Park African Limited v Agricultural Society of Kenya [2022] KEBPRT 147 (KLR)

Park African Limited v Agricultural Society of Kenya (Tribunal Case 293 of 2020) [2022] KEBPRT 147 (KLR) (Civ) (5 May 2022) (Ruling)

Neutral citation: [2022] KEBPRT 147 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case 293 of 2020

Gakuhi Chege, Vice Chair

May 5, 2022

Between

Park African Limited

Tenant

and

Agricultural Society of Kenya

Landlord

Ruling

1. By a motion dated November 11, 2021, the tenant is seeking in material part for an extension of six(6) months within which it shall pay the balance of rent occasioned by the increase of rent made on September 24, 2021.

2. The application is supported by the affidavit of Jenny Maranga sworn on November 11, 2021 and the grounds on the face thereof.

3. On September 24, 2021, the monthly rent payable in respect of the suit premises was increased from Kshs.5,000/- to Kshs.59,000/- with effect from January 2020 in terms of annexure “JM 1”. As a result, the applicant found itself in arrears of Kshs.1,298,000/- owing to the landlord. A period of Thirty (30) days was given to clear the arrears.

4. In a letter dated October 26, 2021, the landlord demanded payment of Kshs.3,287,702/- by November 25, 2021. The letter is attached as annexure “JM2”. The tenant vide a letter dated 29th October 2021 sought to be allowed to pay the admitted arrears of Kshs.1,298,000/- in instalments of Kshs.59,000/- per month until payment in full. It disputed the arrears of Kshs.3,287,702/- demanded by the landlord. The letter is annexed as “JM3”.

5. By a letter dated November 3, 2021, the landlord communicated its refusal to extend time for payment of the arrears. The said letter is annexed as “JM4”.

6. The tenant contends that its business was affected for a period of two (2) years on account of Covid-19 pandemic but with the reopening of economy, business was on a recovery path. It is for that reason that the tenant seeks for six(6) months in which to pay the admitted arrears of Kshs.1,298,000/-.

7. In a replying affidavit sworn by Batram Muthoka on 11th November 2020, the application is opposed by the landlord. The landlord refers to the delay in prosecuting the reference.

8. The landlord has annexed a rent reconciliation statement marked “BM1” showing that the rent arrears as at October 13, 2021 was Kshs.3,287,701. 86.

9. The tenant is accused of being a perpetual defaulter despite having been overly indulged for years by giving it time to clear the rent arrears but refused to honour its rent obligation.

10. It is the landlord’s case that there is no reason why the Respondent should not be allowed to recover rent arrears which have been lawfully sanctioned by this Tribunal.

11. The landlord contends that the tenant intends to evade payment of rent and is not entitled to the equitable remedy on account of its conduct.

12. The landlord further contends that the tenant has always been aware and notified of its rent arrears and cannot purport to challenge it at this stage in a calculated attempt to escape its obligations by frustrating the recovery process.

13. The tenant filed a further affidavit sworn on 7th December 2021 wherein it contends that the tenancy was declared to be controlled vide annexure ‘JM7’ but the landlord has been increasing the rent without authority of the Tribunal which increment is included in the rent statement.

14. According to the tenant, the rent due is Kshs.1,077,000/-.

15. The application was ordered to be canvassed through written submissions and both parties complied. I shall advert to the submissions while considering the issues for determination below.

16. The issues for determination are the following:-(a)Whether the tenant is entitled to the orders sought in the application dated November 11, 2021. (b)How should the rent arrears be calculated by the landlord?.(c)Who is liable to pay costs of the application?.

17. The applicant came back to this Tribunal after the ruling of 24th September 2021 pursuant to which the monthly rent payable in respect of the demised premises was increased to Kshs.59,000/- with effect from January 1, 2020.

18. The proceedings herein were instituted in opposition to a notice to alter terms of tenancy issued by the landlord dated March 9, 2005 from Kshs.5000/- to Kshs.76,000/- per month with effect from June 1, 2015.

19. It is therefore clear that the monthly rent applicable as at March 9, 2005 was Kshs.5000/- and the said amount only changed after the ruling of September 24, 2021 with effect from 1st January 2020.

20. I have noted from the landlord’s rent reconciliation statement marked ‘BM1’ under the footnotes on page 2 thereof as follows:-“1. The calculation for the year 2020 and 2021 has been done with Kshs.59,000/- provided in the ruling being inclusive of VAT.2. Calculations for the years prior to 2020 is based on the society’s policy of 20% increment every two years.3. The tenant has made payment twice in 2021 of Kshs.161,220/- and Kshs.25,500/- totaling to Kshs.186,720/-.4. Based on the above, the tenant currently owes the society a total of Kshs.3,287,701. 86 as at October 2021”.21. Footnote no. 2 above alludes to society’s policy of 20% increment every two years. This policy is not provided for under Cap. 301, Laws of Kenya which stipulates at Section 4(1) as follows:-““Notwithstanding the provisions of any other written law or anything contained in the terms and conditions of a controlled tenancy, no such tenancy shall 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 the following provisions of this Act”

21. Subsection (2) thereof provides as follows:-“A landlord who wishes to terminate a controlled tenancy or to alter to the detriment of the tenant any term or condition in or right or service enjoyed by the tenant under such a tenancy shall give notice in that behalf to the tenant in the prescribed form”

22. The policy alluded to by the landlord has not been exhibited and no law has been quoted to justify the said increment for the period considered by this Tribunal while dealing with the tenancy notice dated March 9, 2015 which proposed to increase rent from Kshs.5000/- to Kshs.76,600/- per month with effect from June 1, 2015.

23. The said notice was issued pursuant to section 4(2) of Cap. 301 in realization that the premises was a controlled tenancy.

24. As such any arrears of rent between March 9, 2015 to 31st December 2019 ought to be calculated at the rate of Kshs.5000/- per month being the reserved rent for the said period. The purported increment of 20% offends Cap. 301, Laws of Kenya.

25. The tenant is entitled to be credited with rent payments made during the period.

26. After 1st January 2020, the monthly rent ought to be calculated at Kshs.59,000/- in line with this Tribunal’s ruling delivered on September 24, 2021.

27. I note from the landlord’s rent reconciliation statement that as at March 19, 2015, the tenant was in arrears of Kshs.486,795/- which month concides with the date of tenancy notice. The same shall be used as a basis for calculating the amount due.

28. I have looked at the rent reconciliation statement and have noted that the tenant paid the following amounts after March 2015:-(i)19/6/2015 Kshs.34,000/-(ii)Year 2016 Kshs.76,000/-(iii)5/5/2017 Kshs.76,000/-(iv)24/9/2018 Kshs.127,500/-(v)24/8/2021 Kshs.161,220/-(vi)13/10/2021 Kshs. 25,500/-Total paid Kshs.501220/-

29. Between the same period the following amounts became due in rent:-April 2015 - December 2015 - Kshs.45,000. 00January 2016 - December 2016 - Kshs.60,000. 00January 2017 - December 2017 - Kshs.60,000. 00January 2018 - December 2018 - Kshs.60,000. 00January 2019 - December 2019 - Kshs.60,000. 00January 2020 - December 2020 - Kshs.708,000. 00January 2021 - December 2021 - Kshs.590,000. 00Total thereafter Kshs.1,583,000. 00Less paid on Account Kshs. 501,220. 00Balance as at October 2021 Kshs.1,081,780. 00

30. The landlord is further entitled to additional rent of Kshs.354,000/- being rent for the months of November 2021 to April 2022 (6 months) less any payments made during the said period.

31. In the premises, the amount of Kshs.3,287. 701086 claimed by the landlord as at 31st October 2021 is not correct going by the above analysis. The landlord is thus only entitled to recover Kshs.1,081,780/- as at that date plus an additional Kshs.354,000/- being rent from November 2021 to April 30, 2022 to make altogether Kshs.1,435,780/- less any amount paid after October 13, 2021.

32. As to whether the tenant is entitled to the extension sought or not, the tribunal is being called upon to exercise a discretion which ought to be done judicially. I note that the tenant has admitted in the further affidavit to be owing Kshs.1,077,000/- out of the initial amount claimed by the landlord. The tenant had sought for six months to clear the said amount by its application dated November 11, 2021. The six (6) months will expire on 11th May 2022.

33. In the premises, I shall allow the application so that the tenant pays the said amount of Kshs.1,435,780/- being the rent due as at 30th April 2022 less any amount paid after 13th October 2021 by 11th May 2022. In the event of failure to do so, the landlord shall be at liberty to use legal means including distress for rent to recover the same.

34. In conclusion therefore, the following orders commend to me in line with section 12 (4) of Cap. 301, Laws of Kenya:-i.The application dated November 11, 2021 is allowed and the tenant is allowed to pay the rent on or before 11th May 2022. ii.The amount due by the tenant to the landlord is Kshs.1,435,780/- as at April 30, 2022 less any payments made after 13th October 2021. iii.The landlord shall be entitled to use legal means to recover the said amount after May 11, 2022 should the tenant fail to settle the same.iv.Each party shall bear own costs of the application.It is so ordered.

RULING DATED, SIGNED AND DELIVERED VIRTUALLY THIS 5TH DAY OF MAY 2022. HON. GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALIn the presence of:Kenyonzo for Applicant/TenantNo appearance for the Landlord