Nexic Company Limited v Board of Trustees National Social Security Fund & Regent Auctioneers [2016] KEHC 2640 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

ENVIRONMENT & LAND COURT

ELC  NO.563 OF 2015

NEXIC COMPANY LIMITED……………………………..…......................…… PLAINTIFF

VERSUS

THE BOARD OF TRUSTEES NATIONAL SOCIAL SECURITY FUND….1ST DEFENDANT

REGENT AUCTIONEERS……….……………….………......................…2ND DEFENDANT

RULING

The 1st Defendant is the registered proprietor of all that parcel of land known as L.R No. 209/8595 on which it has a building known as View Park Towers.  The Plaintiff is one of the 1st Defendant’s tenants in View Park Towers where it occupies office premises measuring approximately 160 sq. feet (hereinafter referred to as “the suit property”) on terms and conditions which are contained in the letter of offer dated 23rd November 2010. According to the said letter of offer which was accepted by the Plaintiff, the 1st Defendant granted to the Plaintiff a lease over the suit property for a term of 6 years with effect from 1st January, 2011 at a quarterly rent of Kshs.24,000/= for the first two years, Kshs.28,800/= for the next two years and Kshs.34,560/= for the last two years.  In addition to the rent, the Plaintiff was to pay service charge to the 1st defendant on a reimbursement basis for the expenses incurred by the 1st Defendant in maintaining the building on which the suit property is situated. The Plaintiff was to pay service charge at the rate of Kshs.7,680/=  per quarter upon taking possession of the suit property.  The 1st Defendant was however entitled to recover any service charge incurred during the Plaintiff’s tenancy over and above the said sum of Kshs.7,680/= at the end of the every year of the Plaintiff tenancy subject to audit.

The Plaintiff brought this suit against the Defendants on 22nd June 2015 seeking a permanent injunction to restrain the Defendants from levying distress, attaching, carrying away, evicting or in any other way interfering with the Plaintiff’s possession of the suit property. The Plaintiff also sought a mandatory injunction to compel the Defendants to produce audited accounts for the expenses incurred in maintaining the building on which the suit property is situated on the basis of which it has been levying service charge for the suit property.  It its plaint dated 22nd June 2015, the Plaintiff averred that it has been regular and diligent in paying rent to the Plaintiff for the suit property as and when it falls due and that it has never delayed in the payment of its rent for the entire duration that it has been the 1stDefendant’s tenant.  The Plaintiff averred that on 29th September 2014 the 1st Defendant wrote to all the tenants in View Park Towers through its agents Lustman & Co. (90) Ltd. to the effect that following the service charge audit that was carried out for the financial years 2012, 2013 and 2014, it had been discovered that the expenses that the 1stDefendant had incurred in maintaining View Park Towers building was more than the expenses that the 1st Defendant had billed to the tenants and on account of that, the tenants were required to pay the excess service charge on a prorate basis.  Following this letter, the 1st Defendant submitted to the Plaintiff an invoice for Kshs.31,787 as its share of the excess service charge which was back dated to the year 2011.  The Plaintiff averred that the 1st Defendant refused and/or neglected to produce upon request the audited accounts on which the invoiced service charge was based.

The Plaintiff averred that on 4th June 2015, the 1st Defendant forwarded to the Plaintiff a statement of its rent account in which the 1st Defendant claimed that a total sum of Kshs.209,962. 61 was due and payable by the Plaintiff to the 1st Defendant. This amount was comprised of among others, excess service charge of Kshs.31,787/=, alleged unpaid rent for January to March, 2013 in the sum of Kshs.37,862. 40, alleged unpaid rent for October to December, 2013 in the sum of Ksh. 43,430. 40, and alleged unpaid rent for October to December 2014 in the sum of Kshs.53,452. 80/=.

The Plaintiff averred that on 15th June 2015, it pointed out to the 1st Defendant that the said statement of rent account was erroneous but the Defendant insisted that the said sum of Kshs.209,962. 61 was due and payable by the Plaintiff and proceeded on the same day to instruct the 2nd Defendant to levy distress against the Plaintiff for the recovery of the said amount of kshs.209,962. 61. The Plaintiff averred that the distress that was levied against it by the Defendantswas illegal in that the alleged service charge of Kshs.31,787/= which was back dated to 2011 was not payable and that the rent that the Defendants claimed to be due for the years 2013 and 2014 had been paid and as such was also not payable.

Together with the plaint, the Plaintiff filed an application by way of Notice of Motion dated 22nd June 2015 seeking a temporary injunction to restrain the Defendants from levying distress for rent, evicting, harassing or in any other way interfering with the Plaintiff’s quiet possession of the suit property pending the hearing and determination of this suit.   The Plaintiff’s application which was supported by the affidavit of the Mercy Ndanu Kyalo was brought on the same grounds which I have highlighted above.  The Plaintiff contended that the distress that was levied upon it by the Defendants was illegal since the service charge and rent on the basis of which the distress was levied was not payable.

The Plaintiff’s application was opposed by the Defendants through a replying affidavit sworn by one, Arnold Muturi who described himself as a valuer and property agent with Lustman and Co. (90) Ltd. which is managing View Park Towers on behalf of the 1st Defendant.  Mr. Muturi stated that he was authorized by the 1stDefendant to swear the affidavit.  He stated that the Plaintiff is contractually bound to pay the service charge claimed by the 1st Defendant.  He stated that during the subsistence of the Plaintiff’s tenancy with the 1st Defendant, the 1st Defendant incurred expenses in managing the suit property in excess of the service charge that was paid by the Plaintiff during the financial years 2011/2012, 2012/2013 and 2013/2014 and as such it became necessary to call upon the Plaintiff to pay the said excess service charge that was incurred by the 1st Defendant. He stated that the 1st Defendant issued the Plaintiff with the audited accounts showing how the said excess service charge was arrived at but the Plaintiff refused to acknowledge receipt thereof. On the issue of rent, Mr. Muturi stated that at times, the Plaintiff used to delay in its rent payments and paid the same in arrears. He stated that the distress that was levied by the 1st Defendant against the Plaintiff was lawful.

The Plaintiff’s application was argued by way of written submission.  The Plaintiff filed its submissions on 9th November 2015 while the Defendants did so on 17th December 2015. I have considered the Plaintiff’s application together with the affidavit filed in support thereof.  I have also considered the Defendants affidavit in opposition to the application.  At this stage, what I need to determine is whether the Plaintiff has established a prima facie case against the Defendants with a probability of success and whether the Plaintiff stands to suffer irreparable harm which cannot be compensated in damages if the injunction sought is not granted.  In the event that I am in doubt as to the above, the application would be determined on a balance of convenience. See, Giellavs. Cassman Brown & Co. Ltd. (1973) EA 358.  The Plaintiff’s complaint against the Defendants is that they have levied an illegal distress against it.  It is not in dispute that the 1stDefendant instructed the 2nd defendant to levy distress against the Plaintiff for the recovery of an alleged rent arrears of Kshs.209,962. 61.  It is also not in dispute that the 2nd Defendant proceeded to the Plaintiff’s premises and attached the Plaintiff’s movable assets pursuant to the said instructions and notified the Plaintiff that unless the said sum of Kshs.209,962. 61was paid together with their fees of Kshs.20,996/= within 14 days, the said goods would be removed from the Plaintiff’s premises and sold to recover the said amount.  As I have mentioned earlier, the said sum of Kshs.209,962. 61 is said to comprise of rent arrears and service charge amounting to Kshs.31,787/=.  The Plaintiff has contended that it is not in rent arrears.  The Plaintiff has claimed that it has always paid rent to the 1st Defendant as and when it falls due.  The Plaintiff has claimed that the rent claimed to be due by it to the 1stDefendant had been paid. The Plaintiff annexed to its affidavit in support of the present application, a statement of account that was submitted to it by the 1st Defendant on how the sum of Kshs.209,962. 61 which is the subject of the disputed distress was arrived at. According to the said statement, the rent said not to have been paid by the Plaintiff is for the period covering January to March, 2013, October to December, 2013, October to December 2014 and April to June 2015.  The 1st Defendant having provided this statement showing the months in respect of which the Plaintiff is said not to have paid rent, the onus was upon the Plaintiff who claims that the rent said to be due was actually paid to prove on a prima facie basis such payment.  The distress for rent was levied upon the Plaintiff on 15th June 2016.  The Plaintiff has not placed any evidence before the court to show that it had paid rent that was being demanded by the 1st Defendant.  The Plaintiff which claims to have paid rent for January to March, 2013, October to December, 2013 and October to December 2014 placed no evidence before the court in proof of the said payments. The only payment in respect of which evidence has been placed before the court is that of rent for April to June, 2015 in the sum of kshs.53,452. 80. This payment was made on 15th June 2015,the same day distress was levied against the Plaintiff and was rejected by the 1st Defendant.  From the statement, this payment was due on 1st April 2015 and was not made until 15th June 2015 when distress was levied against the Plaintiff.  From the foregoing, I am not satisfied that the Plaintiff had paid rent in full as at 15th June 2015, when distress for rent was levied against it.  The other component of the sum of Kshs.209,962. 61 in respect of which distress was levied against the Plaintiff was excess service charge in the sum of Kshs.31,787/=.  The Plaintiff has contested this charge. It is not very clear from the affidavit in support of the application and the Plaintiff’s submissions as to whether this charge is contested because it is back-dated or because it is not supported by audited accounts.

I am in agreement with the submission by the 1stDefendant that under the tenancy agreement it had entered into with the Plaintiff, it was entitled to recover from the Plaintiff the expenses it had incurred in the maintenance of the suit propertyover and above the service charge that had been paid by the Plaintiff. The excess service charge was recoverable at the end of every year of the tenancy.  I am not in agreement with the contention by the Plaintiff that the excess service charge could not be back dated. That contention finds no support in the tenancy agreement that the parties had entered into.The payment of the excess service charge was however conditional upon the 1stDefendant furnishing audited accounts of the service charge received, the expenses incurred and the excess or deficit.  The Plaintiff has contended that it called for such accounts and none was submitted.  On its part, the 1stDefendant has contended that the Plaintiff was furnished with the said accounts but it declined to acknowledge receipt thereof.  In its replying affidavit, the 1stDefendant did not annex the service charge audited accounts. Instead, it referred the court to the accounts that were attached to its bundle of documents.  I am in agreement with the submission by the Plaintiff that documents which are not annexed to an affidavit and marked as exhibits in accordance with the provisions of the Oaths and Statutory Declarations Act, Chapter 39 Laws of Kenya have no evidential value in interlocutory proceedings of this nature. The 1st Defendant has therefore not placed any evidence before the court of the audited accounts which it claims to have submitted to the Plaintiff. In the absence of evidence that the excess service charge of Kshs.31,787/= being claimed by the 1st Defendant from the Plaintiff is based on audited accounts in accordance with the terms of the tenancy agreement between the parties, there is arguable case that the charge is unlawful.  Due to the foregoing, I am satisfied that the Plaintiff has established a prima facie case against the Defendants with a probability of success on the issue of the excess service charge claimed by the 1st Defendant.

On the issue as to whether the Plaintiff would suffer irreparable harm if the injunction sought is not granted, I am in agreement with the Plaintiff that that would be the case. The Plaintiff is carrying out business on the suit property. If the distress for rent which is said to be unlawful is allowed to continue, the Plaintiff’s business and reputation would suffer.  The actual loss the Plaintiff is likely to suffer would be difficult to quantify.

Due to the foregoing, I am satisfied that the Plaintiff has satisfied the conditions for granting interlocutory injunction.  I therefore allow the application dated 22nd June 2015 in terms of prayer 3 thereof save that the injunction shall last until the hearing and determination of this suit or the determination of the Plaintiffs tenancy whichever comes earlier.  The costs of the application shall be in the cause.

Delivered and Signed at Nairobi this 2nd day of August, 2016

S. OKONG’O

JUDGE

In the presence of

N/A  for the Plaintiff

Mr. Kiamba  for the Defendants

John  Court Assistant