Geco Car Wash Limited v Northlake Limited [2022] KEBPRT 88 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. E095  OF 2021 (NAIROBI)

GECO CAR WASH LIMITED........TENANT/APPLICANT

VERSUS

NORTHLAKE LIMITED......LANDLORD/RESPONDENT

RULING

1. Before me are two motions dated 6th May 2021 and 4th August 2021 by the tenant and landlord respectively.  The two motions were directed to be disposed of together.

2. In the tenant’s motion dated 6th May 2021, it seeks for restraining orders against the landlord from interfering with its quiet possession of the premises situate on Land Reference No. 330/377/A&B.  It is supported by the affidavit of Roger Gunther Pfeiffer sworn on 6th May 2021 and the grounds on the face thereof.

3. Based on the pleadings, it is clear that by the time of institution of the instant proceedings, the tenant was in rent arrears of Kshs.3,400,000/- which it attributes to the effect of Covid-19 pandemic.  The tenant is however continuing to meet its monthly rent obligations of Kshs.800,000/-.

4. On 24th April 2021, it is deposed that the landlord sent its agent to inform the tenant to vacate the property immediately.  The tenant in turn informed the landlord that it was willing to pay rent as and when due and has been paying rent.  It undertook to clear outstanding arrears by immediate payment of Kshs.1,000,000/- and the balance of Kshs.2,800,000/- in monthly instalments of Kshs.150,000/-.

5. However, the landlord insisted on the tenant vacating immediately without giving any notice whatsoever despite having been a diligent tenant for 10 years.  The tenant had constructed a car wash and other buildings and could not be expected to vacate the property in a moment’s notice in breach of provisions of the applicable law.

6. The tenant feared eviction by the landlord without due process and moved this Tribunal for injunctive relief which  was granted ex-parte on 7th May 2021.

7. The landlord opposes the application through a replying affidavit sworn on 4th August 2021.  It accuses the tenant of non-disclosure of material facts and of having approached the Tribunal with unclean hands after breaching its contractual obligations on rent payment.

8. The  landlord deposes that it was only exercising its statutory right to recover rent arrears which as at August 2021 stood at Kshs.4,832,019/- and which the tenant party acknowledges.  As such the tenant being a defaulting partly should not be enjoying equitable reliefs in the nature of injunction.

9. The landlord denies harbouring any  intentions of evicting the tenant from the premises as it only laid claim and demand payment of rent arrears and allegations of threatened eviction were only meant to hoodwink the tribunal to issue injunctive orders.

10. The tenant is accused of breaching its contractual obligations regarding payment of rent and has failed to make good the arrears which state of affairs cannot continue to obtain in perpetuity.

11. It is the landlord’s case that there is no prejudice and or loss or damage to be occasioned to the tenant if it was allowed to exercise its right to levy distress for rent arrears duly admitted.

12. On the other hand, the landlord by its application dated 4th August 2021 is seeking leave to levy distress against the tenant to recover the outstanding rent arrears in the sum of Kshs.4,232,540/- lawfully due and owing.  The application is supported by the affidavit of Charles Githinji the property manager of the landlord sworn on 4th August 2021 and the grounds on the face thereof.

13. The landlord annexes a statement of rent account marked ‘G-2’ in proof of the tenant’s indebtedness and reiterate the contents of the replying affidavit sworn on 4th August 2021.

14. The landlord also seeks for an order to set aside and/or discharge the orders of this Tribunal issued on 7th May 2021.  The orders according to the landlord were obtained through non-disclosure of material facts by a defaulting tenant who should not be enjoying equitable reliefs.  The tenant is accused of having approached the Tribunal with unclean hands and was taking advantage of interim orders in place to breach its contractual obligations.

15. The tenant opposes the application through the replying affidavit of Roger Gunther Pfeiffer sworn on 30th August 2021.

16. The tenant states that it has always been a good tenant for the last 8 years or so and has always paid rent in time and at no one time has the landlord ever distressed for rent neither had a dispute over rent ever existed which demonstrates fulfillment of its obligations under the lease.

17. The tenant acknowledges being in rent arrears in the sum of Kshs.4,000,000/- arising from the Covid-19 pandemic economic slow down which arrears it was willing to clear in instalments on terms issued by the Tribunal.

18. The Tenant deposes that it intended to pay Kshs. 1 million in the first instance but on 26th April 2021, the landlord sent its manager to inform it that it would be evicted without any due process.

19. Negotiations entered into between the parties are said to have borne no fruits but the tenant had commenced clearance of the arrears through the landlord’s account.  It requests for reconciliation of accounts.

20. The two applications were ordered to be disposed of by way of written submissions and both parties complied.

21. The issues for determination are:-

a. Whether the tenant is entitled to the reliefs claimed in the application dated 6/5/2021.

b. Whether the landlord is entitled to the reliefs claimed in the application dated 4/5/2021.

c. Who is liable to pay costs?

22. It is not in dispute that by the time the tenant obtained ex-parte orders, it was in rent arrears of Kshs.4,232,540/- as at 31st May 2021.  This is no doubt a collosal figure.

23. At paragraph 10 of his supporting affidavit, the tenant deposes that it was willing to liquidate the amount in arrears by paying Kshs. 1 million immediately and the balance in monthly instalments of Kshs.150,000/-.  To date the said amounts have not been tendered.

24. Contrary to the said proposal, the tenant in response to the landlord’s application for leave to levy distress contends that it was willing to settle the arrears in instalments in terms that this Tribunal may impose.

25. The tenant in its submissions argues that the landlord is intent on evicting it without following due process.  However, I have not seen any evidence of threats of eviction.  In my view the real dispute between the parties revolves around non-payment of rent by the tenant.

26. In the case of Samuel Kipkrori Ngeno & Another – vs- Local Authorities Pension Trust (Registered Trustees) & Another (2013) e KLR at paragraphs 9 and 12 the superior court had the following to say:-

“9. A tenant’s first and main obligation is to pay rent as and when it becomes due, for the landlord has the right to an income form his investment.  Why would a tenant allow himself to fall into such huge arrears of rent”.

“12. The temporary injunction sought in the present application is an equitable remedy at the court’s discretion.  He who comes to equity must come with clean hands.  A tenant who is in huge arrears of rent is underserving of the court’s discretion.  The court cannot be the refuge of a tenant who fails to meet his principle obligation of paying rent as and when it becomes due”.

27. the tenant has not demonstrated good faith in settling the accrued arrears.  The tenant desires that this court continues to protect it to the chagrin of the landlord who is entitled to a return on investment.  This is not equity.

28.  The landlord is on the other hand entitled to levy distress under section 3(1) of the Distress for Rent Act Cap.293 Laws of Kenya.  This Tribunal has powers under section 12(1) (h) of Cap. 301, Laws of Kenya to permit levy of distress for rent.

29. In the premises, the following final orders commend to me:-

a. The tenant’s application dated 6th May 2021 and the reference of even date is hereby dismissed with costs.

b.  The landlord’s application dated 4th August 2021 is allowed in terms of prayers 1 and 2 with costs.

c. The distress fees payable by the landlord is hereby waived in view of the loss already incurred on account of delay in conclusion of this matter and payment of accrued arrears.

d. The tenant shall pay costs of Kshs.30,000/- to the landlord.

It is so ordered.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY THIS 11TH DAY OF FEBRUARY, 2022

HON. GAKUHI CHEGE

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:

Miss Nganga for Tenant

Mr. Nyanyuki for the Landlord