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Court of AppealDismissedCourt of Appeal at Nyeri (appeal number not stated in the judgment; originating suit Principal Magistrate's Court at Muranga Civil Case No. 491 of 2008)· [2024] KECA 802 (KLR)

Mawa Family Co Ltd v Industrial & Commercial Development Corporation & another (Civil Appeal 76 of 2017) [2024] KECA 802 (KLR)

Court of Appeal of Kenya
5 July 2024
3,841 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 property buyer who fails to pay on time loses any right to force the seller to complete the sale.

What this practically means

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Executive summary

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The appellant, Mawa Family Co Ltd, was the highest bidder at Kshs.300,000 at a public auction conducted by the Industrial & Commercial Development Corporation in exercise of its statutory power of sale over land in Makuyu, Muranga County. It paid a 25% deposit but failed to pay the balance of Kshs.225,000 within the 30 days stipulated in the memorandum of sale, which made time of the essence and provided for forfeiture of the deposit and resale on default. Nearly a year later the appellant sought an extension of time, which the chargee declined; the property had already been resold by auction to the 2nd respondent, who paid the full price of Kshs.400,000. The trial magistrate found for the appellant and ordered specific performance, but the High Court (Ngaah Jairus, J.) on consolidated appeals set aside that judgment and allowed the 2nd respondent's counter-claim. The appellant's second appeal to the Court of Appeal at Nyeri challenged the finding of breach and the refusal of specific performance. Applying its settled jurisdiction on second appeals, confined to matters of law, and following Gurdev Singh Birdi and Sun Sand Dunes, the Court held that the appellant breached a fundamental term by non-payment and that a party in breach of an essential term is not entitled to the equitable, discretionary remedy of specific performance. The Court of Appeal (W. Karanja, Jamila Mohammed and L. Kimaru, JJ.A) dismissed the appeal with costs to the respondents on 5th July 2024, affirming the High Court judgment.

Key legal issues

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01

Whether the appellant breached the contract

Holding

The appellant breached a fundamental term of the memorandum of sale by failing to pay the balance of the purchase price within 30 days when time was of the essence; the chargee was justified in forfeiting the deposit and reselling to another party.

Reasoning

The memorandum of sale expressly required payment of the balance within 30 days, with time of the essence, and provided for forfeiture of the deposit and resale on default. The appellant admitted non-payment and sought an extension almost a year later, which was declined. Applying the objective approach to construction of contractual terms, the Court found the appellant in breach and the chargee entitled to resell.

p. 6
02

Whether specific performance could issue

Holding

No. Specific performance is an equitable and discretionary remedy not available to a party in breach of an essential term who has not performed its own obligations.

Reasoning

Following Gurdev Singh Birdi, a purchaser seeking specific performance must show it performed or was ready and willing to perform all its obligations. Here the appellant never paid the balance, and time was expressly of the essence. The first appellate court correctly held that a party with soiled hands could not obtain the equitable remedy, especially where the property had been sold to a third party who paid the full price.

p. 7

Legal principles established

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  • On a second appeal, the Court of Appeal confines itself to matters of law only, unless the courts below considered matters they should not have, failed to consider matters they should have, or the decision is perverse
  • A party seeking specific performance must demonstrate that it performed or was ready and willing to perform all terms of the agreement it was obliged to perform; a party in breach of an essential term is not entitled to the equitable relief of specific performance

Court orders

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  1. 1.The appeal is dismissed
  2. 2.Costs of the appeal awarded to the respondents

Authorities

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Legislation

  • Registered Land Act (repealed)Section 74 (statutory power of sale)

Cases cited (6)

  • Maina versus Mugiria
    [1983] KLR 78
  • Kenya Breweries Ltd versus Godfrey Odongo
    Civil Appeal No. 127 of 2007
  • Stanley N. Muriithi & Another versus Bernard Munene Ithiga
    [2016] eKLR
  • Martin versus Glywed Distributors Ltd (t/a MBS Fastenings)
    1983 ICR 511
  • Gurdev Singh Birdi and Marinder Singh Ghatora and Abubakar Madhubuti
    Civil Appeal No. 165 of 1996
  • Sun Sand Dunes Limited v Raiya Construction Limited
    [2018] eKLR
On appeal from
High Court of Kenya at Nyeri
not stated in the judgment (consolidated appeals by the 1st and 2nd respondents against Muranga PMCC No. 491 of 2008)
Jurisdiction invoked
Second appeal to the Court of Appeal confined to matters of law; no specific constitutional or statutory provision is cited in the judgment

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, "Mawa Family Co Ltd v Industrial & Commercial Development Corporation & another (Civil Appeal 76 of 2017) [2024] KECA 802 (KLR)", Case Analysis (2024). Court of Appeal at Nyeri (appeal number not stated in the judgment; originating suit Principal Magistrate's Court at Muranga Civil Case No. 491 of 2008). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/802/eng@2024-07-05

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