Donuts World Limited v Verity Management Limited & Pyramid Auctioneers [2022] KEBPRT 84 (KLR)

Full Case Text

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. 259 OF 2021 (NAIROBI)

DONUTS WORLD LIMITED..............................................APPLICANT

VERSUS

VERITY MANAGEMENT LIMITED......................1ST RESPONDENT

PYRAMID AUCTIONEERS.....................................2ND RESPONDENT

RULING

1. Before me is a motion dated 22/3/2021 in which the applicant seeks for a restraining order against the Respondents from interfering with its goods and tools of trade in the business premises identified as G-14 situated within Soin Arcade, Westlands, Nairobi.

2. The application is supported by the affidavit of Augustine Wanjau sowrn on the 22nd March 2021 and the grounds on the face thereof.

3. It is deposed that the said Augustine Wanjau is a director of the applicant which entered into an oral lease agreement with the 1st Respondent to occupy the space known as G-14 within Soin Arcade, Westlands, Nairobi (hereinafter called the suit premises).

4. The applicant states that it was paying rent promptly until it started experiencing diminishing business returns and temporary closure due to Covid-19 pandemic which affected payment of rent in time.

5. In February 2021, the applicant gave the landlord a rent payment schedule in order to clear the rent arrears marked ‘AW-1&2’. On 12/3/2021, the landlord is alleged to have unlawfully and maliciously instructed the 2nd Respondent to levy distress against the applicant’s good and tools of trade as per annexture ‘AW-3’ which are worth millions of money.

6. It is further deposed that the arrears are highly exaggerated by the Respondents and the latter have refused to separate arrears owed by the applicant and those owed by the previous tenant “Elimu Yetu”.

7. The business is the applicant’s only source of income and the Respondents’ actions could bring it to its knees.

8. The applicant is accused of refusal to sign the lease in order that the tenant may enjoy its rights.

9. The application is opposed through a replying affidavit of Elizabeth Mbithi sworn on 30/11/2021 who is a director of the 1st Respondent in terms of annexture ‘EM-1’.

10. The 1st Respondent is a property agent of Soin Limited which owns Soin Arcade-L.R. No. 209/11400, Westlands as per annexture ‘EM-2’.

11. According to the 1st Respondent, Augustine Wanjau had no capacity to swear the affidavit in support of the case as he is not a director of the applicant as per annexture ‘EM-3’ dated 5th June 2018.

12. It is also denied that there exists an oral lease agreement between the applicant and 1st Respondent in respect of a space identified as G-14 and as such the applicant is a stranger to the latter without any contractual relationship which explains why no date or terms of occupation are given by it.

13. It is however admitted that there existed a tenancy agreement in respect of shop No. G8 between the 1st Respondent and Elimu Yetu Ltd an outfit related to the applicant as a partner in terms of annexture ‘EM-4’.

14. The 1st Respondent alludes to a joint venture partnership agreement between the Applicant and Elimu Yetu Limited dated 30th May 2019 where the two outfits agreed, to partner in running and managing a restaurant named ‘Donuts world’ as per annexture ‘EM-5’.

15. The applicant is said to occupy the suit premises on the basis of the said arrangement. It occupies shop no. G-8 and not G-14. The outstanding rent arrears for the said premises was Kshs.2,575. 541. 20 as per annexture ‘EM-6’.

16. The outstanding electricity bill arrears owed to Kenya Power & Co. (KPLC) is Kshs.232,510. 00 which continues to accrue.

17. The applicant is accused of failure to comply with orders of 24/3/2021 directing it to pay Kshs.200,000/- by 8/4/2021 towards part arrears as well as monthly rent which had accrued since obtaining orders herein on 24/3/2021 thereby prejudicing the 1st Respondent. Annexutre AW-1 & 2 did not emanate from the 1st Respondent.

18. All rent payments are done by Elimu Yetu Limited against whom the 2nd Respondent was instructed to levy distress by the 1st Respondent.

19. The 1st Respondent deposes that it is equally entitled to its source of income and have all the rights to levy distress against insensitive and non-compliant tenants like the applicant.

20. There exists a lease agreement between the 1st Respondent and the applicants business partner Elimu Yetu Limited marked ‘EM-4’.

21. The applicant filed a further affidavit sworn by Augustine Wanjau on 22nd December 2021 wherein it is deposed that the replying affidavit served upon its advocates was not dated or commissioned. This is however a non-issue as the one filed in court is dated 30th November 2021 and is duly commissioned as required.

22. The 1st Respondent annexes invoices in the names of ‘Elimu Yetu and donuts World Limited’ in respect of premises ‘G-14’ together with statements and cheques marked ‘DW-3’.

23. The 1st Respondent has annexed form CR-12 in respect of Taste Donut World Limited and Skyup Infinity Travel Agency Limited showing that Augustine Wanjau was a director in both companies which entered into a joint venture partnership agreement on 10/1/2020 with Donuts world Limited to run the business housed by the 1st Respondent at Soin Arcade.

24. On 17th July 2021, a sum of Kshs.150,000/- was deposited into the 1st Respondent’s account which it is alleged to have refused to issue a receipt making it difficult for the applicant to deposit further amount into the account.

25. According to the applicant, a meeting was held on 1/12/2020 between its representative and those of the 1st Respondent and a formula for payment of accrued rent arrears of Kshs.692,506. 40 agreed upon as per annexture ‘DW-5’ and as such the 1st Respondent was not entitled to levy distress.

26. It was directed that the application be disposed of by way of written submissions but only the 1st Respondent complied.

27. I am required to determine the following issues:-

(a) Whether there exists a landlord/tenant relationship between the 1st Respondent and the applicant herein.

(b) Whether the applicant is entitled to the reliefs claimed.

28. It is not in dispute that the 1st Respondent offered a space to Elimu Yetu Limited vide a letter dated 3rd August 2019 within Soin Arcade -L.R NO. 209/11400, shop No. 8, Ground floor, Westlands, Nairobi measuring approximately 1,222 square feet located on ground floor together with part corridors, staircases and lobbies with effect from 1st September 2019.

29. The said offer was accepted and executed by all the parties thereto and is attached to the replying affidavit as annexture ‘EM4’.

30. There is also evidence vide annexture ‘EM5’ to the effect that Elimu Yetu Limited entered into a joint venture partnership agreement with Donuts World Limited on 30th May 2019 to run the business known as Donuts World Limited together. This explains how the applicant came into the suit premises.

31. It is important to note that the lease agreement entered into between the 1st Respondent and Elimu Yetu Limited is for a period of six (6) years from 1st September 2019 and does not contain a termination clause other than for breach of covenant. This clearly removes the tenancy from the application of Cap. 301, Laws of Kenya which defines what constitutes a controlled tenancy under section 2(1) thereof. As such this Tribunal lacks the requisite jurisdiction to deal with the case.

32. In the case of Owner and Master of Motor Vessel ‘Joey’ – vs- Owners and Master of Motor tugs ‘Barbara’ and ‘Steve’ ‘B’ (2007) eKLR the court of appeal at page 7 held that the question of jurisdiction is a threshold issue and most be determined at the threshold stage using such evidence as may be placed before the Judge by the parties. The court cited Nyarangi J.A. in Owners of Motor Vessel ‘Lilian S’ -vs- Caltex Oil (Kenya) Ltd (1989) KLR 1 where he graphically put it thus:-

“……….I think it is reasonably plain that a question of jurisdiction ought to be raised at the earliest opportunity and the court seized……of the matter is then obliged to decide the issue right away on the material before it. Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there could be no basis for a continuation of the proceedings pending other evidence. A court of law down (sic) tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction……….”.

33. I note that the applicant has not presented any evidence that it had a separate or independent tenancy relationship with the 1st landlord and all documents presented before court in terms of payment receipts are in the name of Elimu Yetu Limited which is the 1st Respondents’ recognized tenant. The applicant as a business partner of the said Elimu Yetu Limited is bound by the lease entered into with 1st Respondent and cannot sue or claim to enforce any rights under the said agreement.

34. I am fortified in this regard by the decision of the court of appeal in Agricultural Finance Corporation – vs- Lengetia Limited & Jack Mwangi (1985) eKLR, where the court cited with approval the treatise Halsbury’s Laws of England, 3rd Edition, Volume 8 at paragraph 110 as follows:-

“As a general rule, a contract affects only the parties to it and cannot be enforced by or against a person who is not a party, even if the contract is made for his benefit and purports to give him the right to sue or make him liable upon it. The fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue upon the contract”.

35. I find and hold that the applicant is non-suited against the Respondents and the instant proceedings are a candidate for dismissal.

36. In the premises, I find that there being no landlord/tenant relationship between the 1st Respondent and the applicant and the tenancy between the former and Elimu Yetu Limited being for 6 years and therefore not controlled, this honourable Tribunal has no jurisdiction to adjudicate the dispute.

37. Consequently, the following orders commend to me:-

(a) The application dated 22/3/2021 and the reference of even date are hereby struck out for want of jurisdiction.

(b) The ex-parte orders given on 23/3/2021 are hereby discharged and/or vacated.

It is so ordered.

DATED, SIGNED & DELIVERED VIRTUALLY THIS 4TH DAY OF FEBRAURY 2022.

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:

Tombe for the Applicant

Mrs. Rotich for the Landlord