Muthoga Gaturu & Company Advocates v Absa Bank Kenya PLC [2022] KEBPRT 193 (KLR)

Muthoga Gaturu & Company Advocates v Absa Bank Kenya PLC (Tribunal Case E020 of 2022) [2022] KEBPRT 193 (KLR) (14 July 2022) (Ruling)

Neutral citation: [2022] KEBPRT 193 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E020 of 2022

Gakuhi Chege, Vice Chair

July 14, 2022

Between

Muthoga Gaturu & Company Advocates

Applicant

and

Absa Bank Kenya PLC

Respondent

Ruling

1. By a reference dated February 11, 2022, the tenant moved this Tribunal under section 12(4) of cap. 301, Laws of Kenya complaining that the tenancy notice issued by the landlord was given in unjustified circumstances with a view to terminating its tenancy. The tenant further complains that the landlord has failed and/or neglected to attend to repair and maintenance works relating to the premises.

2. The tenant simultaneously filed a motion dated February 11, 2022seeking for injunction to prohibit the landlord/Respondent from evicting, removing, distressing, entering into and/or in any other way interfering with the peaceful entitlement and possession of the office premises situate on L.R Nyeri/Municipality Block III/221 (Absa Building- Nyeri Town) pending the hearing and determination of the reference filed herein.

3. The application is supported by the affidavit of R. Paul Mugambi who is an advocate of the High Court practicing in the legal firm of Muthoga Gaturu & Company Advocates, the tenant in this matter.

4. The applicant has been the respondent’s tenant in the suit premises since the year 1998 operating legal services business thereon. It is the applicant’s contention that therespondent that some of the external and structural parts of the suit premises fell into disrepair upon which it requested the respondent to undertake necessary repairs and maintenance. The respondent undertook partial/minimal repairs and maintenance works on the premises leaving critical aspects unattended despite several reminders on the same since the year 2013 as evidenced by annexures ‘RPM1’. The tenant however continued paying rent to the landlord without fail.

5. The landlord through a letter dated January 7, 2020required the tenant to enter into a formal lease with it. The said letter is marked annexure ‘RPM4’. The tenant by a letter dated February 17, 2020requested the landlord to address the pending maintenance concerns so as to put the premises into a proper tenantable state and condition to allow discussions to formalize the existing tenancy on agreed terms and conditions. The required repairs were set out in a letter marked RPM6 dated September 14, 2021.

6. On December 17, 2021, the landlord served the applicant with a tenancy notice seeking to terminate the tenancy relationship on the ground that the respondent “intends to occupy the premises for the purposes of carrying on banking business. The notice was expressed to take effect on February 17, 2022and is marked as annexure ‘RPM7’.

7. According to the tenant, the ground for termination is not genuine for the reason that the respondent had never had need to utilize the demised premises for banking business for the last 20 years. Additionally, if this were the reason, the same would have been evident in correspondence exchanged between the parties. The tenant objected vide annexure ‘RPM8’.

8. The tenant therefore contends that it stood to suffer irreparable harm in the event that the orders sought in the application are not granted given that the applicant has operated in the premises for the last 20 years.

9. It is the tenant’s case that the notice to terminate tenancy is not justified, is unreasonable and ought not be allowed by this Tribunal.

10. The application is opposed through the affidavit of Wilson Murage, a Senior Legal Officer at the landlord bank. It confirms that the tenant was granted a lease on March 12, 1999over Title no. Nyeri Municipality/Block 111/221 marked ‘WM1’ for a period of 5 years 3 months with effect from 1st June 1998 on condition that the tenant would seek extension in writing 3 months before expiry thereof.

11. The tenant did not seek extension of the lease and the same expired on August 30, 2003. The tenant nonetheless remained in possession and continued paying the reserved monthly rent of Kshs.22,000/-.

12. The landlord sought to formalize the relationship through a new lease agreement but was confronted with demands for repair of the premises by the tenant before it could sign such lease. The repairs were effected but the tenant made further demands for repairs.

13. With the passage of time, the landlord deposes that it is in need of the premises for its business specifically banc assurance wing, First Assurance branch in Nyeri next to the bank for efficiency and synergy as per annexure ‘WM-2’.

14. As such the premises shall be used by the bank for more than one year. As a result, the bank issued a notice to terminate the tenancy of the applicant marked ‘WM-3’. The tenant objected upon receipt by a notice dated January 12, 2022 demanding for repairs. The objection is marked ‘WM-4’.

15. It is the landlord’s case that the tenant did not dispute its reason for requiring possession. The landlord contends that it has in good faith gone above and beyond merely stating that it needs the premises for business and has elucidated the exact business intended to be undertaken at the demised premises. As such the state of repair of the premises is irrelevant to the consideration of the notice. The issue of 20 years goodwill cited by the tenant cannot defeat the landlord’s rights to own use of the premises and the tenant can look for alternative premises.

16. It is the respondent’s case that the orders sought are tantamount to violation of its right to property underarticle 40 of the Constitution and as such ought to be dismissed with costs.

17. The applicant filed a supplementary affidavit sworn by Patrick J. Mwiti on April 8, 2022. The deponent is the Managing Partner of the tenant legal firm. He states that the tenant’s continued occupation of the suit premises after expiry of initial lease created a periodic tenancy. It maintains that the landlord failed to undertake all the repairs brought to its attention in the year 2009 as evidenced by annexures ‘RPM1’. The tenant had been offered a long term lease of 5 years 3 months and as such the ground of termination of tenancy was only an excuse by the landlord. The tenant calls for an inspection to be conducted by the Tribunal on the state of repair of the suit premises.

18. The application was directed to be disposed of by way of written submissions and both parties complied. I shall advert to the submissions while considering the issues in dispute.

19. The issues for determination in this matter are:-a.Whether the tenant is entitled to the reliefs sought in the application dated February 11, 2022. b.Who is liable to pay costs of the application?.

20. The principles upon which applications for temporary injunction are considered were long settled in the case of Giella v Cassman Brown & Co Ltd(1973) EA 358 as follows:-(i)An applicant must show a prima facie case with a probability of success.(ii)An injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury.(iii)When the court is in doubt, it will decide the application on the balance of convenience.

21. A prima facie case was defined in the case of Mrao Ltd v First American Bank Ltd & 2 others(2003) eKLR at paragraph 4 as follows:-“4. A prima facie case in a civil application includes but is not limited to a genuine and arguable case. It is a case on the material presented to the court, a Tribunal properly directing itself will conclude that there exists a right which has apparently been infringed by the opposite party as to call for an explanation or rebuttal from the latter”.

22. The tenant’s counsel submits that the landlord offered the premises for long lease on August 13, 2021 for a period of 5 years 3 months. However, the landlord changed mind 3 months later and purported to terminate the tenancy for reasons that it required the premises for its own use. There is therefore need to prove the said ground at the full hearing of the reference under section 7(1) (g) of cap 301 for purposes of establishing if the landlord has intention to occupy the premises. I agree that by this argument, the tenant has established a prima facie case with a probability of success.

23. As to whether the ground is genuine or not, this shall be considered during the full trial of the reference.

24. All the arguments in regard to the notice advanced by counsel for the landlord shall be dealt with at the full hearing as I am only called upon at this stage to consider the application for injunction.

25. As regards the second principle of injunction, the tenant submits that it would suffer irreparable harm if evicted as it has been in occupation of the premises since 1988 in the backdrop of a challenge to the validity of the grounds set out in the tenancy notice dated December 16, 2021. It is argued that a refusal of the injunction order sought would expose the tenant to eviction or removal from the premises by the landlord before the full hearing and determination of the reference. The tenant continues to pay rent to the landlord.

26. Unless the injunction order is granted, the tenant argues that the exercise of contesting the validity of the tenancy notice will be rendered an academic exercise if it was to eventually succeed in challenging the validity of the notice. The operation of the law firm will have been disrupted and cut short and its thriving business destroyed. Such damage it is argued cannot be compensated by an award of damages. As such, the balance of convenience tilts in its favour.

27. On the other hand, the landlord’s counsel submits that businesses and especially law firms change office addresses all the time without any harm to the business. It is submitted that the tenant has not demonstrated what irreparable harm it stood to suffer if the orders sought are not granted. The landlord cites the case of David Wainaina Gikuru v Alice Nyambura Wamai (2016) eKLR where it was held that a tenant served with a termination notice would not suffer irreparable damage as the notice period is considered in law to be sufficient to enable the tenant to reorganize himself. Otherwise no landlord would ever be in a position to issue a notice to a tenant because every notice to vacate must of necessity come with some collateral loss.

28. It is argued that the two months’ notice being a proper notice accords the tenant sufficient time to source for alternative premises for its use and no irreparable damage would be suffered in the circumstances. Instead it is the landlord who is suffering loss of business opportunity which cannot be compensated by way of damages.

29. It is important to note at this stage that the issue before me is not whether or not, I should uphold or reject the tenancy notice but whether I should exercise my discretion to grant or refuse the injunction sought by the tenant.

30. In the case of Assanand v Pettitt (1978) eKLR the High court cited with approval the English case of Preston v Luck(1884) 27 Eh D at P.505 where it was held as follows:-“The object of a temporary injunction is to keep things in status quo so that if at the hearing, the plaintiffs obtain a judgment in their favour, the defendants will have been prevented from dealing in the meantime with the property in such a way as to make that judgment ineffectual”.

31. In this case, if the injunction sought is not granted, the applicant will be exposed to possible eviction from the suit premises and as such will be denied the right to its case being heard on the merits. The right to be heard is a constitutional right under article 50 of the Constitution of Kenya, 2010 and any denial thereof in my view cannot be compensated by an award of damages. I am therefore ready to grant the injunction sought by the tenant to enable the matter to escalate to hearing while the substratum of the suit is maintained by both parties. I therefore need not consider the third ground of the balance of convenience.

32. In the premises, the orders that commend to me are:-(i)The Application dated February 11, 2022 is allowed in terms of prayer 3 thereof.(ii)The costs of the application shall abide the outcome of the main reference.(iii)Both parties shall comply with Order 11 of the Procedure Ruleswithin the next Thirty (30) days hereof to pave way for the hearing of main reference.

It is so ordered.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY THIS 14TH DAY OF JULY 2022. HON. GAKUHI CHEGEVICE CHIARBUSINESS PREMISES RENT TRIBUNALIn the presence of:Mugambi for the TenantNo application for the RespondentFurther order:Mention on 18th August 2022 to confirm compliance with order (iii) above.Mention notice to issue.HON. GAKUHI CHEGEVICE CHIARBUSINESS PREMISES RENT TRIBUNAL