Rawal v Bullies Tanneries Ltd (Civil Appeal No. 18 of 1956) [1956] EACA 24 (1 January 1956)

## APPELLATE CIVIL

## Before EDMONDS. J.

O. P. RAWAL, Appellant . v.

## BULLIES TANNERIES LTD., Respondent

## Civil Appeal No. 18 of 1956

Landlord and Tenant-composition of Rent Control Board-immaterial if no failure of natural justice—claim by tenant to be under Ordinance—estoppel —tenancy of employee—vacant possession.

The landlord company applied to the Central Rent Control Board for possession of premises which were required to house one of its employees. The premises had been acquired by the landlord company from another company and the then occupier, an employee of the vendor company, was absorbed in to the employment of the landlord company. Later, the premises were let to the tenant who was the respondent to the application before the Rent Control Board. After the hearing before the Board had commenced, certain amendments were allowed to be made to the application and, during the hearing there was a change in the composition of the Board. Possession was given by the Board to the landlord company.

Held (10-8-56)—(1) That where the composition of the Board changes during the taking of evidence, the Appellate Court will not interfere if there is no failure in natural justice.

(2) That if the tenant claims by letter to be protected by the Increase of Rent (Restriction) Ordinance, 1949, there is an estoppel between the parties, and the tenancy becomes a statutory one.

(3) That occupation, rent free, of the premises by a whole-time employee of the company and dependant on his continued employment is not a tenancy under the Ordinance and is equivalent to vacant possession.

(4) There being no formal procedure laid down by which a Board's proceedings<br>should be governed, there was no irregularity in the action of the Board in allowing amendment of the application before it.

Cases cited: Meghji Karam v. Karamshi Devraj, Civ. App. No. 738/1952; Karman Devraj v. Manibhai Isherbhai Patel, (1955) 28 K. L. R. 143; Joseph v. Joseph, (1948) 117 L. J. R. 513; Nasibchand v. Govindlal Khemraj, Civ. App. No. 90/1955; Harnam Singh v. Jamal Pirbhai, (1951) A. C. 688.

Bhandari for the Appellant.

Keith for the Respondent.

Reported by R. H. Lownie, Resident Magistrate, Nairobi.

JUDGMENT.—This appeal by the tenant is against an order of the Central Rent Control Board, Nairobi, giving vacant possession to the landlord of the dwelling-house occupied by the tenant at Thika. I will deal with the grounds of appeal in the order in which they were taken by counsel for the appellant.

Grounds 10 and 11 are set out as follows:—

"10. The Board which heard the case was not properly constituted because a part of the case was heard by the Chairman and two members, namely Mrs. Napier and Mr. Chunilal Kirparam, and the remainder of the case by the Chairman and the following two members: Mrs. Napier and Mr. Saleh Mohamed.

11. The Appellant would further contend that even if the Board were to be held to be legally and properly constituted, it prejudiced the case of the Appellant because one member of the Board gave his opinion of the case after hearing only part of it."

There is nothing unfamiliar about the form of these grounds of appeal. Three local cases are in point. In Meghji Karam v. Karamshi Devraj (Civil Appeal No. 738/51) the court had to deal with a case where one board had decided a preliminary point of jurisdiction, and a differently constituted board consisting of three members, had decided the case on its merits. The latter members had all heard all the evidence. Some of the earlier evidence had also been heard by another member who, however, had dropped out. It was held that, in the circumstances, there had been no failure of natural justice and the decision of the Board was upheld. The following is the material part of the judgment:—

"Now there is nothing in section 4 (4), nor in any other provision of the Ordinance, which lays down that in determining a dispute falling within its jurisdiction the composition of the Board shall remain constant throughout. The only requirement is that it shall always be presided over by the Chairman or Deputy Chairman, who shall sit with not less than two members. This requirement was complied with in the present case. For the rest, it seems to me that there can be no objection to the composition of the Board being varied during the course of the determination of a dispute provided always—and the proviso is an important one—that such variation does not offend against the concepts of natural justice. An obvious example of a variation in composition which would so offend would be a case where the decision upon a dispute was given by a Board composed of members who, or any of whom, had not heard the whole of the evidence upon which that decision was given. Such a glaring instance was that which was deservedly subjected to strong censure by a divisional court in Joseph v. Joseph (1948) 117 L. J. R. 513, a case where two out of three justices in a petty sessional bench had given judgment without having heard a word of evidence, and where the Bench's judgment was accordingly set aside ... "

The second local case is that of Karman Devraj v. Manibhai Isherbhai Patel, (1955) 28 K. L. R. 143. The facts in that case were that the Central Rent Control Board, composed of the Chairman and two ordinary members, sat to hear an application. The Board adjourned after the evidence-in-chief of one witness, the landlord, had been part heard. A year later a quorum of the Board, consisting of the same two ordinary members but with the Deputy Chairman substituted for the Chairman, heard the remainder of the evidence and, having found the landlord was credible, decided in his favour. The Deputy Chairman had stated that he proposed to read over the record and to proceed. No objection was taken to this course. At the continued hearing the landlord had reiterated the important part of his evidence. The tenant appealed, principally on the ground that the change in the composition of the Board had caused a failure in justice and jurisdiction. It was held, inter alia, that: -

"(2) Where, after adjournment, evidence is found to be part-heard, the better and indeed the proper course, when there has been a change in the composition of the Board, is to rehear the evidence; but should the changed **Board elect to go on, although this is an irregularity, such irregularity is not,** of itself, gross enough to cause an Appellate Court to intervene, unless there has been a failure in natural justice.

(3) If a Board has to form an opinion as to the credibility of a witness, after a change in its composition during hearing, so that the new member is not in a position to observe the demeanour of the witness at a time when that opinion alone could have been formed, any finding on the credibility of

that witness might be so unreliable as to amount to a failure in natural justice, leading to a reversal of the finding by the Appellate Court. It could not be said that the Deputy Chairman was not present at such a time nor in a position not to form a reliable opinion as to the credibility of the landlord as a witness.

. . . . . . . . . . . . . . . . . . .

(5) Assuming a hypothetical scale of injustice, an irregularity might be gross enough not only to cause the balance to go down on the side of injustice but also to cause loss of jurisdiction, as might occur if a member of the Board, who had not heard any of the important evidence, contributed to a finding. No such gross irregularity was to be discovered, because the Deputy Chairman had been present throughout the hearing, save part of the evidence of the landlord, which part had been substantially reiterated in his hearing."

These two cases were considered by the learned Chief Justice in Nasibchand v. Govindlal Khemrai (Civil Appeal 90 of 1955) and as regards the Meghii Karam case, the learned Chief Justice said: —

"It is plain that had Windham J. been dealing with a case where any member of the Board had not heard all the material evidence, his decision would have been the other way"

and as regards the second case, he commented: $\rightarrow$

"It is plain from the judgment that the decision of the Rent Control Board would not have been permitted to stand if, as in the instant case, a member of the Board who had not heard a substantial part of the evidence had contributed to the findings."

The learned Chief Justice then held, as regards the facts in the case before him, as follows:

"It is sufficient for me to hold that where, as in the instant case, there is a conflict of evidence depending to some extent on credibility, and the decision of the matter depends on a finding of fact by a member of a reconstituted Board who has not heard the whole of the relevant and important evidence, then that decision cannot stand. This can be put on the ground that natural justice has not been done."

It is now necessary to relate the facts in the instant case to the ratio decidendi of those cases. At its first sitting the Board consisted of the Chairman and two members—Mrs. Rayner and Mr. Saleh Mohamed. At that hearing there was argument on certain preliminary matters but no evidence was heard. On the 9th February the Board was differently constituted but again no evidence was heard, and it was not until 19th March, 1956, that the application proceeded to hearing when the Board consisted of the Chairman, Mrs. Napier and Mr. Chunilal Kirparam. The manager of the respondent company then gave evidence, as did one other witness, whose evidence however did not affect the ultimate question for decision by the Board and, at the conclusion of this evidence, the hearing was adjourned. At the adjourned hearing on 23rd April, 1956, Mr. Saleh Mohamed took the place of Mr. Chunilal Kirparam. The balance of the applicant's evidence and the evidence of the respondent was then heard, and finally the Board made the order which is the subject of this appeal.

The facts of this case, however, can be distinguished from those in the cases to which I have referred in that there was no conflict of evidence whatever in the instant case. The parties were *ad idem* on all material facts, and the principal question, apart from certain legal aspects of the application which the Board had to consider before it was re-constituted, was whether it was reasonable to

make the order for vacant possession. Most of the evidence given by the manager of the respondent company, which evidence was not heard by the Board member Mr. Saleh Mohamed, related to this question of reasonableness, but at the hearing after adjournment, when Mr. Saleh Mohamed replaced Mr. Chunilal Kirparam, one of the directors of the respondent company gave evidence which substantially was the same as that given by the manager on the question of reasonableness. While learned counsel for the appellant had objected to the changed composition of the Board at the resumed hearing, I do not consider that the change in itself is sufficient, on the authorities before me, to entail the declaration that natural justice has not been done. As I have said, there was no conflict of evidence, and consequently the Board's decision did not depend upon the credibility of the parties; but the evidence of the manager as to reaonableness, must, of course, be held to have been material, and the question for decision is whether the fact that Mr. Saleh Mohamed had not heard this evidence amounts to a failure in natural justice. It is my view, however, that, even had the manager not given evidence, the Board would on the other evidence have come to the same conclusion as to reasonableness as it did, and I would go further and say that on that evidence the only conclusion to which the Board could have come was that it was reasonable to make the order. I do not, therefore, think that there is any merit in these two grounds of appeal.

The next grounds taken for the appellant were Nos. 4 and 5 and 6 in the $\frac{1}{2}$ Memorandum. They are as follows: $-$

"4. The Board was wrong in accepting evidence of the notice to quit as the respondent/applicant had not alleged in his pleadings (application) that notice to quit had been given to the tenant.

5. The Board was wrong in coming to the decision that the appellant could not challenge the validity of the notice to quit because he had stated that he would seek protection of the Increase of Rent (Restriction) Ordinance. The appellant would contend that the authority relied upon by the Board (Harnam Singh v. Jamal Pirbhai, (1951) A. C. 688) does not support the view that a party having once stated that he would seek protection of the Ordinance is estopped from challenging the validity of the notice to quit.

6. The appellant would further contend that the notice to quit was bad in law and hence the Board had no jurisdiction in the matter."

I will deal with the 5th ground first. On the 20th September, 1954, the respondent company wrote to the appellant informing him that it would require the dwelling-house which he occupied, with effect from the 1st November, and asking the appellant to accept the letter as formal notice to quit. Correspondence then passed between the appellant and the respondent on the subject of the vacation of the premises, and finally the respondent's advocate wrote on the 30th May, 1955, a letter in which the following passage appears: $-$

"Our client will contend that your letter does not amount in law to a valid and good notice purporting to terminate our client's tenancy. In any case the permises in question come within the scope of Increase of Rent Restriction Ordinance, 1949, and our client seeks protection of the Ordinance against any notice to quit."

In the Harnam Singh case the following passage appears from the judgment of the Privy Council (at page 699): $-$

"Their Lordships have found it impossible to accept the learned Judge's conclusion that at the date of suit there was in existence something other than a statutory tenancy. They consider that as between these parties this point is disposed of by the letter which the respondent's solicitors wrote

to the appellant on August 25th, 1943, and which is referred to in paragraph II of the amended plaint. The appellant had on the previous day served the respondent with one of several successive notices to quit, possession being. required on or before 30th September, 1943. To this the solicitors replied: "Our client will not vacate the premises in accordance with your notice but will remain in occupation as a statutory tenant from the date of the expiry of the notice". This statement is both explicit and conclusive. It is an unequivocal intimation that as from the coming 30th September the respondent will claim no tenancy rights as a matter of subsisting contract but will thereafter treat himself as a tenant holding over under the protection of the Ordinance. In their Lordships' view that letter created an estoppel between the parties."

In my view the implications of the wording in the paragraph which I have quoted from the letter of the respondent's advocates are no different from the expressed statement in the letter quoted by their Lordships where it is stated that the tenant "will remain in occupation as a statutory tenant". The respondent's advocates meant exactly the same when they said that their client would seek "protection of the Ordinance against any notice to quit". It is further my view that the decision in the Harnam Singh case applies in the instant case, that the respondent is estopped from setting up a contractual tenancy and that the appellant company was entitled to treat him for all purposes subsequent to his advocates' letter as a statutory tenant. This being so, notice to quit was unnecessary and, even if it was given, the fact that it might have been an invalid notice cannot affect the question. This, therefore, disposes of the 4th, 5th and 6th grounds of appeal.

In his 7th ground of appeal the appellant maintains that: $\rightarrow$

"7. The Board failed to appreciate that the facts of the respondent/ applicant's case did not attract the provisions of section 16 (1) ( $\ell$ ) of the Increase of Rent (Restriction) Ordinance, 1949, under which the Board has acted, and ordered vacant possession against the appellant."

Section 16 (1) (e) provides as follows: $-$

- "(1) No order for the recovery of possession of any premises to which this Ordinance applies, or for the electment of a tenant therefrom shall be made unless- - ( $\ell$ ) the landlord is the owner, or was prior to the prescribed date the lessee, of the dwelling house (not having purchased or acquired such dwelling house without vacant possession for the purpose of acquiring the right to occupy such dwelling house) and requires such dwelling house for occupation as a residence for some person in his whole-time employment."

Learned Counsel for the appellant argues that at the time the company acquired the dwelling house it was occupied by an employee of the previous company whose business and concern the respondent company had purchased, and that, before this subsection can be relied upon, it must be established that the dwelling house had been acquired with vacant possession. He referred to the Memorandum of Objects and Reasons annexed to the publication of the Bill (1949 Official) Gazette 334). I think that it is clear that a condition of the application of subsection (1) is that at the time a dwelling house is acquired a landlord must acquire it with vacant possession, but I further think that the facts in the instant case do establish that the company did acquire vacant possession at the time of the purchase of the house. The evidence establishes that in January, 1949 the respondent company purchased the business and assets, including this house and others, from a previous company, that at that time the house in question was in the occupation of an employee of the previous concern, and that this employee

was taken on in the same employment by the respondent company and was living in this house as its employee free of rent. It cannot, therefore, be said that he was a tenant, having any rights as such under the Ordinance. His occupation of the house depended upon his continued employment or upon any decision which the respondent company might take as to who the occupant of that particular house should be. The Ordinance, I am satisfied, when referring to the necessity of a landlord under subsection (1) acquiring a dwelling house with vacant possession, intended that that should mean that the dwelling house should not be occupied by any tenant within the definition of tenant contained in the Ordinance. Although the employee was in occupation of the house, he was not a tenant and the acquisition of the dwelling house by the respondent company was tantamount to acquisition with vacant possession. There is, therefore, no merit in this ground of appeal.

The 9th ground of appeal attacks the Board's decision on the question of reasonableness, and one of the grounds on which this attack is made is that no alternative accommodation was available which was reasonably equivalent to that occupied by the appellant. This might have been (I do not say it would have been) a substantial ground had the Board made its Order under the provisions of section 16 (1) (e) (i), where it is provided that a Board may make an order for vacant possession if a dwelling house is reasonably required by a landlord for occupation of some person in his whole time employment provided that the Board is satisfied that alternative accommodation reasonably equivalent in all respects is available for the tenant. But the Board's Order in this case was made under subsection (1), which makes no similar provision that before making an Order under this subsection the Board must be satisfied that alternative accommodation is available. Of course, in considering the general question of reasonableness under section 16 (2), the question of the existence of alternative accommodation is one of the factors which the Board must take into consideration, but it is not bound to refuse an Order for vacant possession if, in fact, there is no alternative accommodation available. It can still make the Order for possession on the general consideration of the balance of convenience, etc., to both parties. In this case, as I have already said, the evidence, recorded at some considerable length, was almost wholly directed to the question of reasonableness and, in my view, the Board's decision was in every respect a justifiable one.

I now refer to the first three grounds of appeal which attack the procedure adopted by the Board in adjourning the case when it was first mentioned before them at the request of the respondent and despite the objection of the appellant, and in accepting an amended application when such amended application is alleged to have been based on new facts. There is no substance in these grounds to appeal whatever. As has been held time and again there is no formal procedure laid down for a rent restriction Board and there is nothing in what this Board did during the preliminaries which could possibly be said to have resulted in any injustice to the appellant. Had the Board refused the adjournment and dismissed the application the respondent could have brought a fresh application, and this would have meant additional costs for the parties. In the same way, had the Board refused to accept the amended application, the costs would have been increased for the parties upon the presentation of a fresh application by the appellant.

The final ground of appeal, No. 8 was not pursued.

The appeal is accordingly dismissed with costs.

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