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Court of AppealPartially AllowedCivil Appeal (Kitale High Court appeal re Business Premises Rent Tribunal orders)

Kimakia Co-operative Society v Green Hotel [1988] KECA 114 (KLR)

Court of Appeal of Kenya
29 September 1988
3,168 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that a Rent Tribunal order for possession for reconstruction ends a controlled tenancy, and landlords cannot be forced to grant a new one.

What this practically means

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Executive summary

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The Court of Appeal allowed in part an appeal by the landlord Society against a High Court judgment which, while declaring several Business Premises Rent Tribunal orders null and void, had awarded the tenant respondent Kshs 160,000 damages on its counterclaim, on the assumption that the controlled tenancy subsisted for about eight years after the premises were taken back for reconstruction. The court held unanimously that the Tribunal's February 9, 1976 order for possession for reconstruction under section 7(f) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (cap 301) terminated the controlled tenancy, following the House of Lords in Heath v Drown on identical English legislation. The Tribunal could not compel the landlord to grant a new tenancy; any fresh tenancy had to be negotiated, and the tenant, having rejected the new terms, had no subsisting tenancy and no claim for loss of trading profits. As no profits were proved, only nominal damages could lie at most. The court set aside the judgment on the counterclaim, substituted judgment dismissing it with costs, and ordered the Kshs 20,000 paid into court under the nullified Tribunal orders to be repaid to the appellant. However, the appellant's reciprocal claim for rent or mesne profits for storing the tenant's goods failed for want of proof of storage costs. Each party was ordered to bear its own costs below, with the appellant receiving half the costs of the appeal. The decision binds subordinate courts and tribunals on the terminating effect of section 7(f) possession orders and the Tribunal's inability to review its own orders except under section 13.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Tribunal's order of February 9, 1976 for possession for reconstruction under section 7(f) of cap 301 terminated the controlled tenancy or left it subsisting
  2. 2.Whether the respondent was entitled to damages of Kshs 160,000 for loss of trading profits for the period after reconstruction
  3. 3.Whether the Kshs 20,000 paid into court under a Tribunal order later declared null should have been released to the appellant Society
  4. 4.Whether the appellant Society proved its claim for rent or mesne profits for storing the respondent's goods

Key legal issues

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01

Effect of a section 7(f) possession order on a controlled tenancy

Holding

The Tribunal's order of February 9, 1976 for possession for reconstruction terminated the controlled tenancy; the learned judge erred in holding the tenancy continued after reconstruction.

Reasoning

Section 7(f) commences with the premise that reconstruction occurs at the termination of the tenancy; an order under it is one for legal possession ending the tenancy even if a new tenancy is envisaged. Relinquishing possession by a controlled tenant ends the tenancy, consistent with Heath v Drown under identical English legislation. The Tribunal cannot compel the landlord to grant a new tenancy; any new tenancy is negotiable on fresh terms.

p. 3
02

Entitlement to damages for loss of trading profits

Holding

The respondent, having never taken up a new tenancy and having proved no profits, was entitled to no damages beyond nominal ones at most; the Kshs 160,000 award was unsound.

Reasoning

Since the tenancy terminated and the tenant never accepted the new premises or terms, there was no tenancy to breach and no loss of trading profits claimable. No profits were proved on which damages could be assessed; where a party given the chance to prove a specific loss fails to do so, only nominal damages lie. The judge's assessment of Kshs 20,000 per year was guesswork.

p. 4
03

Fate of the Kshs 20,000 deposited under orders later declared null

Holding

Once the Tribunal's orders for damages and possession were declared null, the Kshs 20,000 should have been ordered repaid to the appellant.

Reasoning

The High Court had declared the Tribunal's orders null and void, and there was no cross-appeal on those declarations. It followed that the sum paid into court under those null orders should revert to the appellant rather than be paid to the respondent.

p. 4
04

Finality and inviolability of an unappealed Tribunal possession order

Holding

The Tribunal's order of February 9, 1976 for possession for reconstruction, there being no appeal against it, stands; the Tribunal could not go back on it nor require the reconstruction to preserve the layout of the old tenancy.

Reasoning

The time to test whether the reconstruction was genuine was when the Tribunal made its order; absent appeal, that order stands. The Municipality approved the reconstruction plans and the Tribunal could not reverse itself; the High Court had to accept the first order as it stood. The tenant's preference for the partition wall to be removed was not within his options.

p. 4

Legal principles established

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  • A Tribunal order for possession for reconstruction under section 7(f) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (cap 301) terminates the controlled tenancy; the landlord cannot be compelled to grant a new tenancy and any new tenancy is a matter for fresh negotiation.
  • Where a party had the chance to prove a specific loss and did not, only nominal damages are available; damages cannot be awarded on conjecture.
  • The Tribunal cannot review its own orders except as provided in section 13 of the Act; its orders may otherwise be revisited only on appeal.

Court orders

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  1. 1.Appeal allowed against the judgment on the counterclaim: judgment for the respondent on the counterclaim set aside and substituted with judgment for the appellant dismissing the counterclaim with costs
  2. 2.Kshs 20,000 held in court to be repaid to the appellant
  3. 3.Appeal rejected on the appellant's claim for rent or mesne profits for storage
  4. 4.Each party to bear their own costs in the court below
  5. 5.Appellant awarded half the costs of this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Delivered the leading judgment allowing the appeal against the damages award on the counterclaim, holding that the Tribunal's possession order under section 7(f) terminated the controlled tenancy, that no damages were provable, and ordering repayment of Kshs 20,000; rejected the appellant's unproven storage/mesne profits claim.

In the result I would set aside the judgment for the respondent on the Counterclaim and substitute judgment for the appellant, dismissing the Counterclaim with costs.p. 4
concurring

Wrote the judgment

Concurred that an order under section 7(f) terminates a controlled tenancy, that the Tribunal could not compel a landlord to grant a new tenancy nor review its orders except under section 13, and that the tenant had no basis for a damages claim; would allow the appeal with costs.

In law, where there is no tenancy entered into since the previous one was validly terminated, there is no tenancy. On my part I would allow this appeal with costs.p. 5
concurring

Wrote the judgment

Agreed the trial judge erred in holding the controlled tenancy continued after the Tribunal's possession order; the tenancy terminated on the order, no new tenancy was created, and the damages award was uncalled for. Concurred in the orders proposed by Platt JA.

I would concur in the orders proposed by Platt JA as to allowing the appeal, setting aside the award of damages and refund of the sum of Ksh. 20,000 to the appellant and on costs.p. 5
On appeal from
High Court of Kenya
Jurisdiction invoked
Appeal to the Court of Appeal from the High Court (first appeal as of right under the applicable appellate legislation; the judgment does not state the specific provision)

Relief refused

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Appellant's claim for rent or mesne profits for storing the respondent's goods for eight years

No basis for assessing storage costs was proved at trial

p. 4

Costs

Each party to bear their own costs in the court below; the appellant awarded half the costs of the appeal

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the result I would set aside the judgment for the respondent on the Counterclaim and substitute judgment for the appellant, dismissing the Counterclaim with costs.
p. 4Final orders - disposal of counterclaim
I would order that each party bear his own costs in the Court below and award the appellant half the costs of this appeal.
p. 4Final orders - costs
Once an order has been granted, that brings a controlled tenancy to an end.
p. 4Effect of section 7(f) possession order
But if a specific loss is to be compensated and the party was given the chance to prove the loss and did not, he cannot have more than nominal damages.
p. 4Unproven specific loss - nominal damages only
The Tribunal cannot review its previous order except as provided in section 13 of the Act and only in awarding damages. The Tribunal's orders could only be reviewed on appeal.
p. 5Tribunal functus officio / review

Issues in the judgment

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minor

The judgment text does not state the High Court case number, the name of the trial judge, or the date of the decision appealed from.

minor

The judgment quotes Lord Kilbrandon's speech with the typographical errors 'ex hepothesi' (for ex hypothesi) and 'currency tenancy' (for current tenancy) as printed.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Kimakia Co-operative Society v Green Hotel [1988] KECA 114 (KLR)", Case Analysis (1988). Civil Appeal (Kitale High Court appeal re Business Premises Rent Tribunal orders). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1988/114/eng@1988-09-29

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