David Ngure Kienjeku v Engroup (K) International Limited [2021] KEBPRT 331 (KLR)

REPUBLIC OF KENYA

IN THE BUSINESS PREMISES RENT TRIBUNAL

AT MOMBASA

TRIBUNAL CASE NO. 309 OF 2020

DAVID NGURE KIENJEKU.......................................................TENANT/APPLICANT

VERSUS

ENGROUP (K) INTERNATIONAL LIMITED...............LANDLORD/RESPONDENT

RULING

(TO APPLY TO MOMBASA 308 OF 2020)

1. The application before me is the tenant’s notice of motion dated 21st May, 2021 brought by way of certificate. The said application was precipitated by the instructions issued to the auctioneer to levy distress.

2. It is imperative to note that the Landlord had earlier issued the tenant with a notice to terminate or alter the terms of the tenancy dated 20th November 2020 in accordance with the provisions of section 4(2) of Cap 301. The notice sought to increase the rent payable from Kshs. 4,500 to Kshs. 50,000. Aggrieved by the said notice the applicant challenged the same by filing the present reference on 15th December, 2020.

3. There was little activity in this matter until the Landlord moved to levy distress whereby the tenant rushed to seek refuge and protection from the Tribunal.  The Landlord opposed the application by filing a replying affidavit. The parties addressed me on the issue of rent increment. Each party filed a separate valuation report which support their respective positions. The parties have equally filed their submissions which I have considered.

4. The main issue for determination is the validity of the Landlord’s notice to increase the rent payable. This Tribunal draws its power to determine or vary rent from the provisions of Section 12 (1) (b)which states:

"to determine or vary the rent to be payable in respect of any controlled tenancy, having regard to all the circumstances thereof."

5. The governing statute does not prescribe any method to be employed by the Tribunal in order to determine the rent payable. It follows that the Tribunal has wide discretion over this aspect of its mandate. This discretion is to be exercised judiciously to ensure that the ends of justice are met as was discussed by the Court of Appeal in the case of Shah & Shah vs Kagunda 1978 KLR 35 , where Simpson J, stated at page 1536 as follows :-

"It is I think generally accepted that the tribunal has discretion which must be exercised judicially having regard to the evidence before it."

6. The attendant regulations provide for the guiding principles in assessment of rent in Form G as follows: -

a) Ascertaining the original cost of construction of the building.

b) The age of the building.

c) The market value of the land on which the premises are built

d) The improvements and cost of such improvements.

e) Amenities or services provided by the Landlord.

f) The rent at which the premises were let for the past three years

7. The valuation report filed by the tenant recommends the payment of rent in the sum of Kshs. 24,000. The report has considered comparable from around the demised premises. The tenant has decried that this figure is too high as he has been a tenant for over four decades and the shop is his only source of livelihood.

8. The valuation report presented to us by the Landlord recommends the rent to be the sum of Kshs. 40,000. The said report has equally made reference to comparable from the same area.  The discrepancies in the figures given by the parties is huge. One thing that is agreeable to the two experts is that the current rent paid by the tenant is inordinately low.

9. It is against this background that the Tribunal is invited to make a decision on this subject of rent increment. I have considered the valuation reports filed. The tenant’s valuation report uses comparable which indicate the rent paid by the other tenants as at 2017 and 2018. The rate of inflation keeps rising and affects the cost of living. The rent payable for premises is equally affected.

10. It should be noted that the argument that the shop is the tenant’s only source of income does not hold. The Tribunal may sympathize with him but the Landlord has a right to earn a meaningful and decent livelihood from their investment. Like any other investment, the property should be commercially viable. The rent payable should be commensurate to the value of the property as envisaged under Form G.

11.   The Landlord has apart from the valuation report attached documentation in the form of the Land rates payable for the property. The overhead costs and utilities such as service charge must be factored in computing the rent payable.

12. The further affidavit filed by the tenant alludes to the demised premises being located in a strategic location. The premises are located near town. It therefore follows that human traffic is high thus the demand for the premises is equally high. The sales would also be expected to be high considering the potential number of customers at any given time. The proposed rent of Kshs. 50,000 is justified as elucidated above.

13. The upshot of this therefore is that the Tenant’s application is devoid of merit and the same shall be dismissed accordingly. Having dealt with this, it shall be of no consequence to address the prayers of temporary injunction as sought by the tenant.

14. I will now turn to the issue of when the notice takes effect. On this limb I am guided by the pronouncement by the Mombasa ELC in Mohamed Noor & 23 others v Seif Binsaid Properties Ltd [2020] eKLRwhere the court stated as thus:

“If the Tribunal upholds the increase in rent, it is of course arguable that the landlord was correct all this time, and thus deserving of the increased rent from the time that he issued the notice to do so. It is also arguable that a tenant ought not to benefit from any delays that the landlord suffered while the tenant was prosecuting the case if at the end of the day the landlord ends up being successful.”

15. I have perused through the record. The was a period of dormancy in prosecuting the same. The tenant only sprung to action when the Landlord commenced the process of levying distress. In light of this, it is only fair that the notice takes effect from the date stipulated in the notice.

Disposition:

1. The tenant’s application dated 21st May, 2021 is dismissed with costs to the Landlord.

2. The Landlord’s Notice dated 20th November ,2020 is upheld and took effect from 1st March, 2021.

It is so ordered.

RULING DATED, SIGNED and DELIVERED 10TH  DAY OF SEPTEMBER, 2021.

HON. P. MAY

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:

Mohammed for the Landlord

No appearance for the Tenant