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Court of AppealDismissedCivil Appeal No. 154 of 2009· [2018] KECA 376 (KLR)

Delilah Kerubo Otiso v Ramesh Chander Ndingra [2018] KECA 376 (KLR)

Court of Appeal
31 July 2018
William OukoW. OukoRNR. N. NambuyeAMAsike Makhandia
5,188 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 confirmed that a seller who stalls a land deal, then hides behind the Land Control Act, must still pay Kshs 20 million in damages.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi (Ouko, P, Nambuye and Makhandia, JJ.A) against the judgment of Ojwang, J dated 7th October 2005 in H.C.C.C. No. 1930 of 1997. The parties entered into a sale agreement dated 24th November 1995 for schools and premises on agricultural land for Kshs. 10.5 million. The transaction was controlled and no Land Control Board consent was obtained, rendering it void under the Land Control Act. The trial Judge found the appellant in breach, declined specific performance for want of consent, and ordered a refund of Kshs. 2,886,107.40 with interest at 35%, general damages of Kshs. 20 million for breach of contract, and costs. The appellant argued that sections 6(1) and 7 of the Act confined the respondent's remedy to recovery of monies paid as a debt, that general damages were untenable, and that the 35% interest was void. The Court of Appeal identified four issues: breach, general damages, interest and costs. It held the appellant was clearly in breach, having become evasive and unavailable, failed to execute consent forms and never shown readiness to complete. It affirmed that although general damages are not normally recoverable for breach of contract, the appellant's oppressive, high-handed, outrageous conduct bordering on fraud brought the case within the recognised exceptions; refusing relief would have allowed him to benefit from his own mischief. The contractual 35% interest rate was enforceable, and costs properly followed the event. The appeal was dismissed in its entirety with costs to the respondent. The decision of the High Court was affirmed in full.

Key legal issues

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01

Whether the appellant was in breach of the sale agreement dated 24th November 1995

Holding

The appellant was clearly in breach; he became evasive and unavailable, failed to execute Land Control Board consent forms, and never demonstrated readiness and willingness to complete.

Reasoning

The Court found the material facts undisputed: the appellant received the deposit and further payments, was to furnish completion documents and sign consent forms, but disappeared and only re-emerged after the six-month consent period had expired. He offered no reasonable excuse and could not show he was ready, able and willing to complete. A finding of no breach would be preposterous.

p. 4
02

Whether general damages of Kshs. 20 million for breach of contract were tenable notwithstanding the transaction being void under the Land Control Act

Holding

The Judge was right to award general damages; the agreement encompassed commercial undertakings beyond land, and the appellant's oppressive, outrageous conduct bordering on fraud brought the case within the exceptions to the general rule against general damages for breach of contract.

Reasoning

The appellant argued that sections 6 and 7 of the Land Control Act limited the remedy to recovery of monies paid as a debt. The Court held the agreement was not all about land but included commercial undertakings, and applying general contract principles rather than annulling the agreement was just. Allowing the appellant to escape would sanction his unacceptable conduct and let him benefit from his own mischief; the respondent had mitigated his loss.

p. 5
03

Whether interest at 35% on the refund of Kshs. 2,886,107.40 was recoverable

Holding

The award of interest at 35% stands because the parties had agreed that rate in the sale agreement and the court could not re-write it.

Reasoning

The appellant contended that the interest clause formed part of a transaction void for all purposes under section 7 of the Land Control Act. The Court held that nothing turns on the contention: the rate was a term of the sale agreement which the court had no business interfering with beyond enforcing it.

p. 5
04

Whether the award of costs to the respondent should be disturbed

Holding

Costs follow the event; the successful respondent was properly awarded costs and there were no 'good reasons' to interfere with the trial court's discretion.

Reasoning

Relying on the general principle that costs follow the event unless the court orders otherwise for good reasons, and the Supreme Court's guidance that 'good reasons' are identified case by case, the Court found no exception apparent or advanced to justify interfering with the trial court's discretion.

p. 5

Legal principles established

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  • On a first appeal, the Court of Appeal must re-evaluate and re-appraise the evidence and reach its own conclusions, while making due allowance for not having seen or heard the witnesses.
  • Although general damages are not normally awarded for breach of contract, they are recoverable as an exception where the defaulting party's conduct is oppressive, high-handed, outrageous, insolent, vindictive or borders on fraud.
  • A party who deliberately frustrates a controlled transaction and then invokes the Land Control Act to escape liability cannot benefit from his own mischief; contractual liability in damages survives even where the transaction is void for want of Land Control Board consent.

Court orders

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  1. 1.Appeal dismissed in its entirety
  2. 2.Costs of the appeal to the respondent

Authorities

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Legislation

  • Land Control Act (Cap. 302)section 6(1)
  • Land Control Act (Cap. 302)section 7
  • Registered Land Act (now repealed)section 73
  • Court of Appeal Rulesrule 29(1)
  • Development and Use of Land (Planning) Regulations, 1961

Cases cited (14)

  • Kenya Ports Authority v Kuston (Kenya) Limited
    (2009) 2EA 212
  • Selle & Another v Associated Motor Boat Company Ltd & Others
    (1968) EA 123
  • Jivanji vs Sanyo Electrical Company Ltd
    (2003) KLR 425
  • Kariuki v Kariuki
    [1983] KLR 225
  • Richard Kamiri Gachwe Kahia v Edward Kamau Ng'ang'a
    Civil Appeal No. 16 of 2001
  • Rioki Estate Co. Ltd v Kinuthia Njoroge
    [1977] KLR 146
  • Marine Management Association & Another v National Maritime Authority
    [2012] 18 NWLR 504
  • Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited
    (2016) eKLR
  • Hadley v Baxendale
    (1854) 9 Exch. 341
  • Standard Chartered Bank Limited v Intercom Services Ltd & Others
    NRB Civil Appeal No. 37 of 2003 (2004) eKLR
  • Provincial Insurance Company EA Ltd v Mordekai Mwangi Nandwa
    (supra)
  • Joseph Ungadi Kodera vs Ebby Kangisha Kavai
    KSM C.A. No. 239 of 1997 (ur)
  • Attorney General v Halal Meat Products Limited
    (2016) eKLR
  • Jasbir Singh Rai & 3 Others vs Tarlochan Singh Rai & Others
    (2014) eKLR
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 1930 of 1997
Jurisdiction invoked
First appeal to the Court of Appeal under rule 29(1) of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (23)

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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, "Delilah Kerubo Otiso v Ramesh Chander Ndingra [2018] KECA 376 (KLR)", Case Analysis (2018). Civil Appeal No. 154 of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/376/eng@2018-07-31

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