Mungai v Tebere Concrete Company Limited & another (Civil Appeal E089 & E091 of 2022 (Consolidated)) [2024] KECA 1549 (KLR)
The bottom line
#Kenya's Court of Appeal upheld a land sale rescission: a buyer who doesn't pay the balance can't keep the property, and courts can't rewrite contracts.
What this practically means
#Executive summary
#Key legal issues
#Whether the rescission of the sale agreement was lawful
The rescission was lawful: the 2nd respondent gave adequate notice over six months of correspondence, demanded payment of the balance, and refunded the deposit with the stipulated 30% interest in accordance with clause four of the agreement.
The court re-assessed the correspondence and found the 2nd respondent repeatedly requested settlement of the Kshs.3.5 million balance, notified rescission by letter dated 27th February 2015, later demanded vacation, and refunded Kshs.1.9 million plus 30% interest by Banker's cheques. The 1st respondent never offered to pay the balance. The trial Judge erred in importing a notice-to-complete requirement from the Law Society Conditions of Sale, which rewrote the parties' agreement.
Whether a constructive trust arose in favour of the 1st respondent
No constructive trust arose; there was no wrongdoing or unjust enrichment, and the 1st respondent failed to pay the full purchase consideration.
The court held that a constructive trust requires wrongdoing or unjust enrichment, neither of which was proved against the appellant or the 2nd respondent. The 1st respondent made no effort over more than three years to pay the balance, the balance remained unpaid even at the filing of suit, and the deposit had been duly refunded.
Whether the trial Judge erred by introducing the Law Society Conditions of Sale into the contract
The trial Judge rewrote the parties' agreement, which a court may not do absent pleaded and proved coercion, fraud or undue influence.
Relying on National Bank Kenya Limited v. Pipeplastic Samsolit, the court held that parties are bound by the terms of their contract and equity does not ordinarily relieve a party from a bad bargain. Introducing a notice-to-complete requirement from the Law Society Conditions of Sale impermissibly varied the express terms allowing rescission and refund of the deposit plus 30% interest.
Whether the appellant and the 2nd respondent were entitled to mesne profits
Neither was entitled to mesne profits because the 1st respondent's occupation prior to rescission was lawful under the sale agreement.
The agreement permitted the 1st respondent to take immediate possession upon execution. Possession therefore was not trespass until lawful rescission, and the court declined to award mesne profits on the respective counterclaims of the appellant and the 2nd respondent.
Legal principles established
#- A court of law cannot rewrite a contract between parties; they are bound by its terms unless coercion, fraud or undue influence are pleaded and proved.
- A first appellate court must reconsider and evaluate the evidence afresh and draw its own conclusions, making due allowance for not having seen or heard the witnesses.
- A constructive trust does not arise where there is no evidence of wrongdoing or unjust enrichment and where the claimant failed to pay the full purchase consideration.
Court orders
#- 1.The decision of the learned trial Judge allowing the 1st respondent's suit is set aside
- 2.Substituted therefor is a judgment of this Court dismissing the 1st respondent's suit filed before the ELC
- 3.The 1st respondent is ordered to vacate the suit property within sixty (60) days from the date of the judgment and give vacant possession to the appellant
- 4.In default, the appellant shall be at liberty to evict the 1st respondent from the suit property
- 5.The costs of the appeal shall be paid by the 1st respondent to the appellant and the 2nd respondent
- On appeal from
- Environment and Land Court at Embu
- Jurisdiction invoked
- First appellate jurisdiction over appeals from the Environment and Land Court under Article 164 of the Constitution (appeal as of right on facts and law; exact provision not expressly stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mungai v Tebere Concrete Company Limited & another (Civil Appeal E089 & E091 of 2022 (Consolidated)) [2024] KECA 1549 (KLR)", Case Analysis (2024). Civil Appeal No. E089 of 2022 (consolidated with Civil Appeal No. E091 of 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1549/eng@2024-10-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.