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ELCDismissedPlaint dated 11th November 2010, filed 12th November 2010· [2017] KEELC 1828 (KLR)

National Fund for The Disabled of Kenya Registered Trustee v Esquire Limited [2017] KEELC 1828 (KLR)

High Court of Kenya
22 September 2017
2,407 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan landlord cannot evict an unwritten commercial tenant or force them to sign a lease; only the Rent Tribunal can end such tenancies.

What this practically means

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Executive summary

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The Plaintiff, registered proprietor of Rehema House on L.R. Number 209/4540, Nairobi, sued the Defendant, its tenant of premises on the ground and first floors, seeking vacant possession, or in the alternative an order compelling the Defendant to execute a formal written lease agreement forwarded to it (with the Registrar of the High Court to execute it upon refusal), plus Kshs. 198,764/- in legal fees, costs and interest. The Defendant admitted refusing to sign the lease but pleaded that it is a monthly tenant whose tenancy is not reduced into writing and is therefore a controlled/protected tenancy under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap. 301, so that the dispute belongs to the Business Premises Rent Tribunal. At the hearing, the Plaintiff's Property Manager confirmed the tenancy was currently unwritten and that the Plaintiff had instructed its lawyers to prepare the lease; the Defendant's director testified that signing the lease would strip the Defendant of its statutory protection. The court framed five issues and found, first, that the Defendant is a controlled tenant within the meaning of section 2 of the Act, a finding supported by the parties' earlier Tribunal Case No. 257 of 2005 over a rent increase. Second, termination of a controlled tenancy requires a prescribed tenancy notice under section 4 with an objection right under section 6(1), and lies within the Business Premises Rent Tribunal's exclusive jurisdiction, which the High Court lacks; eviction could not be ordered. Third, a party cannot be compelled to enter a contract, so the Defendant could not be forced to sign the lease. It followed that the legal fees claim also failed. The suit was dismissed with costs to the Defendant.

Key legal issues

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01

Whether the Defendant is a controlled tenant under Cap. 301

Holding

The Defendant is a controlled tenant within the meaning of the Act

Reasoning

Under section 2 of the Act a controlled tenancy is one which has not been reduced into writing. The Defendant's business qualifies as a 'shop', and its current tenancy is not in writing. The prior Business Premises Rent Tribunal case No. 257 of 2005, in which the Plaintiff admitted that Tribunal's jurisdiction, resulted in a determination that the Defendant is a controlled tenant, supporting this finding.

p. 3
02

Whether the Defendant should be evicted from the suit premises

Holding

No; the High Court lacks jurisdiction over termination of controlled tenancies

Reasoning

Section 4(1) of the Act provides that a controlled tenancy shall not terminate or be terminated otherwise than in accordance with the Act, requiring a prescribed tenancy notice stating grounds and giving a one-month objection window under section 4(5), with a right of reference to the Tribunal under section 6(1). No such notice was served, and termination of controlled tenancies is within the Business Premises Rent Tribunal's jurisdiction, not the High Court's.

p. 5
03

Whether the Defendant can be compelled to sign the written lease agreement

Holding

No

Reasoning

A cardinal principle of contract law is that a party cannot be compelled to enter into a contract of any nature. The Defendant, as a protected controlled tenant under the Act, cannot be compelled to sign the written lease agreement, since signing it would forfeit its statutory protection.

p. 5
04

Whether the Defendant should pay the legal fees for preparation of the lease

Holding

No

Reasoning

It follows from the finding that the Defendant cannot be compelled to sign the lease that it cannot be compelled to pay the Kshs. 198,764/- legal fees incurred in preparing it, particularly as the Plaintiff instructed its own lawyers to prepare the agreement.

p. 5

Legal principles established

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  • A controlled tenancy under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act is a tenancy of a shop, hotel or catering establishment which has not been reduced into writing
  • Termination of a controlled tenancy is a matter within the exclusive jurisdiction of the Business Premises Rent Tribunal and requires a prescribed tenancy notice under section 4 of the Act
  • A party cannot be compelled to enter into a contract of any nature

Court orders

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  1. 1.The suit is dismissed
  2. 2.Costs of the suit are awarded to the Defendant

Authorities

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Legislation

  • Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Cap. 301section 2 (definition of controlled tenancy and shop)
  • Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Cap. 301section 4(1) and 4(2)
  • Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Cap. 301section 4(5)
  • Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Cap. 301section 6(1)
  • Landlord and Tenants (Shops, Hotels and Catering Establishments) Act, Cap. 301section 12(1)
Jurisdiction invoked
Original civil jurisdiction of the High Court under the plaint procedure; subject to the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Cap. 301

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "National Fund for The Disabled of Kenya Registered Trustee v Esquire Limited [2017] KEELC 1828 (KLR)", Case Analysis (2017). Plaint dated 11th November 2010, filed 12th November 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/1828/eng@2017-09-22

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.