Optica Limited v Aya Limited [2025] KEBPRT 197 (KLR)

Optica Limited v Aya Limited (Tribunal Case E032 of 2024) [2025] KEBPRT 197 (KLR) (Civ) (24 February 2025) (Judgment)

Neutral citation: [2025] KEBPRT 197 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E032 of 2024

P Kitur, Member

February 24, 2025

Between

Optica Limited

Applicant

and

Aya Limited

Respondent

Judgment

A. Parties 1. The Applicant known as Optica Limited is a company operating in Kenya that sells eyewear and offers eye related medical services. It occupies the suit premises as a tenant of the Landlord.

2. The firm of Mahida & Maina Company Advocates represents the Applicant.

3. The Landlord is a company duly registered in Kenya and is the registered owner of the premises located at Eldoret Municipality Block 7/6 (the suit premises).

4. The firm of Owino Angwenyi & Company Advocates represents the Landlord.

B. The Dispute Background. 5. It is evident from the proceedings that the parties have maintained a tenancy relationship over the suit premises. However, the terms of the tenancy remain unascertained due to the absence of a written lease agreement currently in force, following the expiry of the previous one. The tenancy continued without interruption until approximately 17th January 2024, when the Landlord issued a notice to the tenant to terminate the tenancy, effective 16th March 2024.

6. Aggrieved by the notice, the tenant filed a Reference dated 12th March 2024 to this tribunal, opposing the notice issued by the landlord. The tenant cited the illegality of the notice and argued that the grounds for the termination were unjustified.

7. The tenant additionally filed a Notice of Motion dated 12th March 2024 seeking the following orders:i.Spent.ii.Thatthe Honorable Tribunal be pleased to grant an order of injunction restraining the Respondent whether by its officers, servants, workmen, agents or otherwise howsoever from evicting the Applicant/Tenant, its officers, servants or agents from the suit premises and/or in any manner interfering with its Tenancy pending hearing and determination of this Application.iii.Thatthe Honorable Tribunal be pleased to grant an order of injunction restraining the Respondent whether by its officers, servants, workmen, agents or otherwise howsoever from evicting the Applicant/Tenant, its officers, servants or agents from the suit premises and/or in any manner interfering with its Tenancy pending hearing and determination of this suit herein.iv.Thatthe Honourable Tribunal be pleased to grant any other order it deems fit to grant.v.Thatcosts for this Application be provided for. be no orders as to costs.

8. The parties agreed to file their respective submissions on the Application.

9. On 11th June 2024, the Court observed that the tenant initiated the present suit by filing both a complaint and a reference dated 12th March 2024. Pursuant to Section 6 of the Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Chapter 301 of the Laws of Kenya (the Act), when a party opposes a tenancy notice, such notice shall be of no effect until the determination of the Reference. Consequently, the Application dated 12th March 2024, required no further prosecution, and the matter proceeded to the hearing of the Reference.

10. During the hearing of the Applicant’s case. The Applicant called one witness who is the Chief Executive Officer of Optica Limited. The witness provided testimony on behalf of the Tenant. He stated that the Tenant has been operating an Ophthalmic and Dispensing Optician business at the premises in Eldoret Town for many years. That on 17th January 2024, the landlord issued a termination notice, claiming the intention to occupy the premises for business purposes for a period of not less than one year. The witness explained that he attempted to renegotiate the terms of the tenancy to reach a mutually beneficial agreement, but these efforts were unsuccessful.

11. The witness further testified that the landlord's discussions and claims were unsubstantiated, with no credible evidence provided to support their intention to occupy the premises. He expressed concerns over the vague grounds presented by the landlord and highlighted the injustice that would result from evicting the Tenant without clear and specific intentions for the premises. He emphasized that the Tenant had always fulfilled their obligations and conditions, and the eviction would cause significant disruption and loss.

12. Additionally, the witness pointed out the Tenant's long-standing presence at the premises, having operated there for over 25 years and built a loyal customer base. He stated that the eviction would lead to a significant loss of clients and jeopardize the continuity of the business. That the Tenant had also made substantial and costly alterations and renovations to facilitate medical eyecare services, which would not be recoverable if they were evicted. The witness believed that the landlord's grounds for terminating the tenancy were not genuine.

13. The Applicant’s witness was cross-examined by the Counsel for the Landlord. The witness admitted to the existence of the tenancy relationship between the parties. That it carried out renovations without the requisite approvals from the landlord and the county government. It also admitted that there was no lease agreement at present and that it was not in any arrears regarding rent payments.

14. During the hearing of the Landlords case, the Landlord’s witness known as Isaac Njoroge, a director in charge of operations at Aya Ltd, testified on behalf of the Landlord. He stated that on 17th January 2024, a notice of termination of tenancy was served to Optica Ltd, effective from 16th March 2024. The grounds for termination were based on the company's resolution to occupy the premises for at least one year to carry out business activities. That the decision to reclaim the property was aimed at expanding their business, specifically the Aya Inn hotel, bar, and restaurant. The company's minutes, along with hotel and county approvals and statements, were provided as proof of this decision before the court.

15. The witness further clarified that there were no pending issues with the Tenant concerning rent, renovations, or county approvals. He asserted that any claims of renovations mentioned in the tenant's reference were forgeries, pointing out the altered invoices indicating "for" Eldoret. Additionally, there were no KRA receipts or county approvals to support the alleged renovations. He emphasized that there was no lease agreement in force at the time, and the notice of termination had been issued following the relevant laws, ensuring that the tenant would not be prejudiced in any way.

16. Finally, the witness argued that the tenant was obligated to vacate the premises to allow the company to repossess, undertake necessary renovations within the stipulated timeframe, and expand its hotel, bar, and restaurant business. He maintained that the company's actions were legitimate and aligned with their business expansion plans, and the eviction was necessary to facilitate this growth.

17. The Tenant filed submissions dated 15th January 2025 while the Landlord filed their submissions dated 19th January 2025. I have thoroughly reviewed both submissions and will make relevant references to them in my analysis and determination.

C. List Of Issues For Determinationi.Whether the Landlords Notice of Termination of Tenancy dated 17th January 2024 was valid?ii.Who shall bear costs of the suit?

D. Analysis And Findings. 18. The jurisdiction of this tribunal was not expressly disputed. However, the landlord, in their submissions dated 19th January 2025, raised a question regarding the existence of any tenancy agreement between the parties. The landlord asserted that they issued the tenancy notice based on the fact that there was no tenancy agreement in force between the parties.

19. This tribunal has the authority to determine disputes arising from controlled tenancies. It is mandated to decide whether a tenancy is controlled under section 12 (1) of the Act. Controlled tenancies include tenancies of shops, hotels, or catering establishments that have not been formalized in writing. In this case, it is evident that the parties have an unwritten tenancy due to the lack of renewal of the expired agreement. Therefore, the tenancy in question is a controlled tenancy, and the tribunal has jurisdiction to hear and determine disputes arising from it.

20. To the center of the dispute, the Tenant mainly seeks an order of this Tribunal to restrain the landlord from evicting them from the suit premises following the issuance of a notice to terminate tenancy by the Landlord. The Landlord issued the Tenant with a Notice of termination of the tenancy dated 17th January 2024, pursuant to section 4(2) of the Act.

21. The position of the law on the issue of a termination notice is now settled. The Court in Manaver N. Alibhai T/A Diani Boutique v South Coast Fitness & Sports Centre Limited, Civil Appeal No. 203 of 1994, stated that: -“The Act lays down clearly and in detail, the procedure for the termination of a controlled tenancy. Section 4(1) of the Act states in very clear language that a controlled tenancy shall not terminate or be terminated, and no term or condition in, or right or service enjoyed by the tenant of, any such tenancy shall be altered, otherwise than in accordance with specified provisions of the Act. These provisions include the giving of a notice in the prescribed form. The notice shall not take effect earlier than 2 months from the date of receipt thereof by the tenant. The notice must also specify the ground upon which termination is sought. The prescribed notice in Form A also requires the landlord to ask the tenant to notify him in writing whether or not the tenant agrees to comply with the notice.”

22. It is evident that the notice of termination of the tenancy herein was in Form A as prescribed by the Act. Further, the notice of termination of the tenancy was to take effect on 16th March 2024, being a period exceeding two months as required by the Act.

23. Having established that the notice of termination of the tenancy was in the prescribed form, I shall proceed to analyze the substance of the notice with regard to the grounds of termination of the tenancy as follows:

Whether the ground on which the Landlord sought to terminate the tenancy was valid. 24. Section 7 (1) (g) of the Act allows for termination of tenancy on grounds that the Landlord intends to personally occupy the premises for a period of not less than one year. The provision specifically provides as follows:7(g) Subject as hereinafter provided, that on the termination of the tenancy the landlord himself intends to occupy for a period of not less than one year the premises comprised in the tenancy for the purposes, or partly for the purposes, of a business to be carried on by him therein, or at his residence.

25. Upon reviewing the termination notice issued by the landlord, it becomes evident that the grounds for terminating the tenancy were explicitly outlined. The landlord clearly stated in the notice that, following the termination of the tenancy, they intended to occupy the premises for a period of no less than one year to conduct business activities on the property.

26. In order to succeed in obtaining orders to prevent the eviction, the burden of proof lies with the Tenant to show that the Landlord failed to meet the threshold of terminating the tenancy on the ground under section 7 (1) g of the Act. This Honourable Court must be satisfied that the Landlord failed to demonstrate its intention to occupy the suit premises for a period of not less than one year.

27. The criteria for determining the landlord’s intention were dealt with in the case of Auto Engineering Ltd v M. Gonella & Company Limited [1978] eKLR where the Court held:“Apart from making a mere assertion that he intends to occupy the premises for a period of not less than one year the landlord’s intention can be gauged from surrounding circumstances which lead a court to find on a balance of probabilities that the Landlord has established such an intention.”

28. Indeed, in finding that the Landlord had established a clear and settled intention to occupy the suit premises, the Environment and Land Court in the case of Hashim Omar Hashim v Alliance Nominee Limited [2020] eKLR stated as follows:“…I do not think that in the instance of this case there is any doubt as to what business the landlord wishes to carry out, for it is clear that it is for short term rental. I am in the circumstances of this case, ready to infer that the landlord wishes to use the premises for more than one year, based partly on the reason that the landlord disclosed the nature of the business he intended to operate and the amount of money intended to be spent, which is Kshs. 20 – 30 Million. I do not think that one would use this amount of money on this premises in order to use it for a period of less than one year. I am satisfied, just as the Chairman of the Tribunal was, that there was a genuine reason given by the landlord for needing to have the premises to operate its own business. The notice given, which was six months, was also sufficient, and I think that it was now incumbent upon the appellant to seek alternative ways of operating his restaurant business without the bungalow in question.”

29. A similar position was upheld by the Court in James Kariuki Kithinji v Dominic Ntongai [2020] eKLR, where the Court in noting that the Landlord had established a clear intention to commence a business in the suit premises stated as follows:“…The act does not state that a detailed account should be given regarding the nature of the intended use of the premises by the landlord. It was therefore sufficient for the respondent to demonstrate that he intended to put up a business and use the suit premises...As regards the first issue, I find that the respondent gave evidence before the tribunal stating that he had registered a company and was intending to carry out a business. He was to use the suit premises as an office and a show room for the products he was to be selling. He provided details of his registered company...”

30. In the present case, it is important to highlight that the Landlord explicitly stated their intention to conduct their own business on the suit premises by expanding their restaurant operations. They also provided details regarding the nature of the business they intended to pursue. Furthermore, the tribunal has confirmed that the business proposed by the Landlord is indeed different from the one currently operated by the tenant.

31. In addition, the Landlord has provided evidence indicating that positive steps have been taken to commence their business. These include registration documents, a business permit, and bank account statements, which demonstrate that the Landlord has the necessary resources to execute their intentions, with a quoted figure of Kshs. 9 million. That sort of amount, in my view would not be invested for use for a period of less than one year. As such, I am persuaded that the Landlord is acting in good faith and genuinely intends to start their own business on the suit premises.

32. Furthermore, the Landlord produced minutes of the board of directors meeting held on 29th April 2023, wherein members unanimously agreed to evict all tenants from the property so that the members could occupy it.

33. Consequently, it is my finding that the Landlord has demonstrated a firm and clear intention to start a business, and that this business can only be conducted once the tenant vacates the suit property.

34. Further to the above, Section 7(2) of the Act imposes a limitation on the right of any Applicant seeking vacant possession of a rented premises in accordance with Section 7 (1) (g). The above provision to seeks to protect a tenant from eviction by a Landlord who has not been a Landlord for at least five years preceding the notice seeking termination of the tenancy.

35. Courts, in several authorities, have interpreted the requirement of Section 7 (2) of the Act. Indeed, the Court in Auto Engineering Ltd v M. Gonella & Company Limited affirmed that:“It is common ground, for the purposes of these appeals at least, that the landlord has owned the property for at least five years before the date of the notice to quit, and that the tenancy is a controlled tenancy within the meaning of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act.”

36. Additionally, the Court in the case of Pentapham Limited v Soroya Investments Limited Nairobi ECLA No 62 of 2016 [2018] eKLR in finding that the Landlord had acquired interest in the suit premises for a period of at least five years prior to issuing the notice of termination of tenancy stated as follows:“…From the above provisions it is clear that a landlord is only allowed to oppose a reference under Section 7 (1)(g) if he purchased the premises 5 years preceding the issuance of termination notice and if the premises had been occupied wholly or mainly for purposes of a shop, hotel or catering establishment. In the instant case the premises were purchased by the respondent from Kenya National Assurance Company Limited in 2008. The notice to terminate the tenancy was issued on 1st December 2014. As at the time of issuance of the notice, the premises were occupied as a shop which was operating as a chemist. The respondent had held the premises for more than five years and therefore was allowed to terminate the tenancy. I therefore find that the Respondent had met the requirement of Section 7(2) of the Act.”

37. Applying the above analysis to the present case, it is undisputed that the parties have had a tenancy relationship spanning 25 years, as asserted by the Tenant. Indeed, the Landlord issued the termination notice on 17th January 2024, at which time they had been the landlord of the tenant for more than five years.

38. On this basis, I find that the Landlord met the threshold set in Section 7 (2) of the Act which requires that the Landlord should have acquired interest in the suit premises for at least five years preceding the date of issuance of the notice of termination of tenancy.

39. In the upshot, this Tribunal finds that the notice to terminate the tenancy dated 17th January 2024, is valid and legal under the relevant Laws of Kenya. As a result, the Tribunal dismisses the Tenant's Reference dated 12th March 2024, finding no merit in either.

40. Regarding costs, the Tribunal has the discretion to award them under Section 12(1)(k) of Cap. 301, Laws of Kenya. Costs typically follow the event unless there are good reasons to order otherwise. In this case, there is no reason why the landlord should not be awarded costs.

E. Orders 41. In conclusion, the following orders commend to me:-a. A declaration is hereby made that the tenancy notice dated 17th January 2024 by the landlord terminating the tenancy is legal, valid and enforceable.b. The tenant shall vacate the suit premises no later than 28th February 2025. c. Costs are awarded to the Landlord assessed at Kshs. 50,000/=.d. File is marked as closed.

HON P. KITURMEMBERBUSINESS PREMISES RENT TRIBUNALRuling dated, signed and delivered virtually by Hon P. Kitur this 24th day of February 2025 in the presence of Owino for the Landlord and Muoki for the Tenant.