| |
MUSTAFA, J A
[1] The respondent, Jubilee Insurance Company Limited (herein¬ after called
the Company) by a lease dated 31st January, 1955 leased to the appellant,
Rex Hotel Limited (hereinafter called Rex Hotel) a hotel building and
premises from 1st October, 1955 for a term of 10 years at a monthly rental
of Shs. 8,000/-.
[2] The lease contained this proviso ¬
"If the lessee shall be desirous of determining this lease at the end of
first five years of the aforesaid term and of such desire shall give to the
lessor three calendar months previous notice in writing then in such case at
the end of such five years the term hereby granted shall cease but subject
to the rights and remedies of the lessor for or in respect of any rent in
arrears or any breach of any of the lessee's covenants."
[3] On 12th September, 1963 a deed of variation was executed between the
Company and the Rex Hotel whereby it was mutually agreed that the term of 10
years created by the first lease "shall be and is hereby extended for a
further period to include up to 31st August, 1970".
[4] This deed of variation provided for the following matters¬:-
(a) An extension of the term
(b) A reduction of the monthly rent from Shs. 8,000/- per month to
Shs.6,200/-
(c) The payment by Rex Hotel of any increase in the amount of the existing
Municipal rates (1963)
(d) that the covenants and the conditions contained in the original lease
which were then applicable to the premises shall continue to be applicable.
[5] Before the expiry of the lease the Company gave the Rex Hotel a notice
in writing to the effect that the Company would require vacant possession of
the premises when the lease would expire on 31stAugust, 1970.
[6] The Rex Hotel refused to give the Company any such assurance and claimed
protection under the Landlord and Tenant (Shops, Hotels and Catering
Establishments) Act (Cap.301) (h0rcinafter called the Act).
[7] On or about 24th March 1970 the Company filed a suit against the Rex
Hotel in the High Court claiming
(a) a declaration that the demised premises were not subject to the
provisions of the Act, (b) a declaration that the company was entitled to
vacant possession of the premises on 31st August 1970. At the trial the
Company added verbal prayers for an order for possession of the premises and
for an order for mesne profits from 31st August, 1970 until the date of
possession, as when the case came to be heard the lease had already expired.
[8] The trial judge decreed the two declarations as prayed for as well as
the orders for possession and for mesne profits. From that judgment the Rex
Hotel has appealed to this Court, and the Company has cross-appealed. The
trial judge found that to discover the intention of the parties both the
lease and the deed of variation must be read together.
[9] He came to the conclusion that the deed of variation of 1963 was
intended to create an extension of the original lease and was not intended
to be a new lease. He concluded that the deed of variation extended the term
of the old lease subject to a reduced rent and to the Rex Hotel paying any
increased municipal rates and subject to such terms and conditions of the
original lease as were still applicable as on the date of the deed of
variation, that is, 12th September, 1963.
[10] It is true he said "the lease was not surrendered expressly or by
implication". I think what the trial judge meant was that the original lease
was at no time surrendered but was merely extended for a further period by
the deed of variation.
[11] Mr. Nazareth for the Rex Hotel submitted that the deed of variation had
created a new lease from the date of expiry of the original lease which was
1st October, 1965. In that event the new lease would be for a term of 4
years 11 months, from 1st October, 1965 to 31st August 1970.
[12] He said that the trial judge had found as a fact that the lease was not
surrendered expressly or by implication and this finding was not appealed.
He submitted, in view of this finding, that the new term could only commence
from 1st October, 1965, after the term of the original lease had expired. He
pointed out that the learned judge also said "In my opinion the lease and
deed of variation must be read together and their joint effect is that, as
from 12th September, 1963, the defendants obtained an extended term up to
31st August, 1970 at a reduced rent, subject to such terms and conditions”
[13] He submitted that if the trial judge had found that the new lease was
to take effect from the date of the deed of variation, that is 12th
September, 1963 then he was contradicting himself because he had also found
that the original lease had not been surrendered, and the new lease
therefore could only take effect after the original lease had expired.
[14] If there was a new lease and the new lease commenced from the 1st
October, 1965 then the new lease was only for a term of 4 years 11 months,
and the Rex Hotel would be protected as the lease would be a "controlled
tenancy" as defined in the Act.
[15] Section 2 of the Act, as amended, reads:-¬
“controlled tenancy” means a tenancy of a shop, hotel or catering
establishment ¬
(a) which has not been reduced into writing? or
(b) which has boon reduced into writing and which¬
is for a period not exceeding five years or
Contains provision for termination, otherwise than for breach of covenant,
within five years from the commencement thereof…"
[16] Mr. Nazareth submitted that if the new lease was for a period of less
than 5 years, then section 2(b)(i) applies. However if the lease was a
continuous one for 15 years then the original lease contained a provision
for termination otherwise than for breach of covenant within 5 years from
the commencement thereof.
[17] In that event he submitted that section 2(b)(ii) would apply because in
that case the original lease of 1965 has to be looked at and that lease
contained the clause for an option to terminate within the first 5 years.
Mr. Nazareth however conceded that the deed of variation effectively deleted
the option to terminate.
[18] Mr. Nazareth also submitted that the trial judge was wrong in making an
order for possession and for mesne profits. At the time when the plaint was
filed the Company could not have asked for an order of possession or for
mesne profits as that would clearly have been premature. Again the suit was
for declarations which are essentially discretionary remedies whereas a
prayer for possession is a remedy which can be claimed as of right provided
the facts are proved.
[19] Mr. Slade submitted that he had asked for the orders for possession and
for mesne profits as ancillary and consequential reliefs. The trial judge in
his judgment had dealt with this matter as if Mr. Slade had asked for an
amendment to the plaint. The trial judge said:-¬
"I therefore grant Mr. Slade's application and order that the plaint be and
is hereby amended accordingly."
[20] Mr. Slade never asked for any amendment] what he had asked for was in
the nature of consequential reliefs following on the declarations. Mr. Slade
invoked the provisions of Order 2 rule 7 and Order 7 rule 6 of the Civil
Procedure Rules.
[21] I am satisfied that the trial judge was in error in making the orders
for possession and for mesne profits when these remedies could not have been
claimed by the Company when the suit was filed as no cause of action would
have existed at that time.
[22] Nor can I understand how an order for possession could possibly be a
consequential or ancillary relief arising from a declaration that the
premises were not subject to the provisions of the Act, and that the Company
would be entitled to vacant possession at the expiry of the lease.
[23] I am of the view that the lease and the deed of variation have to be
read together and the combined meaning and effect of these two declarations
is that there was to be a continuation of the original lease but subject to
the variations and amendments in terms of the deed of variation, that is to
say, at a reduced rent, an obligation by the Hex Hotel to pay any increased
Municipal rates, and the deletion of the option of termination within the
first 5 years, such variations to take effect as from 12th September, 1963.
[24] The deed of variation did not in my view create a new lease either from
12th September, 1963 or from the expiry of the original lease, that is from
1st October, 1965. The effect of this deed of variation was merely to extend
the term of the old lease from 10 to 15 years subject to certain variations
as contained in the deed itself.
[25] The parties had stated what they intended, and meant what they said.
That being so, the suit premises would not be under a controlled tenancy
within the meaning of the Act as amended, as the lease was for a period
exceeding 5 years and did not contain any provision for termination
otherwise than for breach of covenant within 5 years from the commencement
of the lease, the option for termination having expressly been deleted by
the deed of variation in 1963.
[26] I will now briefly deal with the cross appeal. In construing section
2(b)(ii) of the Act the trial judge in acceding to the submission of Mr.
Slade held that the words "by the landlord" should be interporeted after the
word "termination" as he was of the view that these words were implied since
the purport of the Act was to protect the tenant.
[27] With respect I disagree. There is no ambiguity in the meaning or the
words in section (2)(b)(ii) of the Act and I can see no reason at all why a
literal interpretation should not be adopted.
[28] The word used there is termination", not “re-entry”, and termination
can apply with equal force to a tenant or a landlord. Mr. Slade in his
cross-appeal sou6ht to support the orders for possession and for mesne
profits as orders for consequential relief.
[29] He also submitted, as an alternative, that if a new lease was created
by the deed of variation, then it commenced as from 12th September, 1963 and
would be a new lease for about 7 years. He also submitted that the dead of
variation had expressly deleted the option to terminate and in any event the
said option had expired prior to the enactment of the Act or its amendment.
[30] In view of my finding that the lease was a continuous and unbroken
lease for a term of about 15 years, and that the words "by the landlord"
could not be interpolated "after the word "termination" in section 2(b )(ii)
of the Act, the cross-appeal substantially fails.
[31] I am of the view therefore that the trial judge was right in granting
the declarations namely
(1) that the demised premises were not subject to the provisions of the
Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (Cap.
301) as amended and
(2) That the Company was entitled to vacant possession of the demised
premises on 31st August, 1970.
[32] I am of the view that the trial judge was in error in granting the
company the "further reliefs", namely, the orders for possession and for
mesne profits.
[33] I would therefore amend the judgment and decree of the High Court by
deleting therefrom
(a) The order for possession of the demised premises
(b) The order for mesne profits as from 31st day of August, 1970 till the
date of possession.
[34] The appellant, Rex Hotel has partly succeeded in its appeal. I would
award half the costs of the appeal and the costs of the cross¬ appeal to the
appellant, Rex Hotel.
[35] As regards the costs in the High Court, I see no reason to disturb the
order made..
DUFFUS, P.
[36] I have had the advantage of reading the judgment of Mustafa, J.A. in
draft tenancy, as set out in the definition of a "controlled tenancy" in
section 2 of the Landlord and Tenant (Shops, Hotels and Catering
Establishments) Act, Cap. 301 (as amended by the 1970 Act) must refer to the
tenancy existing at the relevant date. The rele¬vant date here is the date
on which the suit was instituted, i.e. the 24th March 1970.
[37] I quote the relevant portions of section 2 "controlled tenancy" means a
tenancy of a shop, hotel or catering establishment
(a) Which has not been reduced into writing; or
(b) Which has been reduced into writing and which:-
(i) is for a period five years; or
(ii) Contains provision for termination, otherwise than for breach of
covenant, within five years from the commence¬ment thereof' "
[38] Therefore the tenancy in this case is the tenancy existing at the time
when the action was filed and also when the judgment was given. This tenancy
had been reduced into writing and the terms and conditions were those set
out in the deed of variation dated the 12th September, 1963, and in the
original lease dated 31st January, 1955.
[39] Mr. Nazareth has submitted that the deed of variation in fact created a
new lease for a term of under five years, running from the 1st October,
1965, until the 31st August, 1970. With respect, this cannot be correct.
[40] I agree that the deed of variation created a new agreement and a new
tenancy in accordance with the terms and conditions set out in that
variation. The parties intended to and, in fact, entered into a new tenancy
on these conditions. They agreed that the tenancy as from the 12th
September, 1963, was for a definite term extending from that date up to the
31st August, 1970, a period of nearly seven years.
[41] They also agreed on a new and reduced rental and other conditions. By
clause 3 of the deed of variation the parties specifically agreed
“It is hereby further mutually agreed between the parties hereto and
declared that all the Lessor's and Lessee’s covenants and conditions as
contained in the said Lease and the proviso for re-entry therein contained
and which are now applicable to the premises comprised therein shall
continue to be applicable to the demised premises as if the rent thereby
reserved has been only Shs. 6200/- (six thousand two hundred) per month and
the term extended to the 31st day of August, 1970.”
"It is in my view quite clear that the proviso to paragraph 4 (3) of the
1955 lease, giving an option to the lessee to determine the lease at the end
of five years, i.e. on the 30th September, 1960, would no longer apply to
the new agreement made on the 12th September, 1963, as the option no longer
existed.
[42] I therefore agree with Mustafa, J.A. that the tenancy, the subject of
this action, would not be a “controlled tenancy" within the meaning of the
Landlord and Tenant (Shops, Hotels and
Catering Establishments) Act.
[43] I also agree with Mustafa, J.A. for the reasons which he has set out in
his judgment, that the learned trial judge should not have made the orders
for possession and for mesne profits.
[44] The lease was still in force at the time the action was brought and the
tenant was still lawfully in possession and there could have been no
question at that time of having an order for possession made. The
plaintiff/respondent did not seek to amend the plaint at any time and the
judge was, with respect, in error when in the circumstances of this case, he
amended the plaint during the course of his judgment.
[45] The main purpose of the cross-appeal was to support the order for
possession and mesne profits as being such consequential relief as could be
included in the prayer "such further or other relief".
[46] I agree with Mustafa, J.A. that the learned judge was wrong to have
granted this relief either by way of amendment to the plaint or by way of
including this as consequential relief sought in the prayer to the plaint.
[47] The question of the interpretation of paragraph 2(b)(ii) of the
definition of "controlled tenancy" arose and the learned judge held that the
words “contains provision for termination" must be read as if the words "by
the landlord” were applied after the word "termination”. With respect, this
question does not arise in this hearing.
[48] As I have said, the tenancy in existence at the relevant time was
clearly for a period exceeding five years and the provision for the
termination of the tenancy within five years from the commence¬ment no
longer existed. It is therefore unnecessary to consider whether the
provision for termination only applied to the landlord and not to both
parties.
[49] There remains the question of costs. I agree with Mustafa, J.A. that
the appellant, having only succeeded in a part of his appeal should, in the
particular circumstances of this case, have only half the costs of the
appeal. I agree that the order for costs in the court below should remain.
[50] On the question of the cross-appeal I agree that the plaintiff has net
succeeded in the main purpose of his cross-appeal which was to support the
order for possession, and although I have agreed in part with grounds 2 and
3 of his cross-appeal, I agree that the appellant should have the costs of
the cross-appeal.
[51] As Law, J.A. also agrees the appeal is allowed in accordance with the
order set out in the judgment of Mustafa, J.A.
LAW, J. A
[52] I have had the advantage of reading in draft the judgment prepared by
Mustafa J.A. I agree with it in every respect, and can¬not usefully add
anything. I concur with the order proposed. |
|
