Lulu East Africa Limited v National Social Security Fund & 3 others (Civil Appeal 212 of 2018) [2024] KECA 1936 (KLR) (20 December 2024) (Judgment)

Neutral citation: [2024] KECA 1936 (KLR)

Republic of Kenya

In the Court of Appeal at Nairobi

Civil Appeal 212 of 2018

PO Kiage, A Ali-Aroni & LA Achode, JJA

December 20, 2024

Between

Lulu East Africa Limited

Appellant

and

National Social Security Fund

1^st Respondent

Sokomania Limited

2^nd Respondent

Value Zone Limited

3^rd Respondent

Hasmo Agencies Limited

4^th Respondent

(Being an appeal from the judgment of the Environment and Land Court at Nairobi (S.Okongo J) on 14th February 2018 in ELC Appeal No. 60 (B) of 2016 Environment and Land Appeal 60 ‘B’ of 2016 )

Judgment

1.This is a second appeal by Lulu East Africa Limited the Appellant, against the judgment in Environment and Land Court, (ELC) in Nairobi dated 14^th February 2018, delivered by Okongo J. The judgement was in favour of National Social Security Fund, the 1^st respondent and Hasmo Agencies Limited the 4^th respondent, and against Sokamania Limited the 2^nd respondent and the appellant. Value Zone Limited is the 3^rd respondent herein.

2.The 1^st respondent is the registered proprietor of Land Ref: Nos 209/11412, 209/11331, 209/12220, 209/12219 and 209/12287 (the suit properties) situated on Kenyatta Avenue, Nairobi. The 1^st respondent constructed a parking bay containing 455 parking spaces on the suit property and subsequently, advertised for the provision of management and collection of parking fees services in respect of the parking bay. The 3^rd respondent won the tender and entered into a car park management contract with the 1^st respondent on 26^th April 2013. The contract was to run for one year but was backdated to take effect from 1^st March 2013. The 3^rd respondent undertook to manage and collect parking fees from the parking bay on behalf of the 1^st respondent.

3.Immediately thereafter, the 3^rd respondent entered into a car park license contract with the 2^nd respondent. Under the license, the 1^st respondent made available for the use of the 2^nd respondent, the parking bay containing 230 parking spaces constructed on Land Ref: No. 209/12287 and 209/12219 (the 2^nd respondent’s parking bay), for a fixed term of six months. The license would operate with effect from 1^st March 2013 and terminate on 31^st August 2013. Under the license the 2^nd respondent was to pay to the 3^rd respondent Kshs. 1 million per month. The 3^rd respondent entered into a similar car park license contract with the appellant in respect of the parking bay constructed on Land Ref: NOs 209/11331, 209/11412 and 209/12220 (the appellant’s parking bay).

4.The car park management contract between the 1^st respondent and the 3^rd respondent expired on 30^th September 2015 and was extended to 31^st December 2015. The car parking licenses between the 3^rd respondent, and the appellant and 2^nd respondent also expired at the same time and were extended to 31^st December 2015. Prior to the expiration of the contracts, the 1^st respondent advertised for tenders for a new service provider for its parking bay and the tender was awarded to the 4^th respondent.

5.On 21^st December 2015 the 1^st respondent and the 4^th respondent entered into a carpark license for a period of one year with effect from 1^st January 2016 in respect of all the parking bays under the suit property with a total of 455 parking spaces. When it came to handing over vacant possession of the suit property, the appellant and 2^nd respondent refused to vacate the parking bay to enable the 4^th respondent to take over the management.

6.The appellant and the 2^nd respondent instead filed References together with applications at the Business Premises Rent Tribunal (BPRT), against the 1^st respondent and the 3^rd respondent. In the applications dated 7^th January 2016, and 3^rd February 2016, respectively, they stated that the 1^st and 3^rd respondents had illegally threatened to evict them from the parking bay without issuing a termination notice under the provisions of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act.

7.They sought a temporary injunction restraining the 1^st respondent and 3^rd respondent from evicting them, taking possession, or obstructing them from using, or interfering with their use of the parking bay. On 7^th January 2016, the tribunal granted the orders sought on interim basis pending the hearing of the two applications.

8.Consequently, on 14^th January 2016, the 4^th respondent filed applications in both applications seeking: to be joined to the proceedings as interested party; for the tribunal to set aside the order issued on 7^th January 2016 and issue orders compelling the appellant and the 2^nd respondent to vacate the parking bay. It also sought that the appellant be ordered to pay damages in the sum of Kshs. 136,000 per day to the 4^th respondent until it vacates the parking bay.

9.The tribunal consolidated the appellant’s, 2^nd respondent’s and 4^th respondent’s applications. Upon hearing all the parties present, the Tribunal allowed the appellant’s and 2^nd respondent’s applications and dismissed the 4^th respondent’s application. It also terminated the proceedings against the 3^rd respondent.

10.Dissatisfied with the ruling of the Tribunal, the 1^st respondent filed an appeal in the ELC at Nairobi, on grounds that the Tribunal erred in making findings:i.That the occupation of the premises by the appellant and the 2^nd respondent was a protected tenancy,ii.That was final on seriously contested issues on an interim application,iii.That the dispute did not relate to the facts of the case but was limited to the law only,iv.That is final determination on the nature of the relationship between the parties in an interim application,v.That the car park licenses between the appellant and the 2^nd respondent, and the 3^rd respondent created tenancies and not licenses,vi.That the 1^st respondent became a landlord to the appellant and the 2^nd respondent by operation of law,vii.Terminating the proceedings against the 3^rd respondent.

11.The learned judge considered the appeal before him and allowed it, setting aside the orders made by the Tribunal on 27^th May 2016, and dismissing the appellant’s and 2^nd respondent’s applications. He further allowed the 4^th respondent’s prayer to be joined as an interested party.

12.Aggrieved by the judgment of the superior court, the appellant filed the instant appeal. The Memorandum of Appeal dated 29^th June 2018 is predicated on grounds that the learned Judge erred both in law and fact:a.In holding that the Business Premises Rent Tribunal established under Chapter 301 Laws of Kenya had jurisdiction to entertain the claim by the 4^th respondent (Hasmo Agencies Limited) when the 4^th respondent is neither a landlord nor a tenant under the Act.b.In allowing the 4^th respondent’s application dated 14^th January 2016 yet the 4^th respondent had not appealed against the dismissal of the same by the Chairman of The Business Premises Rent Tribunal.c.The judge erred both in law and fact in interfering with The Chairman of The Business Premises Rent Tribunal’s discretion without any justification.d.In granting Final Orders in an interlocutory appeal.e.In addressing and making findings on issues never addressed by the BPRT contrary to the law.f.In failing to appreciate the facts of the appeal and the law relating to Tenancy as provided under Chapter 301 Laws of Kenya thus arriving at the wrong decision.

13.The firm of Kairu Kimani and Co. Advocates filed written submissions dated 30^th July 2020 on behalf of the appellant, while the firm of TripleOkLaw LLP Advocates filed the submissions dated 8^th March 2024 for the 1^st respondent.

14.The appellant urges that the superior court’s holding that a third party or interested party can be a party in the reference, contravened the express provisions of Chapter 301. It was further urged that the appeal before the judge was that of the 1^st respondent. Thus, there was no basis in law for the judge to determine an issue which was not before the court.

15.The appellant contends that the judge made several conclusive findings that he was not supposed to make in an interlocutory appeal. Such findings include stating that the relationship between the 1^st and the 3^rd respondent could not amount to a lease. This ought to be determined after a full trial.

16.In rebuttal, the 1^st respondent submits that the 4^th respondent met the test to be joined in the complaint as an interested party. It relies on the Supreme Court’s decision in Communication Commission of Kenya & Others v Royal Media Services Limited & 7 Others (2014) eKLR, where the Court set out factors to be considered to qualify as an interested party. In its view, the 4^th Respondent met that threshold and therefore, the court did not err in entertaining its claim as an interested party.

17.It is submitted that the 1^st respondent appealed against the entire ruling of the BPRT, including findings regarding the 4^th respondent’s application which had been dismissed. Additionally, they urge that the ELC is bestowed with powers to substitute the findings of the BPRT under Order 42 Rule 32 of the Civil Procedures Rules. Further, the only prayer allowed by the ELC on the 4^th respondent’s application had legal justification.

18.It is urged that the decision of the BPRT warranted the interference of the ELC, because discretion was exercised in a manner that fell afoul of the test for the exercise thereof. This would justify the interference of an appellate court. Further, the appellant has not demonstrated what final orders were issued by the ELC since the primary relationship between the parties remains unresolved.

19.The 1^st respondent urges that there has never been any relationship between itself and the appellant, or the 2^nd respondent but there existed a relationship between the 3^rd respondent and itself. Both parties confirmed that it was not a tenancy agreement but a license agreement.

20.Our mandate as the second appellate court is well captured in a myriad of this Court’s decisions. For instance in Muumbo and another v Muumbo and 2 others (Civil Appeal 373 of 2018) [2022] KECA 568 (KLR) this Court held that:“This is a second appeal. Our mandate is as has been enunciated in a long line of cases decided by the Court. See Maina vs. Mugiria [1983] KLR 78, Kenya Breweries Ltd vs. Godfrey Odongo, Civil Appeal No. 127 of 2007, and Stanley N. Muriithi & Another vs. Bernard Munene Ithiga [2016] eKLR, among numerous others for the holdings/ propositions inter alia that, on a second appeal, the Court confines itself to matters of law only, unless it is shown that the Courts below considered matters they should not have considered or failed to consider matters they should have considered or looking at the entire decision, it is perverse.

21.In the appeal before us the grounds of appeal can be collapsed into three issues for determination. These are: whether the superior court erroneously interfered with the discretion of the tribunal, whether it made conclusive findings on interlocutory application, and whether it was wrong in allowing the 4^th respondent’s application to be joined as an interested party.

22.It is trite law that the court will not interfere with the exercise of discretion of the court below. The exceptions to this rule have been articulated by this Court, in Nguruman Limited v Jan Bonde Nielsen, Herman Philipus Steyn also known as Hermannus Phillipus Steyn & Hedda Steyn (Civil Appeal 77 of 2012) [2014] KECA 606 (KLR) as follows:“…We emphasize by reiterating that this Court will not interfere with the exercise of discretion by the Judge in the court below unless satisfied that the decision of the Judge is clearly wrong because of some misdirection, or because of failure to take into consideration relevant matter or because the Judge considered irrelevant matters and as a result arrived at a wrong conclusion, or where there is a clear abuse by the Judge of his discretion. Whenever a court exercises a discretion, there is always a presumption of correctness of decision which is reversible only upon showing of a clear abuse of discretion.”

23.The learned judge pronounced himself thus:“….I have considered the evidence that was before the tribunal on the basis of which the tribunal arrived at the findings I have mentioned herein earlier. I am not in agreement with the finding of the tribunal that the 1^st and 2^nd respondents had established a prima facie case against the appellant and the 3^rd respondent. I am not persuaded that the 1^st and 2^nd respondents established before the tribunal that they had a right that had been violated or was threatened with violation by the appellant and the 3^rd respondent.”

24.The learned judge further held that:“I have noted from the record that the 2^nd respondent had already filed a civil suit to recover the deposit that it had paid to the 3^rd respondent. I agree with the appellant that the tribunal erred in its failure to consider whether the 1^st and 2^nd respondent could be compensated in damages. I am of the view that if the tribunal had considered this factor, it would not have issued the orders which are subject of this appeal.”

25.The power to grant or deny a temporary injunction is in the discretion of the court. However, this discretion must be exercised reasonably, judiciously and on sound legal principles. The law governing the issuance of interlocutory orders was succinctly set out in the often-cited case of Giella v Cassman Brown (1973) EA at p. 360 as follows:“First, an application must show a prima facie case with a probability of success. Second, an interlocutory injunction will not normally be granted unless the applicant might otherwise suffer irreparable injury, which would not adequately be compensated by an award of damages. Thirdly, if the Court is in doubt, it will decide an application on the balance of convenience.

26.The contention arising is in regard to whether a contract exists between the 3^rd respondent and the appellant or the 2^nd respondent. From the record there is no evidence that a contract was executed between the 1^st respondent and the appellant, or the 2^nd respondent. The evidence before the tribunal indicates that the 1^st and 3^rd respondents executed a contract on 26^th April 2013 and they agreed that it was a management and service contract.

27.Without delving into the merits of the suit, we are satisfied that the superior court was correct to find that in the circumstances of this case, a prima facie case had not been established.

28.We also note, as was held in the superior court, that the appellant did not establish that if the interlocutory injunction was not granted, it would suffer irreparable injury that cannot be compensated adequately by damages. In the premise we find that the superior court properly interfered with the discretion of the tribunal by dismissing the appellant’s and 2^nd respondent’s applications for injunction.

29.We turn now to the issue of whether the learned judge made conclusive findings in an interlocutory application. The appellant contends that the learned judge did so regarding the relationship between the 1^st and 2^nd respondent. The 1^st respondent on the other hand contends that this is not the case as the relationship between the parties remained unresolved.

30.The superior court had this to say regarding the relationship between the 1^st and 3^rd respondent:“….. The Appellant was the owner of a parking bay with 455 parking spaces. The appellant invited tenders for the provision of management services for the said parking bay. The duties of the service provider entailed the management of the parking bay and collection of the parking fees on behalf of the Appellant in consideration of an agreed commission. The 3^rd respondent was awarded the tender pursuant to which it entered into the contract dated 26^th April, 2013 with the Appellant. The contract between the 3^rd respondent and the Appellant was in my view strictly a management and service contract contrary to the findings by the tribunal, there was nothing in the contract between the Appellant and the 3^rd Respondent that allowed the 3^rd Respondent to sublet the parking bay.”

31.In our view, the learned judge made a conclusive finding regarding the relationship between the 1^st and 3^rd respondents. This should have been left to the Tribunal which is best suited to determine the relationship between the parties upon a full hearing of the matter.

32.Lastly, the appellate court in allowing the 4^th respondent’s application to be enjoined as an interested party held that:“In its submissions, the 4^th respondent urged the court to set aside the orders that were issued by the tribunal on 27^th May, 2016 and to allow its applications dated 14^th January, 2016 that were dismissed by the tribunal. The 4^th respondent did not appeal against the whole decision of the tribunal that was made on 27^th May 2016, underOrder 42 rule 5 of the Civil Procedure Rules, the court has power to grant the prayers sought by the 4^th Respondent herein.With regard to the said applications by the 4^th Respondent that were dismissed by the tribunal, I am of the view that the 4^th Respondent had established sufficient interest in the dispute that was before the tribunal and as such should have been added to the complaint that was before the tribunal as an interested party.”

33.In determining whether the superior court was proper in joining the 4^th respondent, we have recourse to the decision in Communications Commission of Kenya and Others (supra), cited by the 1^st respondent, where the Supreme Court stated that:“22.In determining whether the applicant should be admitted into these proceedings as an Interested Party we are guided by this Court’s Ruling in the Mumo Matemo case where the Court (at paragraphs 14 and 18) held:‘An interested party is one who has a stake in the proceedings, though he or she was not party to the cause ab initio. He or she is one who will be affected by the decision of the Court when it is made, either way. Such a person feels that his or her interest will not be well articulated unless he himself, or she herself appears in the proceedings, and champions his or her cause…”23.Similarly, in the case of Meme v. Republic,[2004] 1 EA 124, the High Court observed that a party could be enjoined in a matter for the reasons that:“(i)Joinder of a person because his presence will result in the complete settlement of all the questions involved in the proceedings;(ii)joinder to provide protection for the rights of a party who would otherwise be adversely affected in law;(iii)joinder to prevent a likely course of proliferated litigation’.”

34.Applying the threshold set out above, we are satisfied that the superior court cannot be faulted for holding that the 4^th respondent should be joined in the proceedings as an interested party. The relationships between all the parties are yet to be conclusively determined since the impugned pronouncement herein was made in interlocutory applications.

35.Save to the limited extent that the judge erred in conclusively determining that the relationship between the 1^st respondent and the 3^rd respondent was strictly a management and service contract and that 3^rd respondent could not sublet the parking bay, this appeal is found to lack merit on all the remaining grounds and is dismissed. We therefore, make the following orders:i.The superior court’s conclusive findings on the relationship between the 1^st and 3^rd respondent be and are hereby expunged from the record.ii.The orders by the superior court are hereby upheld.iii.Costs of this appeal shall abide the outcome of the reference

DATED AND DELIVERED AT NAIROBI THIS 20^TH DAY OF DECEMBER, 2024P. O. KIAGE.....................................JUDGE OF APPEALALI- ARONI.....................................JUDGE OF APPEALL. ACHODE.....................................JUDGE OF APPEALI certify that this is a true copy of the originalSignedDEPUTY REGISTRAR

Date	Case	Court	Judges	Appeal outcome
20 December 2024	Lulu East Africa Limited v National Social Security Fund & 3 others (Civil Appeal 212 of 2018) [2024] KECA 1936 (KLR) (20 December 2024) (Judgment) This judgment	Court of Appeal	A Ali-Aroni, LA Achode, PO Kiage
14 February 2018	↳ National Social Security Fund v Sokomania Limited & 3 others [2018] KEELC 4553 (KLR)	Environment and Land Court
14 February 2018	↳ ELC Appeal No. 60 (B) of 2016	Environment and Land Court	SO Okong'o	Dismissed

Lulu East Africa Limited v National Social Security Fund & 3 others (Civil Appeal 212 of 2018) [2024] KECA 1936 (KLR) (20 December 2024) (Judgment)

Lulu East Africa Limited v National Social Security Fund & 3 others (Civil Appeal 212 of 2018) [2024] KECA 1936 (KLR) (20 December 2024) (Judgment)

Cited documents 1

Act 1

Documents citing this one 0