The importance of procedural compliance when terminating controlled tenancies: The Case of Orchards Communications Limited v Suitable Hotels Limited Tribunal Case E247 of 2023 [2024] KEBPRT 524 (KLR) (21 March 2024)

Background of the Case

Suitable Hotels Limited (the Landlord) filed an application seeking to:

• Attach the Tenant’s goods for rent arrears totalling Kshs. 3,561,037, and
• Evict Orchards Communications Limited (the Tenant) from the premises.

The Tenant had previously admitted owing some rent but disputed the total amount and sought to remain on the premises.

 

Key Issues

1.      Whether the Landlord had complied with statutory procedures for terminating a controlled tenancy.

2.      Whether the Tribunal should authorize attachment and eviction.

3.      How the rent arrears should be settled.

 

Tribunal's Ruling Summary

• Statutory Non-Compliance: The Tribunal held that the Landlord had not issued a proper termination notice as required under Section 4(2) of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act, making the eviction request premature and procedurally defective.
• Payment of Arrears: The Tribunal found that the Tenant owed Kshs. 1,135,016.98 in arrears and ordered the amount to be paid in 3 equal monthly instalments, starting April 2024.
• Future Default: If the Tenant defaulted on this plan, the Landlord would be allowed to levy distress using a licensed auctioneer.
• Costs: The Tenant was ordered to pay costs of the application.

 

Legal Significance

This case reinforces:

• The importance of procedural compliance when terminating controlled tenancies.
• The Tribunal’s discretion to balance landlord rights with tenant protections.
• Recognition that landlords cannot bypass statutory safeguards, even when rent arrears exist.