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ELCDismissedEnvironment and Land Appeal E016 of 2023· [2023] KEELC 18785 (KLR)

Patel & another v Wonderpac Industries Limited

Environment and Land Court
6 July 2023
EWE.K. Wabwoto
2,514 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 that an unsigned lease cannot defeat the Business Premises Rent Tribunal's jurisdiction over a controlled tenancy.

What this practically means

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Executive summary

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This was a first appeal to the Environment and Land Court at Nairobi against a ruling of the Business Premises Rent Tribunal (Nairobi BPRT Case No E815 of 2022) delivered on 27 January 2023 by Hon. Cyprian Mugambi, Chairperson, dismissing the Appellants' preliminary objection. The Appellants, Kanji Kunverji Patel and Kay Construction Company Ltd, argued before the Tribunal that it lacked jurisdiction because the 2017 tenancy agreement was for six years and thus not a controlled tenancy under Cap 301, and because clause 3.9 of that agreement required referral of disputes to arbitration. On appeal, they sought setting aside of the ruling, a declaration that the 2017 lease was validly executed, referral to arbitration, and costs. The Respondent, Wonderpac Industries Limited, maintained the tenancy was a controlled tenancy, that no lease had been executed since 2004, that a party cannot be compelled to execute an agreement, and that the arbitration clause rested on an unexecuted document. E.K. Wabwoto J framed two issues: the Tribunal's jurisdiction and the appropriate reliefs. The court found the 2017 agreement was never executed; the last executed agreement was a three-year tenancy from November 2004, and the tenancy continued as a periodic tenancy under sections 57 and 60 of the Land Act, hence a controlled tenancy under section 2(1) of Cap 301 conferring jurisdiction on the Tribunal. The arbitration request failed for want of an executed agreement. The appeal was dismissed with each party bearing its own costs, the matter returning to the Tribunal for full hearing.

Key legal issues

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01

Whether the Tribunal had jurisdiction given the alleged 6-year 2017 lease and arbitration clause

Holding

The 2017 lease was never executed; the tenancy remained a periodic tenancy and thus a controlled tenancy under section 2(1) of Cap 301, so the Tribunal had jurisdiction.

Reasoning

The court reviewed the evidence before the Tribunal and found the initial five-year tenancy from 2000 was superseded by a three-year tenancy from November 2004, with no executed agreement since. An unexecuted arrangement continues as a periodic lease under sections 57 and 60 of the Land Act, falling within the definition of a controlled tenancy under Cap 301, so the Tribunal's jurisdictional finding could not be faulted.

02

Whether the dispute should be referred to arbitration under clause 3.9 of the 2017 lease

Holding

No referral to arbitration; the clause is founded on an unexecuted agreement.

Reasoning

The Appellants' arbitration request depended on the 2017 lease agreement, which the court found was never executed by the parties. Since the foundation of the clause did not exist as a binding contract, the court had no basis to compel arbitration, and the request was refused.

p. 5

Legal principles established

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  • Where no subsequent lease is executed after expiry of an earlier one, the tenancy continues as a periodic lease and may constitute a controlled tenancy under Cap 301, conferring jurisdiction on the BPRT.

Court orders

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  1. 1.The Appeal is devoid of merit and is dismissed
  2. 2.Each party to bear own costs of the Appeal

Authorities

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Legislation

  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Actsection 2
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Actsection 4(5)
  • Land Actsections 57 and 60

Cases cited (9)

  • Feba Radio (Kenya) Limited t/a Feba Radio v Ikiyu Enterprises Limited
    (2017) eKLR
  • Kenya Commercial Bank Limited vs Popatlal Madhavji & another
    (2019) eKLR
  • Kanji K. Patel & 2 others v Steel Marks Limited
    (2021) eKLR
  • Spameright Auto Limited & Shell & BP (Malindi) Kenya Limited
    (208) eKLR
  • Nyutu Agrovet Limited v Airtel Networks Ltd
    (2015)
  • Eunice Soko Mlagui v Suresh Parmar & 4 others
    (2017) eKLR
  • National Fund for the Disabled of Kenya Registered Trustee v Esquire Limited
    (2017) eKLR

    A party cannot be compelled to execute an agreement nor have unilateral lease terms imposed.

  • Selle & another v Associated Motor Boat Co. Ltd & others
    (1968) EA 123

    Duty of a first appellate court to re-evaluate evidence and reach its own conclusions.

  • China Zhongxing Construction Company Ltd v Ann Akuru Sophia
    (2020) eKLR

    Approval of the Selle principle on first appeals.

On appeal from
Business Premises Rent Tribunal
Nairobi BPRT Case No E815 of 2022
Jurisdiction invoked
Appeal from the Business Premises Rent Tribunal under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301)

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, "Patel & another v Wonderpac Industries Limited", Case Analysis (2023). Environment and Land Appeal E016 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/18785/eng@2023-07-06

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