Neo Amadiva Limited v Cape Holdings Limited & Sannex Enterprises Auctioneers [2019] KEBPRT 8 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO. 256 OF 2018 (NAIROBI)

NEO AMADIVA LIMITED....................................................................................TENANT

VERSUS

CAPE HOLDINGS LIMITED........................................................................LANDLORD

SANNEX ENTERPRISES AUCTIONEERS........................................................AGENT

RULING

The Tenant/Applicant on 22nd March 2018 filed a reference under section 12(4) of Cap 301.  The complaint against the Landlord/Respondent was stated as hereunder;

“The complaint concerns the Landlord in that the Landlord unlawfully levied for distress against the Tenant despite the Tenant having paid the rent due and owing.”

The Tenant on the same date also filed a notice of motion seeking interim restraining orders.  The orders were issued on 22nd March 2018 ex-parte.  The Landlord/Respondent filed a replying affidavit sworn by Amerpal Bhogal on 18th April 2019.

The Landlord’s advocate also filed a notice of preliminary objection which is the subject matter of the ruling.

The Landlord’s preliminary objection dated 18th April 2018 has raised the following grounds

a.   That the honourable Tribunal has no jurisdiction to hear and determine the present suit by virtue of section 3 of the Landlord and Tenant (shops, Hotels and Catering Establishments Cap 301 of the Laws of Kenya) which excludes parties with a lease of 5 years and 3 months from the purview of the Tribunal’s jurisdiction.

b.   That in view of the provisions of the above the reference cannot be maintained and should be dismissed with costs.

The advocate for the Landlord on record filed written submissions on the issue of the preliminary objection on 17th May 2018 and the Advocates for the Tenants filed written submissions on the preliminary objection on 23rd October 2018.  The Tribunal has perused and read the written submissions in details and upon consideration of the same makes the following findings;

1.   That a preliminary objection must raise issues of pure law and must be based on admitted facts(Mukisa Biscuit Case [1969] EA 696).

2.   The parties before the Tribunal, that is, the Applicant and the 1st Respondent admit that they executed the letter of offer dated 23rd July 2012.  1st Respondent’s exhibit ABI in the affidavit sworn on 18th April 2018 by Amerpal Bhogal in reply to the Tenant’s notice dated 22nd March 2018.  The execution of the letter of offer was not disclosed by the Tenant in the notice of motion dated 22nd March 2018.

3.   The parties admit that no formal lease was executed after the letter of offer was executed on 23rd July 2019.

The above facts are admitted.  The only issue for determination by the Tribunal is whether the execution of letter of offer dated 23rd July 2012 created a controlled tenancy within the meaning of section 2 of Cap 301 or not.

The advocates for the Landlord have submitted that execution of the letter of offer created a lease agreement for a period of 6 years and not a controlled tenancy.  They have submitted that the Tribunal has no jurisdiction.

The advocates for the Landlords on the other hand have submitted that execution of the letter of offer did not create a controlled tenancy as the parties did not execute a formal lease.

The Tribunal is satisfied that the issue raised by the Landlord in this matter is an issue of pure law and is based on an admitted document.  Landlord’s exhibit ABI has the following key clauses;

1.   Clause 6: The lease will be for a term of six (6) years from the commencement date with a clause providing for rent escalation as set out in clause 7 below.  The lease will include a provision for renewal at the prevailing market rates.

2.   Lease start date; 1 day of August 2012.

Clause 19: Possession

This will be granted on the lease commencement date subject to the Tenant having made all the requisite payments hereunder…

3.   Clause 21; By accepting these Heads of Terms, the Tenant is deemed to approve the conditions contained herein and agrees to execute a formal lease of the premises upon receipt of the same. This offer is strictly subject to the approval of the Landlord.

Clause 23: Contract

Until such time as the standard lease has been executed and registered, all covenants, conditions and the rent agreed, shall be deemed to have been incorporated in this offer.

The letter of offer was accepted and executed by the Tenant and the Landlord on 23rd July 2012.  The issue before the Tribunal is the interpretation of the letter of offer dated 23rd July 2012.  It is conceded that the Tenant took possession of the suit premises upon execution of the letter of offer;

Section 2 of Cap 301 makes it clear that where a tenancy has been reduced into writing and is for a period of more than 5 years, the Tribunal has no jurisdiction to hear and determine the dispute.

The Tribunal upon consideration of the letter of offer dated 23rd July 2012 is satisfied that execution of the letter of offer had the following legal effects;

1.   That it reduced the tenancy between the parties into writing for a period of 6 years.

2.   It created a binding contract between the parties for a period of 6 years.

3.   Failure of the parties to execute a formal lease did not invalidate the tenancy agreement created by the letter of offer dated 23rd July 2012.

4.   Cap 301 does not require execution of a formal lease or registration of the same.  All that is required is that the tenancy agreement is reduced into writing.

5. The Tribunal would not have entertained the dispute if the Tenant had disclosed the existence of the letter of offer in the notice of motion dated 22nd March 2018.

All in all, the Tribunal is satisfied in the light of the above findings that it has no jurisdiction to hear and determine the dispute and makes the following orders;

1.   The Respondent/Landlord’s preliminary objection dated 18th April 2018 is upheld.

2.   The Tenant’s reference dated 22nd March 2018 and the notice of motion dated 22nd March 2018 are struck out as incompetent as the tenancy is not controlled within the meaning of section 2 of Cap 301.

3.   The interim orders issued on 22nd March 2018 are discharged forthwith.

4.   The Tenant shall pay the Landlord and the auctioneer costs of the reference.

5.   Costs shall be agreed or shall be taxed by the Tribunal.

Ruling delivered this 5thday of July 2019 in the presence of Mr Muchiri holding brief forKimani for the Landlord.  Tenant’s advocates absent.

MBICHI MBOROKI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL