Genwatt Investment Group Limited v Wahinya alias John Karuga [2024] KEBPRT 7 (KLR)

Genwatt Investment Group Limited v Wahinya alias John Karuga (Tribunal Case E671 of 2023) [2024] KEBPRT 7 (KLR) (15 January 2024) (Ruling)

Neutral citation: [2024] KEBPRT 7 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E671 of 2023

Andrew Muma, Ag. Chair

January 15, 2024

Between

Genwatt Investment Group Limited

Applicant

and

John Karuga Wahinya Alias John Karuga

Respondent

Ruling

A. Parties and Representatives 1. The applicant, Genwatt Investment Group Limited, is a Tenant who rented space for business at LR No 209/10646 (IR No 4821) located along Mombasa Road within Nairobi City County (hereinafter known as the ‘the Tenant’).

2. The Firm of Mahmoud Gitau Jillo LLP appears for Applicant/Tenant.

3. The Respondent, John Karuga Wahinya alias John Karuga is the Landlord and owner of property known as LR No 209/10646 (IR No 4821) located along Mombasa Road within Nairobi City County (hereinafter known as the ‘the suit premises’).

4. The Firm of Patrick Maina PMA & Company Advocates appears for Respondent/Landlord.

B. The Dispute Background 5. The Dispute in this matter arose when the Landlord issued the Tenant with an Eviction Notice vide a letter dated 7th July 2023 requiring the Tenant to hand over vacant possession of the suit premises by 8th July 2023.

6. Through a Reference and Application both dated 10th July 2023, the Tenant moved this Honourable Tribunal seeking among other orders that pending the hearing and determination of the reference, the Tribunal grant the Landlord and/or their agents/servants be ordered to facilitate the acquisition of water and electricity connection on the suit premises and be restrained from evicting the Tenant from the suit premises and unlawfully interfering with the Tenant’s use and occupation of the premises.

7. Vide an Order issued on 13th July 2023, the Tribunal certified the matter as urgent, issued an Order requiring the Landlord to facilitate the acquisition of water and electricity connection on the suit premises and prohibiting the Landlord from evicting the Tenant pending hearing and determination of the application.

C. Tenant’s Case 8. The Tenant through its director, Abdirizak Mohamed Isse, avers that he entered into a tenancy agreement with the Landlord on 26th June 2023 upon execution of a lease agreement which they forwarded to the Landlord’s advocates for execution by the Landlord. The Tenant’s advocates then proceeded to make payment of 2 months’ rent, 1 month rent deposit and legal fees to the Landlord’s advocates.

9. The Tenant claims that they were granted vacant possession of the demised premises and begun construction works on the premises to facilitate their intended use of the premises.

10. The Tenant avers that he issued a termination notice to its former Landlord on 1st July 2023 and even proceeded to purchase materials for the construction works at the new site.

11. The Tenant contends that on 5th July 2023, they received, through their advocates, a cancellation notice together with the cancelled lease agreements. Subsequently, on 7th July 2023, the Landlord sent an eviction notice and demanded for the Tenant to hand over possession of the premises the next day, 8th July 2023 by 10:00am.

12. In addition, the Tenant also claimed that the Landlord failed to provide the necessary assistance to the Tenant to acquire water and electricity connectivity on the suit premises.

D. Landlord’s Case 13. The Landlord avers that he did not execute the lease agreement due to integrity issues that he discovered on the tenant’s part compelling him to change his mind on the initial intention to enter into a lease agreement with the Tenant.

14. Subsequently, the Landlord issued a notice of cancellation of the intended lease agreement together with the cancelled lease agreement. He further states that he refunded the Kshs 930,000 that was paid to his advocates being payment for 2 months’ rent, 1 month rent deposit and the legal fees.

15. The Landlord also contends that the Tenant was not granted possession to the suit premises, but rather the Tenant was given a temporary access to the property, out of good will and professional courtesy, for purposes of conducting due diligence, i.e., inspection over the property.

E. Jurisdiction 16. The Jurisdiction of this Honourable Court has been contested by the Landlord vide a Notice of Preliminary Objection dated 15th November 2023.

17. It is the Landlord’s submissions that the Tenant that the lease agreement was not executed by both the Tenant and the Landlord and as such the Tribunal lacks the jurisdiction to determine the matter since there exists no Landlord-Tenant relationship.

F. ISsues for Determination 18. I have carefully perused all the pleadings and evidence presented before this Honourable Tribunal by the parties. It is therefore my respectful finding that the following issues are ripe for determination;a.Whether there exists a Landlord- Tenancy relationship?b.Whether the Notice issued by the Landlord on 7th July 2023 was valid?c.Whether the Tenant should continue occupancy of the suit premises?

G. Analysis and Findings a. Whether there exists a Landlord- Tenancy relationship? 19. This Honourable Tribunal has the duty to interrogate the question of jurisdiction and satisfy itself before making any further step in line with the celebrated case of Owners of the Motor Vessel ‘Lillian S’ v Caltex Oil (Kenya) Limited [1989] eKLR where the Court of Appeal held as follows:“I think that 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 would be no basis for a continuation of proceedings pending other evidence. A court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.

20. As was stated by the Supreme Court in Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR:“A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the Constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. ...”

21. The jurisdiction of the Business Premises Rent Tribunal is governed by the Landlord and Tenant Shops Hotels and Catering Establishments Act Cap 301 Laws of Kenya (hereinafter the Act). The preamble to the Act states that:“It is an Act of Parliament to make provisions with respect to certain premises for the protection of tenants of such premises form eviction or from exploitation and for matters connected therewith and incidental thereto.”

22. Further, according to the Act, the jurisdiction of this Honourable Tribunal is limited to controlled tenancies.

23. A controlled tenancy is defined under Section 2 of the Act as follows: -“controlled tenancy” means a tenancy of a shop, hotel or catering establishment—a.which has not been reduced into writing; orb.which has been reduced into writing and which—(i)is for a period not exceeding five years; or(ii)contains provision for termination, otherwise than for breach of covenant, within five years from the commencement thereof; or(iii)relates to premises of a class specified under subsection (2) of this section:Provided that no tenancy to which the Government, the Community or a local authority is a party, whether as landlord or as tenant, shall be a controlled tenancy;

24. The Landlord’s contention that the Tribunal lacks jurisdiction to hear this matter is hinged on the allegation that there exists no landlord-tenant relationship since the landlord did not execute the lease agreement.

25. The lease agreement filed by the Landlord reveals that it is only the Tenant who executed the lease agreement. The lease agreement is therefore invalid and cannot be binding upon the parties.

26. The landlord contends that the non-existence of a binding lease agreement automatically makes the landlord-tenancy relationship non-existent. However, a reading of Section 2 of Cap 301 Laws of Kenya provides that a controlled tenancy can exist when the same has not been reduced into writing.

27. It is clear from the conduct of both the Tenant and the Landlord that they intended to form a landlord- tenant relationship. The Landlord in his submissions states that it is the Landlord’s advocates who drafted the lease agreement and forwarded to the tenant’s advocates for their input.

28. Further, the parties agreed on the initial payment to be made by the Tenant to the Landlord being 2 months’ rent, 1 month’s rent deposit and the legal fees amounting to Kshs 930,000. The Landlord’s advocates acknowledged receipt of this amount.

29. Additionally, the Landlord granted the Tenant vacant possession of the property after payment of the agrees amount by handing over the keys to the premises. The Landlord also admits that when the Tenant requested for documents to facilitate the installation of water and electricity on the suit premises, the Landlord agreed and shared the said documents.

30. The Tenant on his end submits that he bought some materials and started construction works on the suit premises to make it suitable for the intended use.

31. From the above, it is my finding that a landlord- tenant relationship was established between the Tenant and the Landlord herein. The said relationship was not reduced in writing thus falling under ambit of controlled tenancy. It is therefore this Tribunal’s finding that it is clothed with the requisite jurisdiction to hear and determine this matter.

b. Whether The Notice Issued By The Landlord On 7Th July 2023 Was Valid. 32. Termination of controlled tenancies is regulated by section 4 of the Landlord and Tenant (Shops, Hotels & Catering Establishments) cap 301 Laws of Kenya. The said provision obligates a landlord who wishes to terminate a controlled tenancy to issue a notice of termination of not less than two (2) months, failure to which such notice shall not take effect.

33. Further, Section 4(2) of Cap 301 Laws of Kenya provides that the notice ought to be n a preferred form. It provides thus:“A landlord who wishes to terminate a controlled tenancy or to alter to the detriment of the tenant any term or condition in or right or service enjoyed by the tenant under such a tenancy shall give notice in that behalf in the prescribed form”.

34. In the case of Manaver N. Alibhai T/A Diani Boutique v South Coast Fitness & Sports Centre Limited, Civil Appeal No 203 of 1994 it was stated as follows;“The Act lays down clearly and in detail, the procedure for the termination of a controlled tenancy. Section 4(1) of the Act states in very clear language that a controlled tenancy shall not terminate or be terminated, and no term or condition in, or right or service enjoyed by the tenant of, any such tenancy shall be altered, otherwise than in accordance with specified provisions of the Act. These provisions include the giving of a notice in the prescribed form. The notice shall not take effect earlier than 2 months from the date of receipt thereof by the tenant. The notice must also specify the ground upon which termination is sought. The prescribed notice in Form A also requires the landlord to ask the tenant to notify him in writing whether or not the tenant agrees to comply with the notice.”

35. Having established that there exists a controlled tenancy, the Landlord, with the intention to terminate the tenancy, was obligated to do so in accordance with the provisions of Cap 301 Laws of Kenya.

36. In this case the Landlord issued the Tenant with a letter dated 7th July 2023 demanding the Tenant to vacate the suit premises by 8th July 2023.

37. It is evident that the notice does not meet the threshold espoused in Section 4 of Cap 301 as it was not in the prescribed form. Further, the notice required the tenant to vacate the premises by 8th July 2023, a date that was less than 2 months from the date of the notice. The Tribunal therefore finds the notice invalid and ineffectual.

38. Whether the Tenant should continue occupancy of the suit premises? I note that the Landlord is not desirous of continuing with the landlord-tenant relationship. He not only sent the cancellation notice together with the cancelled lease agreement but also fully refunded the Tenant, through its advocates, all the monies paid to the Landlord through his advocates.

39. Even though the Tribunal finds for jurisdiction the landlord Tenant relationship oral or written is a contract and bound by the rules of contract offer, acceptance and consideration in this case contractually minds never really seemed to have met for the landlord but for the tenant it sure did the only issue was that he was yet to commence business in the premises. This tribunal sides with the Tenant in light of the findings in issue 1 and 2 above.

40. Whilst the ideal situation here would be to allow the tenant to continue with the construction and commence business I feel the tenant if compensated having not started any construction would be able to find an alternative site to undertake his business. It is not prudent to start on a footing of a forced Landlord tenant relationship. I have noted the tenant has annexed costs and receipts in his affidavit and going by the same this tribunal will award him the damages prayed for being 1,022,085. 00.

41. On the damages of having had to get an alternative place for business during the pendency of this suit no evidence has been adduced in form of lease or receipts. This tribunal finds the same speculative and declines to award the amounts prayed for.

42. Having made the above findings, I now turn to the prayers made by each party in these proceedings and make the following orders in the upshot.

H. Orders 43. Tenant’s Application and Reference dated 10th July 2023 is partially allowed in the following terms:a.Tenant to grant vacant possession of the premises to the Landlord.b.Landlord to pay the Tenant Kshs 1,022, 085. 00 in the next 30 days being the damages incurred by the Tenant as stipulated in their affidavit annexture AM3. c.Each party shall bear their own costs.

RULING DATED, DELIVERED AND SIGNED AT NAIROBI ON THIS 15TH DAY OF JANUARY 2024 IN PRESENCE OF NYOROKU FOR THE APPLICANT/TENANT AND MAINA FOR THE LANDLORD/RESPONDENT.HON. A MUMAAG. CHAIR/MEMBERHON JACKSON ROPMEMBERBUSINESS PREMISES RENT TRIBUNAL