Ushago Diani Investment Limited v Jabeen Manan Abdulwahab [2018] KECA 244 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed courts enforce agreements as written — they cannot invent rent or land-transfer terms the parties never agreed on.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether there was an agreement between the parties that the respondent would transfer the suit land to the appellant
- 2.Whether the respondent was entitled to rent over the suit premises
Key legal issues
#Whether there was an agreement that the respondent would transfer the suit land to the appellant
No such agreement, written or oral, existed; the MEMARTS contained no term of transfer and the alleged minutes were not executed by the shareholders
The court, as first appellate court, re-evaluated the evidence. The Memorandum and Articles of Association contained no provision for transfer of the suit land. Minutes of the meeting of 11th August 2008 were not executed by any shareholder and could not verify the alleged agreement. Manfred, a co-shareholder allegedly in the same position, took back his parcel, casting doubt on the alleged common intention. The respondent's contemporaneous letter of 8th June 2009 disclaimed any transfer of plot 1463.
Whether the trial court could grant rent in the absence of any agreement on rent
The learned Judge erred; his role was confined to ascertaining and enforcing any agreement on rent, and there was none, so the award of Kshs.5,208,000 rent arrears was set aside
The court held that the Judge's function in contract is to enforce the parties' agreement, not to introduce fair terms. There was no written or admitted oral agreement on rent; the respondent's 'resulting tenancy' theory required an inference the Judge had no basis to make. Relying on Attorney General of Belize v Belize Telecom, the court held a court cannot improve upon an instrument to make it fairer, and set aside the rent award, dismissing the counter-claim.
Whether the doctrines of estoppel and constructive trust applied
They could not be considered, being raised for the first time on appeal without having been pleaded or addressed at trial
The appellant raised estoppel and constructive trust only on appeal. The court held that considering them would prejudice the respondent, who had no opportunity to tender countering evidence, and the trial court never addressed its mind to them. Citing Sarah Jelangat Siele and Galaxy Paints, the court reaffirmed that issues flow from the pleadings unless left to the court by the parties' conduct.
Whether the appellant proved fraud and misrepresentation
Fraud was not proved; the respondent's contemporaneous letter disclaiming the transfer corroborated her position
Applying the strict standard that fraud must be distinctly alleged and proved, the court found the respondent's 8th June 2009 letter to the auditor, which disavowed any agreement or intention to transfer plot 1463, corroborated her defence. Given the auditor's testimony that audited accounts may not have been circulated to all shareholders, the trial court rightly gave the respondent the benefit of doubt.
Whether the trial Judge breached the doctrine of stare decisis
The appellant did not demonstrate any disregard of precedent by the learned Judge
The appellant argued the Judge failed to apply binding Court of Appeal decisions but did not specify which decisions were ignored or how the facts aligned. The court, having reviewed the record, found no demonstration that the Judge disregarded the doctrine of precedent and stare decisis in reaching his findings.
Legal principles established
#- A court construing a contract has no power to introduce terms to make it fairer or more reasonable; it may only ascertain and enforce the parties' intention as expressed in the agreement
- A first appellate court will not ordinarily interfere with findings of fact by the trial court unless they are based on no evidence, on a misapprehension of it, or on wrong principles
- Issues for determination flow from the pleadings; a party may not raise a new issue (such as estoppel or constructive trust) for the first time on appeal where it would prejudice the other party
- Fraud must be specifically pleaded and distinctly proved; it is not allowable to leave fraud to be inferred from the facts
- Estoppel cannot override express statutory procedures; there can be no estoppel against a statute
Court orders
#- 1.Set aside the High Court's judgment dated 20th April, 2018 in regard to rent payable
- 2.Substituted that part of the judgment with an order dismissing both the appellant's suit and the respondent's counter-claim
- 3.Declared that the respondent is and was at times the owner of the suit property, but was not entitled to rent in accordance with the agreement of the parties
- 4.Directed each party to bear its own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C No. 157 of 2009
- Jurisdiction invoked
- First appellate jurisdiction over appeals from the High Court (Court of Appeal's appellate mandate; the judgment frames itself as 'the first appellate court in the matter')
Relief refused
#Rest of the appellant's appeal challenging the dismissal of its suit (transfer of Kwale/Diani Beach Block/1463, declarations, damages for fraud)
No agreement to transfer the suit land was proved; fraud was not distinctly proved; estoppel and constructive trust were raised for the first time on appeal
Respondent's counter-claim for rent arrears (upheld at Kshs.5,208,000 by the trial court)
There was no agreement on rent and the learned Judge had no basis to infer a resulting tenancy
Costs
Due to the partial success of the appeal we direct each party to bear its own costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Accordingly, we find that the appeal herein partially succeeds to the extent of the award granted with respect to rent. We hereby set aside the High Court’s judgment dated 20 th April, 2018 in regard to rent payable and substitute the same with an order dismissing both the appellant’s suit and the respondent’s counter-claim with no orders as to costs.
For the purposes of clarity, we hereby declare that the respondent is and was at times the owner of the suit property, but was not entitled to rent in accordance with the agreement of the parties.
Due to the partial success of the appeal we direct each party to bear its own costs.
The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute, or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means …
It is trite that parties are bound by their pleadings and the issues for determination in a suit generally flow from the pleadings. A court can only pronounce judgment on the issues arising from the pleadings or such issues as the parties have framed for the court’s determination.
estoppel cannot be used to circumvent Constitutional provisions and estoppel cannot override express statutory procedures; there can be no estoppel against a statute.
It is also settled law that fraudulent conduct must be distinctly alleged and as distinctly proved, and it is not allowable to leave fraud to be inferred from the facts.
Issues in the judgment
#The trial Judge's quoted ruling on rent refers to a commencement date of '15.12.2000' which is plainly inconsistent with the facts (business began in December 2007 and rent was fixed effective 1st January 2008); an apparent typographical error in the quoted trial court passage
The respondent is referred to interchangeably with the masculine and feminine pronoun in the judgment (e.g. 'Her position was that...' and 'her evidence' versus 'He reiterated that...' for counsel; also respondent named 'Abdulwahab' in the caption but 'Adulwahab' in the narration)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ushago Diani Investment Limited v Jabeen Manan Abdulwahab [2018] KECA 244 (KLR)", Case Analysis (2018). Civil Appeal No. 60 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/244/eng@2018-10-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.