Mnazi Moja Estates Ltd v Ambalal Mistry & 5 others [1986] KECA 34 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a landlord's silence is not refusal of lease consent, and tenants must follow proper procedure before suing.
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 material before the High Court, it was shown that the landlords unreasonably refused consent to the proposed assignment of the lease
- 2.Whether a desire by the reversioner landlord to purchase the lease can constitute a valid reason for refusing consent
- 3.Whether an originating summons was the appropriate procedure for seeking a declaration that consent was unreasonably withheld
Key legal issues
#Whether the landlords unreasonably refused consent to the assignment
No unreasonable refusal was established; there was no clear refusal before the application, the identity and authority of the person allegedly refusing was unclear, and the only reason given (a wish to purchase the property) emerged only at the hearing.
The respondents applied by letter on 7 October 1985 but never received a positive or negative reply. The affidavits alleging refusal by 'a director' gave no details of who refused, when, or what was said, and the director authorised to deal with the matter (Mr Githere) denied any approach. The reason of wishing to purchase was revealed for the first time at the hearing and did not amount to coercion of the kind in Bates v Donaldson or Re Winfrey & Chatterton's Agreement.
Whether a reversioner's desire to purchase the lease is a valid reason for withholding consent
The English authorities establish only that a prior offer to buy used to coerce the tenant is not a valid reason; the Court declined to hold that a desire to purchase can never constitute a valid reason in law.
Bates v Donaldson and Re Winfrey & Chatterton's Agreement both involved prior offers by the reversioner to buy the lease, aimed at coercing sale and obtaining possession. No such prior offer existed here. The Court was not satisfied the refusal (if any) was designed to coerce the lessees into selling, and refused to lay down an absolute rule that a desire to purchase is always invalid.
Procedural competence of the originating summons
Order XXXVI of the Civil Procedure Rules makes no provision for a declaration that consent to assignment was unreasonably refused; the originating summons was not properly grounded and such matters should be commenced by suit (plaint).
The summons was brought under Order XXXVI rule 3A and section 97 of the Civil Procedure Act; rule 3A concerns mortgage disputes and section 97 no longer exists, having been replaced by section 3A on inherent jurisdiction. None of the rules of Order XXXVI (rules 1, 2, 3, 4, 5 or 5A) covers a declaration of unreasonable refusal of consent. A question of jurisdiction must be taken up whether or not raised below.
Fairness of the hearing in the High Court
The hearing was rushed; directions for the trial of issues arising from the affidavits should have been given under Rule 9 of Order XXXVI, and the appellant was denied a proper opportunity to be heard.
The matter was stood over to 14 February 1986 and heard the same afternoon on affidavit evidence, with the appellant's advocate instructed only that morning and compelled to file an affidavit the same morning. Rule 9 of Order XXXVI was not complied with; directions as to the trial of issues, and whether rule 10 should convert the summons into a suit, should have been given.
Legal principles established
#- A desire by the reversioner landlord to purchase the lease himself is not, as a matter of law, never a valid reason for refusing consent to assignment.
- A lessee must apply for consent to the right person, give the lessor reasonable time to consider the request, and may only then seek a declaration that a refusal (or protracted silence) is unreasonable.
- Where a question of jurisdiction arises, the Court of Appeal must take it up whether or not the point was raised below.
- Originating summons procedure is inappropriate where the issues raise complex and contentious questions of fact.
Court orders
#- 1.Appeal allowed
- 2.Order and decree of the High Court set aside
- 3.Proceedings remitted to the High Court to hear and determine the case according to evidence, which should be oral evidence (Hancox and Gachuhi Ag JA); Platt Ag JA would strike out the proceedings as incompetent and direct that a suit be brought
- 4.Costs of the appeal awarded to the appellant
- 5.Each party to bear their own costs of the High Court proceedings
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Distinguished Bates v Donaldson and Re Winfrey & Chatterton's Agreement as cases of prior offers by the reversioner to coerce sale; held that a desire to purchase the reversion is not, as a matter of law, never a valid reason; found the refusal not proven on the affidavits; would allow the appeal, set aside the High Court order and remit for oral evidence.
I am not prepared to go so far as to say that a desire by the landlord to purchase the reversion himself can never, as a matter of law, constitute a valid reason.p. 2
Wrote the judgment
Set out seven principles (adapted from Woodfall) governing applications for landlord's consent; held there was no clear refusal before the application, that the hearing was rushed and Rule 9 of Order XXXVI breached; held the originating summons was incompetently grounded since Order XXXVI makes no provision for a declaration of unreasonable refusal of consent; would allow the appeal and strike out the proceedings as incompetent, directing a suit be brought.
In none of the rules, is there a place for a declaration that consent was unreasonably refused. It is not a construction point in rule 5.p. 5
Wrote the judgment
Held the matter was rushed; a mere letter to the Mombasa office unaccompanied by a reminder could not amount to a request, and failure to reply could not be a refusal; Kenya has no provision under Order XXXVI for declaratory proceedings by originating summons; the appellant was wrongly denied a proper hearing; would allow the appeal with costs and set aside the High Court order, the plaintiff to start afresh.
Just a mere letter to the Mombasa office which was not followed by a reminder while the main office is in Nairobi cannot be a sufficient request and failure to reply cannot be sufficiently stated to be a refusal to grant the consent.p. 5
- On appeal from
- High Court of Kenya
- Originating Summons (Mombasa)
- Jurisdiction invoked
- First appellate jurisdiction of the Court of Appeal over the High Court (no specific provision cited in the judgment)
Relief refused
#Immediate declaration and order compelling the appellant to sign the consents to the transfer and bank charge (as granted by the High Court)
Refusal of consent was not proved on the affidavits; no clear refusal preceded the application; the matter was decided on the wrong procedure without proper inquiry
Costs
Costs of the appeal to the appellant; each party to bear their own costs of the High Court proceedings
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.
I would therefore allow the appeal and set aside the order and decree of the High Court. I would make an order remitting the proceedings to the High Court to hear and determine the case according to the evidence, which in my opinion should be oral evidence, brought before it.
I would award the costs of the appeal to the appellant. I agree that each party should bear their own costs of the High Court proceedings.
In the result then I would allow the appeal. I would set aside the judgment and orders of the High Court and strike out the proceedings as incompetent.
The plaintiff seeking declaration has to satisfy the court through evidence that prior to coming to court, consent was validly applied for and the answer or reply given by which the applicant hold that consent is unreasonably withheld.
Just a mere letter to the Mombasa office which was not followed by a reminder while the main office is in Nairobi cannot be a sufficient request and failure to reply cannot be sufficiently stated to be a refusal to grant the consent.
Where a question of jurisdiction is concerned, this court must take it up, whether or not the point was raised below.
While it is appreciated that the court aim at the expeditious disposal of the suits yet at times such expeditious disposal of the suits may cause injustice.
Issues in the judgment
#Divergence in the remedy among the judges: Hancox JA and Gachuhi Ag JA would remit/start afresh, while Platt Ag JA would strike out the proceedings as incompetent; the operative disposition is not expressed as a single consolidated order.
The indenture date is given as September 25, 1956 in Hancox JA's judgment but April 25, 1956 in Platt Ag JA's judgment.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mnazi Moja Estates Ltd v Ambalal Mistry & 5 others [1986] KECA 34 (KLR)", Case Analysis (1986). Civil Appeal (Mombasa). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1986/34/eng@1986-07-22
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.