Case No.:

AC-REV-3o9-1962

Court:

Court of Appeal

Issue No.:

1962

Principles

·  Landlord and Tenant—” Premises “—Rent Restriction Ordinance, ss. 4 and ii— Distinction between lease of “premises” and assignment of business—Latter not covered by Rent Restriction Ordinance, s. ii

A lease is for premises” within the meaning of Rent Restriction Ordinance t953, S. 4, and is therefore covered by Rent Restriction Ordinance. S. ii, when the agreement is ‘ essentially and predominantly one of tenancy of premises” and not “an assignment of the whole business “; this may be determined by evidence of the nature of “goodwill” transferred and by evidence of the equipment provided in the premises.

Judgment

(COURT OF APPEAL)

EL HAG HASSAN v. AHMED DAFA EL SEED

AC-REV-3o9-1962

Advocates: Abdalla el Hassan for defendant-applicant Mahgoub and Dafalla ... for plaintiff-respondent

Babiker Awadalla J. April 1, 1963: —This is an application for revision of the decision Of His Honour the Province Judge, Khartoum (Hashim,

Province Judge) setting aside the decree of the learned District Judge, Khartoum, in CS-84o-1962.

The case is one of eviction in which respondent, plaintiff in the suit, claimed recovery of possession of shop No. 2, Block 9, Industrial area, Khartoum town, registered on lease from the Government in the name of Mahmoud Mohamed All el Zayyat. It appears that respondent held the shop on tenancy from the registered owner but the point was never considered in the court below and it is not clear what the nature of the relationship between respondent and his lessor is and what are its terms.

Applicant, defendant in the suit, applied for dismissal of the case on the ground that the petition disclosed no ground for eviction under the Rent Restriction Ordinance, s.. ii. Without hearing any argument, the learned District Judge dismissed the case on the ground that the Rent Restriction Ordinance applied. Respondent applied for revision to His Honour the Province Judge and the latter, without hearing the other party, ruled that the Rent Restriction Ordinance did not apply to furnished shops and quoted, in support of his decision, this court’s judgment in Hussein Tanon v. Estate of Anastasios Agas, AC-REV-I68-I9 (1962) S.L.J.R. 22. It is against this decision that the present application is now being made. The case was ordered to be decided on written statements.

It is contended on behalf of applicant that Hussein Tanon v. Estate of Anastasios Agas, supra, did not decide that the whole of the Rent Restriction Ordinance was inapplicable but only that part of it was inapplicable which related to the fixing of the standard rent. On behalf of respondent it was pressed that the Ordinance is silent about furnished shops, and that therefore resort had to be made to precedents and that the case relied upon by His Honour the Province Judge clearly held that the Ordinance does not apply to furnished shops.

On order of this court, the tenancy agreement was produced and the following is a summary of its provisions:

Clause I: describes the subject-matter of the agreement as being the goodwill “of the place” and whatever equipment is found there but not the premises.

Clause 2: states that the rent is £S.26 payable in advance.

Clause3: provides for the duration of the agreement.

Clause4: provides for the mode of termination of the agreement.

Clause5: states that the tenant shall in no case stay in the place longer than was justified by the agreement.

Clause 6: provides for the carrying out by the tenant of minor repairs like “white-washing” at his own expense.

Clause 7: gives the owner the right to terminate the agreement in case of breach.

Clause 8: is a restrictive clause against competition with the owner’s business in the vicinity.

Despite what it says in clause (i) there is no doubt about it that the agreement includes a tenancy of the premises. In fact that parties seem to have taken it for granted that this is so and the suggestion that the agreement is not a tenancy agreement was not made on behalf of respondent in the court below.

It now remains to be considered whether the provisions of the Rent Restriction Ordinance are applicable to the case or otherwise. In this connection I would like to refer to two decisions by this court. The first one was Hussein Tanon v. Estate of Anastasios Agas, supra, and the second one is Ahmed Mohamed Abbashar v. El Hadi El Hag El Amin, AC-REV- (1960) S.L.J.R. 8i. The second case was not referred to in the court below, nor was it cited by any of the learned advocates in their written statements to this court. I have referred to it because at first sight it may seem contradictory to some of the pronouncements made by Nur J. in the former case.

In Ahmed Mohamed Abbashar v. El Hadi El Hag El Amin, AC-REV- 367-1960, (1962) S.L.J.R. 81, there was a rent of a shop together with shelves owned by the landlord. It was contended that the provision by the landlord of the shelves took the case out of the operation of the Rent Restriction Ordinance. This court refused such a contention and said at page 2 of its judgment:

“It is not disputed that the shop was equipped with shelves and assuming that it could be said that the shelves are ‘furniture,’ Rent Restriction Ordinance, s. 16, only applied to dwelling-houses. Even in its application to dwelling-houses, it does not take them out of the operation of the Ordinance, but simply gives the court power to check abuses if in its opinion the letting out of the furniture was used as a cloak for contravening the provisions of the Ordinance.”

The agreement in Tanon’s case was not a tenancy of a furnished business place but was the tenancy of a restaurant known as “lassos Restaurant.” The Court of Appeal, in my view quite rightly, decided that the case was not covered by the Ordinance. The distinction between Tanon’s case and AC-REV-367- 1960, supra, is that the latter case is a tenancy of premises and no more. It is true that in that case the landlord provided shelves for the shop. but such a minor event can in no way change the essential character of the agreement’s being a tenancy agreement. It is in the light of that distinction that the examples given by Nur J. in his judgment at (1962) S.L.J.R. 22. 33, should he considered. Where, for example, a landlord instals machinery and tools in the premises and converts them to a workshop and thereafter lets them, it cannot be said that the case is governed by the Rent Restriction Ordinance, for the relation ship in such a case is not basically and predominantly one of landlord and tenant. The statement by Nur J. that the legislature intentionally excluded the application of the Rent Restriction Ordinance to furnished premises should therefore be read in the light of the distinction above referred to. The nature of the equipment provided together with all the attendant circumstances may be such as to alter the whole complexion of the relationship and take it quite outside the ambit of the Ordinance. That is what occurred in Tanon’s case, which was looked upon by the court as an assignment of the whole business for the duration of the agreement and not merely the transfer of possession of premises. Bearing this distinction in mind, let us deal with the case now in hand. The agreement, which no doubt includes a tenancy of premises, says that its subject-matter is the “goodwill” of the place and whatever equipment is found there. Whether, therefore, the tenancy of premises is the predominant element or whether it is merely an ancillary one would depend on what the parties meant by “goodwill” as well as upon evidence of the “equipment” provided in the premises.

For these reasons, I think that the court below was wrong in dismissing the plaint without a hearing. I am, therefore, of opinion that the case should go back for a rehearing with a view to deciding, in the light of the above, whether the agreement is or is not governed by the Ordinance. Only one issue need be framed: “Is the agreement between the parties essentially and predominantly one of tenancy of premises?”

This application is therefore allowed with costs and case referred back for rehearing in the light of the above.

M. A. Abu Rannat C.J. April 1, 1963: —l concur

• Court: M. A. Abu Rannat C.J. and B. Awadalla j.