Edward Mugambi v Jason Mathiu [2007] KECA 330 (KLR)

Relying on Hodgin's Law of Contract in East Africa, the court distinguished conditions from warranties: breach of a condition goes to the root of the contract and discharges it. Non-payment of the consideration was such a breach. The respondent elected to rescind by notice and sue for eviction; the party in default could not dictate that the respondent claim only the unpaid balance. The court found the evidence that the balance remained unpaid overwhelming, noting the respondent had returned the Peugeot 504 to the appellant, who resold it.

Although the transaction was contractual, the appellant gained possession of the respondent's land under the contract and remained in possession when suit was filed. Had his possession continued for twelve years he might have claimed adverse possession. The claim was thus one to recover land, governed by section 7, and whether the right of action accrued in 1982 or 1986, twelve years had not elapsed by 23rd September, 1992. The limitation defence was rightly rejected by both courts below.

The Magistrate had accepted, and the High Court had confirmed, credible and overwhelming evidence that only Kshs.17,000/- was paid and that the respondent returned the vehicle to the appellant. The court held the two courts below were perfectly entitled to hold as they did on fundamental breach and, being satisfied they reached a just decision on the evidence and the law, declined to interfere and dismissed the appeal.

The appellant had received Kshs.17,000/- as part of the purchase price but had been in occupation of the land since 1981, using it and deriving benefit from that user. The Magistrate's refusal to award mesne profits balanced the equities, making a refund order unjust. The respondent did not cross-appeal on mesne profits, and the court was satisfied the two courts below reached a just decision.