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Court of AppealPartially AllowedCivil Appeal No 68 of 1983

SAPRA STUDIO V KENYA NATIONAL PROPERTIES LIMITED [1985] KECA 123 (KLR)

Court of Appeal
25 April 1985
12,738 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~51 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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Sapra Studio, a sub-tenant of Kenya National Properties Limited, negotiated a direct lease effective after the head lease to Kenya Cold Storage (1964) Ltd was to expire on November 7, 1975. Todd J later declared the head tenancy to be a controlled tenancy under the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (cap 301), so it did not end on that date. Brar J held the direct-tenancy agreement void for mutual mistake of fact, dismissed Sapra's suit and gave judgment on the landlord's counterclaim. The Court of Appeal (Hancox JA writing the leading judgment, with concurring judgments from Nyarangi JA and Chesoni Ag JA) allowed the appeal on the ground that the mistake was one of law: the parties knew the lease expired on November 7, 1975 but misapprehended the effect of cap 301, and no relief lies for a mistake of law. The agreement was therefore not avoided and was, at most, voidable. The judgment of Brar J was set aside and judgment given for Sapra on the claim. On the landlord's cross-appeal on quantum, the court rejected loss-of-bargain damages for the thirty-five months assessed below, holding they were not within the contemplation of the parties, and substituted a reduced award (Hancox JA: Kshs 48,750; Chesoni Ag JA: Kshs 75,684 on a rental-value measure). Costs of the appeal and three quarters of the High Court costs went to the appellant; cross-appeal costs to the respondent. In a later ruling (June 12, 1985, with Platt Ag JA replacing the resigned Chesoni Ag JA), the court held it lacked jurisdiction to correct its omission to deal with interest on the damages.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether there was a common or mutual mistake which entitled Kenya National to say there was no contract at all between Sapra and themselves
  2. 2.Whether the distinction between the terms 'lease' and 'tenancy' affected the analysis
  3. 3.Whether the mistake, if any, was one of fact or one of law
  4. 4.Whether any condition precedent to the agreement was waived
  5. 5.What damages the appellant was entitled to on the cross-appeal, including whether the rule in Bain v Fothergill applied
  6. 6.Whether the reconstituted court could correct the omission to deal with interest under the slip rule or rehear the matter de novo

Key legal issues

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01

Mutual mistake of fact versus mistake of law

Holding

The mistake of both parties was as to the effect of the Landlord and Tenant (Shops, Hotels and Catering Establishments) Act (cap 301) on the head tenancy, i.e. a mistake of law, so the agreement for a direct tenancy was not avoided and remained enforceable.

Reasoning

The parties knew the lease would expire on November 7, 1975 and it did; what they misapprehended was the statutory protection that continued the tenancy under cap 301. Halsbury and Jenkins LJ's dissent in Solle v Butcher show that ignorance of the effect of a public statute is a mistake of law for which no relief lies. The trial judge misapprehended Solle v Butcher in holding the contract void for a mistake of fact.

p. 6
02

Distinction between 'lease' and 'tenancy'

Holding

The terms are distinct but the question was not determinative: whichever term was used, neither party was under any misapprehension about the subsisting relationship between Kenya National and Kenya Cold Storage, and Todd J's judgment was merely declaratory.

Reasoning

The court examined dictionary definitions and section 2 of the Act. Chesoni Ag JA held the Act does not allow interchangeability of the terms, but Hancox JA held it mattered not which term was used since the conduct of the parties showed they contemplated the termination of the whole relationship. Todd J's declaration did not change the actual state of affairs.

p. 4
03

Measure of damages for failure to complete an agreement for lease

Holding

The rule in Bain v Fothergill does not apply because the failure was not due to defective title but to a mistake of law and a statutory impediment; damages were assessed on the rent paid, advocates' costs incurred, and nominal damages.

Reasoning

Hancox JA distinguished the defective-title cases and applied Hadley v Baxendale contemplation to reject loss-of-bargain damages. Chesoni Ag JA, dissenting on quantum, applied the normal measure of rental value less contractual rent with a mitigation reduction from April 1976. Both agreed the trial judge's notional figure of Kshs 207,200 could not stand.

p. 11
04

Slip rule jurisdiction of a reconstituted appellate court

Holding

Although the omission of interest was an accidental slip or omission correctable under rule 35 before perfection, neither the remaining members of the original court nor the reconstituted court had jurisdiction to correct it or to rehear the matter de novo.

Reasoning

The authorities show courts have inherent power to recall a judgment before perfection by formal order; the omission of interest was an accidental omission, not a clerical error. But because Chesoni Ag JA had ceased to hold office, the court that gave judgment could no longer exist, and interest could not be argued in isolation from damages. Raniga v Jivraj was not followed on amendment after the formal order.

p. 16

Legal principles established

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  • Relief will not be granted on the ground of a mistake of law as distinguished from a mistake of fact; a contract affected only by a mutual mistake of law is not void.
  • Even a mistake as to a fundamental fact renders a contract voidable, not void, so it remains valid until set aside on some equitable ground.
  • The restrictive rule in Bain v Fothergill on damages for failure to complete is confined to defective title cases and does not extend to a statutory impediment or a mistake of law.
  • A court may correct an accidental slip or omission in its judgment under the slip rule only before the decision is perfected and only by the same constitution of the court; a reconstituted court cannot do so.
  • The terms 'lease' and 'tenancy' are distinct: a lease is the instrument or agreement which gives rise to the relationship of landlord and tenant, while a tenancy is the interest or possession held under it.

Court orders

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  1. 1.Appeal allowed on ground 2 of the memorandum of appeal (mistake was one of law; the agreement was not avoided)
  2. 2.Judgment of Brar J dismissing the action and giving judgment on the counterclaim set aside; judgment given for the appellants on the claim
  3. 3.Cross-appeal allowed to the extent of substituting for the judge's notional figure the damages awarded by the court
  4. 4.Costs of the appeal and three quarters of the costs of the proceedings in the High Court awarded to the appellant
  5. 5.Costs of the cross-appeal awarded to the respondents
  6. 6.On the ruling of June 12, 1985: no order as to costs, the matter having been raised by the court of its own motion

The bench

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Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.

HA
majority

Wrote the judgment

Delivered the leading judgment allowing the appeal on the ground that the mistake was one of law, not fact, so the agreement was not avoided; on the cross-appeal he restricted damages to a refund of Kshs 27,000 rent, Kshs 19,750 advocate's costs and Kshs 2,000 nominal damages (Kshs 48,750 total). He also delivered the subsequent ruling holding that the reconstituted court had no jurisdiction to correct the omission of interest.

In my judgment therefore ground 2 of the memorandum of appeal, that the mistake was one of law, is entitled to succeed and the agreement for the future tenancy was not avoided as the respondents claimed.p. 6
majority
CH
ChesoniAg JA
partial dissent

Wrote the judgment

Agreed that the appeal should be allowed on the ground that the mistake was one of law, but departed from Hancox JA on quantum: applying the normal measure of damages (rental value less contractual rent) with a reduction for failure to mitigate, he would substitute Kshs 75,684 rather than Kshs 48,750, while agreeing on costs.

I would, for the reasons stated, allow the appeal, set aside the judgment of Brar, J and give judgment for the appellant on the claim. Like Hancox, JA, I would too allow the cross-appeal to the extent of substituting Kshs 75,684 for the learned judge's notional figure.p. 13
PL
PlattAg JA
concurring

Wrote the judgment

In the ruling of June 12, 1985, Platt Ag JA agreed that the court which omitted the issue of interest would have had jurisdiction under rule 35(1), but since the court that heard the appeal could no longer be reconstituted, the question must be answered against the appellants; he agreed on costs.

I have no doubt that, but for the resignation of one of the members of the court which accidentally omitted to consider the issue of interest, the court would have had jurisdiction under rule 35(1) to correct the omissionp. 16
On appeal from
High Court at Nairobi
High Court Civil Case No 539 of 1980
Jurisdiction invoked
Appellate jurisdiction of the Court of Appeal under the Appellate Jurisdiction Act (cap 9), proviso to section 5(3) referred to

Relief refused

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Damages at the difference between Kshs 10,750 and Kshs 5,400 per month for thirty-five months as assessed by the trial judge

Such loss could not reasonably have been supposed to be in the contemplation of both parties at the time of the contract under Hadley v Baxendale; the case fell within or was analogous to the restrictive rule in Bain v Fothergill and both parties bore a share of responsibility

p. 11

Interest on the damages

The reconstituted court had no jurisdiction under the slip rule to correct the omission, and the matter could not be reheard de novo once a member of the original court had ceased to hold office

p. 15

Costs

Costs of the appeal and three quarters of the costs of the proceedings in the High Court to the appellant; costs of the cross-appeal to the respondents; no order as to costs on the ruling of June 12, 1985.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In my judgment therefore ground 2 of the memorandum of appeal, that the mistake was one of law, is entitled to succeed and the agreement for the future tenancy was not avoided as the respondents claimed.
p. 6Mistake of law does not avoid a contract
I would therefore set aside the judgment of Brar J dismissing the action with costs and giving judgment to the respondents and former defendants on their counterclaim. I would give judgment for the appellants on the claim.
p. 7Disposition – judgment below set aside
I would award the costs of the appeal and three quarters of the costs of the proceedings in the High Court to the appellant. I would award the costs of the cross-appeal to the respondents.
p. 11Final orders – costs
Accordingly, while in my view the slip rule could have been invoked in this case (so as to deal with the question of interest) by the same court before the decision had been perfected (for I do not , with respect agree with the decision in Raniga v Jivraj in this respect) neither the remaining two members, nor the three members constituting the present court, have any jurisdiction to do so now.
p. 15Final orders on the ruling – no jurisdiction to award interest
No relief is available to a plaintiff on the ground of a mistake in law.
p. 12Mistake of law – no relief
The normal measure of damages for cases like this one which fall outside the Bain v Fothergill rule is the rental value of the premises less the contractual rent reserved by the lease
p. 13Measure of damages (Chesoni Ag JA)

Issues in the judgment

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material

The two judges differ on the substituted damages figure, and the judgment does not state which figure prevailed in the formal order: Hancox JA totals Kshs 48,750 while Chesoni Ag JA substitutes Kshs 75,684.

minor

Chesoni Ag JA's separate judgment states the nominal damages of Kshs 2,000 should be paid to 'the respondents' where Hancox JA awarded them to the appellant, and describes the breach as 'voluntary' where Hancox JA described it as 'involuntary'.

minor

The advocate's costs figure appears as Kshs 19,950 in the narrative of the trial judge's assessment but as Kshs 19,750 in the damages computation.

minor

The Chesoni Ag JA damages computation is internally inconsistent: it lists '20½ months at Kshs 1,868.75' but the stated result for that line is Kshs 53,259.40, which does not correspond to the figures given.

minor

Bain v Fothergill is cited with differing citations in the judgment ([1874] LR 7 HL 200 and [1874] LR HL 158).

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "SAPRA STUDIO V KENYA NATIONAL PROPERTIES LIMITED [1985] KECA 123 (KLR)", Case Analysis (1985). Civil Appeal No 68 of 1983. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1985/123/eng@1985-04-25

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.