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ELCPartially AllowedNairobi BPRT Case No 217 of 2021 (Appeal)· [2022] KEELC 66 (KLR)

Hotel v Ngethe & another (Environment & Land Case E099 of 2021) [2022] KEELC 66 (KLR)

High Court of Kenya (Business Premises Rent Tribunal Appeal)
19 May 2022
5,101 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan hotel tenant won temporary protection from eviction and distress, but must deposit Kshs 10 million in security while its appeal is heard.

What this practically means

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Executive summary

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This ruling of the High Court at Nairobi (O. A. Angote, J, dated 19th May 2022) determined two competing interlocutory applications in an appeal against a ruling of the Business Premises Rent Tribunal. The Tribunal (Hon. Patricia May, Vice Chairlady) had dismissed the Appellant's Reference challenging an eviction notice and allowed the landlord to levy distress for rent arrears. The Appellant sought a temporary prohibition against eviction and distress, a stay of the Tribunal's ruling, and compensation for goods repossessed by Chador Auctioneers on 16th July 2021. The Respondents sought an order that the Appellant deposit Kshs 16,186,500 in rent arrears into a joint interest-earning account as security. Applying Order 42 Rule 6 of the Civil Procedure Rules and the settled three-pronged test (sufficient cause, substantial loss, security), the court found the application filed without delay and held that eviction would terminate the landlord-tenant relationship, oust the Tribunal's jurisdiction and render the appeal nugatory, while the Appellant's claimed investment might go uncompensated. It rejected the compensation claim as premature, and instead of the Respondents' demanded Kshs 16,186,500, fixed security at Kshs 10,000,000 to be deposited within 10 days, failing which execution would issue. Eviction and distress were temporarily prohibited and the Tribunal's orders stayed pending appeal; the Record of Appeal was to be filed within 30 days, with each party bearing its own costs.

Key legal issues

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01

Whether the application for stay was made without unreasonable delay

Holding

Satisfied - the application was filed one day after the ruling appealed from

Reasoning

The ruling sought to be appealed was delivered on 22nd December 2021 and the application filed on 23rd December 2021, a day later. The court therefore found this prerequisite of Order 42 Rule 6 met without elaboration.

p. 7
02

Whether the Appellant demonstrated substantial loss

Holding

Yes - eviction would terminate the landlord-tenant relationship, oust the Tribunal's jurisdiction and render the appeal nugatory, and the Appellant risked losing its claimed investment uncompensated

Reasoning

The court reasoned that the Tribunal's jurisdiction over controlled tenancies depends on the existence of a landlord-tenant relationship; eviction would end that relationship and make the appeal academic. Further, if the claim of substantial contribution to construction were true at trial, the Appellant would suffer substantial loss if evicted or distressed before offset determination.

p. 8
03

What security for due performance of the decree should be ordered

Holding

Kshs 10,000,000 to be deposited in a joint interest-earning account held by both parties' advocates within 10 days, failing which execution to issue

Reasoning

Noting the Appellant is a tenant in occupation running a hotel and admitted not paying rent on the basis of an alleged oral agreement to recoup investment, the court fixed security at Kshs 10,000,000. It noted the Auctioneers' Notification of Sale showed rent due of Kshs 6,254,000 as at 21st June 2021, and that security is meant to guarantee due performance, not to punish.

p. 9

Legal principles established

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  • Stay of execution pending appeal requires satisfaction of three prerequisites: sufficient cause, substantial loss and furnishing of security, with the application made without unreasonable delay.
  • Eviction of a tenant before determination of the appeal would end the landlord-tenant relationship and render the appeal nugatory.
  • The purpose of security in a stay application is to guarantee due performance of the decree, not to punish the applicant.

Court orders

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  1. 1.The Landlord/Respondents are hereby temporarily prohibited and restrained from evicting the Tenant and/or distressing the Tenant's/Applicant's property for Rent pending the hearing and determination of the Appeal
  2. 2.A stay of execution of the Ruling and Orders of the Learned Vice Chairlady Honourable Patricia May in Nairobi Business Premises Rent Tribunal Case No 217 of 2021 is hereby granted pending the hearing and determination of the Appeal
  3. 3.The above two orders are granted on condition that the Appellant/Tenant deposits Kshs. 10,000,000 in a joint interest earning account to be opened in the names of the Appellant's and the Respondents' advocates within 10 days from the date of the Ruling, failure of which execution to issue as directed by the Tribunal
  4. 4.The Record of Appeal to be filed within 30 days of the Ruling
  5. 5.Each party to bear its/their own costs

Authorities

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Legislation

  • Civil Procedure Rules 2010Order 42 Rule 6(1) and (2)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) ActSection 4 and Section 4(2); Section 12(4)

Cases cited (15)

  • Butt vs Rent Restriction Tribunal
    [1979] eKLR / [1982] KLR 417
  • Simba Coach Limited v Kiriiyu Merchants Auctioneers
    [2019] eKLR
  • Vishram Ravji Halai v Thornton & Turpin Civil Application No. Nairobi 15 of 1990
    [1990] KLR 365
  • Parimal v Veena
  • Wilson Cheboi Yego v Samuel Kipsang Cheboi
    [2019] eKLR
  • Century Oil Trading Company Ltd v Kenya Shell Limited
    [2008] eKLR
  • Halai & another v Thornton & Turpin (1963) Ltd
    [1990] eKLR
  • Butt v Rent Restriction Tribunal
    [1982] KLR 417
  • Samvir Trustee Limited v Guardian Bank Limited
    [2007] eKLR
  • Antoine Ndiaye v African Virtual University
    [2015] eKLR
  • Rhoda Mukuma v John Abuoga
    [1988] eKLR
  • Tropical Commodities Suppliers Limited & 7 others v International Credit Bank Ltd (in liquidation)
    (2004) 2 EA 331
  • Kenya Shell Limited v Benjamin Karuga Kibiru & another
    [1986] eKLR
  • Jitendra Mathurdas Kanabar & 2 others v Fish & Meat Ltd.
    Civil Appeal No. 267 of 1996
  • Exclusive Mines Limited & another vs Ministry of Mining & 2 others
    [2015] eKLR
On appeal from
Business Premises Rent Tribunal
Nairobi BPRT Case No 217 of 2021
Jurisdiction invoked
Appeal from the Business Premises Rent Tribunal under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act; stay sought under Order 42 Rule 6 of the Civil Procedure Rules 2010

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, "Hotel v Ngethe & another (Environment & Land Case E099 of 2021) [2022] KEELC 66 (KLR)", Case Analysis (2022). Nairobi BPRT Case No 217 of 2021 (Appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/66/eng@2022-05-19

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