Speed Crafts Africa Limited & another v Kenya Railways Corporation [2025] KEBPRT 280 (KLR)

Speed Crafts Africa Limited & another v Kenya Railways Corporation (Tribunal Case E1401 & 1417 of 2024 (Consolidated)) [2025] KEBPRT 280 (KLR) (9 May 2025) (Ruling)

Neutral citation: [2025] KEBPRT 280 (KLR)

Republic of Kenya

In the Business Premises Rent Tribunal

Tribunal Case E1401 & 1417 of 2024 (Consolidated)

CN Mugambi, Chair

May 9, 2025

Between

Speed Crafts Africa Limited

1st Tenant

Woodvilla Interiors Limited

2nd Tenant

and

Kenya Railways Corporation

Landlord

Ruling

Introduction 1. The Tenants respective Applications in case Numbers NAIROBI BPRT E1401/2024 and E1412/2024 seek similar orders that;-a.The Landlord’s notice of termination of tenancy dated 1. 12. 2024 be stayed.b.The Respondent be injuncted from evicting the Tenants from their business premises on L.R. No. 209/6228 plant depot Manager Office on Kitui Road, Nairobi Industrial Area (herein the suit premises).c.The Respondent be injuncted from blocking the Access Road to the suit premises.d.The Respondent be permanently injuncted from in any way interfering with the Tenant’s use and quiet enjoyment of the suit premises or issuing any further notice of termination of tenancy.e.The OCS, Railways Nairobi Police Station assist in the enforcement of the court orders sought.

2. The only variation is that the Tenant in BPRT Case No. 1401/2024 has sought the assistance of the OCS Industrial Police Station.

3. The Respondent has filed grounds of opposition to the Tenant’s Application and the grounds are a replication of each other.

4. Consequently, I will consolidate these suits for purposes of a determination as they raise the same issues and touch on the same notice to terminate by the Respondent. I have further noticed that on 20. 2.2024, a joint order was issued in respect of both files.

The Tenant’s depositions 5. The Tenant in case No. E1401/2024 has sworn an affidavit in support of its Application which may be summarized as follows;-a.That it rented the suit premises on 9. 06. 2021 at a quarterly rent of Kshs. 232,758. 62/= and has been continuously in the suit premises since June 2021 without any incident and remains in possession to date.b.That although the Tenant is not in any arrears, the Respondent has issued a notice to the Tenant requiring the Tenant to vacate the suit premises by 31. 12. 2024. c.That the tenancy between the parties herein is a controlled tenancy and the notice dated 1. 12. 2024 does not comply with the provisions of Section 4 of Cap 301 which requires that the notice be issued in the prescribed form.d.That the said notice is also issued contrary to the provisions of the letter of Offer dated 9. 06. 2021 which required the issuance of a three (3) months’ notice and therefore has no contractual or legal basis.e.That the Applicant after taking possession of the premises has enhanced its value by undertaking constant improvements and repairs.

6. The Affidavit of the Tenant in case No. E1417/2024 is similar to the one sworn by the Tenant in case No. 1401/2024 save that the Tenants in E1401/2024 has deponed as follows;-a.That it rented the suit premises on 1. 08. 2022 and has been in continuous occupation thereof since then.b.That the Respondent has blocked the access road to the premises.

The Respondent’s Grounds of Opposition 7. The Respondent has filed similar grounds of opposition dated 24. 1.2025 in both cases and I reproduce the said grounds as follows;-a.That the Application is an abuse of the court process, bar in law and a waste of precious judicial time.b.That the Application is as such vexatious, frivolous and scandalous.c.That the Respondent was well within its rights to terminate the tenancy and all legal procedures under Cap 301 were duly followed.d.That the Application is moonshine, baseless and based on a misrepresentation of both fact and law.e.That the Application does not meet the threshold for granting the orders sought.f.That the Application be dismissed with costs to the Respondent.

8. Both parties have filed their written submissions and I have read the same.

Analysis and determination 9. In my view, the issues that arise for determination in these Applications are the following;-a.Whether the Tribunal has the jurisdiction to hear and determinate the Applications.b.Whether the Tenants are entitled to the orders sought in their Applications.c.What orders ought to be issued in these Applications.

Issue A: Whether the Tribunal has the jurisdiction to hear and determinate the Applications. 10. The basis of the challenge of the court’s jurisdiction by the Respondent is the position taken by the Respondent that it is a state corporation, a parastatal created pursuant to the Kenya Railways Corporation Act Cap 287 of the Laws of Kenya, wholly owned and funded by the Government of Kenya. It is the Respondents position therefore that pursuant to the provisions of Section 2 of Cap 301 of the Laws of Kenya, there cannot be a controlled tenancy between the parties herein.

11. Under Section 2(1) of Cap 301 of the Laws of Kenya, a Controlled Tenancy means a tenancy of a shop, hotel or catering establishment;a.Which has not been reduced into writing orb.Which has been reduced into writing and which;i.Is for a period not exceeding five years orii.Contains provision for termination otherwise than for breach of covenant within five years from the commencement thereof oriii.Relates to premises of a class specified under subsection (2) of this section provided that no tenancy to which the Government, the community or a local authority is a party whether as landlord or as tenancy shall be a controlled tenancy.

12. Can Kenya Railways be classified as Government, Community or Local Authority for the purposes of the exception under Section 2(1) of Cap 301? The Kenya Railways Corporation is established under Section 1 of the Kenya Railways Corporation Act, Cap 287 of the Laws of Kenya. Under Section 2 thereof, the Corporation is constituted a body corporate. The said Section provides as follows;-“The Corporation shall be a body corporate with perpetual succession and a common seal and shall have power to sue and be sued in its corporate name and to acquire, hold and dispose of movable and immovable property for the purposes of the corporation.”Under Section 4 of the Act (Cap 287) the control and executive management of the corporation shall be vested in the managing director.

13. The Landlord herein is a state corporation as defined under Section 2 of the State Corporations Act Cap 445 which provides as follows;-“State Corporation means;a.a state corporation established under Section 3. b.A body corporate established before or after the commencement of this Act or under an Act of Parliament or other written law.”

14. In the case of; Greenstar Systems Limited vs Kenyatta International Convention Centre, High Court of Kenya at Nairobi Commercial & Tax Division, Misc. Civil Application No. 278 of 2017, the court while quoting Blacks Law Dictionary 8thEdition defined the term Government as being;-i.The structure of principles and rules determining how a state or organization is regulated.ii.The sovereign power in a nation or state.iii.An organization through which a body of people exercises political authority, the machinery by which sovereign power is expressed.The court in the above case, while declaring that Kenyatta International Convention Centre (hereinafter KICC) is not a Government department stated as follows;-“The Applicant does not fit within the confines of this definition. The Applicant is a tourism agency established under the Tourism Act. It is not a Government department. The fact that the Applicant is a state corporation cannot lend to the inference that it is a Government department as envisaged by the Government proceedings Act.”

15. The court in the same case, Greenstar (supra) cited the case of; Association of Retirement Benefits Scheme vs Attorney General & 3 Others [2017] eKLR, which cited with approval the Indian Supreme Court Case of International Airports Authority of India & Others [1979] SC R 1042 in which the test of determining whether an entity was a Government body or not was stated as follows;-a.Consider whether any share Capital of the corporation is held by the Government and if so, what would indicate that the Corporation is an instrumentality or agency of Government.b.Whether the financial assistance of the state is so much as to meet almost the entire expenditure of the corporation, that fact would afford some indication of the corporation being impregnated with Government character.c.It may also be relevant to consider whether the corporate enjoys monopoly status conferred by the state.d.Whether the body has deep and persuasive state control.e.Whether the functions of the corporation are of public importance and closely related to Governmental functions then that would be a relevant factor in classifying the corporation as an instrumentality or agency of Government and;f.If a department of a Government is transferred to a corporation, then it becomes an instrumentality or agency of the Government.

16. Following from the above, are the functions of the Kenya Railways Corporation strictly of public importance and closely related to Government functions? The functions and powers of the corporation are provided for under Article IV of the Act, Cap 287 of the Laws of Kenya. Under the said Article, the corporation has a duty to provide a coordinated and integrated system of rail and inland waterways transport services, port facilities and auxiliary road services. The corporation also has a general duty to secure all reasonable facilities for the carriage of passengers and goods amongst other general duties.

17. Under Section 13 of Cap 157, the corporation has powers to consign goods on behalf of other persons from any place within Kenya to any other place whether within Kenya or elsewhere. It also has power to provide hotels and other living accommodation and places of refreshment for passengers and other persons making use of its services. The corporation further has powers in its own name to enter into agreements with any person (see Section 13K of Cap 287) and to hold shares in any company or other bodies.

18. Following from the above, and considering the factors under paragraph 12 above, I do not think the Kenya Railways Corporation can be termed as Government strictly so called or described. The objects and purposes of the Applicant being majorly the provision of transport facilities for passengers and goods, amongst others, these functions cannot be said to be strictly or closely related to Government functions. It is also clear from Section25 of Cap 287 that the corporation is not entirely funded by the Government as it can raise revenue by exercising its borrowing powers under that Section.

19. In the case of; Kimoii Ruto & Another vs Samuel Kipkosgei Keitany & Another [2014] eKLR, the court faced with an almost similar scenario delivered itself as follows;-“It will be seen from the above that state corporations may be established by the President (under Section 3) or through an Act of Parliament. They are ordinarily body corporates with capacity to sue and to be sued and with capacity to hold property. I find it difficult that they should be considered as “Government” because if they were, then litigation would be governed by the Government Proceedings Act (Cap 40) and I am more prepared to hold that they are not strictly “Government” unless the context otherwise prescribes, but rather that they are independent agents of Government formed by Government in order to undertake and perform certain functions on behalf of Government, which functions cannot adequately or efficiently be performed within the structure of Government Ministries.”

17. Further, in the case of; Ikon Prints Media Company Ltd vs Kenya National Highway Authority & 2 Others [2015] eKLR, the court held as follows;-“Foremost though, it is important to point out that it would not be tenable to invoke the Government Proceedings Act (Cap 40) as a bar to any execution herein. The 1st Respondent is a body corporate with perpetual succession and a common seal. It is a corporate entity capable of subsisting independently. It is dependent on Government funding but it is not Government or servant of or agent of Government for the purposes of the Government Proceedings Act. The 1st Respondent is an independent Judicial person capable of being sued and suing. Its litigation does not involve the Government. Any judgments decreed against the 1st Respondent are not judgments against the Government but against an independent judicial body.”

18. Under the Government Proceedings Act, the Government is sued under the name of the Attorney General. State Corporations which have corporate existence are sued under their own name. If state Corporations were strictly Government, then their founding statutes would provide that they would be sued under or through the Honourable Attorney General.In the Greenstar Systems Limited case (supra) the court proceeded to state;-“The above authority which is of persuasive value upholds the view that a state corporation or parastatal is not automatically subject to the Government Proceedings Act where proceedings are instituted under this Act, the Honourable Attorney General will be a party.”

20. Also, in the case of; LRMG Proprietary Ltd vs JKUAT Enterprises Ltd [2024] KEHC 886 (KIR) the court stated as follows;-“My reading of the above Section is that for any party to benefit from the protection in execution proceedings accorded by Section 21 (4) of the Act, it must fall within the description of Government, a Government department or an officer of Government. There is sufficient jurisprudence affirming that state Corporations although controlled and managed by Government are not Government, a Government department or an officer of the Government as contemplated by the Act. They are independent legal persons and cannot invoke Section 21(4) as a bar to execution.”

21. On this issue, I therefore return a finding that the Kenya Railways Corporation is not GOVERNMENT as legally defined and interpreted and/or contemplated and it is therefore not exempted from the application of the provisions of Cap 301 of the Laws of Kenya. Consequently, the Tribunal has the jurisdiction to hear and determine this dispute.

Issue B: Whether the Tenants are entitled to the orders sought in their Applications. 22. The Tenant’s Complaint is basically that the notices of termination issued by the Respondent are illegal, defective and invalid and that they have been issued contrary to the letters of offer that the Tenants accepted. The letter communicating the termination is the one dated 1. 12. 2024 and required the Tenants to vacate the suit premises by 31. 12. 2024. Under Clause 14 (Special Condition) of the Letter of Offer, it is provided as follows;-The lessee shall 1. Release the demised premises to the lessor unconditionally should it be required for rail purposes without ………of whatever nature within ninety (90) days of the request.”The Respondent’s letter of termination was clearly in contravention of the terms of the letter of offer as it only allowed the Tenants a period of thirty days to move out of the demised premises.

23. The tenancy between the parties having been declared a controlled tenancy, then the Tenants are protected within the meaning of the provisions of Cap 301 of the Laws of Kenya. In this regard, if the Respondent was minded of terminating the tenancy, it was bound by the provisions of Section 4(2) of Cap 301 to issue a statutory termination notice.

24. Although the Respondent has argued in its submissions that there was no need to issue a statutory notice in view of paragraph 6 of the letter of offer, this position is not tenable for the reasons that controlled tenancies can only be terminated in accordance with the provisions of Cap 301 of the Laws of Kenya. In this regard, Section 4(1) of Cap 301 provides 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 if any such tenancy shall be altered otherwise than in accordance with the following provisions of this Act”Further, under Section 3(6)(a) of Cap 301, the Act provides that any agreement relating to a controlled tenancy shall be void in so far as it purports to preclude the operations of the Act.

25. It is therefore clear that the Respondent was bound to comply with the provisions of Cap 301 and particularly in the issuance of the statutory notice required under Section 4(2) of the said Act.

26. I have perused the notices issued to the Tenants and I am satisfied that they are not only in breach of the terms of the letter of offer but they are also issued contrary to the provisions of Section 4(2), 4(4) and 4(5) of Cap 301 and they are therefore illegal, defective and of no legal consequence.

27. The Respondent has raised the issue of non-payment of rent. The Tenants have in their affidavits stated that they do not owe the Landlord any rent arrears. As the Landlord has not filed any replying affidavit and/or a copy of the rent book required under Section 3(3) of Cap 301, I am unable to determine with any certainty that indeed the Tenants owe rent. The Landlord has not demonstrated in these proceedings that it has taken any active steps to recover rent and I will therefore say no more of this issue.

Disposition 28. In view of the above findings, I do allow the Applications by the Tenants in BPRT Case No. 1401/2024 and 1417/2024 as prayed.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 9TH DAY OF MAY, 2025. HON. CYPRIAN MUGAMBI CHAIRPERSONBUSINESS PREMISES RENT TRIBUNALDelivered in the presence;Ms. Wafula for the LandlordMr. Mwenda for the Tenants