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Court of AppealPartially AllowedCivil Appeal No. 56 of 2014· [2015] KECA 6 (KLR)

Billey Oluoch Okun Orinda v Ayub Muthee M'igweta & 2 others [2015] KECA 6 (KLR)

Court of Appeal of Kenya
28 October 2015
5,209 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 courts can only decide issues parties actually plead, overturning a frustration-based ruling and enforcing a 1990 land sale contract.

What this practically means

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Executive summary

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This is a first appeal to the Court of Appeal at Nyeri (Waki, Nambuye and Kiage, JJ.A) from the judgment of Kasango J. of the High Court at Meru dated 30 October 2009 in H.C.C.C. No. 72 of 1995. The dispute concerned the sale of plot NTIMA/IGOKI/4218 under a written agreement dated 20 November 1990. The purchaser paid Kshs 261,000, obtained Land Control Board consent, took possession and built substantial developments. After a boundary dispute reduced the plot by half an acre, he tendered a reduced balance, which the vendors rejected. The High Court held the contract was frustrated, ordered a bare refund of Kshs 261,000, and ordered the purchaser to give up possession. The Court of Appeal held that the trial judge erred in deciding the case on the doctrine of frustration, an issue never pleaded, evidenced or argued by either party, and that a court cannot base its decision on an unpleaded issue; the Odd Jobs exception was inapplicable. It further held that frustration, even if established, does not render a contract null and void but only discharges further performance. The Court set aside the finding of forceful possession, found a valid and enforceable agreement with title held in constructive trust, and granted specific performance in terms of prayer (a) of the plaint. It nonetheless upheld the respondents' counterclaim for the unpaid balance of Kshs 119,000 with 12% interest from 2 May 1995. The appeal was allowed only in part; each party was ordered to bear its own costs both here and below. The judgment binds subordinate courts on the rule that issues must be founded on pleadings and on the true effect of frustration.

Key legal issues

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01

Whether the trial court could decide the case on the unpleaded doctrine of frustration

Holding

It could not; frustration was never pleaded, evidenced or submitted on by any party, and the Odd Jobs exception did not apply

Reasoning

Both parties pleaded the contract - Samson seeking its completion through specific performance, the respondents alleging breach and counterclaiming for the balance. Neither party pleaded or led evidence on frustration, and counsel did not address it. The narrow exception permitting decision on unpleaded issues requires that the issue be left to the court at trial, which was not the case here. The trial judge therefore decided a case no party had brought, denying the parties fair adjudication.

p. 5
02

The legal effect of frustration on a contract

Holding

Frustration does not avoid the contract ab initio; it only terminates further performance, and restitution for payments and part performance must be considered

Reasoning

Relying on Fibrosa in the House of Lords, the court explained that each party must fulfil obligations up to the moment impossibility supervenes; the contract is not avoided by becoming impossible. Thus, even if frustration were established, facts relating to payments made by the purchaser and developments made pursuant to the contract ought to have been considered and enforced as part performance. The trial court's order of a bare refund was therefore an erroneous statement of the doctrine.

p. 6
03

Whether the appellant was entitled to specific performance

Holding

Yes; there was a valid, binding and enforceable agreement, possession was taken with the respondents' consent, and specific performance was the appropriate remedy

Reasoning

All ingredients of an enforceable contract were present and largely admitted: Land Control Board consent was obtained and part of the price paid. The respondents' own counterclaim pleaded acquiescence to the building, contradicting the claim of forceful entry; the finding of forceful possession was against the weight of evidence and was set aside. Given the appellant's 20 years of possession and legitimate developments, the respondents held title in constructive trust and specific performance was granted.

p. 7
04

Whether the respondents' counterclaim was proved

Holding

It was upheld; the balance of the purchase price of Kshs 119,000 remained unpaid and was awarded with interest at 12% from filing of the counterclaim

Reasoning

The court found it clear that the full balance of the purchase price was never paid. The respondents had pleaded a counterclaim for the balance plus interest, which the trial court had not addressed. The Court of Appeal entered judgment for the sum with interest at court rates of 12% from the date of filing the counterclaim on 2nd May 1995 until payment in full.

p. 8

Legal principles established

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  • A court can only lawfully determine issues that are specifically pleaded and proved; it cannot base its decision on an unpleaded issue, subject to the Odd Jobs v Mubia exception where the issue is left to the court by the parties at trial.
  • Frustration, even where pleaded and proved, does not render a contract null and void; it merely discharges further performance and releases the parties from future obligations.
  • A party relying on a frustrating event must clearly plead the particular facts constituting the frustration in its pleadings; merely mentioning it in passing is insufficient.
  • On a first appeal, the appellate court must re-evaluate and re-assess the evidence and draw its own conclusions, while allowing for the trial court's advantage in seeing and hearing the witnesses.

Court orders

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  1. 1.The trial court's finding that the appellant forcefully took possession of the plot is set aside
  2. 2.The trial court's finding that the contract was frustrated is overturned; specific performance granted in terms of prayer (a) of the plaint
  3. 3.The respondents' title to the plot is held in constructive trust for the appellant from the date of the agreement and entry into possession
  4. 4.Judgment entered for the respondents on their counterclaim for Kshs 119,000 with interest at court rates of 12% from 2nd May 1995 until payment in full
  5. 5.Each party to bear its own costs both in the appeal and in the court below

Authorities

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Legislation

  • Law of Contract ActSection 2

Cases cited (8)

  • Selle v. Associated Motor Boat Company
    [1968] E.A. 123
  • Gandy v. Caspair Air Charters Ltd.
    (1956) 23 EACA 139
  • Malawi Railways Ltd vs. Nyasulu
    [1998] MWSC 3
  • Kenya Commercial Finance Co. Ltd –vs- Kipng'eno Arap Ngeny & Another
    Civil Appeal No. 100 of 2001
  • Odd Jobs –vs- Mubia
    [1970] EA 476
  • Vyas Industries –vs- Diocese of Meru
    [1982] KLR 114
  • Fibrosa Spolka Akcyjna –vs- Fairbairn Lawson Combe Barbour Ltd.
    (1942) 2 ALL ER 122
  • Reliable Electrical Engineers (K) Ltd vs. Mantrac Kenya Limited
    (2006) eKLR
On appeal from
High Court of Kenya at Meru
H.C.C.C. No. 72 of 1995
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (statutory first appeal from the High Court); no specific constitutional or statutory article is cited in the judgment

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, "Billey Oluoch Okun Orinda v Ayub Muthee M'igweta & 2 others [2015] KECA 6 (KLR)", Case Analysis (2015). Civil Appeal No. 56 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/6/eng@2015-10-28

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