Essence Limited t/a Foyer Restaurant v National Hospital Insurance Fund (BOM) & 2 others [2022] KEBPRT 708 (KLR)

Essence Limited t/a Foyer Restaurant v National Hospital Insurance Fund (BOM) & 2 others (Tribunal Case E102 of 2022) [2022] KEBPRT 708 (KLR) (6 September 2022) (Ruling)

Neutral citation: [2022] KEBPRT 708 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E102 of 2022

Gakuhi Chege, Vice Chair

September 6, 2022

Between

Essence Limited t/a Foyer Restaurant

Applicant

and

National Hospital Insurance Fund (BOM)

1st Respondent

Legend Management Limited

2nd Respondent

Peter Gachie t/a Regent Auctioneers

3rd Respondent

Ruling

1. On May 12, 2022, this tribunal delivered a ruling dismissing a preliminary objection dated February 14, 2022 by the respondents to the effect that the six (6) years lease entered between the 1st respondent and the tenant does not fall under a controlled tenancy and as such this tribunal lacked jurisdiction to entertain the suit.

2. It was observed at paragraph 9 of the said ruling that the revised letter of offer forwarded to the tenant vide annexure “MAL8” had not been exhibited by either party to confirm whether the same was executed by both parties or not.

3. On the same date, the 1st respondent applied for and was granted leave to withdraw the replying affidavit sworn by Wilson Mburu Kamau on February 26, 2022 and file a comprehensive response.

4. Pursuant to the said leave, the 1st respondent filed a replying affidavit sworn on May 18, 2022 by Wilson Mburu Kamau in his capacity as the Manager of property and Asset Management of the 1st respondent.

5. Among the documents attached to the said replying affidavit as annexure ‘WMK4’ is a letter of offer dated September 28, 2015 which is executed by both parties. On behalf of the tenant, it is executed by Marie A Luseno and Christabel A Onyango as directors.

6. Under clause 5 of the said letter of offer, the term of the lease is provided as follows:-“The lease will be for a period of six (6) years on a full internal repairing and insuring basis. There will be no sub-letting, transfer or assigning of lease”.

7. In a further affidavit sworn on June 27, 2022, at paragraph 3, Marie A Luseno deposes that the tenancy is a controlled one and that this tribunal had already ruled on the issue on May 12, 2022 with finality that it had jurisdiction.

8. At paragraph 14 of the said affidavit, the tenant’s director deposes that the applicant has never been furnished nor signed any lease agreement since it started operating the restaurant in 2005 and only signed one letter of offer for G7 space dated September 28, 2005 and a separate letter of offer dated September 23, 2015 for GIO space.

9. It is further deposed that no lease was ever issued to the tenant for the two premises in terms of clause 24 (b) and 26 (b) of the two letters of offer aforesaid and as such the tenancy was controlled in absence of a written lease.

10. In the ruling of May 12, 2022 at paragraph 10, this tribunal observed as follows:-“10. In the premises, I have no materials before me that indeed there exists a 6 year lease between the two parties as argued by the landlord and this issue ought to be subjected to hearing in the normal manner”.

11. As the issue of existence of a lease agreement of more than 5 years goes into the jurisdiction of this tribunal, I shall frame it as a threshold issue in this ruling based on all the materials before me.

12. The Court of Appeal in the case of Bachelor’s Bakery Ltd v Westlands securities Ltd [1982] KLR 366 held as follows:-“1. The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301) is a special Act designed for the protection of tenants who have entered into a lease agreement not exceeding five years that has not been reduced in writing. The Act overrides any other written law which is in conflict with its provisions. This agreement having been reduced in writing and being for a period exceeding five years did not fall within the jurisdiction of the Act.

2. The parties entered into an agreement exceeding five years making the agreement a contract falling under the Transfer of Property Act, 1982, section 106. Such an agreement is valid between the parties even in the absence of registration”.

13. In the case of Eldo City Limited v Com Products Kenya Ltd andanother [2013] eKLR at paragraphs 13 & 14, Justice A Mabeya held as follows:-“13. In the case of RTS Flexible Systems Ltd v Molkerei alois Muller GmbH & Co KG [2010] UK SC 14, the Supreme Court of United Kingdom considered whether using the phrase “subject to contract” during contract negotiations prevented an enforceable contract from being formed. The court held that whether or not there was a binding contract in place could be established by considering the communication, and assessing whether it led to the objective conclusion that the parties intended to create legal relations and whether the parties had agreed on all the terms essential to form a contract. In Investec Bank (UK) Ltd v Zulman and another [2010] EWCA VIV 536, the court cautioned against putting too much weight behind the phrase “subject to contract and held that it is the parties intention that matters. The presence or absence of the phrase will not of itself determine whether or not a contract exists. It is the intention of the parties that matters”.“14. How does the court then determine the intention of the parties?. The cases of storer v Manchester City Council [1974] 1WLR 1403 is instructive. In that case Lord Denning MR stated that:-“ In contracts you do not look into the actual intent in a man’s mind. You look at what he said and did. A contract is formed when there is, to all outward appearances, a contract. A man cannot get out of a contract by saying, I did not intend to contract, if by his words he has done so. His intention is to be found only in the outward expression which his letters convey. If they show a concluded contract that is enough”.

14. I have examined the letter of offer against the correspondences exchanged between the parties and I am of the firm view that the parties herein intended to enter into a lease of six (6) years. One such letter is dated October 10, 2015 attached to the replying affidavit marked “WMK-3” wherein the tenant at paragraph 4 states as follows:-“Sometime in July 2005, we bid and were awarded the lease for the premises G10 vide a letter dated August 17, 2005. In the tender document, in the technical proposal, we indicated our desire to have occupation of the premise for a period of 6 years with a provision of an extension for a further period of six years on the same terms”.

15. Although the applicant appears to state in its replying affidavit that the premises are different ie G7 & G10 the letter of offer dated September 28, 2015 relates to the restaurant which according to clause 11 thereof is located on the ground floor measuring 1,006 square feet inclusive of common area apportionment.

16. Going by the above analysis, I am convinced beyond any peradventure that the tenancy entered into by the parties herein is not controlled under section 2(1) of Cap 301, Laws of Kenya and as such this tribunal has no jurisdiction to adjudicate upon the dispute.

17. In the previous ruling as observed above, the letter of offer dated September 28, 2015 was not availed to the tribunal and I held as much that the issue would be subjected to evidence and no conclusive findings were made in that regard.

18. In conclusion therefore the final orders that commend to me in this matter are:-(i) The tenancy herein being for 6 years is not controlled within the meaning of section 2(1) of Cap 301 and this tribunal has no jurisdiction to adjudicate upon the instant dispute.(ii) The tenant’s case is hereby struck out and the interim orders given herein are hereby discharged/set aside.(iii) The respondents are awarded costs assessed at Kshs 30,000/- all inclusive against the tenant.It is so ordered.

RULING DATED, SIGNED & DELIVERED VIRTUALLY THIS 6TH DAY OF SEPTEMBER 2022. HON. GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALIn the presence of:Nyamweya for the 1st RespondentOdera for the Tenant/Applicant