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Court of AppealDismissedCivil Appeal No. 388 of 2017· [2019] KECA 203 (KLR)

Tiara Properties Limited v Shadrack Musyoka [2019] KECA 203 (KLR)

Court of Appeal
8 November 2019
3,266 words in judgment
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The bottom line

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Kenya's Court of Appeal refused to throw out a property buyer's lawsuit, confirming that weak-looking contracts still deserve a full trial before dismissal.

What this practically means

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Executive summary

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The appellant, Tiara Properties Limited, appealed against a ruling of the Environment and Land Court at Nairobi (Obaga, J) dated 10th May 2017 declining to strike out a plaint by the respondent, Shadrack Musyoka, who sought specific performance of a letter of offer for the purchase of office suit 2A II on L.R No. 3734/619 off plan for Kshs 8,000,000, or alternatively special damages of Kshs 11,176,000 for loss of bargain, having paid a 20% deposit. The appellant moved under Order 2 Rule 15(1)(a) and (d) of the Civil Procedure Rules, arguing that the letter of offer, being 'subject to contract' and unattested, was unenforceable under section 3(3) of the Law of Contract Act and that the suit was an abuse of process. The Court of Appeal (Ouko (P), Okwengu and Sichale, JJ.A) dismissed the appeal. Applying the Mbogo v Shah test, it held the learned Judge properly exercised his discretion: the plaint raised triable issues identifiable from the pleadings, and no evidence is admissible on a Rule 15(1)(a) application. The Court distinguished Kukal Properties and Doris Morgan as cases decided on full evidence, holding that whether the letter of offer created a binding contract separate from the contemplated formal sale contract could not be determined at the interlocutory stage without evidence. The plaint was not an abuse of process since it also carried an alternative, non-groundless damages claim. The appeal was dismissed with costs.

Key legal issues

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01

Appellate interference with exercise of discretion

Holding

The Court declined to interfere with the ELC Judge's discretion in refusing to strike out the plaint, as the Judge properly identified triable issues from the pleadings.

Reasoning

The Court applied the classic Mbogo v Shah test: interference is warranted only where the judge misdirected himself and so reached a wrong decision, or where it is manifest he was clearly wrong. The Judge correctly confined himself to the pleadings, identified triable issues on the letter of offer and the deposit, and appropriately refrained from addressing the merits at the interlocutory stage. No misdirection was shown.

p. 4
02

Scope of evidence on a strike-out application under Order 2 Rule 15(1)(a)

Holding

Where the ground is failure to disclose a reasonable cause of action, the court must be guided by the pleadings only; evidence by affidavit is admissible only on the abuse-of-process ground under Rule 15(1)(d).

Reasoning

Rule 15(2) prohibits evidence on a Rule 15(1)(a) application. The appellant sought the benefit of both sub-rules by raising maintainability under section 3(3) of the Law of Contract Act through an affidavit. The Court held that the letter of offer, containing terms such as a booking fee, balance on completion and stamp duty, raised issues requiring evidence; the plaint could not be condemned on the pleadings alone.

p. 3
03

Whether the plaint was an abuse of process given section 3(3) of the Law of Contract Act

Holding

The plaint was not an abuse of process; the letter of offer question was raised prematurely at the interlocutory stage and the plaint included an alternative claim for damages for loss of bargain which was not groundless.

Reasoning

The Court held the question whether the letter of offer, though marked 'subject to contract', created a binding contract separate from a contract for the sale of land required evidence and could not be resolved on a strike-out. Further, the plaint's alternative prayer for loss of bargain was independent of specific performance and not groundless, so the suit facilitated the pursuit of justice rather than abusing it.

p. 4

Legal principles established

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  • An appellate court will not interfere with the exercise of discretion by a judge of the superior court unless the judge misdirected himself in some matter and thereby arrived at a wrong decision, or it is manifest from the case as a whole that the judge was clearly wrong in the exercise of his discretion and there has been misjustice.
  • On an application to strike out a plaint under Order 2 Rule 15(1)(a) for not disclosing a reasonable cause of action, no evidence is admissible; the court is confined to the pleadings and should not embark on the merits.
  • No suit ought to be summarily dismissed unless it is so hopeless that it plainly and obviously discloses no reasonable cause of action and is beyond redemption by amendment.
  • Whether a letter of offer marked 'subject to contract' is capable of creating a binding contract separate from the contemplated formal contract for sale of land cannot be decided summarily at the interlocutory stage without full evidence.

Court orders

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  1. 1.The appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Civil Procedure RulesOrder 2 Rule 15(1)(a)
  • Civil Procedure RulesOrder 2 Rule 15(1)(d)
  • Civil Procedure RulesOrder 2 Rule 15(2)
  • Law of Contract Act, Cap 23Section 3 (including section 3(3))
  • Land Act 2012Section 38

Cases cited (6)

  • Mbogo vs. Shah
    [1968] EA 93
  • D.T. Dobie & Company (Kenya) Ltd vs. Muchina & Another
  • Kukal Properties Development Ltd vs. Tafazzal H. Maloo & 3 Others
    [1993] eKLR
  • Doris Morgan vs. Stubenitsky
    [1977] eKLR
  • Mumias Sugar Company Limited vs. Freight Forwarders (K) Limited
    [2005] eKLR
  • Crescent Construction Co. Ltd vs Delphis Bank Ltd
    [2007] eKLR
On appeal from
Environment and Land Court at Nairobi
ELC No. 660 of 2015
Jurisdiction invoked
First appeal to the Court of Appeal against a ruling of the Environment and Land Court (not a certification appeal); appellate jurisdiction under the Court of Appeal Act and Article 164 of the Constitution

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Tiara Properties Limited v Shadrack Musyoka [2019] KECA 203 (KLR)", Case Analysis (2019). Civil Appeal No. 388 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/203/eng@2019-11-08

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