Hezekiel Gachigo Macharia t/a Skypark Restaurant v Zaverchad Punja Warehouses [2025] KEBPRT 264 (KLR)

Hezekiel Gachigo Macharia t/a Skypark Restaurant v Zaverchad Punja Warehouses (Tribunal Case E136 of 2023) [2025] KEBPRT 264 (KLR) (Civ) (30 April 2025) (Ruling)

Neutral citation: [2025] KEBPRT 264 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E136 of 2023

A Muma, Member

April 30, 2025

Between

Hezekiel Gachigo Macharia t/a Skypark Restaurant

Tenant

and

Zaverchad Punja Warehouses

Landlord

Ruling

A. Parties And Their Representatives 1. The Tenant, Hezekiel Gachigo Macharia T/A Skypark Restaurant is the tenant of a portion of space on land parcel Mombasa/Block XX/181, situated along Digo Road in Mombasa County (the “suit premises”).

2. The Tenant appears in person in this matter.

3. The Respondent, Zaverchad Punja Warehouses is the registered proprietors of the suit premises (the “Landlord”).

4. The firm of N.A. Ali & Co. Advocates represents the Landlord in this matter.

B. Background Of The Dispute 5. Through a Reference dated 31st May, 2023 and an Application of even date, the Tenant herein moved the Tribunal seeking several prayers, inter alia, that the Landlord be ordered to repair the windows and the roof of the premises, temporary injunction prohibiting the Landlord from evicting the Tenant and prohibition against enforcing the Proclamation Notice issued to the Tenant pending inter partes hearing of the Application and the main suit.

6. The matter was slated for hearing of the Application on 31st May, 2023. Upon ex-parte hearing the Application, the Tribunal granted the temporary injunctive order sought in the Application and ordered that the same be served upon the Landlord.

7. The matter came up for hearing on 27th July 2023. The Tenant stated that he runs a restaurant and a bar in the suit premises and that it is in a bad state and inhabitable. He added that despite the foregoing, when he delayed in rent payment the Landlord sent him auctioneers. The Advocate for the Landlord stated that the claim was for rent arrears which the Tenant paid the same was withdrawn verbally. The Tribunal directed that an inspection be done on the suit premises and the report be filed.

8. The matter came up for directions on 4th September, 2023 where both parties confirmed that the inspection was done. The inspection report dated 4th August, 2023 confirmed the need for renovation. The Tribunal directed that the Tenant to apply the rent for September, 2023 for renovation and the parties to negotiate and record a consent.

9. The Tenant subsequently moved the Tribunal vide a Notice of Motion dated 24th January, 2024 seeking several prayers, inter alia, temporary injunction against the Landlord or its agents from selling his properties and that the Termination Notice issued by the Landlord be declared invalid.

10. In his Supporting Affidavit sworn on even date, the Tenant averred that the Landlord issued him with a termination notice which was in violation of the Tribunal Orders issued on 4th September, 2023. The Tenant averred that the Landlord has instructed Alfajiri Auctioneers to make distress for rent.

11. The Tribunal issued orders on 21st, March, 2024 to the effect that Alfajiri Auctioneers not to interfere with the Tenat’s quiet possession and that water to be restored immediately. When the matter came for hearing on 2nd April, 2024, the Tribunal directed that the Tenant vacates on or before 15th April, 2024 for the Landlord to commence renovation and complete the same in six (6) months.

12. The matter came up for mention on 7th October, 2024. The Landlord’s advocate confirmed that the renovations are complete and the Tenant can move back in. He stated that the new rent is to be assessed and agreed upon. The Tenant contended that the renovation was poorly done. The Tribunal directed that the Landlord and Tenant to file Rent Valuation Report.

13. Consequently, the Tenant vide his List of Documents dated 5th March, 2025 filed his Valuation Report dated 15th October, 2024. The Landlord vide its Further List of Documents dated 18th February, 2025 filed its Rent Valuation Report dated 12th February, 2025.

14. Subject of the instant Ruling therefore is the assessment of rent payable to the suit property.

C. Jurisdiction 15. The Jurisdiction of this Honourable Tribunal is not contested and therefore is not in dispute.

D. Issues for Determination 16. I have carefully perused the Valuation Reports filed before this Honourable Tribunal and the arguments by the parties. It is therefore my respectful finding that the sole issue for determination is the rent payable in respect of the suit premises.

E. Analysis And Findings What is the rent payable by the Tenant in respect of the suit premises? 17. Section 9(2) of Cap 301, it is provides as follows:Without prejudice to the generality of this section, a Tribunal may, upon any reference;a."determine or vary the rent to be payable in respect of the controlled tenancy, having regard to the terms thereof and to the rent at which the premises concerned might reasonably be expected to be let in the open market…"

18. Under section 12(1)(b) of Cap 301, the Tribunal has power to determine or vary the rent to be payable in respect of any controlled tenancy having regard to all the circumstances thereof.

19. The Act does require the Tribunal to have regard to the terms of the tenancy and the rent which the premises would fetch in the open market. The Act further requires the Tribunal to have regard to all the circumstances of the tenancy.

20. The Act does not define what amounts to “all circumstances” and neither does it provide a formula for arriving at the rent at which the suit premises may be let in the open market. The Tribunal therefore exercises a discretion over these matters and this discretion must be exercised judicially having regard to the evidence before the Tribunal. (See the case of Nairobi High Court Civil Appeal No 61A of 1976 Shah & Shah v Francis Titus Kigundu).

21. In Nyeri ELCA case No 31 of 2015, Margaret Wanjugu Nduma & 3othersv James Gichuki Gathara [2020] eKLR. The court while dealing with the applicable principles governing assessment of rent stated at paragraph 37 stated thus:“On the first issue for determination as to whether the chairperson property applied the principles governing assessment of rent, the principles governing the assessment of rent are found in form G of the regulations as follows;i.Ascertaining the original, cost of construction of the building.ii.The age of the building.iii.The market value of the land on which the premises are built.iv.The improvement and cost of such improvements.v.Amenities or services provided for by the Landlord.vi.The rent at which the premises were let for the past three years.”

22. In Cleaners Limited v Barclays Bank & Co [1972] EA 188, the Court of Appeal held that;“It is the reasonableness of the rent that must, be in the forefront of the Tribunal’s investigation and determination. It must be the concern of this court too. The average rates per square foot or meter of a number of nearby buildings on ground floor premises in which similar trades are exercised are among other things relevant to assessing the rent that would reasonably be expected in the open market.”

23. Further in Tala Investment Ltd v Green Spot Limited, Civil Appeal No 269 of 1993, Justice Shah stated;“In dealing with principles upon which a Tribunal should act in assessing rent, its duty is to consider all the reports properly before it. The Tribunal must go into individual comparable to decide which is a better report rather than merely arrive at a mean figure that is the mean figure of the Landlord’s and Tenant’s valuer’s report. That is not proper criteria.”

24. The Tenant in his Valuation Report dated 15th October, 2024 valued the rent payable to the suit premises at Kshs 365. 33 per m2 per month. The same was based on the comparable lettings which Kshs 360 per m2, Kshs 338 per m2 and Kshs 398 per m2 per month. The Report also estimated the total area of the suit premises at 747. 4 M2.

25. The Landlord on its part filed the Valuation Report dated 12th February, 2025 wherein the rent payable was valued at a total of Kshs 542,297. 66. The same was based on comparable which charged Kshs 896. 97 per m2, Kshs 814. 55 per m2 and Kshs 672. 74 per m2 per month.

26. The comparables as per the various Valuation Reports were as follows:Tenant’s Valuation Report dated 15th October, 2024No. Total Area (m2 ) Total rent per month (Kshs ) Rent per M2 (Kshs )

702 250,000 360

74 25,000 338

64 25,000 398Landlord’s Valuation Report dated 12th February, 2025 No. Total Area (m2 ) Total rent per month (Kshs ) Rent per M2 (Kshs )

334. 46 300,000 896. 7

368. 30 300,000 814. 55

445. 74 300,000 672. 74

27. This Tribunal notes that the Valuation Reports are not binding upon it but only guides it to arrive at a fair assessment of rent. Consequently, this Tribunal must exercise its mind to the statutory principles governing the assessment of rent.

28. I have carefully perused the Valuation Reports and the respective oral submissions on 25th March, 2025 before this Tribunal by the parties. In comparison of the two Reports and as per the extract tables above, it is evidently clear that the Landlord’s Valuation Report dated 12th February, 2025 presents approximate area to the suit premises.

29. Quite particularly, the Tenant’s Valuation Report seeks to provide comparable premises to the suit premises by providing properties whose total area are as low as 64 m2. Comparatively unless I had the benefit of listening to this valuer, I find it unjust to hold that the Report is provides a comparable estimate to the suit property.

30. The Landlord on the other hand provided comparables whose total areas were largely comparable to the suit property. The same represented approximate total area to the suit property as such more reliable in the circumstances.

31. This Tribunal is bound by the High Court decision in Tala Investment Ltd v Green Spot Limited, Civil Appeal No 269 of 1993, where Justice Shah held that when deciding on rent assessment, this Tribunal must decide which is a better report compared to the other.

32. Accordingly, I find that the Landlord’s Valuation Report dated 12th February, 2025 more credible and I adopt the same.

F. Orders 33. It is hereby ordered as follows:a. That the Lease will begin on 1st April, 2025. b. That the Landlord’s Valuation Report dated 12th February, 2025 is hereby adopted.c. The Rent payable by the Tenant is assessed at Kshs 540,000 per month.d. Each party to bear their own costs.

HON A. MUMAMEMBERBUSINESS PREMISES RENT TRIBUNALRuling dated, delivered and signed at Mombasa on this 30th day of April 2025 in the presence of Natasha for Landlord and in the absence of the Tenant.HON A. MUMAMEMBERBUSINESS PREMISES RENT TRIBUNAL