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ELCAllowed· [2017] KEELC 3837 (KLR)

Trouvay & Cauvin Limited v Aggrey Luseno & another [2017] KEELC 3837 (KLR)

Environment and Land Court
3 November 2017
LML.N. Mbugua
791 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Nairobi court ruled that where a lease says rent is inclusive of VAT, landlords cannot separately charge VAT or seize tenant property to recover it.

What this practically means

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Executive summary

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The plaintiff, a tenant of premises known as L.R. No. 2/704 Morningside Office Park, sued over a sub-lease agreement dated 1st August 2013 for a term of 5 years and 3 months. The sub-lease fixed annual rent at Kshs.1,826,304.00 (monthly Kshs.152,192.00) and provided in clause 4(1) that the annual rent was exclusive of service charge but inclusive of V.A.T. Despite this, the 1st defendant invoiced the plaintiff monthly V.A.T. of Kshs.73,052.16, and on 24th July 2014 the 2nd defendant, auctioneers acting on the 1st defendant's instructions, proclaimed the plaintiff's goods to levy distress for alleged rent arrears of Kshs.806,812.48 plus auctioneer's fees of Kshs.80,000 and advocate's fees of Kshs.50,000. The plaintiff sought a permanent injunction restraining recovery of that amount and any V.A.T. claim, plus costs. The defendant did not enter appearance or file a defence, and the suit proceeded ex-parte on the evidence of PW1, Margaret Wakonyo Mungai, who adopted her statement and produced the plaintiff's documents. Holding that the document conferring occupancy rights was the sub-lease and that clause 4(1) meant rent was inclusive of V.A.T., the court found the plaintiff not liable to be charged V.A.T. separately, only service charge being payable in addition to rent. The plaintiff's case was proved; the court issued the permanent injunction as prayed and condemned the defendants to pay costs. Judgment was delivered at Nairobi on 3rd November 2017 by Hon. L.N. Mbugua, ELC Judge.

Key legal issues

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01

Interpretation of clause 4(1) of the sub-lease regarding V.A.T.

Holding

The rent under the sub-lease was inclusive of V.A.T., so the defendants had no contractual basis to invoice V.A.T. separately or levy distress for it.

Reasoning

The court examined the invoices and found a monthly V.A.T. charge of Ksh.73,052.16. It then turned to the sub-lease, the document conferring the right to occupy, and read clause 4(1) literally: rent is exclusive of service charge and inclusive of V.A.T. On plain meaning, only service charge could be added to rent, so any distress founded on V.A.T. claims was unenforceable.

p. 2
02

Whether the plaintiff proved its case for permanent injunction

Holding

Plaintiff proved its case on a balance of probability and was granted the permanent injunction as prayed.

Reasoning

The suit proceeded ex-parte after service, as the defendant neither entered appearance nor filed a defence. PW1, Margaret Wakonyo Mungai, adopted her statement and produced documentary exhibits including the sub-lease, invoices, payment schedules and the proclamation of distress. The evidence established that rent paid included V.A.T. and the distress was unwarranted, justifying the injunction.

p. 2

Legal principles established

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  • Where a lease provides that rent is inclusive of V.A.T., the landlord cannot separately invoice or levy distress for V.A.T. in addition to the rent; only service charge expressly excluded may be added.

Court orders

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  1. 1.A permanent injunction restraining the defendants, their employees, servants, and/or agents from levying distress, attaching or in any other way recovering the amount of Ksh.806,812.48 or any other amount relating to alleged rent arrears or any claim of V.A.T. in respect of the leased premises known as L.R. No. 2/704, Morningside Office Park
  2. 2.Defendants condemned to pay costs of the suit
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over the lease/premises dispute (provision not stated in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Trouvay & Cauvin Limited v Aggrey Luseno & another [2017] KEELC 3837 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3837/eng@2017-11-03

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