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Court of AppealPartially AllowedCivil Appeal No. 48 of 2014· [2015] KECA 278 (KLR)

Abdul Jalil Yafai v Farid Jalil Mohammed [2015] KECA 278 (KLR)

Court of Appeal of Kenya
30 October 2015
ASAsike-MakhandiaWilliam OukoW. OukoKMK. M'Inoti
5,018 words in judgment
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The bottom line

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The Court of Appeal confirmed that a written agreement cannot be amended by one side alone, and that courts will enforce contracts as written unless fraud is proven.

What this practically means

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Executive summary

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The appellant, settled in the United Kingdom, agreed in 2004 with his nephew, the respondent, on a joint venture to develop a fishing club and cottages at Watamu, remitting Kshs. 9,000,000 from a Lloyds TSB loan into a joint account operated solely by the respondent. The relationship soured when the appellant found parcel Kilifi/Jimba/992 registered jointly in their names and charged to a bank without his consent. A written agreement of 18th December 2008 provided for the sale of property and equal sharing of proceeds after deducting the UK loan, but was later unilaterally amended by the parties' advocate to insert parcel No. 992. Both parties sued; the suits were consolidated and Angote J. held the amendment inconsequential, yet ordered both parcels sold with proceeds shared equally. The Court of Appeal, as a first appellate court, re-evaluated the evidence afresh. It agreed the unilateral amendment was ineffectual but held the learned Judge's orders circuitous: having struck out parcel No. 992 from the agreement he nonetheless restored it to sale. Construing the original agreement holistically, the court found the parties intended parcel No. 992, the only registered parcel with the cottage developments, as the subject matter. The respondent's conduct amounted to material misrepresentation rather than outright fraud: he supplied the unregistered parcel No. 374 knowing it was unsuitable, diverted building materials and mortgaged parcel No. 992 without consent. The UK loan repayment schedule was an incorporated term binding the respondent. The appeal was allowed, the High Court orders substituted, and each party ordered to bear its own costs both here and below.

Key legal issues

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01

Subject matter of the agreement of 18th December 2008

Holding

The parties intended parcel No. 992, the registered parcel, to be the subject matter of the agreement, not the unregistered parcel No. 374

Reasoning

The court construed the agreement holistically and from the parties' conduct: the terms 'registered proprietors', 'developments thereon' and 'encumbrance' could only apply to the registered parcel No. 992. The cottages were on parcel No. 992; parcel No. 374 had only a wall and was unregistered and subject of a tribunal decree in the respondent's favour. The respondent himself sought sale of No. 992 in his originating summons and offered it to a purchaser.

p. 6
02

Validity of the unilateral amendment inserting parcel No. 992

Holding

The amendment was improperly and ineffectually effected because the respondent was not consulted, but this did not defeat the appellant's case since the original agreement already concerned parcel No. 992

Reasoning

The trial court held the amendment inconsequential because changes to a written agreement can only be made by the parties who signed it. The Court of Appeal agreed the amendment was improper as it was made without the respondent's concurrence. However, on fresh evaluation of the evidence, the original agreement as construed concerned parcel No. 992 anyway, so the trial court's consequential orders restoring No. 992 to sale were without foundation and were reversed.

p. 3
03

Respondent's conduct: fraud or material misrepresentation

Holding

The respondent's conduct did not amount to outright fraud but constituted material misrepresentation that led to the collapse of the project

Reasoning

The respondent deliberately supplied the unregistered parcel No. 374 into the agreement knowing it was unsuitable, diverted building materials to his own warehouse, mortgaged parcel No. 992 without the appellant's consent, and failed to account for Kshs. 9,000,000 received. Given his purchase price of Kshs. 800,000, it would be unconscionable to let him keep the parcel with the developments and the unaccounted funds.

p. 7
04

The UK loan as a term of the agreement

Holding

The respondent was bound by the loan repayment schedule annexed to the agreement; proceeds of the sale of parcel No. 992 must first settle the UK loan

Reasoning

Although the respondent claimed not to be privy to the Lloyds TSB loan, the court was satisfied he was subsequently made aware. The loan repayment schedule was expressly annexed to the agreement, incorporating it as a term that the loan be settled before the balance of proceeds could be shared. The respondent's objection to that term was without basis since he signed the agreement.

p. 7

Legal principles established

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  • An agreement involving parties cannot be amended in the absence and without the concurrence of one of the parties; a unilateral amendment by an advocate is inconsequential
  • Parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved; courts cannot rewrite contracts
  • On a first appeal, the Court of Appeal evaluates afresh the evidence on record to draw its own independent conclusions while bearing in mind it did not see or hear the witnesses
  • Courts interpret contracts to find the true intention of the parties from the perspective of an objective observer; where there is an obvious gap, terms may be implied without rewriting the agreement

Court orders

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  1. 1.Parcel No. Kilifi/Jimba/992 to be valued by a valuer mutually appointed by the two parties within 30 days from the date of the judgment
  2. 2.The value of the developments on parcel No. 374 including the perimeter wall and any other structures on the land to be similarly determined and paid over to the appellant
  3. 3.Should any party fail to participate in the appointment of a valuer, the party who is ready will be at liberty to appoint one and the other party shall be bound by the valuation
  4. 4.Once valued, parcel No. Kilifi/Jimba/992 shall be sold and the proceeds shall first be applied in settling the loan granted to the appellant by Lloyds TSB, United Kingdom
  5. 5.The balance, if any, from the proceeds of that sale shall be shared equally by the parties
  6. 6.The cost of valuation of the parcels shall be borne equally by both parties
  7. 7.Each party to bear his own costs of the appeal and those in the High Court

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 60
  • Registered Land Act (repealed)sections 3 and 27
  • Land Registration Actsections 25 and 26(1)
  • Land Disputes Tribunals Act (repealed)section 7
  • Civil Procedure RulesOrder 3 Rule 2(c)

Cases cited (2)

  • Selle vs. Associated Motor Boat Co. Ltd
    [1968] EA 123
  • National Bank of Kenya Ltd. v. Pipleplastic Samkolit (K) ltd & Another
    [2002] EA 503
On appeal from
High Court of Kenya at Nairobi
Civil Suit No. 15 of 2013 and ELC No. 14B of 2013 (Consolidated)
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (Constitution Article 164) against the judgment of the High Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (10)

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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, "Abdul Jalil Yafai v Farid Jalil Mohammed [2015] KECA 278 (KLR)", Case Analysis (2015). Civil Appeal No. 48 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/278/eng@2015-10-30

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