23 December 2011

Kenya: Tribunal Rejects Marshalls' Application Over Rent Dispute

Business Premises Rent Tribunal Thursday threw out an application by Marshalls East Africa Ltd in a tenancy dispute between the motor dealer and its former partner, Foton East Africa.

The tribunal chairperson, Diana Mochache, ruled that since Foton and Marshalls had both lost the tenancy status, the court had no jurisdiction to resolve the dispute. Marshalls is accusing Foton of blocking the entrance they were jointly using to access the premises and that the firm was in rent arrears.

Ms Mochache had earlier directed Foton to pay outstanding rent arrears of Sh10 million, failure to which Marshalls would be at liberty to seize Foton's properties.

Marshalls went ahead and carted away Foton's motor vehicles but the tribunal restrained it from auctioning the motor vehicles. When the dispute was referred to the tribunal in April, Foton accused Marshalls of vandalising the vehicles.

The tribunal heard that Marshalls had been a tenant of Davis Motors for 20 years but it later sublet the premises to Foton and entered into a one-year tenancy agreement over the premises on Mombasa Road.

The agreed rent was Sh1.3 million and the tribunal was told that Foton paid Sh3.9 million for three months rent and a further Sh4.5 million. Thereafter, according to the pleadings, Foton claimed that it was unaware Marshalls was also a tenant in the same premises.

To avert the dispute, the parties agreed that an agreement be drawn incorporating Foton as a tenant and not a as sub-tenant. The tripartite talks saw Davis allow Foton to assume tenancy for five years with a Sh1.6 million monthly rent payable to Davis Motors.

However, a month after the deal, Davis terminated the lease over rent arrears and ordered both tenants to leave. Davis later moved to court seeking to remove both Marshalls and Foton from the building.

But in her ruling Thursday, Ms Mochache said after the tripartite agreement, Marshalls had no legal authority demand rent from Foton."The relationship between the parties prevailing before the tripartite agreement cannot be revived by the termination of the subsequent (tripartite) relationship.

Having lost any tenancy status jointly and severally, it therefore means the tribunal has no jurisdiction to determine the dispute between the two parties," ruled Ms Mochache.

Shortly after the ruling, Marshalls through lawyer James Nyiha sought for a stay pending appeal but the application was rejected with the tribunal chairperson saying the motor dealer's only available remedy was to file a case in the judicial review, a division of the High Court.

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