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ELCDismissedNot stated in the extract· [2021] KEELC 2230 (KLR)

Cotton Roots Fashions Ltd v Veeral Shah & another [2021] KEELC 2230 (KLR)

Environment and Land Court
5 July 2021
KBK. Bor
2,669 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Environment and Land Court confirmed it—not the rent tribunal—handles lease disputes where termination is only allowed for breach of the lease.

What this practically means

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Executive summary

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The Defendants filed a notice of motion dated 16 March 2021 seeking to strike out the Plaintiff's suit for want of jurisdiction, contending that the leases dated 15 November 2016 over the ground and first floors of a building on L.R. No. 209/2527/2, Nairobi constitute a controlled tenancy under Section 2(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Chapter 301, thus vesting jurisdiction in the Business Premises Rent Tribunal. They relied on clauses 8.1 and 8.2 of the lease, arguing these were termination or 'break' clauses that brought the tenancy within the BPRT's jurisdiction, and urged that available remedies must be exhausted before invoking the court's jurisdiction. The Plaintiff opposed, arguing the lease was for 5 years and 3 months and that both clauses permit termination only for breach of covenant, placing the dispute outside the BPRT; it also invoked estoppel from an earlier application and relied on authority holding that mere termination clauses do not create a controlled tenancy. The court framed one issue: whether it has jurisdiction. Applying the Supreme Court's pronouncement in Samuel Kamau Macharia on jurisdiction and the Re Hebtulla Properties line of cases on the BPRT's statutory limits, the court construed clauses 8.1 and 8.2 and held that both tie termination to events of breach of covenant, so the leases do not fall within Section 2(1)(b)(ii). The BPRT therefore had no jurisdiction and the ELC, drawing jurisdiction from Article 162(2)(b) of the Constitution and the ELC Act, is the proper forum. The application was dismissed with costs to the Plaintiff.

Key legal issues

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01

Whether the leases dated 15/11/2016 constitute a controlled tenancy under Section 2(1) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, thereby ousting the ELC's jurisdiction

Holding

The leases are not a controlled tenancy; clauses 8.1 and 8.2 permit termination only for breach of covenant, so the dispute falls outside the BPRT's jurisdiction and within the ELC's.

Reasoning

The court read clauses 8.1 and 8.2 closely and found that both tie termination to events of breach of the lease terms: clause 8.1 gives the landlord a right of re-entry upon unpaid rent, breach, bankruptcy, liquidation or distress, while clause 8.2 allows the tenant to terminate only if the landlord is in breach. A controlled tenancy under Section 2(1)(b)(ii) requires a provision for termination otherwise than for breach of covenant within five years. Since the clauses operate only for breach, the leases do not conform to that definition, the BPRT has no jurisdiction, and the ELC is the proper forum.

p. 3
02

Whether the ELC has power to grant the reliefs sought in the plaint

Holding

The reliefs sought (permanent injunction, damages, declaration of constructive trust, specific performance) are within the ELC's powers under Section 13(7) of the ELC Act.

Reasoning

The court noted the plaint seeks a permanent injunction restraining interference with occupation, special and general damages, a declaration of constructive trust, and specific performance. It agreed with the Plaintiff that these are orders the court is empowered to grant under Section 13(7) of the Environment and Land Court Act, reinforcing that the ELC is the proper forum.

p. 2

Legal principles established

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  • A court's jurisdiction flows from the Constitution or legislation, and jurisdiction is not a mere procedural technicality.
  • The BPRT is a creature of statute whose jurisdiction is confined to controlled tenancies and matters spelled out in the Act.
  • Termination clauses that operate only upon breach of covenant do not bring a lease within the definition of a controlled tenancy under Section 2(1)(b)(ii) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act.

Court orders

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  1. 1.The application dated 16th March 2021 is dismissed with costs to the Plaintiff

Authorities

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Legislation

  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Chapter 301Section 2(1)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, Chapter 301Section 2(1)(b)(ii)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) ActSections 6, 9, 12(1), 12(1)(a)-(n), 12(4)
  • Constitution of Kenya 2010Article 162(2)(b)
  • Environment and Land Court Act, 2011Section 13(7)

Cases cited (4)

  • Samuel Kamau Macharia & Another v Kenya Commercial Bank & 2 Others
    [2012] eKLR
  • Republic v Chairman Business Premises Rent Tribunal & 2 Others, Ex Parte Abdul Kadir Hubess
    [2017] eKLR
  • Republic v Business Premises Rent Tribunal & Another, Ex-Parte Albert Kigera Karume
    [2015] eKLR
  • Re Hebtulla Properties Ltd.
    [1979] KLR 96; [1976-80] 1 KLR 1195
Jurisdiction invoked
Article 162(2)(b) of the Constitution of Kenya 2010 and the Environment and Land Court Act, 2011

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, "Cotton Roots Fashions Ltd v Veeral Shah & another [2021] KEELC 2230 (KLR)", Case Analysis (2021). Not stated in the extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/2230/eng@2021-07-05

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