African Universal Merchandise Ltd v Kulia Investments Ltd [1980] KECA 25 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a written lease agreement for more than five years is not a protected tenancy, so the landlord could lawfully reclaim the premises.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether, on the facts, the appellant's tenancy of the suit premises was a 'controlled tenancy' within the meaning of section 2(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (cap 301)
Key legal issues
#Whether a tenancy created by an oral agreement for lease later embodied in an executed and registered lease for a term exceeding five years is a 'controlled tenancy' under section 2(1) of the Shops Act.
It is not a controlled tenancy. The respondent relied not on the tenancy created by the executed and registered lease but on the tenancy created by the agreement for lease for a period exceeding five years which was reduced into writing.
Section 2(1) of the Shops Act excludes from 'controlled tenancy' a written tenancy for a period exceeding five years. The definition of 'tenancy' includes one created by an agreement for lease. The appellant's argument that no interest passed until registration under section 32 of the Registration of Titles Act, and that a lease operates only from execution and cannot be retrospective (per Stamp LJ in Roberts v Church Commissioners), failed because the respondent did not rely on the executed lease itself. The term agreed exceeded five years and the agreement was reduced into writing.
Whether execution of a formal lease after an oral agreement reduces the effective term by the period of delay, converting the tenancy into a controlled one.
No. The subsequent execution of the lease embodying the terms of the oral agreement is itself a reducing into writing of that agreement and does not shorten the agreed term.
Law JA reasoned that otherwise landlords and tenants who freely negotiated a fixed term exceeding five years could, by delay in execution, artificially bring themselves within the Act, producing absurdity. The court aligned itself with the reasoning of Sheridan J in Melas and Monnas v New Carlton Hotel Ltd and Sachdeva J in East African Power and Lighting Co Ltd v Nesbitt, resolving what had been conflicting High Court decisions.
Legal principles established
#- A tenancy for a fixed term exceeding five years created by an agreement for lease which has been reduced into writing (whether by a written agreement or by the subsequent execution of a lease embodying the terms of the agreement) is not a 'controlled tenancy' under section 2(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, and the High Court has jurisdiction over such a tenancy.
- Delay in engrossing and executing a formal lease cannot be used to deduct from the agreed term so as to bring a tenancy within the Act as a controlled tenancy.
Court orders
#- 1.This appeal be dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the leading judgment. Held that the tenancy was not a controlled tenancy under section 2(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act because the tenancy was created by an agreement for lease for a period exceeding five years which was reduced into writing; the tenant's arguments based on the Execution/registration of the lease under section 32 of the Registration of Titles Act and against retrospective tenancies did not assist.
The respondent relies on a tenancy created by an agreement for lease which is for a period exceeding 5 years and which has been reduced into writing.p. 3
Wrote the judgment
Separate concurring judgment. Accepted that a lease takes effect only on registration, but held that the subsequent execution of a lease embodying the terms of the oral agreement constitutes a reducing into writing of that agreement and does not shorten the agreed term by the delay in execution, else absurd results would follow.
In my view, the subsequent execution of a lease embodying the terms of the oral agreement is a reducing into writing of that agreement, and does not have the effect of reducing the agreed term by the period taken up in agreeing, engrossing and executing the lease so as to convert the tenancy into a controlled tenancy.p. 5
Wrote the judgment
Separate short concurring judgment agreeing with Potter JA, observing that a distinction may be drawn between agreements per se caught by statutory provisions and the freedom of parties to contract within or outside the ambit of such statutory provisions.
I agree with it and I have nothing useful to add in this particular case except to say, that it appears to me, that a distinction may well be drawn between agreements between parties perse, which agreements may or may not be caught by statutory provisions relating to the subject matter of the said agreement, as opposed to the freedom of the individual unwittingly or otherwise to contract out or within the ambit of such relevant statutory provisions which may exist.p. 5
- On appeal from
- High Court at Nairobi
- null
- Jurisdiction invoked
- First appellate jurisdiction over the High Court (appeal from a summary judgment under Order XXXV of the Civil Procedure Rules)
Relief refused
#The appellant's appeal against the summary judgment awarding the respondent possession of the suit premises
The tenancy was created by an agreement for lease for a period exceeding five years reduced into writing, and therefore was not a controlled tenancy; the High Court consequently had jurisdiction.
Costs
The appeal was dismissed with costs to the respondent.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The respondent relies on a tenancy created by an agreement for lease which is for a period exceeding 5 years and which has been reduced into writing. In the terms of the definitions of "tenancy" and""controlled tenancy" in section 2 of the Shops Act that is not a "controlled tenancy".
In my view, the subsequent execution of a lease embodying the terms of the oral agreement is a reducing into writing of that agreement, and does not have the effect of reducing the agreed term by the period taken up in agreeing, engrossing and executing the lease so as to convert the tenancy into a controlled tenancy.
I would dismiss this appeal. As Miller JA also agrees, it is ordered that this appeal be dismissed with costs.
Issues in the judgment
#The name of the High Court judge is inconsistently spelled within the judgment ('Wilkinson-Guillemard J' in the coram heading versus 'Wilkinson-Guilemard J' in the body).
The judgment is silent on whether the appeal was with leave; it is styled a 'Civil Appeal' from a summary judgment of the High Court, but the basis of the appeal as of right or by leave is not stated.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- SAPRA STUDIO V KENYA NATIONAL PROPERTIES LIMITED [1985] KECA 123 (KLR)[1985] KECA 123 (KLR)25 Apr 1985
- Sapra Studio v Kenya National Properties Ltd [1985] KECA 59 (KLR)[1985] KECA 59 (KLR)25 Apr 1985
Cite this brief
#Cite this brief
Caselaw, "African Universal Merchandise Ltd v Kulia Investments Ltd [1980] KECA 25 (KLR)", Case Analysis (1980). Civil Appeal 8 of 1980. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1980/25/eng@1980-10-08
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.