Mason Services Limited v Kengen Staff Retirement Benefits Scheme & another [2025] KEBPRT 168 (KLR)

Mason Services Limited v Kengen Staff Retirement Benefits Scheme & another (Tribunal Case E1279 of 2024) [2025] KEBPRT 168 (KLR) (28 February 2025) (Judgment)

Neutral citation: [2025] KEBPRT 168 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E1279 of 2024

A Muma, Member

February 28, 2025

Between

Mason Services Limited

Tenant

and

Kengen Staff Retirement Benefits Scheme

1st Respondent

Icon Auctioneers

2nd Respondent

Judgment

A. Parties And Their Representatives 1. The Applicant, Mason Services Limited is a Tenant at the property known as L.R. No 209/7382/2 popularly known as KenGen RBS Garden Apartments hereinafter referred to as the suit “the premises.”

2. The firm of Oyugi & Company Advocates represents the Tenant in this matter.

3. The Respondents, Kengen Staff Retirement Benefits Scheme is the Landlord of the suit premises while the 2nd Respondent, Icon Auctioneers are duly registered as Auctioneers under the Auctioneers Act, Cap 526 of the Laws of Kenya.

4. The 2nd Respondent was acting as the 1st Respondent’s agent in levying distress for rent.

5. The firm of Kiptiness & Odhiambo Associates LLP represents the Landlord in this matter.

B. Background Of The Dispute 6. The Tenant approached this Tribunal vide a Reference dated 20th November 2024 and a Notice of Motion Application filed under Certificate of Urgency of an even date seeking the following orders pending the hearing and determination of the Application and Reference:I.that this Tribunal be pleased to issues orders restraining the Landlord and the 2nd Respondent from harassing, levying distress for rent, and/or interfering in any manner whatsoever with the Tenant in their occupation of the suit premises; andIIthat this Tribunal be pleased to provide for the costs of the Application.

7. On even date, this Tribunal granted the orders in (I) and directed the Tenant to serve the application upon the Respondents for inter-partes hearing on 16th December 2024.

8. The Landlord filed a Replying Affidavit dated 10th December 2024 in opposition to the Tenant’s Reference and Application.

C. Tenant’s Case 9. The Tenant’s position is that they had demonstrated the legal threshold for grant of temporary injunctions. The gravamen of the Tenant’s argument was that they are a protected Tenant pursuant to the provisions of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301 of the Laws of Kenya.

10. The Tenant also argued that they do not have outstanding rent arrears and that the demand notice issued by the Landlord did not meet the threshold for a valid termination notice. They further faulted the Landlord for moving to levy distress for the alleged rent arrears prior to the expiry of the 7-days’ notice as communicated in the demand letter dated 18th November 2024.

D. Landlord’s Case 11. It is the Landlord’s position that the Tenant had outstanding rent arrears to the tune of Kenya Shillings One Million Nine Hundred and Fifty Five Thousand One Hundred and Sixty Five and Sixty Nine Cents (Kshs. 1,955,165. 69). The Landlord further maintained that they were rightfully exercising the right to collect the debt under the Distress for Rent Act.

12. The Landlord also averred that they did not require this Tribunal’s consent to levy distress for rent and that the only obligation imposed upon them by the law is to establish the existence of the rental arrears.

13. The Landlord urged this Tribunal to dismiss the Tenant’s application for lack of merit and substance and argued that allowing the orders sought therein would be detrimental to the Landlord’s interests.

E. Issues For Determination 14. Having carefully perused the pleadings presented before this Honorable Tribunal by the parties. It is therefore my respectful finding that the issues for determination are as follows:i.Whether the Tenant has outstanding rent arrears.ii.Whether the Landlord’s purported action of levying distress for rent is merited.

F. Analysis And Determination Whether the Tenant has outstanding rent arrears 15. The parties herein have engaged in a back-and-forth negotiation in an attempt to agree on the rent terms for the intended fresh lease to no avail. From a cursory perusal of the expired leases, the Tenant was to pay a sum of Kshs. 1,359,943. 20 during the 5th and 6th year for Tuck shop lease on a quarterly basis in advance. On the other hand, the Tenant was also to pay a sum of Kshs. 562,293. 46 in the final year for the Salon lease. The sum payable quarterly was Kshs. 140,573. 37. As per the two leases, the rent payable was subject to biannual increment at the rate of 10% from the previous lease period.

16. The rate for rent per square foot at the execution of the leases was Kshs. 66. 55 for the salon. On the other hand, from calculation, the rate per square foot for the Tuck shop at the time of execution was Kshs. 70.

17. The Landlord had proposed to renew Tuck shop lease at the rate of Kshs. 84. 7 per quarter while the Tenant had proposed that the parties maintain the previous quarter’s rate. The Landlord stated that the same would only apply up to December 2021 and thereafter be reviewed by 10% from 1st January 2022 with subsequent 10% bi-annual increments. The parties failed to agree on the terms and therefore never renewed the leases.

18. It is also clear that the Tenant had been granted a 15% discount on rent on 17th October 2020 up to 4th November 2021 where the 15% discount was only allowed for the salon to the month of September 2021.

19. The parties have attached a similar schedule for rent payment. The following breakdown is derived from the said analysis:Salona.The Landlord invoiced the Tenant four invoices in 2021 each for the sum of Kshs. 440, 945. 93 and the Tenant had paid an excess sum of Kshs. 440,946. 07 at the end of the 4th quarter;b.The Landlord later increased the invoice sum to Kshs. 503, 665. 62 for the period of 2022 – 2024. However, the Tenant continued to pay a sum of Kshs. 440,946. 00 as they had paid in 2021. Tuck Shopa.The Landlord invoiced the Tenant invoices of Kshs. 175,854. 81 for the period from 2021 to 2024. However, the Tenant continued to pay a sum of Kshs. 149,477. 00 up to the last quarter of 2023 and a sum commensurate to the invoiced amount of Kshs. 175,854. 81 in the first quarter of 2024.

20. It is an established legal principle that where the parties to a tenancy agreement fail to reach a mutual consent on new rent terms and fail to execute a fresh lease, the rent terms under the expired lease are applicable.

21. In Wonderland Casino Ltd v University of Nairobi [2008] eKLR the Court held as follows:“81. holding over. The tenancy arising by implication in favour of a tenant who holds over after the expiration of his lease and pays rent is only deemed to be on the terms of the old lease in the absence of evidence of a different understanding. “

22. With the foregoing, the Parties to the instant agreement are bound by the terms of the expired leases and not the unilaterally enforced fresh terms. The Parties shall reconcile their rent accounts to determine the Tenant’s outstanding rent arrears.

Whether the Landlord’s purported action of levying distress for rent is merited 23. Section 12(h) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap 301 of the Laws of Kenya grants this Tribunal the powers to grant orders for levying distress for rent. However, section 3 of the Distress for Rent Act, Cap 293 of the laws of Kenya, allows a Landlord to levy distress for rent in case there are outstanding rental arrears.

24. In John Nthumbi Kamwithi – vs- Asha Akumu Juma (2018) eKLR the High Court held as follows:“I find that the appellant had no obligation to seek permission from the Tribunal to levy distress. The fact that the tenancy is controlled does not mean that the landlord applies to the Tribunal to levy distress. Distress is a right the landlord is entitled to for recovery of rent. If the tenant chooses, he/she could file a reference to the Tribunal for orders in objection of the distress”.

25. It is therefore pertinent that a Landlord may levy distress for rent where the Tenant does not dispute to the claimed rent arrears.

26. However, the rental arrears in the instant matter are disputed and ought to have been subjected to determination by this Tribunal. I therefore find that to that extent, the Landlord faulted in instructing the 2nd Respondent to levy distress for rent on disputed rent arrears.

G. Orders 27. In the upshot, the Tenant’s Reference and Application dated 20th November 2024 are hereby partially allowed in the following terms:a.the Landlord shall serve a fresh notice of termination;b.the Tenant shall pay the outstanding arrears calculated on the basis of the expired leases within 6 months from the date of this Ruling in 6 equal monthly instalments;c.the Tenant shall continue paying the rent under the terms specified in the expired lease, that is, Kshs. 440,945. 93 per quarter for the Tuck Shop and Kshs. 149,477. 00 for the Salon;d.The OCS Parklands Police Station to assist in compliance of Order (a) above and Order (b) if necessary;e.Each party shall bear its own costs; andf.The matter is settled in these terms.

RULING DATED, DELIVERED AND SIGNED AT NAIROBI ON THIS 28TH DAY OF FEBRUARY 2025 IN THE PRESENCE OF WAWIRE FOR THE LANDLORD AND MANYARA FOR THE TENANT AND IN THE ABSENCE OF THE PARTIES.HON A. MUMA - MEMBERBUSINESS PREMISES RENT TRIBUNAL