Naivas had been operating the supermarket with a clientele of about 2,000 shoppers daily until sometime in October 2019 when the government commenced construction of the Kiserian–Ngong town road, which passes next to the supermarket.
The road was excavated resulting in blocking access to the supermarket and caused it to lose business, forcing it to shut down the shop.
The supermarket chain says the lease agreement was frustrated by a lack of proper access to the business premises and the issue is whether it is entitled to terminate the lease or is liable to pay rent for the unexpired period.
Top retail chain Naivas Supermarket is seeking to be exempted from paying its former landlord in Ngong town rent amounting to Sh52.3 million after its business at the premises went down.
In the dispute that has since been referred to arbitration, Naivas Limited says its business was frustrated by the government’s decision to block an access path to the shopping mall.
The retailer says the landlord, Premier Home & Properties Limited, is to blame for constructing the building close to a road and without leaving a buffer zone for smooth access to the shop.
The retailer leased the building to operate a supermarket for 10 years from August 2012.
Naivas had been operating the supermarket with a clientele of about 2,000 shoppers daily until sometime in October 2019 when the government commenced construction of the Kiserian–Ngong town road, which passes next to the supermarket.
The road was excavated resulting in blocking access to the supermarket and caused it to lose business, forcing it to shut down the shop.
The supermarket chain says the lease agreement was frustrated by a lack of proper access to the business premises and the issue is whether it is entitled to terminate the lease or is liable to pay rent for the unexpired period amounting to Sh52,306,053.
“Blocking access to the premises affected the business and flow of customers, which is about 35 percent and attempt to engage the property dealer was futile.
“This left the shop with no choice but to close down,” the retailer’s representative, Evelyne Njeri Wanjau, told the High Court in Kajiado.
However, the property firm maintains that it is entitled to the rent. The firm says the supermarket requested a 10-year fixed term with no termination clause. The lease was to expire on July 31, 2022.
The company said the lease had been running smoothly until December 31, 2020, when the supermarket terminated it prematurely, adding that there had never been a dispute in respect to the lease or at all.
Its representative, Jane Wangui Maina, denied that the retailer had engaged the property firm over the issue.
She said the property firm had suffered a loss of Sh52.6 million due to the retailer’s premature termination of the lease.
In her view, the reason advanced for termination, namely, road rehabilitation, is neither provided for nor contemplated by the lease.
Judge Chacha Mwita referred the matter to arbitration after finding that the suit was filed in court in violation of a clause in the lease agreement, which required that a dispute between the parties should be referred to arbitration.
The judge said the clause in the lease is a valid agreement between the parties on disputes arising from the lease.
“I am satisfied that the matter raised in the pleadings is an issue that falls within the arbitration clause and one which should be referred to arbitration,” said Justice Mwita.
The judge directed the two parties to appoint an arbitrator within 30 days to determine the dispute and, in default, the president of the Law Society of Kenya should appoint one.
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