Gigi Motors Limited v Liberdy Motors Limited [2021] KEBPRT 211 (KLR)

REPUBLIC OF KENYA

IN THE BUSINESS PREMISES RENT TRIBUNAL

VIEW PARK TOWERS 7TH & 8TH FLOOR

TRIBUNAL CASE NO. 994 OF 2020

GIGI MOTORS LIMITED................................................TENANT/RESPONDENT

VERSUS

LIBERDY MOTORS LIMITED.................................LANDLORD/RESPONDENT

RULING

1. This ruling determines the notice of motion application filed by the Landlord by way of certificate dated 4th June, 2021 seeking the following orders:

a. Spent

b. THATthe tenant/applicant herein be ordered to immediately pay the outstanding arrears as at 28th May, 2021 of Kshs. 4,676,080/

c. THATthe tenant/applicant be ordered to pay Commercial interests rates on the outstanding arrears as per order 2 above.

d. THATfailure to comply with the above orders, the landlord/respondent be granted leave to levy distress for rent.

e. THATcosts of this application be provided for.

2. The application has been opposed by the tenant through the grounds of opposition dated 19th July, 2021 which are stated as follows:

a. That the prayers sought in the application cannot be granted by the Tribunal

b. That the applicant had objected to the jurisdiction of the Tribunal which issue is yet to be settled by way of ruling

c. That the increments of rent are the same issues awaiting ruling before the court.

3. The application proceeded for inter partes hearing on 22nd July, 2021 whereby the counsels made oral submission in support of their clients’ respective positions. They urged me to consider the documents filed in the application.

4. The parties do not dispute that the tenant is in rent arrears. The amount due is however disputed as the tenant due to a purported escalation clause contained in the licence agreement.

5. The issues for determination can be crystallized as follows:

i. Whether the Tribunal has powers to order for levying of distress

ii. Whether the Landlord’s right to levy distress had crystallized.

6. The question which arises is whether this tribunal has jurisdiction to order for the levy of distress against a tenant who is in rent arrears and the answer to the question is to be found in Section 12(1) (e) (h) of the Landlord and Tenant (Shops, hotels and catering establishments) Act, Cap. 301 which provides as follows: -

“12. Powers of Tribunals

(1) A Tribunal shall, in relation to its area of jurisdiction have power to do all things which it is required or empowered to do by or under the provisions of this Act, and in addition to and without prejudice to the generality of the foregoing shall have power—

(a) to determine whether or not any tenancy is a controlled tenancy;

(b) to determine or vary the rent to be payable in respect of any controlled tenancy, having regard to all the circumstances thereof;

(c) to apportion the payment of rent payable under a controlled tenancy among tenants sharing the occupation of the premises comprised in the controlled tenancy;

(d) where the rent chargeable in respect of any controlled tenancy includes a payment by way of service charge, to fix the amount of such service charge;

(e) to make orders, upon such terms and conditions as it thinks fit, for the recovery of possession and for the payment of arrears of rent and mesne profits, which orders may be applicable to any person, whether or not he is a tenant, being at any material time in occupation of the premises comprised in a controlled tenancy;

(f) for the purpose of enabling additional buildings to be erected, to make orders permitting landlords to excise vacant land out of premises of which, but for the provisions of this Act, the landlord could have recovered possession;

(g) where the landlord fails to carry out any repairs for which he is liable—

(i) to have the required repairs carried out at the cost of the landlord and, if the landlord fails to pay the cost of such repairs, to recover the cost thereof by requiring the tenant to pay rent to the Tribunal for such period as may be required to defray the cost of such repairs, and so that the receipt of the Tribunal shall be a good discharge for any rent so paid;

(ii) to authorize the tenant to carry out the required repairs, and to deduct the cost of such repairs from the rent payable to the landlord;

(h) to permit the levy of distress for rent;

(i) to vary or rescind any order made by the Tribunal under the provisions of this Act;

(j) to administer oaths and order discovery and production of documents in like manner as in civil proceedings before the High Court, to require any landlord or tenant to disclose any information or evidence which the Tribunal considers relevant regarding rents and terms or conditions of tenancies, and to issue summons for the attendance of witnesses to give evidence or produce documents, or both, before the Tribunal;

(k) to award costs in respect of references made to it, which costs may be exemplary costs where the Tribunal is satisfied that a reference to it is frivolous or vexatious;

(l) to award compensation for any loss incurred by a tenant on termination of a controlled tenancy in respect of goodwill, and improvements carried out by the tenant with the landlord’s consent;

(m) to require a tenant or landlord to attend before the Tribunal at a time and place specified by it, and if such tenant or landlord fails to attend, the Tribunal may investigate or determine the matter before it in the absence of such tenant or landlord;

(n) to enter and inspect premises comprised in a controlled tenancy in respect of which a reference has been made to the Tribunal.”

7. This Tribunal by dint of the above provisions of the law has the power to grant orders for the levy of distress. The tenant has claimed that the Landlord had objected to the jurisdiction of the court and the same is awaiting the determination of the Tribunal. This Tribunal pronounced itself  on the issue vide the ruling delivered on 21st May, 2021.

8. The question of the relationship between the amount owing and distress for rent was dealt with in the case of JK Chatrath and another vs. Shah Cedar Mart (1967) EA 93. In that case, the tenant had admitted owing one month’s rent before distress was levied. The former Court of Appeal for Eastern Africa stated that the position in England, which applied to Kenya then as now, by virtue of section 3 of the Distress for Rent Act, was that a landlord was entitled to exercise his right to distrain for rent if any rent was in arrears and the distress did not become illegal merely because it was carried out for more rent than was due. It was stated that the mere taking of more goods in distress on a claim of more rent being in arrears than was in fact in arrears, and selling them on such claim, was not actionable. It was stated that the distrainer for rent was not bound by the amount for which he claimed to distrain, he could sell afterwards only for what was due.

9. The parties herein signed a licence agreement. The terms of the said agreement have not been disputed. The court shall not rewrite contracts for parties, seeNATIONAL BANK OF KENYA LTD VS PIPEPLASTIC SAMKOLIT (k) LIMITED.Amere perusal of the licence agreement indicates that Part A, Clause 1(a) provided for annual rent escalation. The tenant cannot claim to be unaware of the same.  The claims for rent made by the Landlord are justified.

10. Turning to the next prayer by the Landlord for interests on the rent arrears at commercial rates. I am cognizant of the fact that the parties reduced their agreement into writing The two entities are juristic persons who are led by able individuals. Further the agreement was prepared by advocates. They would have easily envisaged the appropriate remedies for breach. The Tribunal shall not include any additional clauses to the agreement. The prayer for interests on the rent arrears is therefore declined.

11. The upshot of this is that the Landlord’s application succeeds partially with no orders as to costs.

ORDERS:

1. The tenant shall clear the rent arrears as at 1st August, 2021 of Kshs. 6,133,000/ within 21days. In default the Landlord shall be at liberty to levy distress for rent.

2. The tenant to continue paying rent as it falls due  during the pendency of the reference.

3. The parties to take a hearing date for the reference within 30  days.

4. Each party shall bear their own costs of the application.

It is so ordered.

RULING READ, SIGNED & DELIVERED 5TH DAY OF OCTOBER 2021.

HON. P. MAY

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

In the presence of:

Miss Asman holding brief for Khan for the Landlord

No appearance for the Tenant