Spiegel Interiors Limited v Muthaiga Road Trust Co. Ltd & Knight Frank [2021] KEBPRT 134 (KLR)

REPUBLIC OF KENYA

BUSINESS PREMISES RENT TRIBUNAL

TRIBUNAL CASE NO 185 (A) OF 2019 (NAIROBI)

SPIEGEL INTERIORS LIMITED.......................................TENANT/APPLICANT

VERSUS

MUTHAIGA ROAD TRUST CO. LTD............LANDLORD/1ST RESPONDENT

KNIGHT FRANK.....................................................................2ND RESPONDENT

RULING

1. The Tenant’s/Applicant’s notice of motion dated 21st February 2019 seeks the following orders;

a. Spent.

b. Spent.

c. That this honourable Tribunal be pleased to set aside the proclamation herein unconditionally or as the court may direct.

d. That this honourable Tribunal be pleased to issue a restraining order restraining the Respondents, their servants, agents or persons acting under them from entering, dealing with or in any other way interfering with the Plaintiff’s quiet enjoyment of LR No. 214/250 Mobil Plaza pending the hearing and determination of these proceedings.

e. That the OCS Muthaiga Police Station to enforce these orders.

f. Costs.

2. The application is based on the grounds set out on the face of the said application and an affidavit in support thereof sworn by Charles Osuna Nyakundi which I summarize as follows;

a. That the deponent is a manager of the Tenant/Applicant and has the authority of the Tenant to swear this affidavit.

b. That he was served with a proclamation dated 14th February 2019 by Keysan Auctioneers indicating that he was in arrears of Kshs 11,805,549. 89.

c. That the Tenant’s statement attached to the proclamation is for the sum of Kshs 6,451,331. 90.

d. That Knight Frank had earlier written to the Tenant indicating that the rent due was Kshs 6,451,331. 90 but after reconciliation it became clear that there was not rent due.

e. That the Tenant’s statement aforesaid indicates that the Tenant has not paid any rent for the year 2018 which is ridiculous since all rent has been dutifully paid for the last twenty five years.

f. That the action of the Landlord is meant to intimidate the Tenant to shift.

g. That the two Respondents have accounting problems which should not be shifted to the Tenant/Applicant.

h. That one of the Respondent’s employees Felisters Thuo was arraigned in court over theft after he misappropriated rent by aTenant.

i. That the Tenant surrendered shops No. 24 and 32 yet Knight Frank continues to treat the Tenant as the Tenant over the said shops.

j. That the proclamation is based on non-existent rent arrears.

k. That the Applicant has built a reputation and it would suffer irreparable harm if the orders sought are not granted.

3. The application is opposed.  The Respondents have filed an affidavit sworn by Irene Nyang’ate Nyabuto on 10th April 2019 and which I summarize as follows;

a. That the Tenant’s application is baseless and an abuse of the process of the Tribunal.

b. That the Tenant has been the Respondent’s Tenant on a portion of LR No. 214/250 since 2004 when the Tenant took up a lease for the premises known as unit 32.

c. That the Tenant over the years has taken leases for units 24, 30 and 31 and the tenancies have been extended over the years on mutually acceptable terms between the parties.

d. That the tenancy relationship between the Landlord and the Tenant is not a controlled tenancy, the same being for a term of five years and six months and having no provision for termination within five years other than for a breach of covenant.

e. That the Tenant having failed to pay rent in the sum of Kshs 12,655. 099 as at 12th February 2019, the Landlord instructed Keysian Auctioneers to levy distress.

f. That the comprehensive Tenant’s statement of account indicating all sums billed and paid and the outstanding balance of Kshs 12,655,099. 52 as at 12th February 2019 have been set out in the Landlord’s annexture INN4. Paragraph 5 of the Tenant’s affidavit is therefore untrue to the extent that it alleges that the 2nd Respondent wrote to it informing it that the outstanding rent was Kshs 6,541,331. 90/-.

g. That a comprehensive statement of accounts is annexed to the affidavit of the Respondents and marked INN – 5.  It shows that as at 5th April 2019the outstanding balance was Kshs 10,843,488. 51/-.

h. That the indictment of a former employee of the 2nd Respondent has no bearing on the matters in issue herein as none of the rent proclaimed was ever subject of the said indictment.

i. That no surrender has been accepted by the Landlord and therefore the alleged release of premise is baseless, null and void and the termination letter by the Tenant (NCO4) is null, void and of no legal effect.

j. That there has been no handover of the premises and the Landlord has neither taken possession nor inspected the same to ascertain their condition as provided for in the tenancy agreement.

k. That the Tenant is currently in rent arrears in the sum of Kshs 10,834,433. 52and the same continues to accrue.

l. That it would be a miscarriage of justice should the Tribunal grant orders sought by the Tenant as it would deny the Landlord the rental income due to it.

4. The Applicant has filed a further affidavit sworn by Charles Osuma Nyakundi which I summarize as follows;

a. That it is common ground that as at June 2018, the Applicant/Tenant had no rent arrears.

b. The only rent in question is the rent for the period after June 2018 and which the Tenant states it has paid.

c. That it is not true that the Tenant is in any rent arrears.

d. That the Tenant has not contracted to pay parking fees and excess charge on signage to the Respondents.

e. That all the figures by the Landlord are cooked up.

f. That the Tenant contests the head of terms displayed by the Respondent.

g. That the handover of shops numbers 24 and 32 was supervised by the Respondent’s agent, one David Okoth.  The Respondents are well aware of this position.

h. That there has been overpayment of rent to the Respondent/Landlord which should be appropriated as future rent.

5. There are a number of issues to be determined in this application but the Respondent has raised the issue of jurisdiction of the Tribunal.  It is the Respondent’s position that the Tribunal does not have jurisdiction to hear and determine this dispute since the lease between the parties is for a period of 5 years and six (6) months.  I propose to deal with this preliminary issue first.

6. The Respondent’s (Landlord’s) submissions on this issue of jurisdiction may be summarized as follows;

a. That section 2(1) of Cap 301 defines a controlled tenancy.

b. That the tenancy between the Applicant and the 1st Respondent having been reduced to writing, being for a term of five years and six months and Not containing a clause for termination then the same is not a controlled tenancy within the meaning of the Act and the Tribunal does not have the jurisdiction to entertain this matter.

c. The Landlord has placed relevance on the cases of Bachelors Bakery Ltd Vs Westlands Securities Ltd [1982] eKLR and owners of the Motor Vessel “Lillian S” Vs Caltex Oil (Kenya) Ltd KLR 1 in support of their propositions above.

7. The Tenant’s/Applicant’s submissions as regards the issue of jurisdiction may be summarized as follows;

a. That the authorities quoted are irrelevant as the honourable Tribunal has jurisdiction.

b. That the head of terms of an expired lease and which has not been renewed and registered cannot be used to oust the jurisdiction of the Tribunal.

c. The head of terms is not stamped, signed as required by the Stamp Duty Act, Cap 480 of the Laws of Kenya and can therefore not be relied upon for legal purposes.

d. That the Respondent has not shown the contract emanating from the purported head of terms.

e. In the absence of legal documents governing the tenancy between the parties after the expiry of the lease, the Tenant/Applicant became a sitting protected Tenant.

f. That when the parties agreed to a reconciliation, it showed/demonstrated that they acknowledged the Tribunal.

g. That the jurisdiction of the Tribunal in this case has been established after presentation of material facts before the court.

h. That the Respondent has to prove the lack of jurisdiction on the part of the Tribunal at the hearing of the main case.

8. The head of terms forming the basis of the Respondent’s objection to the jurisdiction of this court is the one referred to at paragraph 4 of the Respondent’s replying affidavit and is dated 2nd May 2017.

a. Under clause 5 of the head of terms, the lease term is 5 years and 6 months from the commencement date.

b. The premises being let are “the lettable area comprising approximately 5618 square feet of retail accommodation located on first floor marked as unit nuclear 24 (1057 square feet) 31 (2435 square feet) 32 (2126 square feet).

c. The commencement date is 1st June 2018.

d. Under clause 21 of the Head of terms it is stated “By accepting the terms of this letter of offer, the Tenant is deemed to approve the terms contained herewith and agrees to execute a formal lease of the premises upon receipt of the same.”

e. At clause 23, it is provided;

“Until such time as the lease has been executed and registered, all covenants, conditions and the rent agreed shall be deemed to have been incorporated in this letter.”

The Tenant accepted the offer by executing the letter of offer on 18th May 2018, sealing the deal.  The Landlord also executed its part of the letter of offer.

9. Did the letter of offer/heads of terms dated 2nd May 2017 constitute a written contract between the parties?

It is trite law that for a contract to be established between parties, the key elements of offer, acceptance and consideration must be sufficiently fulfilled.  I have already stated hereinabove that the offer by the Landlord/Respondent was accepted by the Tenant upon the execution of the acceptance part in the letter of offer.  The terms that the Tenant accepted are the ones in the said letter and they are in writing.  The lease term in that letter of offer is for a period of five (5)  years and six (6) months commencing 1st June 2018.  I find no ambiguity in the terms.  I find that to be the agreement binding the parties as provided in clause 23 of the letter of offer.

10. In the case of Fidelity Commercial Bank Limited Vs Kenya Garage Vehicle Industries Ltd [2017] eKLR, the court stated;

“It is elementary learning that for there to be a contract, there has to be an acceptance of an offer on the same terms of the offer and such acceptance must be unconditional, unequivocal and absolute accompanied by consideration.”

11. The acceptance of the head of term/letter of offer by the Tenant was not conditional, it was clear on what it amounted to, the terms are clear and parties bound by the said letter of offer as provided under clause 23 above cited.  The letter of offer has not been withdrawn, the Tenant has not disputed execution of the same and none of the parties has really denied it forms the basis of the agreement between them.

12. In view of the foregoing, I do agree with the Respondents that the lease agreement between the parties is for a period of five years and six months, contains no provision for termination on account of breach of covenant, is in writing, and therefore Not a controlled tenancy.  This Tribunal consequently has no jurisdiction to hear and determine the same.

13. The reference and all the applications filled in this matter are dismissed with costs.

HON CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL

RULING DATED, SIGNED AND DELIVERED VIRTUALLY BY HON CYPRIAN MUGAMBI NGUTHARI THIS 5TH DAY OF NOVEMBER 2021 IN THE PRESENCE OF MR AHMED FOR THE LANDLORD AND MR MAKORI FOR THE TENANT.

HON CYPRIAN MUGAMBI NGUTHARI

CHAIRMAN

BUSINESS PREMISES RENT TRIBUNAL