the 6-year term of tenancy. In effect, it could be invoked by either party, and either party could terminate the tenancy within the first 5 years of the term or even 5 years after commencement of the tenancy. In effect, as worded, the termination clause did not exclude termination of the tenancy, within the first 5 years of the term. It was in fact permissive of termination within 5 years from the commencement of the tenancy. To that extent, we are satisfied that the termination as worded brought the tenancy within the meaning of a controlled tenancy under Section 2(1)(b)(ii) of the Act. Consequently, the Tribunal was clothed with jurisdiction over the matter.”

13. The conclusion that I have reached is that the notice of preliminary objection by the landlord and dated December 11, 2023 has no merit and is dismissed. Costs will abide the outcome of the Application and Reference thereof.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY AT KAKAMEGA THIS 1. 3.2024. HON. NDEGWA WAHOME, MBSMEMBERBUSINESS PREMISES RENT TRIBUNALDelivered in the presence of;Mrs. Njoroge holding brief for Mr. Murithi for the landlord – presentMr. Amuga for the Tenant/Applicant