The Court of Appeal in Nairobi on Monday, July 24 delivered a ruling in favour of a business complex owner observing that a tenant had no right to compel the building owner to permit subleasing of the space to another person for the purpose of running a supermarket business.
In the judgment rendered by Justices H.A Omondi, Dr K.I. Laibuta, and Ali Aroni, the court observed that the decision was unequivocally founded on the terms of the contract.
The contract, spanning an extensive tenor of 999 years and commencing on June 1, 2014, explicitly stipulated that the tenant's usage of the space was strictly limited to establishing an office unit and showroom. Any other purposes were explicitly prohibited under the contractual agreement.
"Clause 2.10 of the leases provided that the applicant will not to use or permit to be used the said premises for any purpose other than as offices/showrooms and not for any purpose or in any manner which may at any time be or become a nuisance or annoyance to the owners or occupiers of any Office Units/Showrooms in the premises or be injurious or detrimental to the reputation of the premises. No pet or animal of any kind will be permitted on the premises," the court documents read in parts.
The building which hosts several floors and located on Ngong Lane off Ngong Road in Nairobi, became contentious when a Chinese tenant proposed to use the suit property to operate a supermarket with a mini-market. However, the respondent declined the request on the basis that the new arrangement offended several clauses in the lease contract.
In the absence of an amicable agreement between the two parties, the landlord refunded the money paid by the tenant as rent.
Following the disagreement, the appellant referred their issue to an arbitrator who was appointed by the Law Society of Kenya, as per leasing regulations.
"Save as the Lessor’s and/or the Manager’s right of re-entry upon the said Premises contained in Clause 5.1 above, all disputes and questions whatsoever which shall arise between the parties hereto touching this Lease or the construction or application thereof of any clause or things herein contained or to the rights or liabilities of any part under this lease shall be referred to the decision of a single Arbitrator to be appointed by the Chairman of the Law Society of Kenya," the lease agreement read in parts.
The arbitrator dismissed the applicant's petition, noting that the leasing agreement did not allow them to set up supermarket businesses within the premises.
The same ruling was sustained at the High Court where the presiding Judge noted that the applicant ought to have sought a secondary agreement with the owner of the building before renting it out to the Chinese investor.
Aggrieved by the ruling and orders of the High Court, the appellant moved to Court on eleven grounds faulting the judge for misinterpreting the appellant’s application thereby reaching a wrong conclusion.
The investor also accused the High Court Judge of failing to address the issues raised by the appellant.
However, after hearing the case, Court of Appeal also dismissed the application noting that the petition lacked legal basis.
"Having carefully examined the record of appeal, the rival submissions of learned counsel for the parties, the cited authorities and the law, we reach the reasoned conclusion that the appeal herein fails and is hereby dismissed with costs to the respondents," Court of Appeal Judges ruled.
