Egerton University Retirement Benefits Scheme v Chandarana Supermarket Limited [2025] KEBPRT 190 (KLR)

Egerton University Retirement Benefits Scheme v Chandarana Supermarket Limited (Tribunal Case E100 of 2024) [2025] KEBPRT 190 (KLR) (27 February 2025) (Ruling)

Neutral citation: [2025] KEBPRT 190 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E100 of 2024

P Kitur, Member

February 27, 2025

Between

Egerton University Retirement Benefits Scheme

Landlord

and

Chandarana Supermarket Limited

Tenant

Ruling

A. Parties 1. The Landlord is the registered owner of the commercial premises erected on the property known as Property Title Number Nakuru Municipality Block 7/7 measuring approximately 1. 214 hectares (hereinafter referred to as the “suit premises).

2. The Tenant operates a hypermarket business and occupies approximately 41,664. 5 square feet of the lower ground floor and upper ground floor of the building erected on the suit as a tenant of the Landlord.

3. The firm of Robson Harris Advocates LLP represents the Landlord.

4. The firm of Macharia-Mwangi & Njeru Advocates represents the Tenant.

B. The Dispute Background 5. By the execution of a letter of offer dated 30th March 2021, the parties herein entered into a tenancy agreement over the suit premises. The letter provided that the tenancy shall be for a fixed term of eleven years commencing on 1st March 2021 and was subject to renewal for a further ten years.

6. The letter of offer was subject to a lease agreement, which was to be executed by the parties upon the tenant's occupation of the premises. Notwithstanding, the Tenant took occupation of the suit premises.

7. The Landlord filed a reference dated 1st August 2024 to this tribunal complaining of the tenant's notice of termination purporting to vacate the premises.

8. Tenant issued a Notice of Termination of Tenancy for the reason that it was unable to make sales and therefore rendered unable to pay rent.

9. The Landlord filed a reference, and an application for the following orders: (i)An order of the court directing the Tenant to pay the outstanding arrears owed as at 31st July 2024 in the sum of Kshs. 36,540,000/=; (ii)The Landlord be granted leave to levy distress for the recovery of the rent arrears, (iii) an order of the court with the effect of restraining the landlord from terminating the tenancy before the end of the lease term as contained in the agreement; among others.

10. The court granted the interim orders.

11. The Landlord once again filed an application under certificate of urgency dated 13th August 2024 seeking the following an order of a waiver of the court fees to which the court granted the orders.

12. The Tenant filed an application dated 16th August 2024 seeking the following orders:-i.Spentii.A stay of execution of the order issued by this court on 2nd August 2024iii.An order restraining the Landlord and its agents from levying distress upon the Tenant.iv.The court sets aside, vary and review the ex parte orders issued by this court

13. Oder of stay was issued by court on 19th August 2024 as well as injunctive orders.

14. The Landlord filed a replying affidavit in response to the Tenant’s application dated 16th August 2024. Similarly, the tenant filed a supplementary affidavit dated 17th September 2024.

15. The tenant filed a replying affidavit in opposition to the landlord's application dated 1st August 2024. Further, it filed a notice of preliminary objection dated 17th September 2024 on the following grounds:-i.That the tribunal has no jurisdiction to hear and determine the reference and the application dated 1st August 2024 by virtue the provision of section 3 of the Landlord and Tenant (Shops, Hotels and Catering Establishment) Act Cap 301 of the Laws of Kenya which excludes parties to an agreement of eleven years from the purview of the tribunal’s jurisdiction.ii.THAT in view of the above provision, the reference and the notice of motion application dated 1st August 2024 cannot be sustained and ought to be struck out/dismissed with costs.

16. The court directed the parties to dispose of the preliminary objection through written submissions, which they complied.

C. List of Issues for Determination 17. In full consideration of the Preliminary Objection raised by the Tenant, the main issue arising for determination is:-i.Whether this Tribunal has the requisite Jurisdiction to hear and determine the issues raised in the Landlord’s Reference and Application?

D. Analysis and Findings 18. Jurisdiction is everything and once challenged, a determination should be made before the Tribunal can proceed with further disposal of any matter thereto. The Tribunal has no option but to first make a determination whether it is clothed with jurisdiction in the matter. In the case of Owners of the Motor Vessel ‘Lillian” (s) versus Caltex Oil (Kenya) Ltd [1989] KLR1, the Court stated as follows:“Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court had no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.”

19. The law on Preliminary Objections was defined in the locus classicus case of Mukisa Biscuits Manufacturing Company Ltd Vs West End Distributors Limited (1969) EA 696 as follows:“So far as I am aware, a Preliminary Objection consists of a pure point of law which has been pleaded, or which arises by clear implication out of pleadings, and which if argued as a preliminary point may dispose of the suit”.

20. In determining the merits of the preliminary objection, the court is guided to review the tenancy agreement between the parties concerning the suit premises to ascertain the term of the lease and decide whether the tribunal has jurisdiction. This court observed that the parties had executed a letter of offer dated 30th March 2021, which was intended to be subject to a lease. However, the lease was never executed, thereby leaving the letter of intent as the operational agreement.

21. A letter of offer, though different from a lease agreement, is legally binding as it outlines the basic terms and conditions of the proposed tenancy and serves as a preliminary expression of interest with binding legal effects. This binding nature emerges when the letter specifies all essential terms and clearly demonstrates an intention to be legally bound. It is evident from the evidence adduced that the letter of offer was duly executed by the parties herein.

22. It is significant to note that the parties involved relied upon the provisions of the letter of offer through their respective actions. The Landlord accepted rent payments made by the tenants in exchange for their occupancy of the premises, as stipulated in the letter of offer. A tenancy relationship can be inferred from this conduct of the parties, as well as their intention for the letter of offer to govern their tenancy.

23. The letter of offer serves as the agreement regarding the tenancy. Therefore, the provisions contained therein apply to determine the nature of the tenancy. A review of the letter of intent reveals in Clause 6, that the term of the lease was to be for a fixed term of 11 years, commencing from 1st March 2021, with an option for renewal for a further 10 years.

24. Under Section 2 of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, a controlled tenancy means a tenancy of a shop, hotel or catering establishment;i.Which has not been reduced into writing ORii.Which has been reduced into writing and which;i.Is for a period not exceeding five years ORii.Contains provision for termination otherwise than for breach of covenant within five years from the date thereof

25. Based on the foregoing analysis, this tribunal finds and holds that the tenancy herein does not fit into the foregoing definition and the Landlord’s suit is a candidate for striking out.

26. Consequently, the preliminary objection raised by the Tenant on the question of this Tribunal’s jurisdiction has merit and we have no option but to uphold it.

E. Orders 27. In conclusion, this Tribunal makes the following orders:-i.The tenant’s preliminary objection dated 17th September 2024 has merit and is hereby upheld.ii.The landlord’s reference and application dated 1st August 2024 are hereby struck out.iii.For avoidance of doubt, any Orders granted herein are hereby discharged.iv.The Tenant is awarded costs assessed at Kshs. 20,000/=.v.File is marked as closed.

HON P. KITUR - MEMBERBUSINESS PREMISES RENT TRIBUNALRULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON P. KITUR THIS 27TH DAY OF FEBRUARY 2025 IN THE PRESENCE OF MACHARIA FOR THE LANDLORD AND MWANGI FOR THE TENANT.