Pemu Engineering & Equipment Limited v Kithino Housing Co-op Society Ltd & another [2022] KEBPRT 880 (KLR)

Pemu Engineering & Equipment Limited v Kithino Housing Co-op Society Ltd & another (Tribunal Case E527 of 2021) [2022] KEBPRT 880 (KLR) (Civ) (13 December 2022) (Ruling)

Neutral citation: [2022] KEBPRT 880 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Civil

Tribunal Case E527 of 2021

Gakuhi Chege, Vice Chair

December 13, 2022

Between

Pemu Engineering & Equipment Limited

Tenant

and

Kithino Housing Co-op Society Ltd

Landlord

and

Bealine Kenya Auctioneers

Respondent

Ruling

1. Through a motion dated June 29, 2022, the respondents moved this tribunal seeking for leave to terminate the tenant’s tenancy pending hearing and determination of the case. They further seek for vacant possession upon termination of the lease.

2. The landlord contends that it wishes to occupy the said premises for purposes of running its own business and that the tenant had defaulted to pay rent since September 2021 which had accumulated to Kshs 1,200,000/-. This had led to serious financial hardships to the landlord which continued to service a loan over the premises.

3. According to the affidavit of Wilson LE Kimathi, sworn on January 29, 2022 headed 'applicant’s replying affidavit,' the tenant has occupied the suit premises since the year 2013 at an agreed monthly rent of Kshs 300,000/-.

4. On September 16, 2021, the landlord instructed the 2nd respondent to proclaim the tenant’s goods on account of accumulated debt of Kshs 8,494,400/- in rent arrears over a period of 4 years. The respondent obtained restraining orders on September 24, 2021 against the proclamation. He thereafter refused or defaulted to pay rent for 10 months thereby accumulating rent arrears of Kshs 3,000,000/-.

5. As a result, the landlord has incurred serious financial losses as it was financing a loan with Nachu amounting to Kshs 45 million.

6. On December 9, 2021, the landlord had issued a notice of intention to terminate the lease but the tenant refused to move from the suit premises.

7. I have checked the court record and the CTS portal but there is no notice of termination marked ‘PX2’.

8. The application is opposed through the replying affidavit of Peter Muthee who is the tenant’s managing director sworn on July 25, 2022 wherein it is deposed that it filed a complaint dated September 23, 2021 after the landlord sent auctioneers to levy distress on the suit premises. It is deposed that the National Cooperative Housing Union (NACHU) owes the tenant some money and the landlord in turn owes NACHU some money. A payment of Kshs 300,000/- was made on January 21, 2021 by the tenant as per annexure marked ‘PM-1’. The landlord had also been credited with Kshs 3,500,000/- by NACHU on account of the tenant out of money owing by the latter on March 13, 2022 and July 15, 2022 as per annexure marked ‘PM2’.

9. The tenant denies owing Kshs 1,200,000/- or Kshs 3,000,000/- as claimed by the landlord and claims to have overpaid rent by Kshs 542,000/-. As at September 2021, the tenant claims to have over paid rent by Kshs 42000/-

10. Between September 2021 and July 2022, the total accrued rent for 11 months was Kshs 3,300,000/- leading to the alleged overpayment of Kshs 542,000/-. As at July 2022, the tenant claims to have overpaid rent and there was need to settle accounts.

11. The tenant contends that the orders sought are improper as the procedure prescribed by law has not been followed as no notice to terminate tenancy has been served or exhibited.

12. I am required to determine whether to grant the reliefs sought in the landlord’s application dated June 29, 2022 and secondly who is liable to pay costs.

13. Based on the pleadings, I directed the parties on August 4, 2022 at the request of the landlord’s counsel to file rent accounts. The matter was therefore fixed for mention on September 28, 2022 to confirm the said process.

14. On September 28, 2022, the reconciled accounts had not been served upon the tenant by the landlord and the matter was therefore rescheduled for mention on November 9, 2022. On the said date, counsel for the landlord did not attend court and had not filed the reconciled accounts. As a result, the matter was set down for ruling.

15. Having perused the pleadings filed by both parties and noted the non-compliance by the landlord to provide accounts for the amount claimed against the tenant, I am unable to issue the orders sought by the landlord. It appears to me that the landlord is not sure of the amount owing by the tenant as at July 2022.

16. However, it is clear that if the tenant had overpaid rent by Kshs 542,000/- as at July 2022 this would only cover rent for the months of August and part of September 2022, leaving an unpaid balance of Kshs 58,000/-. This means that as at December 31, 2022, the tenant would be owing the landlord a sum of Kshs 958,000/- assuming that no other payment had been made by the former by the said date.

17. I also agree with the tenant that in absence of any notice served upon it under section 4 of the Landlord and Tenant (shops, Hotels and Catering Establishments) Act Cap 301 Laws of Kenya, the tenancy herein cannot be terminated and the orders sought by the landlord cannot inure in its favour.

18. Costs of any action before this tribunal are at the discretion of the court under section 12 (1) (k) of Cap 301, Laws of Kenya but always follow the event unless for good reasons otherwise ordered. I have no reason to deny the tenant costs of the application.

19. Section 12(4) of Cap 301, Laws of Kenya grants this Tribunal power upon conducting an investigation of any complaint filed by a landlord or tenant to make such order thereon as it deems fit.

20. In the circumstances of this case, the orders which commend to me are as follows:-a.The landlord’s application dated June 29, 2022 is disallowed.b.The tenant shall pay to the landlord a sum of Kshs 958,000/- as rent due for the period after September 30, 2022 to December 31, 2022 based on its own accounts.c.The landlord shall pay Kshs 20,000/- as costs of this case to the tenant to be defrayed against the rent account.d.Complaint is marked as compromised in similar terms.

It is so ordered.

RULING DATED, SIGNED & VIRTUALLY DELIVERED THIS 13TH DAY OF DECEMBER 2022. HON GAKUHI CHEGEVICE CHAIRBUSINESS PREMISES RENT TRIBUNALRuling delivered in the presence of:Kiarie Njuguna for the Tenant/RespondentIgweta for the Landlord/Applicant