Lanstar Technologies Limited v Emerg Investments Limited [2024] KEBPRT 401 (KLR)

Lanstar Technologies Limited v Emerg Investments Limited (Tribunal Case 30 of 2018) [2024] KEBPRT 401 (KLR) (28 February 2024) (Ruling)

Neutral citation: [2024] KEBPRT 401 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case 30 of 2018

CN Mugambi, Chair & Joyce Murigi, Member

February 28, 2024

Between

Lanstar Technologies Limited

Tenant

and

Emerg Investments Limited

Landlord

Ruling

1. The Landlord’s notice to terminate or alter terms of tenancy dated 9. 5.2018 is brought on the following grounds; -a.That the tenant is a persistent and continuous defaulter on rent payments and numerous demands have been made for the payment of the said rent which has been unforthcoming.b.That the tenant has not paid rent for two (2) quarters amounting to Kshs. 417,600/= for the months of January, February, March, April, May and June 2018. c.That the Tenant has sublet the suit premises to third parties without the consent of the landlord.d.That the tenant has neglected the suit premises which now is in a state of disrepair.e.That the tenant has neglected to pay its water bills leading to disconnection of water supply thus exposing other users (sic) to health risks and diseases.

2. The tenant in opposing the landlords notice to terminate tenancy filed its Reference on 14. 5.2018.

3. This matter proceeded partially before Hon. Mbichi Mboroki BPRT (as he then was) and on 6. 6.2022, the parties agreed that the proceedings could be typed for the matter to proceed from where Hon. Mbichi Mboroki had reached.

The Landlord’s Case 4. The evidence of the landlord on whose behalf Mr. Nalinkkumar Beghji Shah testified may be summarized as follows: -a.That he is a director of the landlord duly authorized by the landlord’s Board of Directors to act on his behalf and has filed a letter of authority to that effect.b.That the tenant herein was served with the notice to terminate its tenancy dated 9. 5.2018 and the tenant filed its Reference in opposition to the notice. The Reference is dated 14. 5.2018. c.That the tenant is a perpetual defaulter in rent payment and has sublet the premises to third parties, the landlord at this point sought to rely on its replying affidavit and the letter dated 25. 5.2018 demanding the payment of Kshs. 417,600/=.d.That the Tenant’s Advocates on 23. 5.2018 forwarded a cheque for Kshs. 417,600/= being rent for January 2018 up to June 2018. e.That the rent is payable quarterly in advance.f.That the tenant paid a sum of Kshs. 417,600/= on 6. 12. 2017. g.That the tenant has not paid rent for the quarter running from January 2019 to 31. 3.2019. h.That from 2012, the tenant has not paid rent when due and payable and the landlord has been using Auctioneers and Advocates to demand for the rent.i.That the Tenant has sublet the premises to one Eleanor Wambui Githinji without the consent of the landlord.j.That the tenant has also sublet the suit premises to one MS. MUGWERU JENNIFER WANJIKU who operates as Mugweru & Company Advocates.k.That the tenant was neglecting the premises and also failed to pay the water bills.l.That the Respondent has never given its consent to the tenant to sublet its premises.m.That the rent unpaid for the quarter beginning January 2019 is Kshs. 208,800/=.n.That the premises are not in a good state of repairs.

5. Upon cross examination by Counsel for the Tenant, the landlord’s witness responses may be summarized as follows;-a.That the landlord was not served with the References filed on 14. 5.2018. b.That the landlord’s evidence is not that the tenant has not paid rent but that the tenant is a persistent defaulter.c.That the tenant has paid all the rent except for the quarter of January to March 2019. d.That the tenant sometimes pays rent directly to the witness (landlord’s witness No. 1, hereinafter referred to as the witness).e.That although the witness stated that he issues the tenant with invoices every month, he did not attach the invoices to his replying affidavit.f.That the landlord purchased the premises while the tenant was in occupation and the agreement between the parties is an oral one; there is no written agreement.g.That the witness does not have officers on the suit premises but he inspects the premises when necessary.h.That the building is connected with water by the Nakuru Water Services Company; NAWASCO and every tenant has their own connection.i.That it is NAWASCO who disconnected the tenant’s water supply and the tenant was require to follow up with them as the landlord had nothing to do with it. The approval for the reconnection of water is to be done by NAWASCO.j.That the landlord has never received the letter produced as exhibit “JMG3” by the tenant although he confirms his postal address to be 930-20100 Nakuru.k.That the witness cannot remember making the water consumer agreement for the tenant.l.That the tenant has refused to meet with the witness inspite of promises to do so. The witness has even declined to the landlord’s correspondence. The tenant stopped communicating after the distraint for rent.m.That the witness does not have a rent book for this particular tenant.

6. Upon re-examination, the landlord’s witness made the following clarifications;a.That the letter dated 14. 3.2017 in the landlord’s replying affidavit is a rent demand for the sum of Kshs. 208,800/=.b.That the witness is aware of various correspondences exhibited between the landlord’s Advocates and the tenant’s Advocates. The various letters from the landlord’s Advocates are demands for rent.c.That the landlord has had to instruct auctioneers to levy distress for rent against the tenant.

The Tenant’s Case 7. The tenant’s evidence was led by Mr. Joshua Mbugua Gitau and I proceed to summarize the same as follows:-a.That he is a director and Chief Executive Officer of the tenant.b.That the Applicant has been a tenant of the Respondent since 2002, the tenant is still at the premises.c.That though in some instances rent has been delayed for a month or two, the tenant does not owe the landlord any rent arrears.d.That Ms. Jeniffer Mugweru was the tenant’s inhouse counsel and part of the tenant’s team, she is still with the tenant and also does her private work from the premises.e.That Hellen Wambui was a wife of one of the tenant’s directors who requested for space outside the suit premises to do her tailoring work but she was never a “tenant” of the tenant and she has since relocated anyway.f.That the tenant does not have water connection dispite reminders to the landlord.g.That the tenant is still interested in maintaining its tenancy with the landlord.h.The tenant sought to rely on its affidavit sworn on 8. 4.2019.

8. Upon cross examination, the witness responses may be summarized as follows;-a.That the tenant has filed the Reference dated 14. 5.2018 in opposition to the notice to terminate tenancy dated 9. 5.2018. b.That the letter dated 23. 5.2018 was forwarding rent for two quarters while the notice to terminate tenancy (hereinafter referred to as the notice) at paragraph 31 states that rent had not been paid for three quarters.c.That the suit premises was previously owned by SHETH AND WATHIGO before the current landlord took over in the year 2014. d.That the letters dated 13. 3.2013 and 6. 12. 2012 are demanding for rent.e.That the tenant wrote to the landlord about the water connection as shown in the tenant’s affidavit sworn on 8. 4.2019 but never sought orders from the Tribunal in relation to the water connection.f.That the correspondences from the auctioneers was not received by the witness as the tenant only came to know about the auctioneers when they went to the tenant’s offices.g.That the cheque dated 27. 3.2017 was issued to the landlord following a proclamation.h.That there exists a single business permit showing that Ms. Eleanor Wambui Githinji operated business in a premises known as No. 9134 and there is a business card also showing that the said lady was operating from the suit premises.i.That Ms. Jeniffer Mugweru is the tenant’s inhouse lawyer.j.That the minutes on page 20 of the tenant’s affidavit sworn on 8. 4.2019 show Mr. Mcheche as the company lawyer and the minutes do not mention Ms. Jeniffer Mugweru.k.That documents No. 3 to 51 are all related to demands for rent payment from around 2012 to the time the notice was issued.

9. On re-examination, the witness made the following clarifications;-a.That the demands at paragraph 3B of the notice were resolved.b.The issues raised in the letter dated 8. 2.2016 from Sheth & Wathigo were also resolved.c.That there are currently no rent arrears.d.That in the year 2012-2013, the landlord was Sheth & Wathigo and they are not the complainants in the instant notice.e.That on 27. 3.2017, the tenant issued a cheque for the sum of Kshs. 208,800/= and that resolved the issue of rent.f.That a replying affidavit sworn by the witness in BPRT Case No. 24 of 2016 shows Ms. Mugweru to by the tenant’s consultant on matters Human Resource.g.That the tenant would still like to continue with its tenancy on the suit premises.

Analysis and determination 10. The issues that I have to consider in this Reference are the following in my humble view:-a.Whether the landlord has proved that the tenant has defaulted in paying rent for a period of two (2) months after such rent has become due or payable or has persistently delayed in paying rent which has become due and payable as at the time the landlord issued the Tenant with a notice to terminate tenancy.b.Whether the tenant has sublet the premises to one Miss Eleanor Wambui Githinji and Miss Jeniffer Mugweru without the consent of the landlord.c.Whether the tenant has neglected the suit premises as a result of which the same has fallen into disrepair and whether the tenant has failed/neglected to pay for its water bills.d.And ultimately, whether the landlord has established by way of evidence, the grounds of termination of tenancy set out in the notice to terminate tenancy and therefore what orders ought to issue in disposing of this matter.

Issue A 11. The landlord’s notice to terminate tenancy is dated 9. 5.2018. in regard to the issue of default in rent payment, the notice provides as follows;-3(a)“You are continuous and persistent defaulter on rent payments and numerous demands have been made for you to pay the rent which has been unforthcoming.”3(b)“You have not paid rent for 2 quarters amounting to Kshs. 417,600/= for the months of January, February, March, April, May and June 2018. ”

12. The rent is payable quarterly at Kshs. 208,800/= per quarter in or before the 1st day of each preceding month of the quarter.

13. In support of the assertion that the tenant has been a persistent rent defaulter, the landlord has deponed in its replying affidavit sworn on 17. 1.2019 that it has on many occasions instructed its various Advocates to demand rent from the tenant and has also instructed Auctioneers to levy distress for rent against the tenant.

14. Going through the landlord’s bundle of letters marked as “N52” in the landlord’s affidavit sworn on 17. 1.2019, I do note the following;-a.On 8. 2.2016, M/S Sheth & Wathigo Advocates wrote to the tenant demanding rent arrears of Kshs. 208,800/= being rent up to February 2016. b.On 4. 3.2016, M/S Sheth & Wathigo Advocates wrote to M/S Sadabri Agencies to levy distress against the tenant for rent arrears of Kshs. 208,800/=.c.On 11. 9.2012, 25. 3.2013, 5. 3.2015, the firm of M/S Sheth & Wathigo Advocates wrote to Saddabri Auctioneers to levy distress against the landlord.d.On 13. 3.2013, 9. 9.2014, 8. 12. 2014, 24. 5.2015, 16. 6.2016, 14. 7.2015, 11. 8.2015, 28. 10. 2015 and 14. 3.2017, the landlord’s Advocates wrote various letters, all demanding for rent from the tenant. All these letters were written directly to the tenant.e.On 21. 3.2017, the firms of Wachira Wanjiru & Company Advocates instructed Ms. Saddabri Agencies to levy distress for rent against the tenant and on 22. 3.2017, the said agents duly proclaimed the tenant’s goods.f.On 24. 3.2017, M/S Saddabri Auctioneers forwarded their fee note for the proclamation to the tenant for settlement.g.On 27. 3.2017, M/S Obura Mbeche & Company Advocates forwarded a cheque for the sum of Kshs. 208,800/= to cover the rent for the first quarter of 2017 and it would appear this was in response to the proclamation by the landlord’s agents.h.On 14. 7.2017, M/S Wachira Wanjiru & Company Advocates wrote to the tenant demanding the rent of Kshs. 417,600/= and a further reminder on the same was sent to the tenant on 26. 7.2017. i.On 3. 5.2017, the firm of M/S Obura Mbeche forwarded to Wachira Wanjiru & Company Advocates a cheque in the sum of Kshs. 208,800/= covering the rent for the second quarter (April, May and June). The cheque was received without prejudice by Counsel for the landlord and the landlord reserved the right to distress for the “unpaid amount.”j.On 18. 8.2017, the firm of M/S Obura Mbeche forwarded to Wachira Wanjiru & Company Advocates a cheque in the sum of Kshs. 208,800/= covering the rent for the second quarter (April, May and June). The cheque was received without prejudice by Counsel for the landlord and the landlord reserved the right to distress for the “unpaid amount.”k.On 18. 8.2017, M/S Wachira Wanjiru & Company Advocates wrote to the tenant demanding the unpaid balance of Kshs. 208,800/= as per the demand in their letter dated 26. 7.2017. l.That on 11. 11. 2017, Ms. Wachira Wanjiru & Company Advocates wrote to the tenant demanding rent arrears of Kshs. 417,600/= being the rent for the period July to December 2017 and on 23. 11. 2017, the said Advocates instructed M/S Saddabri Agencies to levy distress for rent for the said amount against the tenant.m.On 6. 12. 2017, the firm of Obura Mbeche & Company Advocates forwarded a ……cheque in the sum of Kshs. 417,600/= being the payment for the third and fourth quarters 2017. n.On 9. 5.2018, M/S Wachira Wekhomba Aim Associates wrote to the tenant demanding the payment of Kshs. 417,600/= being the rent arrears for the period of January to June 2018. o.On 23. 5.2019, M/S Obura Mbeche & Company Advocates forwarded a cheque in the sum of Kshs. 417,600/= covering the period of January to June 2018.

15. Would the tenant in this case be termed or be considered to be a persistent defaulter, would the tenant be termed as one who has persistently delayed to pay rent when it was due? From all the correspondence I have set out above, the common trend is that the tenant has generally been paying rent upon demand and threats of distress. The correspondence clearly shows a tenant who continuously paid its rent late and on demand and in most instances not in advance as required by law. There is enough evidence from the correspondence above that the landlord had at times to resort to the auctioneering firm of M/S Saddabri Agencies to levy distress for rent and there is also evidence that on occasions, the tenant only paid rent after the Auctioneers had proclaimed its goods. It is also obvious from the times the rent was paid that it was delayed, for example the rent for the first quarter of 2017 was due in January 2017 but was paid on 27. 3.2017. The rent for the second quarter 2017 covering the months of April, May and June was paid on 3. 8.2017 while it was due in April 2017. On 6. 12. 2017, the tenant paid the rent for the third and fourth quarter 2017. The payments were obviously late and only paid after a lot of pressure from the landlord’s Advocates.

16. I have no difficulties in the circumstances in finding that the tenant is a persistent rent defaulter and delayed in payment of rent when it was due.

17. Were there rent arrears when the landlord issued the notice to terminate the tenant’s tenancy?The landlord’s notice is dated 9. 5.2018. On the same date, the landlord’s Advocates demanded for the payment of rent arrears amounting to Kshs. 417,600/= being the rent arrears covering the period of January to June 2018. This effectively means that as at the time the landlord was issuing the notice, the tenant had been in arrears for two quarters, i.e. the quarter beginning in April 2018. The fact that the tenant cleared these arrears on 23. 5.2019 does not negate the fact that he was in arrears of rent as at the time the notice to terminate was issued. It is therefore my finding that the tenant was in rent arrears at the time the notice to terminate its tenancy was issued by the landlord.

18. I agree and I am guided by the decision of the court in the case of; Dorcas Ondieki Gisege vs Nyakarangania Farmers Co-operative Society [2010] eKLR where the court stated;“Under Section 7(1)(b) of the Landlord and Tenant (shops, hotels and Catering Establishments) Act Cap 301, one of the grounds upon which a landlord may terminate tenancy is where the tenant has defaulted in paying rent for a period of two months after such rent has become due or payable. One of the implied terms and conditions of any tenancy is that the tenant shall pay rent in advance except where it is specifically agreed otherwise. Where there is no tenancy agreement as was the case herein, the Appellant was under an obligation to pay rent in advance. From the evidence on record, there is no dispute that the Appellant was persistently in arrears of rent and/or delayed in the payment of the same for several months. At the time of the service of the notice of termination of tenancy, the Appellant was in substantial arrears of rent. It matters not whether the rent arrears were cleared shortly thereafter.”

19. I further note that the tenant’s Reference to the Tribunal in opposition to the landlord’s notice to terminate tenancy is dated 14. 5.2018, so that even as at the time the tenant was filing the Reference, it was in arrears of rent for two quarters and only managed to clear these arrears on 23. 5.2018, days after it had filed its Reference.

Issue B: 20. It is commonly agreed that the landlord took over the suit premises from the previous landlords in the year 2014 after it purchased the same. From the evidence, it is not clear whether the landlord found the parties it alleges to have subleased the premises already in occupation or whether the said parties came into the premises after the landlord purchased the premises. What is not in doubt is that the landlord found the tenant herein in the premises when it purchased the same. The mere presence of the said parties in the premises without the establishment of the time they came to be in the premises is not enough to …..there is subtenant of the tenant/Applicant herein.Further, the presence of Ms. Jeniffer Mugweru Advocate and Ms. Eleanor Githinji in the suit premises has been adequately explained. I have not found any evidence of a tenancy agreement between the two ladies respectively and the tenant herein.

21. On this issue, I therefore do find that the landlord has not proved that the tenant has sublet the premises to third parties much less so without the consent of the landlord.

Issue C 22. Although it is NAWASCO that has the responsibility to correct connection to water supply, I do note that the tenant on several occasions wrote to the landlord forwarding the consumer agreement forms from Nakuru Water and Sanitation Services for the landlord’s execution but the landlord failed to execute the same. The landlord cannot therefore blame the tenant for the lack of water connectivity when the landlord refused to co-operate with the tenant for the installation of the service. I have also not found any evidence to support the allegation that the tenants have so misused the premises that the same is in a deplorable condition.

Issue D 23. In finally disposing of this matter, I do find that the landlord’s notice to terminate tenancy dated 9. 5.2018, is merited and is hereby approved.

24. It is further ordered that the tenancy between the landlord and the tenant is hereby terminated.

25. It is further ordered that the Reference by the Tenant dated 14. 5.2015 is hereby dismissed with costs to the landlord.

26. It is further ordered that the tenant shall vacate the suit premises within the next sixty (60) days of this Ruling failing which the landlord will be at liberty to evict the tenant using a licensed Auctioneer.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY THIS 28TH DAY OF FEBRUARY 2024. HON. JOYCE MURIGIMEMBERHON. CYPRIAN MUGAMBICHAIRPERSON28. 2.2024Delivered in the presence of Mr. Azziz Annan for the landlordIn the absence of the tenant and Counsel