Ramji Meghji Gudka Limited v Anil Ratilal Tailor & Ram Hospital Limited [2021] KEHC 8130 (KLR) | Landlord Tenant Disputes | Esheria

Ramji Meghji Gudka Limited v Anil Ratilal Tailor & Ram Hospital Limited [2021] KEHC 8130 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT KISII

CIVIL APPEAL NO. 52 OF 2018

RAMJI MEGHJI GUDKA LIMITED......................APPELLANT

VERSUS

DR. ANIL RATILAL TAILOR

RAM HOSPITAL LIMITED..............................RESPONDENTS

(Being an appeal from the ruling and order of Hon. N.

Shiundu (S.R.M.) delivered on 4th day of July 2018 at the

Chief Magistrates Court in Kisii CMCC Misc. App No. 37 of 2015)

JUDGMENT

INTRODUCTION

1. This is an appeal against the ruling and order of the magistrates’ court allowing an application filed by the 2nd respondent on 1st March 2017. The grounds of appeal were enumerated in the memorandum of appeal thus:

1)The Learned Trial Magistrate erred in fact and law in disregarding the submissions of the Appellant’s Counsel that the Respondents were properly served with Notice of Termination of Tenancy pursuant to section 4 of the Landlord and Tenant (Shops Hotels and Catering Establishment) Act Chapter 301 Laws of Kenya (herein after referred to as the Act);

2)The learned trial magistrate erred in fact and law in not appreciating the import of Section 10 of the Act in regard to the effect of Notice where a Tenant fails to refer the Notice of Termination of Tenancy to the Business Premises Rent Tribunal (herein after referred to as the Tribunal);

3)The Learned trial magistrate erred in fact and law without appreciating that there were no proceedings to be stayed at the Business Premises Rent Tribunal as the Respondents herein had failed to lodge a Reference to the said Tribunal pursuant to section 6 of the Act;

4)The Learned Trial Magistrate erred in fact and in law in finding that the matter before it to be returned / and/ or reverted back to the Tribunal for inter partes hearing and determination without appreciating that the respondents herein upon being served with the Notice of Termination of Tenancy but failed to comply with the provisions of Section 6 of the Act and hence Section 10 of the Act took effect;

5)The Learned Trial Magistrate erred in fact and in law in finding that the Honorable court was not the proper forum for the issues raised in the substantive Notice of Motion Application dated 24th February 2017 to be canvassed without appreciating the import of section 14 of the Act which gives subordinate courts the jurisdiction and/or forum to ratify and/or adopt determination or order of the Tribunal determinations and/ or order can be enforced as a decree of the court;

6)The Learned Trial Magistrate erred in fact and in law by whimsically and clandestinely issuing an order staying the order issued by the Tribunal on 6th October 2016 by not appreciating that the honorable court had no jurisdiction to stay the said orders of the Tribunal and that the respondents if aggrieved by the said order of the Tribunal would only invoke the provisions of Section 15 of the Act.

7)Having correctly held and / or captured the position in law pertaining issues before the Tribunal and that the Respondents should have appealed in the Superior court, in this regard the Environment and Land Court, the Learned Trial Magistrate whimsically issued orders that the matter before him be referred back to the Tribunal for determination;

8)The Learned Trial Magistrate erred in fact and law issuing adverse orders against the Appellant on emotional and/ or sympathetic grounds as to the health care services offered by the Respondents instead of pegging his findings and/or decisions on the provisions of the law;

9)The Learned Trial Magistrate erred in fact and in law by ignoring the evidence tendered in support of the Application dated 24th February 2017 and arriving at his own conclusion.

10)The Learned Trial Magistrate failed to cumulatively and/or exhaustively evaluate the entire documentary evidence on record and hence failed to capture and decipher the salient issues and/or features of the application before him (Trial Magistrate) and thus arrived at an erroneous conclusion.

2. The appellants urged the court to set aside the magistrate’s order allowing the application dated 1st March 2017 and substitute it with an order allowing the Notice of Motion dated 24th February 2017. To give context to the appeal, a brief background of the matter before the trial court will be necessary.

3. By dint of its Miscellaneous Civil Application No. 37 of 2017 filed on 24th February 2017, the appellant sought the adoption by the lower court of a determination of the Business Premises Rent Tribunal (herein “the Tribunal”) rendered on 6th October 2016. The appellant claimed that the respondents had entered into a lease agreement with it in respect of LR No. Kisii Municipality /Block III/270. At first the respondents were paying the contractual monthly rents until they began defaulting and by the time the application was made, the respondents had accumulated rent arrears for a period of 2 years. The appellant was thus constrained to issue a Notice to Terminate Tenancy dated 19th July 2016 which was served upon the respondents but they neither objected to it nor filed a reference before the Tribunal. As such, the Notice to Terminate Tenancy took effect and the Tribunal confirmed the termination of the tenancy and decreed eviction. In order to execute the decision of the Tribunal, the appellant sought the adoption of the tribunal’s determination by the magistrate’s court in accordance with section 14 of the Act.

4. Thereafter, the 2nd respondent filed the application dated 1st March 2017 seeking inter alia, a dismissal of the application dated 24th February 2017. The 2nd respondent claimed that the appellant had issued and served the Notice to Terminate Tenancy upon Dr. Anil Ratilal Tailor T/A RAM Hospital Limited, an entity that did not exist in law. The 2nd respondent’s Managing Director, Dr. Tailor averred that it was RAM Hospital Limited as opposed to Dr. Anil Ratilal Tailor T/A RAM Hospital Limited that was the appellant’s tenant. The Managing Director stated that the 2nd respondent’s tenancy had never been terminated thus the proceedings before the trial court were a gross abuse of due process. He claimed that the application dated 24th February 2017 was hinged upon an invalid determination of the Tribunal which could not be adopted by the court.

5. Dr. Tailor also deposed that the 2nd respondent had been paying rent but the appellant had a habit of refusing to bank the cheques issued to it with the aim of evicting the 2nd respondent from the demised premises. He also averred that the 2nd respondent was constructing its own premises within Kisii Town with a view of relocating once the premises were in a habitable state. He informed the court that the 2nd respondent was running a medical facility at the premises and any disruption of its business could result in death and would occasion the job losses of over 70 staff; not to mention the decomposition of bodies that had been persevered at the 2nd respondent’s mortuary.

6. The appellant filed a preliminary objection contesting the competency of the application dated 1st March 2017 but the same was dismissed. The parties proceeded to canvass the application dated 1st March 2017 before the magistrate’s court by way of submissions.

7. Having considered the submissions and depositions made by the parties, the court allowed the application dated 1st March 2017 in a ruling dated 4th July 2018. The court set out the jurisdiction of the Tribunal as provided in the Act and held that since the 1st respondent was challenging a Notice to Terminate their tenancy, the proper forum to raise the issue was the Environment and Land Court. However, the court took into account the fact that the respondent owed the appellant over Kshs. 24,000,000/= in rent arrears and the fact that the respondent operated a hospital in the premises and allowed the application dated 1st March 2017 based on public interest. The court also ordered a stay of proceedings of the order by the Chairman of the Tribunal dated 6th October 2016 and referred the matter to the Tribunal for inter partes hearing and determination.

ISSUES

8. The issues arising from the memorandum of appeal, the submissions and the record of appeal are:

1)Whether the trial court had jurisdiction to hear the application before it;

2)Whether the Tribunal’s determination was issued against the respondents; and

3)Whether the trial court issued orders that had not been sought before it.

ANALYSIS AND DETERMINATION

9. Vide its application dated 24th February 2017, the appellant sought the adoption of a determination of the Business Premises Rent Tribunal of 6th October 2016 which was issued pursuant to a Notice to Terminate Tenancy dated 19th July 2016. The appellant claimed that it had issued the respondents with the Notice to Terminate Tenancy for failure to pay monthly rents for a period of over 2 years with respect to land parcel no. LR No. Kisii Municipality/Block III/270 which they had leased from it.

10. The Landlord and Tenant (Shops Hotels and Catering Establishment) Act(“the Act”) provides at section 6 thereof that where such a notice is issued, the receiving party, if he does not agree with the notice, is to refer the matter to the Tribunal and such a notice shall be of no effect until the matter is determined by the Tribunal. In the present case, the respondents did not file a reference to the Tribunal as provided in the Act and the appellant proceeded to obtain a certified copy of the determination of the Tribunal.

11. The application for adoption of the Tribunal’s decision was brought pursuant tosection 14 of theAct which provides as follows;

14 (1) A duly certified copy of any determination or order of a Tribunal may be filed in a competent subordinate court of the first class by any party to the proceedings before such Tribunal or by the Tribunal, and on such copy being filed and notice thereof being served on the Tribunal by the party filing the same such determination or order may, subject to any right of appeal conferred by or under this Act, be enforced as a decree of the court.

(2) The Tribunal shall, upon being served with a notice under subsection (1) of this section, or upon its own filing of such copy in the court, transmit to the court its record of the proceedings before it, and the same shall be filed by the court along with the certified copy of the determination or order.

12. In as much as the adoption of the determination of the Tribunal seems to be a mechanical process, this does not mean that the court ought to allow any application brought under Section 14 of the Act. That would reduce the court to the level of a mere rubberstamp. The application dated 1st March 2017 for dismissal of the application dated 24th February 2017 for the reason that 2nd respondent was not the subject of the Notice to Terminate Tenancy and the resultant determination of the Tribunal was therefore properly taken before the trial court.

13. The trial court’s finding that the application dated 1st March 2017, was merited provoked the appellant to lodge the present appeal. The appellant maintains that there existed a tenancy relationship between it and the respondents. Learned counsel submitted that the 1st respondent was the tenant in the premises prior to incorporating the 2nd respondent who became a tenant after being brought on board by the 1st respondent. He added that as at the time of the issuance of the Notice to Terminate Tenancy, the respondents were in rent arrears. Despite the trial court’s acknowledgement that the respondent was in arrears, the court erroneously proceeded to maintain the respondents’ occupation of the demised premises.

14. For his part, the 2nd respondent’s learned counsel insists that the appellant’s tenant was his client, the 2nd respondent. He submits that the Notice to Terminate Tenancy was taken out and served against a non-existent entity known as Dr. Anil Ratilal Tailor T/A RAM Hospital Limited. That notwithstanding, the appellant had filed its application dated 24th February 2017 against Dr. Anil Ratilal Tailor and RAM Hospital Limited who were not parties to the matter before the tribunal. Counsel argues that it cannot be said that the person in the application for adoption of the tribunal’s decision was one and the same as the entity against which the Notice to Terminate Tenancy had been issued.

15. The Notice to Terminate Tenancy dated 19th July 2016 shows that the notice was issued against Dr. Anil Ratilal Tailor T/A RAM Hospital LTD. In contrast, the application by the appellant dated 24th February 2017 was filed against both Dr. Anil Ratilal Tailor and RAM Hospital Limited. In its application, the appellant had not only sought the adoption of the Tribunal’s determination by the magistrate’s court but had sought other orders including an order of eviction against the respondents in respect of the demised premises; execution of the eviction order by M/s Omwoyo Auctioneers and an order directing the O.C.S. Kisii Police Station to supervise and provide reasonable security to facilitate the execution of the Eviction Order.

16. It is a legal principle that a company is a separate legal personality from its directors and shareholders. The 2nd respondent is certainly not the same entity as Dr. Anil Ratilal Tailor T/A RAM Hospital LTD against whom the Notice to Terminate Tenancy was issued and against whom the Tribunal’s decision was entered. It therefore goes without saying that the orders sought against the 2nd respondent by the appellant on the basis of the determination of the Tribunal dated 6th October 2016 could not issue. Accordingly, the 2nd respondent’s application for dismissal of the application dated 24th February 2017 was merited.

17. I now turn to the last issue which is whether the trial court erred in granting the order of stay of the Tribunal’s determination and referring the matter back to the Tribunal. The principle that courts should only determine matters placed before them was captured in the case ofDakianga Distributors v Kenya Seed Company Civil Appeal No.  168 of 2011 [2015]eKLR where the court adopted the finding of the Supreme Court of Malawi thusMalawi Railways Limited v Nyasulu [1998] MWSC 3thus:

“It is no part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings.”

18. The trial court was right in its finding that it had no jurisdiction to go into issues concerning the validity of the Notice to Terminate Tenancy. The court relied on the decision of the Court of Appeal in Nandlal Jivraj Shah & 2 others (all trading as Jivaco Agencies v Kingfisher Properties Limited Civil Appeal No.35 of 2015 [2015] eKLR where the court held that determination of the validity of the tenancy notice was an issue that could only be entertained by the tribunal.

19. The questions raised by the respondents on the validity of the determination of the tribunal and on whether the respondents were the appellant’s tenants are issues that could not be determined by the trial court. There was therefore no reason for the court to order a stay of the Tribunal’s orders dated 6th October 2016. Moreover, the order of stay of the Tribunal’s determination and the orders referring the matter back to the Tribunal, were not captured in the pleadings filed by the parties or argued before the court and the court erred in granting orders that had not been sought.

20. For the reasons given above, the appeal is allowed only to the extent that the ruling and orders of the trial court issuing a stay of proceedings on the order dated 6th October 2016 by the Chairman of the Business Rent Tribunal and the order of the court returning the matter back to the Business Rent Tribunal for inter partes hearing and determination on a priority basis are hereby set aside. The orders of the court allowing the application dated 1st March 2017 is hereby upheld. Each party to bear its own costs.

DATED, SIGNED AND DELIVERED AT KISII THIS 25TH DAY OF MARCH, 2021.

R.E. OUGO

JUDGE

In the presence of:

Mr. Musila             For the Appellant

Mr. Nyamurongi    For the Respondent

Ms Rael                   Court Assistant