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ELCDismissed· [2018] KEELC 2612 (KLR)

Tecno Holdings Limited & 4 others v National Social Security Fund Board of Trustees [2018] KEELC 2612 (KLR)

Environment and Land Court (High Court), Mombasa
10 April 2018
LKL. Komingoi
3,109 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~12 min to read original · ~4 min brief

The bottom line

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A Mombasa court refused to stop rent distress, ruling a tenant owing Kshs 23 million and unauthorised subtenants deserve no protection.

What this practically means

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Executive summary

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This is a ruling on the Plaintiffs' Notice of Motion dated 17th October 2017 seeking a temporary injunction restraining the Defendant, a pension trustee and landlord, from levying distress for rent and from interfering with the Plaintiffs' quiet possession of L.R No. Mombasa/Block XX/328 and 329 pending the hearing of the suit. The dispute arises from a lease dated 30th July 2010 for ten years from 1st August 2010, with rent of Kshs.27,000,000 per year payable quarterly and remittance commencing 1st May 2016. The Plaintiffs claimed a two-year grace period and disputed a demand of Kshs.7,830,000 for the quarter ending March 2017, after which auctioneers were instructed and goods of the 2nd to 5th Plaintiffs were proclaimed. The Defendant opposed, contending the 1st Plaintiff was in arrears of Kshs.23,490,800, that the sub-letting to the 2nd to 5th Plaintiffs breached clause 11 of the lease, that those sub-tenants lacked privity of contract, and that the Defendant, as custodian of workers' pension funds, had a right to levy distress. Applying the Giella -versus- Cassman Brown principles, the court found the 1st Plaintiff in arrears with no proof of payment, undeserving of equitable protection; found no privity between the 2nd to 5th Plaintiffs and the Defendant, who were in illegal occupation as trespassers; and held the balance of convenience favoured the Defendant's retiree beneficiaries. The application was dismissed with costs to the Defendant. Leave to appeal was granted, but the oral application for a 14-day stay pending appeal was denied.

Key legal issues

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01

Whether the Plaintiffs established a prima facie case with a probability of success for a temporary injunction.

Holding

They did not. The 1st Plaintiff was in rent arrears of Kshs.23,490,800 under a voluntarily executed lease and could not show it remitted rent; the 2nd to 5th Plaintiffs were in illegal occupation as trespassers for want of the landlord's consent to subletting.

Reasoning

The court examined the lease dated 30th July 2010 for 10 years from 1st August 2010. Clause 2(vi) fixed rent at Kshs.27,000,000 per year, remittance commencing 1st May 2016, payable quarterly under clause 3. Letters of 28th March and 29th June 2017 evidenced arrears, and the 1st Plaintiff proved no payment. The subletting breached clause 11, so no privity existed between the 2nd to 5th Plaintiffs and the Defendant. Following Ngeno and Farkhandas, the applicants failed the prima facie test.

p. 4
02

Whether the Plaintiffs demonstrated irreparable injury not compensable by damages.

Holding

No. The Plaintiffs failed to show harm that cannot be quantified in monetary terms; indeed the 1st Plaintiff collected rent from the sub-tenants without remitting any to the Defendant.

Reasoning

The court found that the alleged harm (closure of businesses on levy of distress) was not demonstrated as beyond monetary compensation. Equity withholds protection from applicants with unclean hands, and the 1st Plaintiff's conduct in collecting sub-rents while in arrears disentitled it to the discretionary relief of an injunction.

p. 4
03

Where the balance of convenience lies.

Holding

The balance of convenience tilts in favour of the Defendant, a public pension custodian whose investments fund Kenyan retirees' livelihoods; the Plaintiffs failed to discharge the burden resting on them.

Reasoning

Applying Paul Gitonga Wanjau, the applicant bears the burden of showing greater inconvenience if the injunction is refused. The court found the Defendant, as manager of a Retirees Fund and a public body, would suffer more, whereas the Plaintiffs sought profit at public expense. This limb also failed.

p. 5

Legal principles established

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  • The test for a temporary injunction is the Giella -versus- Cassman Brown tripartite test: prima facie case, irreparable loss, and balance of convenience.
  • A prima facie case is a right apparently infringed by the opposite party, calling for an explanation or rebuttal.
  • A tenant in substantial rent arrears is undeserving of the court's equitable discretion to grant an injunction.
  • Sub-letting without the landlord's prior written consent creates no tenancy; the sub-tenant is a trespasser with no privity of contract with the landlord.
  • The burden lies on the applicant to show that the inconvenience it would suffer if the injunction is refused is greater than that which the respondent would suffer if it is granted.

Court orders

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  1. 1.The Notice of Motion dated 17th October 2017 seeking a temporary injunction against the levy of distress is dismissed.
  2. 2.Leave to appeal is granted.
  3. 3.The application for stay pending appeal is denied.
  4. 4.Costs of the application awarded to the Defendant/Respondent.

Authorities

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Legislation

  • Civil Procedure Act, Chapter 21 Laws of KenyaSections 1A, 1B, 3A, 63(c) and (e)
  • Civil Procedure RulesOrder 40; Order 4 Rule 4
  • Landlord and Tenant ActConsent requirement for subletting (as quoted in Farkhandas N. Abulkader)

Cases cited (18)

  • Sargo Ngetich And Company Advocates –versus- Sedeo Consultants Limited
    (2015) eKLR
  • Martin M. Odhiambo t/a Express Insurance Services –versus- Marshalls E.A Limited And Another
    (2005) eKLR
  • Affordable Homes Africa Limited –versus- Ian Henderson And 2 Others
    HCCC No. 524 of 2004
  • Agricultural Finance Corporation –versus- Lengitia Limited
    (1985) KLR 765
  • Kenindia Assurance Co. Ltd –versus- Otiende
    (1991) KLR 38
  • Securicor (K) Limited –versus- Benson David Onyango And Another
    (2008) eKLR
  • L'. Estrange –versus- F. Graucob Limited
    (1934) 2KB 294
  • Julius MOgaka Gekonde t/a Eastmart Technical College –versus- Ouru Power Limited And Another
    (2016) eKLR
  • Samuel Kipkorir Ngeno And Another –versus- Local Authorities Pension Trust (Registered Trustees) And Another
    (2013) eKLR
  • Farkhandas N. Abulkader –versus- Mohammed Hasham Bakarani And Another
    (2014) eKLR
  • Standard Chartered Bank (K) Limited –versus- Intercom Services Limited And 4 Others
    Civil Appeal No. 37 of 2003
  • Heptula –versus- Noormohamed
    (1984) eKLR
  • Kenya Commercial Finance Ltd –versus- Afraha Educational Society
    (2001) IEA 86
  • Giella –versus- Cassman Brown And Co. Limited
    (1973) EA 385
  • Mrao Limited –versus- First American Bank of Kenya And 2 Others
    (2003) KLR 125
  • Njenga –versus- Njenga
  • Kenleb Cons Limited –versus- New Gatitu Service Station Limited And Another
  • Paul Gitonga Wanjau –versus- Gathuti Tea Factory Co. Ltd And 2 Others
    (2016) eKLR
Jurisdiction invoked
Civil Procedure Act, Chapter 21 Laws of Kenya, Sections 1A, 1B, 3A and 63(c) and (e), and Order 40 of the Civil Procedure Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Tecno Holdings Limited & 4 others v National Social Security Fund Board of Trustees [2018] KEELC 2612 (KLR)", Case Analysis (2018). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/2612/eng@2018-04-10

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