Jay Raj Enterprises Ltd v Lucky Distributors Ltd & 3 others [2014] KEELC 583 (KLR)
The bottom line
#A Kenyan High Court ruled that a new landlord cannot raise rent on a protected tenant without tribunal approval, fixing rent at the old rate for past years.
What this practically means
#Executive summary
#Key legal issues
#Quantum of rent payable by the plaintiff to the 1st Defendant
Kshs.137,170/- plus VAT per month from October 2010 to July 2013, and Kshs.360,000/- plus VAT per month from August 2013
The plaintiff's payment of Kshs.137,170/- to the 2nd Defendant was unrebutted. The asserted increase to Kshs.500,000/- was not accepted by the plaintiff and was not determined by the BPRT. The tenancy being controlled under Cap 301, any increase required BPRT sanction. The jointly commissioned valuation fixed market rent at Kshs.360,000/- as at the August 2013 assessment, and the court declined to apply it retrospectively.
Whether the 1st Defendant could levy distress for rent at the claimed increased rate
No; distress on the basis of Kshs.500,000/- was without basis since the increase was neither agreed nor BPRT-determined
The letter of 25th July 2009 evidenced only an intention to increase rent, which the plaintiff never accepted, instead filing BPRT Reference No. 442 of 2011. The tenancy was a controlled tenancy governed by Cap 301, requiring BPRT sanction for any unagreed increase. Distress could only be levied for rent lawfully due under the existing tenancy terms.
Admissibility of the Llyod Masika valuation report despite without prejudice negotiations
Admissible, as the parties consensually referred the rent assessment to the valuer
Although negotiations began on a without prejudice basis, the parties agreed to submit the rent question to a neutral, independent valuer jointly nominated, with the plaintiff's own advocates proposing the firm. The signed joint letter of instructions confirmed the consensual reference, so there was no basis to exclude the resulting report.
Effect of the Odunga J ruling of 31st October 2012
It did not determine the rent payable; it barred eviction on condition the plaintiff remitted due rents, and distress for due rent was not restrained
The court reviewed the earlier ruling and found it restrained eviction and interference with quiet possession on condition of payment of due rents, but left the quantum of due rent unanswered. Consequently, if the plaintiff failed to remit due rents, the 1st defendant could properly levy distress for the same.
Legal principles established
#- A transferee landlord takes subject to an existing controlled tenancy and may not vary its terms, including rent, without the sanction of the Business Premises Rent Tribunal where the increase is not agreed.
- Rent under an unvaried controlled tenancy remains payable at the contractual rate; distress cannot be levied on the basis of an unagreed and undetermined increased rent.
- A valuation agreed to by both parties during without prejudice negotiations is admissible where the parties consensually submitted the dispute to the valuer.
Court orders
#- 1.That from October 2010 to July 2013 (34 months) the rent payable is Kshs.137,170/- plus VAT per month
- 2.That from August 2013 to June 2014 (11 months) the rent payable is Kshs.360,000 plus VAT per month
- 3.That the sum of Kshs.4,667,840/- paid following the contested levy of distress of 1st July 2011 be applied to offset the rent due by the plaintiff to the 1st Defendant
- 4.That henceforth the plaintiff continue to remit monthly rent of Kshs.360,000 plus VAT to the 1st Defendant
- 5.That the plaintiff pay all rent and VAT due within fifteen (15) days of the ruling failing which the 1st defendant to be at liberty to levy distress to recover the same
- 6.Each party to bear their own costs for the applications
- Jurisdiction invoked
- Order 51 Rule 1 and Order 45 Rule 1 of the Civil Procedure Rules and section 3A of the Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Jay Raj Enterprises Ltd v Lucky Distributors Ltd & 3 others [2014] KEELC 583 (KLR)", Case Analysis (2014). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2014/583/eng@2014-06-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.