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Court of AppealDismissedCivil Appeal No. 158 of 2001· [2014] KECA 538 (KLR)

Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] KECA 538 (KLR)

Court of Appeal of Kenya
18 June 2014
AVAlnashir VisramMartha Karambu KoomeMartha KoomeJOJ. Otieno-Odek
3,745 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal ruled that a SACCO couldn't be forced to complete a land purchase after genuine financial frustration, but buyers can't blame problems they caused themselves.

What this practically means

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Executive summary

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This first appeal arose from the dismissal by the High Court at Meru (Tuiyot, J.) of the appellant's suit seeking specific performance, or alternatively damages, under a written agreement dated 3rd July, 2000 by which the 1st respondent agreed to purchase the appellant's Plot No. 21 in Maua Municipality for Kshs. 8,000,000, part of which was to be paid to the 2nd respondent to offset the appellant's outstanding charge. The 1st respondent repudiated the agreement before the effective date of performance, citing lack of finances caused by drought and crop failure, and relying on its members' resolution of 30th August, 2000 not to proceed. Before the Court of Appeal, counsel for the appellant conceded that only damages, not specific performance, were being pursued. The Court framed two issues: the validity and enforceability of the agreement, and whether the appeal had been withdrawn against the 2nd respondent. Applying established principles on consideration, the Court held that the parties exchanged future promises of value, so the consideration was executory and the agreement valid. On frustration, however, the Court agreed with the trial judge that the agreement was genuinely frustrated by lack of finances: the appellant did not prove that the 1st respondent's financial predicament was self-induced or attributable to its fault. As specific performance presupposes a valid and enforceable contract, the damages claim had no basis, and no evidence had been adduced to prove it. The appeal against the 2nd respondent had been withdrawn by notice filed on 3rd February, 2005 and marked withdrawn with no orders as to costs. The appeal was accordingly dismissed with costs to the 1st respondent, affirming the judgment of the High Court.

Key legal issues

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01

Validity and enforceability of the agreement dated 3rd July, 2000

Holding

The agreement was valid and supported by executory consideration, but it was discharged by frustration before the effective date of performance, and therefore could not be enforced through specific performance.

Reasoning

The court held that the parties exchanged promises for future acts, constituting valid executory consideration, with the members having authorized the transaction through resolutions. However, the doctrine of frustration, which must be narrowly applied and not founded on the act or election of the party invoking it, applied where the 1st respondent lacked finances due to drought and crop failure. The appellant did not prove the lack of finances was due to the 1st respondent's actions or omissions, so the frustration was not self-induced, discharging both parties from their unperformed promises.

p. 6
02

Whether the appeal was withdrawn against the 2nd respondent

Holding

The appeal against the 2nd respondent was withdrawn by notice filed on 3rd February, 2005, and the Court on 26th October, 2005 marked it as withdrawn with no orders as to costs.

Reasoning

Counsel for the 2nd respondent pointed out that a notice withdrawing the appeal against the 2nd respondent was filed by the appellant on 3rd February, 2005, so no appeal subsisted against the 2nd respondent. The record showed that on 26th October, 2005, pursuant to that notice, the Court marked the appeal against the 2nd respondent as withdrawn with no orders as to costs, and therefore nothing turned on the appeal against the 2nd respondent.

p. 6

Legal principles established

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  • On a first appeal from the High Court, the Court of Appeal must re-analyse and re-assess the evidence on record and reach its own conclusion, while making due allowance for the fact that it neither saw nor heard the witnesses.
  • A contracting party cannot rely on self-induced frustration; the defence of frustration must not be due to the act or election of the party seeking to rely on it, and the burden of proving fault lies on the party alleging it.
  • Where members of a co-operative society resolve through their general meetings to authorize its management to enter a transaction, the agreement is properly made; the supreme authority of a co-operative society is vested in the general meeting.

Court orders

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  1. 1.The appeal is dismissed with costs to the 1st respondent
  2. 2.The appeal against the 2nd respondent was previously marked as withdrawn with no orders as to costs

Authorities

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Legislation

  • Co-operative Societies Act, Chapter 490, Laws of KenyaSection 27(1)

Cases cited (4)

  • Selle -vs- Associated Motor Boat Co.
    [1968] EA 123
  • Wigan -vs- English and Scottish Law life Insurance Association
    (1909) I Ch 291
  • Davis Contractors LTD -vs- Farehum U.D.C
    (1956) A.C 696
  • Joseph Constantine Steamship Line Ltd. -vs- Imperial Smelting Corporation Ltd.
    (1942) AC 154
On appeal from
High Court of Kenya at Meru
H.C.C.C No. 85 of 2000
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (the judgment states it is a first appeal against the High Court decision)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] KECA 538 (KLR)", Case Analysis (2014). Civil Appeal No. 158 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/538/eng@2014-06-18

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