Kcb Bank Kenya Limited v Lawrence Nguniko Simitu & Joyce Ngina Simitu [2021] KEBPRT 451 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 127 OF 2021 (NAIROBI)

KCB BANK KENYA LIMITED.......................................TENANT/APPLICANT

-VERSUS-

LAWRENCE NGUNIKO SIMITU.....................LANDLORD/1ST RESPONDENT

JOYCE NGINA SIMITU…................................LANDLORD/2ND RESPONDENT

RULING

PARTIES AND THEIR REPRESENTATIVE

1. The Applicant herein are the Tenant who entered into a lease agreement for L.R No. 4096/60 measuring      approximately 4400 square feet (herein after referred as the suit premises’)

2. Ashitiva Advocates represent the Tenant in this reference. info@ashitivaadvocates.com, litigation@ashitivaadvocates.com

3. The Respondents are the landlords and the registered proprietors of the suit premise that is the subject matter of the present suit.

4.   Katunga Mbuvi & Co. Advocates represent the Respondents. katmbuvvy@yahoo.com

THE DISPUTE BACKGROUND:

5.   On or about 15th January 2015, a lease was signed between the Landlords and the Tenant wherein the Landlords agreed to lease out the premise, LR NO 4096/60 Kitui measuring approximately 4400 square feet from 15th January 2015 to 30th November 2020 (For a term of 6 years) at the rate of Kshs. 64. 13 per square feet.

6.   On 4th of February 2021, the applicant/ tenant moved this honorable tribunal by way of Notice of Motion dated 4th February 2021 seeking inter alia orders that:

a.   The 1st and 2nd Respondents jointly and severally and either by themselves, their principals, agents, servants and/or anyone else be restrained by way of injunction from evicting and/ or interfering with the quiet enjoyment and quiet possession;

b.   That the applicant continues to pay rent at the current rate of 64. 13/- per sq feet for the 4400 square foot pending hearing of the applications.

c.   That the landlords be restrained from unlawfully interfering with the tenants use and occupation of the premises pending the hearing and determination of the filed reference;

d.   That an order do issue for reassessment of the rent payable by the tenant herein in respect of the suit premise;

e.   That the OCS Kitui Police Station do ensure compliance of the orders sought herein.

f.    That cost of this application be provided for.

The tribunal in its wisdom granted all the prayers save for d and f.

7.  The Landlord moved this tribunal on the 18th of March 2021 seeking inter alia Orders for

a.  Stay and discharge of orders above dated 8th February 2021.

b.  The dismissal of the suit for being an abuse of process, vexatious, frivolous and lack of jurisdiction.

c.  Costs

THE TENANT’S/APPLICANTS’ CASE

8.  The Applicant contends that they became a controlled Tenant by virtue of the fact that there exists no written tenancy agreement with the Landlord since the Applicant continued with the occupation and payment of rent over the suit after the expiry of the Lease in November 2020;

a) That the landlords have deliberately sabotaged the process of renewing the expired lease.

b) That the landlords have interfered with the tenant’s peaceful occupation and enjoyment of the premises by asking   the vacant possession of the premise despite the tenant dutifully paying rent in respect of the premises;

c) That the tenants stand to suffer irreparable damages if the landlord is allowed with his campaign of unlawfully   evicting the tenant from the premise

d) That the tenant has already paid and is ready to continue paying the       rent with the current rates.

9.   The application is Supported by an Affidavit of one Joshua Bosire, who is duly authorized to swear the Affidavit on behalf of the Applicant. The deponent gives the genesis of the suit and explains the manner in which the suit premise was acquired by the Applicant. He deponed that the Applicant wrote a letter to the Respondents making known their intention to renew the lease for a further period of 6 years. That thereafter, parties continued with negotiations to no avail. He further explains that, the applicant, after the expiry of the lease on 30th November 2020, continued occupying the suit premise and continued with the rent payment as per the previous lease.

10. Further, he contends that, the respondents, in sabotaging the said negotiations intended to evict the Tenant by capriciously increasing the rent way beyond the current market price as the precondition to obtaining the new lease.

THE RESPONDENTS’ CASE

11. The Landlord and the first Respondent herein filed a replying affidavit dated 25th Day of February 2021 averring among others issues that; there was a lease agreement between the applicant and the respondents, executed on 15th January 2015and expired on 30th November 2020. That they gave them ample time to renegotiate and renew the lease following various meetings with the managers of the Tenant. He further averred that managers showed unwillingness to renew the lease; and the unwillingness by the Tenant/Applicant prompted the respondents to proceed with the issuance of a formal notice demanding vacant possession.

12. Further, he avers that the Applicant is frustrating the efforts in servicing of the bank loan by the Respondent; and states that they have neither received nor accepted any rent from the Applicant since 30thof November 2020 when the tenancy expired and that this honorable tribunal does not have jurisdiction to hear or determine this matter on the grounds that there was no controlled tenancy at play.

13. Further they filed an application dated 18th March 2021 challenging the tribunals jurisdiction.

JURISDICTION

14. The Jurisdiction of this Tribunal is in dispute.

THE APPLICANTS’ SUBMISSIONS

15. The Applicant’s counsel filed written submission dated 17th March 2021. They submitted that, the Applicant continued to pay rent after the Lease had expired therefore resulting in a controlled tenancy. They further posited that they should pay the rate in the previous lease on the ground that the rate of Ksh.64. 13/- per square foot for the 4000 square feet.

16. Further to their submission, the Applicant submitted that; the Respondents act of increasing the rent exponentially amounts to an unconscionable conduct. That the purposed eviction is an abuse and defeats the Act and exposes the Applicant to irreparable damage and extreme prejudice and upon eviction the Applicant stands to suffer irreparable damages for the reasons that it will lose its potential revenue.

17. The Applicant also filed further submissions dated 10th May 2021. They submitted that this Honorable Tribunal has jurisdiction to entertain and dispense with the issues thereof. They affirm that occupation after the expiry of the tenancy  on 30th November 2020 resulted in to a controlled tenancy. In advancing their case, they relied on various authorities inter alia the case of Primrose Management Limited vs. Chairman of Business and Rent Tribunal, Nairobi and Another [2015] eKLR where justice Odunga held:

“…...the finding on jurisdiction will depend on the factual determination of the nature of the relationship between the 1st respondent and the 2nd respondent. These are the matters which ought to be taken up before the 1st respondent at the inter parties hearing of the application or at the time of hearing of the application for setting aside the ex parte order. Thus court cannot usurp that jurisdiction and stop the 1st respondent in its tracks before it hears the parties on the issue.”

18. The Respondents filed written submissions dated 15th Day of April 2021. They submitted that, they gave sufficient time to the Tenant/Applicant to renew the Lease. That the Tenants had all time to issue notice to the Central Bank of Kenya and the public. They contended that it is not logical for the tenants to dictate the amount of rent to be paid to the Landlords.

19. Further, the Respondents submitted that they have never received or accepted payment of rent from the Tenants since the Lease expired in 30th November 2020. That the Tenant has been in occupation of the suit premise against the interests of the owners.

20. Further, and in advancing their disposition that this honorable Tribunal does not have jurisdiction, the Respondents relied on the case of Esther Wambua vs. Business Premises Rent Tribunal & Others [2015] eKLR, Misc. Civil Application No. 46 of 2014 at the High court in Mombasa, where Justice M.J Anyara Emukule noted that the Business Premises Rent Tribunal does not have jurisdiction to handle issues of tenancies that are not controlled. The learned judge stated;

“In addition, the tenancy not being a controlled tenancy, the Tribunal had no jurisdiction to entertain a complaint in respect of non-controlled tenancy.”

21. With sheer care and respectful considerations, I have analyzed the Notice of Motion dated 4th February 2021, subsequent affidavits, all submissions and relevant authorities cited by the parties in anchoring and advancing their case. The Jurisdiction of this Honorable Tribunal has been contested therefore before proceeding to the meritocracy of the application, I shall first address the issue of the jurisdiction.

22. Jurisdiction is the basis for any pronouncement by a Court or Tribunal. Imperatively this Tribunal needs to first ensure that it is clothed with the relevant jurisdiction before it can entertain and further determine any suit before it.

23. According to the Black's Law Dictionary, Sixth Edition, Jurisdiction is defined as follows: -

"A term of comprehensive import embracing every kind of judicial action. It is the power of the Honorable Court to decide a matter in controversy and presupposes the existence of a duly constituted court with control over the subject matter and the parties. (Emphasis mine).

1. Also Halsbury’s Laws of England 4th Edition, Volume 10, Paragraph 314, defines jurisdiction as: -

“By ‘jurisdiction’ is meant the authority which a court has to decide matters that are litigated before it or to take cognizance of matters presented in a formal way for its decision.”

2.   Under the Constitution of Kenya 2010 Article 159 provides

3.   Judicial authority is derived from the people and vests in, and shall be exercised by, the courts and tribunals established by or under this Constitution.

4.   In exercising judicial authority, the courts and tribunals shall be guided by the following principles

a.   Justice shall be done to all, irrespective of status

b.   Justice shall not be delayed;

c.   Alternative forms of dispute resolution including reconciliation, Mediation, arbitration and traditional dispute resolution mechanisms shall be promoted,

d.   justice shall be administered without undue regard to procedural technicalities;

e.   and the purpose and principles of this Constitution shall be protected and Promoted.

24. Section 12 of The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act provides on the powers of the tribunal whereby it is stated that;

(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;

25. Relevant to the matter before this Tribunal is section 1 (a) of Cap 301whereby the tribunal is granted vide the said provision, power to determine whether or not one is a controlled tenant.

26. In order to determine that there existed a controlled tenancy, I shall first asses and put into context of law the facts presented by the parties and establish the existence or lack of a contract between them.

27. Contract can be either written or verbal. Firstly, there has to be a valid offer an acceptance granted by a free agent mind.

28. In RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC14, [45],the Supreme Court of the United Kingdom addressing itself on consideration as an essential ingredient for a contract stated thus:

“The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations.

29. Furthermore, in Fidelity Commercial Bank Limitedv Kenya Grange Vehicle Industries Limited [2017] eKLR; the Court strongly affirmed consideration as a key element in the establishment of a contract and pronounced itself as follows:

“It is elementary learning that for there to be a contract, there has to be an acceptance of an offer on the same terms of the offer and such acceptance must be unconditional, unequivocal and absolute, accompanied by consideration.”

30. The narrow issue here is whether the continued stay in the suit premise by the Applicant hereof culminates into a controlled tenancy. In distilling with the foregoing issue, the Honorable Tribunal shall be guided by definition of a controlled tenancy under the veneer of the Landlord and Tenant (Shops, Hotel and Catering Establishment)Act and other relevant sources buttressing the aforementioned provision.

31. The Landlord and Tenant (Shops, Hotels and Catering Establishments) Act CAP 31 section 2 defines controlled tenancy as: -

a)A tenancy of a shop, hotel or catering establishment-

b) Which has not been reduced into writing; or

c) 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;

32. This Tribunal is therefore tasked to determine:

1.   Whether the extended stay in the premise by the Applicant was legal;

2.   Was it directly or indirectly permitted by the owner herein the Respondent;

3.   That the applicant paid the due rents as claimed and that the same was received and/or accepted by the landlords;

4.   that the same can culminate into a controlled tenancy.

33. Therefore, the Applicant/Tenant is expected to sufficiently a substantively prove that the extended stay yielded a contract for a controlled tenancy to be presumed to have ensued.

34. Section 107 of the Evidence Act provides as follows:

107. Burden of proof

(1)  Whoever desires any court to give judgment as to any legal right or liability? Dependent on the existence of facts which he asserts must prove that those facts exist.

(2) When a person is bound to prove the existence of any fact it is said that the Burden of proof lies on that person.” (Emphasis added)

35. Further, the court in Re the Estate of Charles Ndegwa Kiragu alias Ndegwa Kiragu – (Deceased) (2016) eKLR stated and affirmed to the provision of section 107 of the Evidence Act that, “he who alleges must prove.” Further, that in dispensing with a cause of proof, parties are expected to tender primary evidence which shall be the primary documents of payments or their certified copies.

36. The proof for payment of the rent that shall suffice and be accepted by this Tribunal are documents or certified copies of the bank statements and or receipts evidencing such payment. The Applicant claims to have made payment for the extended stay in the premise relied on the bank statement attached on their notice of motion. The said statement document is dated 20th November 2020. The Respondents in response submits that the payment made on 20th October 2020 were for the period that subsisted the tenancy between the tenants and landlords.

37. This is further buttressed by the Annexture LNS 1 which is an annexture to the affidavit of one Lawrence Nguniko Simitu supporting the application under certificate by the landlord dated 18th March 2021. Which clearly states and I quote ‘We are therefore not able to process the rent invoice No. 017 that was forwarded to the branch for quarter 1 2021. Indeed I find that No rent has since been paid and accepted by the Landlord.

38. The upshot of this finding is that this tribunal is robbed off its jurisdiction and must down its tools, the Notice to Vacate dated 14th January 2021 does not fall within the purview of cap 301 and the Tenant cannot therefore purport to move this tribunal.

39. In the circumstances I find that the Landlord Application dated 18th March 2021 prays for orders which are deserving and I grant prayers 3,4 and 5.

40. The Landlord is entitled to MESNE PROFITS for the period this matter was before this tribunal.

41. The orders sought by the Tenant in their notice of motion dated 4th February 2021are denied in their entirety.

HON. A. MUMA

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL

Ruling dated, signed and delivered virtually by Hon P. May this 25thday of June 2021 in the presence of Katungu for the Landlordand in the absence of the Tenant.

HON. P. MAY

VICE CHAIR

BUSINESS PREMISES RENT TRIBUNAL