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ELCPartially AllowedBusiness Premises Rent Tribunal Cases Nos. 219, 220, 221 and 222 of 2020 (consolidated under Case No. 222 of 2020), appeal dated 9th June 2023· [2024] KEELC 4975 (KLR)

L.P Holdings Limited v Midway Butchery Limited & 3 others (Environment and Land Appeal E060 of 2023) [2024] KEELC 4975 (KLR)

Environment and Land Court
30 April 2024
3,729 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court upheld a tribunal's rent assessment but backdated the increase to November 2021, splitting the delay fairly between landlord and tenants.

What this practically means

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Executive summary

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This is the Environment and Land Court's judgment on a first appeal, dated 30th April 2024 and delivered by E.K. Wabwoto J at Nairobi, against a ruling of Vice Chair Hon. Andrew Muma of the Business Premises Rent Tribunal in consolidated Cases Nos. 219-222 of 2020. The Tribunal had upheld tenants' references challenging rent increase notices effective 1st April 2020, assessing rent at Kshs.177 per square foot and service charge at Kshs.33, to commence from June 2023. The landlord appealed on eight grounds, principally that the Tribunal ignored its valuation report (which recommended Kshs.220 per square foot) and erroneously fixed the commencement date. The court framed two issues: whether the Tribunal considered the landlord's valuation report, and whether the June 2023 commencement date was erroneous. Relying on Selle v Associated Motor Boat Co, United India Insurance and Mbogo v Shah, the court held that the Tribunal's wide discretion under Section 12(1)(b) of Cap 301 was properly exercised - the Tribunal had considered the landlord's valuation report and found it outdated - and declined to disturb the rent assessment. On the commencement date, however, the court found the Tribunal gave no reasons for postdating the new rates to June 2023, and the Covid-19 justification was not pleaded below. Balancing the roughly three-year and three-month delay, the court apportioned it equally, backdating the new rates to 1st November 2021. The appeal partially succeeded: the rent assessment was upheld, the commencement date varied to 1st November 2021, and each party was ordered to bear its own costs of the appeal.

Key legal issues

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01

Whether the Tribunal failed to consider the Appellant's valuation report in assessing rent

Holding

The Tribunal did consider the Appellant's valuation report; its discretion in setting rent at Kshs.177 per square foot and service charge at Kshs.33 was properly exercised and will not be disturbed.

Reasoning

The court reviewed the record and found the Tribunal acknowledged and weighed the Appellant's 2018 valuation report but found it did not reflect current market value. Section 12(1)(b) of Cap 301 grants the Tribunal wide discretion to determine or vary rent having regard to all circumstances, and no method is prescribed. Following Mbogo v Shah and United India Insurance, a discretionary decision is only disturbed on established grounds of misdirection or plain wrongness, none of which was shown.

p. 6
02

Whether the commencement date of the new rent (June 2023 rather than 1st April 2020) was erroneous

Holding

The Tribunal erred in setting the commencement date without reasons; the court varied the date, apportioning the roughly three-year delay equally, backdating the new rates to 1st November 2021.

Reasoning

The Tribunal gave no reasons for postdating the new rates to June 2023. The Covid-19 justification raised by the Respondents on appeal was neither pleaded nor considered before the Tribunal, so the court could not consider it. Because the reference took about three years and three months, and caution is required in backdating rent (Supa Duka Nakuru), the court split the period equally: the landlord and tenants each give up one year and seven months, yielding a commencement date of 1st November 2021.

p. 7

Legal principles established

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  • An appellate court will not interfere with a discretionary decision simply because it would have given different weight to the factors; interference is only warranted on established grounds of misdirection, misapprehension of facts, wrong considerations taken or omitted, or a plainly wrong decision.
  • Cap 301 prescribes no method for rent assessment; the Tribunal has wide discretion in determining or varying rent for a controlled tenancy.
  • Courts should exercise caution in backdating rent increases, particularly where the tenant would bear a substantial unforeseen financial burden.
  • A tribunal's discretionary order on the commencement date of a rent increase must be supported by reasons; where no reasons are given, the appellate court may interfere and fix a fair commencement date.

Court orders

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  1. 1.The assessment of the Tribunal in respect to the rent and service charge payable is upheld.
  2. 2.The commencement date of the said rent and service charge is varied from 1st June 2023 and backdated to 1st November 2021.
  3. 3.Each party to bear own costs of the appeal.

Authorities

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Legislation

  • Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301)Section 12 (and Section 12(1)(b))
  • Land Lord and Tenant (Shops, Hotels and Catering Establishment) Act (Cap 301)Section 9(2)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) ActSection 4(2)
  • Landlord and Tenant (Shops, Hotels and Catering Establishments) ActSection 15
  • Landlords and Tenants (Shops, Hotels and Catering Establishments) (Tribunal) (Forms & Procedure) Regulations 1966Principles governing assessment of rent
  • Civil Procedure Act (Cap 21)Section 27(1)

Cases cited (11)

  • Careena's Holdings t/a Digitee Cyber vs Nawat Mohamed Haji Mirdor
    [2021] eKLR
  • Mwangi vs Wambugu
    [1989] KLR 453
  • Mohamed Noor & 23 others vs Serf Binsaid Properties Limited
    [2023] eKLR (also cited as [2020] eKLR)
  • Mutema Vuli Wines & Spirits Distributers Ltd vs Thomas K. Mwangi & others
    [2004] eKLR
  • Republic vs Environment & Land Court, Exparte Shah & Shah
    [2018] eKLR
  • Selle & Another vs Associated Motor Boat Co. Ltd & others
    (1968) EA 123
  • China Z Hogxing Construction Company Ltd vs Ann Akeru Sophia
    (2020) eKLR
  • United India Insurance Co. Ltd v East African Underwriters (Kenya) Ltd
    (1985) E.A
  • Mbogo vs Shah
    (1968) EA 93
  • Supa Duka Nakuru Limited vs Baringo United Company Limited
    [2017] eKLR
  • Jasbir Singh Rai & 3 others vs Tarlochan Singh Rai & 4 others
    SC. Petition No. 4 of 2012: [2014] eKLR
On appeal from
Business Premises Rent Tribunal
BPRT Cases Nos. 219, 220, 221 and 222 of 2020 (consolidated under No. 222 of 2020)
Jurisdiction invoked
First appeal from the Business Premises Rent Tribunal under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap 301), including Section 15 conferring on the court the same powers as the Tribunal

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "L.P Holdings Limited v Midway Butchery Limited & 3 others (Environment and Land Appeal E060 of 2023) [2024] KEELC 4975 (KLR)", Case Analysis (2024). Business Premises Rent Tribunal Cases Nos. 219, 220, 221 and 222 of 2020 (consolidated under Case No. 222 of 2020), appeal dated 9th June 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/4975/eng@2024-04-30

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