Margaret Wanjugu Nduma & 3 others v James Gichuki Gathura [2020] KEELC 3410 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the Chairperson properly applied the principles governing assessment of rent
No. The Tribunal placed so much emphasis on comparables at the expense of all the other statutory principles and was not alive to the reality on the ground, contrary to Section 12(1)(b) of the Act.
The Form G principles require the Tribunal to consider the original cost of construction, age of building, market value of land, improvements and amenities, and rents over the past three years. Here, there was no mention of the age of the building, the market value of the land or improvements, even though both valuers had remarked on the deplorable condition of the premises. The Chairman relied almost exclusively on comparables.
Whether the rent increase was outrageous
The rents arrived at by the Tribunal cannot be allowed to stand, given the misplaced emphasis on comparables alone.
Assessment of rent requires consideration of location, comparables in nearby premises and other factors. Having found the Chairman erred by considering only comparables, the court held that the resulting rent increases were unsustainable. Reliance was placed on Karibu House (1973) Ltd v Travel Bureau Ltd on when an appellate court may interfere with a Tribunal's assessment.
Whether the Chairperson adopted an erroneous formula in arriving at the rent increase
Yes. Taking the simple average of the two valuers' rates (Kshs.64.75 per sq ft) was not a proper criterion; the Tribunal ought to have decided which report was better, and where serious disparities existed, should have employed a valuer under Section 12(3).
Following Tala Investments Ltd v Green Spot Limited, a Tribunal must consider all reports properly before it and go into individual comparables rather than merely arrive at a mean figure of the landlord's and tenant's valuers' reports. The court found the simplistic averaging formula erroneous and remitted the matter for reassessment.
Legal principles established
#- In assessing rent, a Tribunal must consider each individual comparable carefully and decide which is the better report, not merely take the average of the comparable presented by both sides
- An appellate court can interfere with a Tribunal's rent assessment if it was reached by mistake of law, disregard of principle, misapprehension of fact, or other enumerated errors
- The duty of the court in determining a fair rent is to balance the tenant's continued occupancy against the landlord's fair return
- Where a Tribunal realises serious disparities between the parties' valuation reports, it should employ the services of a valuer under Section 12(3) of the Act
Court orders
#- 1.The appeal is allowed
- 2.The matter is remitted back to the Tribunal for a reassessment of the rent to be paid by the Appellants for the premises
- 3.Each party shall bear their own costs of the Appeal
- On appeal from
- Business Premises Rent Tribunal
- Nos 25, 22, 24 & 26B/2015 at Nyeri
- Jurisdiction invoked
- Appeal under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301), Section 15(1) and (2)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Embu Mission Church v Njeru & 4 others[2022] KEELC 14955 (KLR)15 Nov 2022applied
- Careenas Holdings t/a Digitec Cyber v Nawab Mohamed Haji Mirdor [2021] KEELC 1431 (KLR)[2021] KEELC 1431 (KLR)6 Oct 2021
Cite this brief
#Cite this brief
Caselaw, "Margaret Wanjugu Nduma & 3 others v James Gichuki Gathura [2020] KEELC 3410 (KLR)", Case Analysis (2020). ELCA Case No. 32 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3410/eng@2020-03-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.