Tropical Footwear Centre Ltd & 2 others v Guled Housing Company Limited [2019] KEELC 1546 (KLR)
The bottom line
#A Kenyan court upheld a rent increase of over 600%, ruling that location and comparable rents matter more than the percentage jump.
What this practically means
#Executive summary
#Key legal issues
#Application of principles governing assessment of rent
The Tribunal Chairperson properly applied the Form G principles; it was the valuers who ignored key principles such as the age of the building, market value of the land and cost of improvements
The Chairperson analysed all comparables in both valuation reports and gave reasons for rejecting them. The valuers from both sides merely mentioned the Form G principles in passing without inquiring into the age of the building, the market value of the land or the improvements and their cost. The court found no basis to fault the Chairperson's adoption of the Respondent's comparables, and no bias in preferring stalls as comparables given the reality of the locality.
Whether the Chairperson descended into the arena by making remarks on market trends not raised by the parties
The remarks did not constitute descent into the arena; a judicial officer may properly be alive to prevailing market conditions relevant to open market rent
The court held the Chairperson's observations on conversion of premises into stalls and human traffic were contextual justifications on location, a relevant factor in assessing market rent. Justice Kneller in the Karibu House case had similarly commended rather than faulted a Tribunal for taking account of general rent increases when assessing open market rent.
Whether the rent increase of 628.5% was outrageous
The increase was not outrageous; percentages are not the test in assessing rent
The court held that in assessing rent one looks at location and comparable rents in nearby premises, not at percentage increases. The Act protects tenants from exploitation but landlords must also get value for their investments considering the location of the premises. The increase from Kshs.17,400/= to Kshs.109,340/= was therefore sustainable.
Whether the formula used in arriving at the rent was erroneous
The average rental analysis was correct despite an apparent typing error in the figures
The Chairperson had adopted comparable No. 1 from the Appellant's Gimco report and comparables 1, 4 and 5 from the Respondent's Ark Consultants report and averaged them. The court found a typing error in the figures but held it immaterial since the method of arriving at the average rental analysis was clear.
Award of costs by the Tribunal
The Tribunal was right to award costs to the Respondent as the successful party
Costs normally follow the event. The Appellant took the Respondent to the Tribunal and the Respondent emerged the victor, so the victor gets the costs. Ground 11 therefore failed.
Legal principles established
#- On a first appeal under Section 15 of the Landlord and Tenants Act, the court must evaluate the evidence and reach its own conclusions while allowing for the fact that it did not see the witnesses testify
- In assessing rent, percentages of increase are not determinative; location and comparables among other factors matter, and landlords are entitled to value for their investments
Court orders
#- 1.The appeal is dismissed with costs to the Respondent.
- On appeal from
- Business Premises Rent Tribunal
- BPRT No. 893 of 2009
- Jurisdiction invoked
- Section 15 of the Landlord and Tenants (Shops, Hotels and Catering Establishments) Act (first appeal to the High Court, transferred to the Environment and Land Court)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Tropical Footwear Centre Ltd & 2 others v Guled Housing Company Limited [2019] KEELC 1546 (KLR)", Case Analysis (2019). ELC No. 537 of 2017 (formerly High Court Appeal No. 70 of 2011; BPRT Appeal No. 893 of 2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/1546/eng@2019-08-26
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.