Khan v Elahi (Civil Appeal No. 52 of 1950) [1951] EACA 39 (1 January 1951)

## COURT OF APPEAL FOR EASTERN AFRICA

Before SIR BARCLAY NIHILL, President, SIR NEWNHAM WORLEY, Vice-President, and LOCKHART-SMITH, J. of A.

## 'BABU KHAN. Appellant (Original Appellant) $\mathbf{v}$

# SHEIKH FAZAL ELAHI, Respondent (Original Respondent)

# Civil Appeal No. 52 of 1950

(Appeal from the decision of H. M. Supreme Court of Kenya-Connell, Ag. J.)

Distress for Rent Ordinance, Cap. 154—Increase of Rent Ordinance—Standard rent—Rates paid by landlord.

The appellant applied to the Magistrate to recover certain goods which he alleged had been wrongly attached by the respondent under the Distress for Rent Ordinance, 1937, Cap. 154. It therefore became necessary to determine whether the appellant had paid sufficient in rent to return in any whole year the full annual value of that part of the premises of which he was a sub-tenant. In computing this figure the Magistrate took into consideration the standard rent plus rates although the landlord had not taken the necessary steps under the Increase of Rent Ordinance to have the sum payable as rates added to the standard rent. The appellants application was dismissed and he appealed to the Supreme Court which confirmed the finding of the Magistrate regarding the amount of the rent though it remitted the case back to the Magistrate for further investigation on other points.

Held (5-6-51).—(1) The "full annual value" mentioned in section 19 (1) (a) of the Distress for<br>Rent Ordinance, 1937, could not be more than the standard rent. As the landlord had not carried out the required formalities the sum he had paid in rates could not be added to increase the amount of the standard rent which in this case could not be more than the<br>rent paid as on 31st December; 1940. The standard rent had therefore been wrongly computed and the appeal succeeded.

### D. H. Khanna for the appellant.

### Stephen for the respondent.

JUDGMENT (delivered by SIR BARCLAY NIHILL, President).—This is a second appeal from a ruling by the Resident Magistrate, Nairobi, dismissing an application for restoration of goods brought by an under tenant under section 20 of the Distress for Rent Ordinance (Cap. 154 of the 1948 Laws of Kenya). The point at issue is quite a simple one namely whether the present appellant, who was a sub-tenant of a part of the premises, paid sufficient in rent to return in any whole year the full annual value of that part of the premises of which he was a subtenant. It is not disputed that the bailiff did seize certain effects belonging to the sub-tenant or that he is entitled to restoration if the answer to the above question is in the affirmative.

The learned Magistrate refused the application because she held that the applicant had not discharged the onus of proving to her satisfaction what the annual value of the premises was. She did, however, arrive at two findings of fact which are not challenged in this appeal and which are most material. Firstly, that at the time of the distress the appellant was a lawful sub-tenant of one Abdul Aziz who was then a tenant of the superior landlord—the present respondent. Secondly, that at the time of the distress Abdul Aziz was the contractual tenant of the respondent in respect of the whole premises. From these

findings of fact it flows, and again this is conceded by the parties, that at the date of the distress, viz. 8th February, 1949, the respondent could not recover from Abdul Aziz, more by way of rent than the standard rent permitted by the Increase of Rent and of Mortgage Interest (Restrictions) Ordinance, 1940. that is to say the rent at which the premises were let on 31st December, 1940. There was some conflict before the learned Magistrate as to whether the prescribed standard rent equalled Sh. 100 per month or Sh. 125 per month which was the figure given by the landlord's attorney, Sheikh Mohamed Bashir. Mr. Khanna is content to accept the latter figure because on it he can show that the appellant who paid Sh. 75 per month for his half share in the premises, was paying more than half the annual rental value of the premises. If, therefore, the annual rental value is the same as or more than the full annual value, the appellant must succeed. Mr. Stephen for the respondent relies on the fact that the rates on the premises have increased since 1940 and that had the respondent taken certain steps under the Rent Restriction legislation he could have increased the standard rent to a figure at which Sh. 75 per month for half the premises would not equal half the standard rent payable. It is conceded, however, that the respondent did not take those steps or at least did not take them effectively so that at the time of the seizure the standard rent did not exceed Sh. 125 per month. The problem, therefore, resolves itself into this, bearing in mind that in this Colony rates are not a charge upon the occupier of premises but upon the landlord, that for the purpose of fixing full annual value must one look to the figure which can be extracted lawfully from the premises by way of rent minus such factors as expenditure on repairs and depreciation, or can one take into account the potential value of the premises on the hypothesis that the landord as a prudent man will take all possible steps calculated to enhance the value of his property? I have no hesitation in answering this question in the appellant's favour for the reason that, at the material date, the full annual value of the premises to the landlord could not be more than the standard rent which by law he was then<br>entitled to recover. It might be less, but it could not be more. What I think the learned Magistrate overlooked was that, on her finding of fact, the ascertainment of the full annual value presented no difficulties, that is to say from the point of view of deciding whether the application was entitled to succeed or not, for whatever the true "full annual value might be" it could not be more than the lawful standard rent, and there was evidence before her on the landlord's showing from which she could not but conclude that the appellant was paying in rent a sum which multiplied by twelve represented more than half the annual rental value of half the premises. It must be rare indeed that the task of a Court is rendered lighter by reason of the provisions of the Rent Restriction legislation but in this case it was so, for the learned Magistrate had not had to consider what the full annual value of the premises might have been in a free and open market.

Similarly in the judgment of the Supreme Court appealed against, in my opinion, the learned Judge went wrong in supposing that because, had the landlord taken certain steps, he could lawfully have called upon his tenant to pay an increased rent, therefore, that hypothetical increase must be added to the prescribed standard rent in order to ascertain the full annual value. The learned Judge seems to have thought that because according to the landlord's evidence he had served on Abdul Aziz notice of an increase in rates this was a factor to be taken into account when determining the full annual value of the premises at the time of the seizure. He overlooked that the learned Magistrate found as a fact that no valid notice to quit was served upon the head tenant before 18th February, and that therefore on the date of the seizure, 8th February, the maximum permissible rent which could be demanded on that date did not exceed Sh. 125. In my view the words "full annual value" used in section 19 (1)

(a) of the Distress for Rent Ordinance must mean the full annual value at the date of the distress and not a hypothetical value which might be brought about in certain eventualities. It is incontestible that in this case at the date of the distress the landlord could not lawfully extract from the premises more rent than was paid on 31st December, 1940. It was therefore unnecessary for the learned Judge in the Court below to remit the case to the learned Magistrate, instead he should have allowed the appeal.

I would allow this appeal with costs, and since the appellant's goods, as set out in paragraph 2 of his declaration dated 18th February, 1949, have been sold, judgment for the amount realized in respect of their sale should be entered for the appellant with liberty to the appellant to produce evidence before the learned Magistrate that the goods were sold at a figure below their market value on the day of their seizure, upon which evidence if he succeeds, the judgment should be varied accordingly. I would also allow the appellant costs in the court below and the costs of his application before the Resident Magistrate.

SIR NEWNHAM WORLEY, Vice-President.—I concur.

LOCKHART-SMITH, J. of A:-I concur.