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ELCPartially AllowedNot stated in the judgment (filed 11th December, 2014; Notice of Preliminary Objection dated 18th December, 2014)· [2015] KEELC 571 (KLR)

Nyeri Teachers Investmetn Company Limted v Solio Ranch Limited & another [2015] KEELC 571 (KLR)

Environment and Land Court
16 March 2015
2,740 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenyan courts cannot enforce an unwritten land sale agreement, but buyers may still sue to recover money paid under it.

What this practically means

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Executive summary

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The Plaintiff sued in December 2014 seeking a permanent injunction restraining the Defendants from alienating plot No. A10 (LR No. 1157/39, approximately 200 acres) save to the Plaintiff, specific performance compelling the 1st Defendant to execute the sale contract, general damages, costs and interest. The claim rested on an agreement alleged to have been reached on 12th September 2013 for the sale of the suit property at Kshs. 60,000,000/=, under which a formal sale agreement was negotiated but never signed; the Plaintiff lodged a caution against the title. The 1st Defendant filed a Notice of Preliminary Objection contending that the suit offended Section 3(3) of the Law of Contract Act (Cap 23) and Sections 36 and 44 of the Land Registration Act, and that the court therefore lacked jurisdiction. The court, per J. L. Onguto J, answered two questions: first, that the objection was a proper preliminary objection raising a point of law on jurisdiction, to be decided in limine on the undisputed facts; second, that compliance with Section 3(3), now reinforced by Section 38 of the Land Act, 2012, is mandatory, and absent a signed, attested written contract neither party may invoke the court's assistance to enforce a disposition of an interest in land. The court found the core reliefs of specific performance and injunction sought to enforce the sale and were incompetent. However, refusing to strike out the entire plaint, the court applied Nitin Properties Ltd v Kalsi and D.T. Dobie & Co Ltd v Muchina, directing the Plaintiff to amend within 21 days to withdraw the offending claims, while leaving intact claims for damages and restitution of Kshs. 6,000,000/= paid to the 1st Defendant. There was no order as to costs.

Key legal issues

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01

Whether the objection on want of a written contract under Section 3(3) of the Law of Contract Act is a proper preliminary objection

Holding

Yes. An objection as to jurisdiction is a classic preliminary objection and must be decided forthwith on the material before the court

Reasoning

Guided by Mukisa Biscuits and MV Lilian S, the court held that an objection to jurisdiction is a point of law properly raised in limine. Once raised, jurisdiction must be decided immediately, however scanty the evidence, since a court without jurisdiction must down tools rather than allow proceedings to continue pending further evidence.

p. 2
02

Whether the court has jurisdiction to entertain a suit seeking to enforce an agreement for the sale of land not reduced to a signed written contract

Holding

No. Compliance with Section 3(3) of the Law of Contract Act (and now Section 38 of the Land Act, 2012) is mandatory, and in its absence neither party may invoke the court's assistance to enforce the disposition

Reasoning

The court traced the writing requirement to the Statute of Frauds 1677 and its forensic, evidentiary and protective functions. It found the two core reliefs - specific performance and injunction - sought to enforce the agreement to sell the suit property, not merely to compel execution of a formal contract, so the suit as framed offended Section 3(3) and the court's jurisdiction was ousted in that regard.

p. 4
03

Whether the entire plaint should be struck out

Holding

No. Only the portions seeking to enforce the disposition of the suit property are bad; the Plaintiff may pursue damages and restitution of Kshs. 6,000,000/= paid, and should amend the plaint within 21 days

Reasoning

Applying Nitin Properties Ltd v Kalsi and D.T. Dobie & Co Ltd v Muchina, the court exercised restraint, holding the claim was not hopelessly bad in its entirety. Striking out would be pyrrhic since the Plaintiff could refile; the claim for damages and restitution of the deposit remains viable, and the offending portions should be withdrawn by amendment.

p. 4

Legal principles established

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  • A question of jurisdiction, once raised, must be decided immediately on the material before the court, however scanty
  • Compliance with Section 3(3) of the Law of Contract Act and Section 38 of the Land Act is mandatory; a court has no power to adjudicate disputes over disposition of an interest in land where a written contract signed by all parties and attested does not exist
  • A plaint can only be struck out if the claim is incontestably or hopelessly bad, and courts should aim at sustaining rather than summarily dismissing suits

Court orders

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  1. 1.The Plaintiff is given 21 days to amend its plaint to withdraw the portions seeking to enforce the disposition of the suit property (specific performance and injunctive relief restraining alienation)
  2. 2.The claims seeking to enforce the sale/disposition of the suit property must be withdrawn by way of amendment within 21 days
  3. 3.The plaint is not struck out in its entirety; the Plaintiff may pursue the claim for damages and restitution of the sum of Kshs. 6,000,000/= paid to the 1st Defendant
  4. 4.No order as to costs

Authorities

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Legislation

  • Law of Contract Act (Cap 23)Section 3(3)
  • Land Registration ActSections 36 and 44
  • Land Act, 2012Section 38
  • Constitution of Kenya, 2010Article 68
  • Arbitration Act, 1995
  • Statute of Frauds 1677

Cases cited (10)

  • Silverbird Kenya Ltd –v- The Junction Ltd & 8 others Nbi ELC 365 of 2011
    Nbi ELC 365 of 2011
  • Kikal Properties Development Ltd –v- Maloo & 8 others
    [1990-94] EA 281
  • Kenya Institute of Management –v- Kenya Re Insurance Corp
    [2008] eKLR
  • Mukisa Biscuits Manufacturing Co. Ltd –v- Westend Bakery Ltd
    [1969] EA 696
  • MV Lilian S
    [1989] KLR 1
  • Lee –v- Showmens Guild of Great Britain
    [1952] 2QB 329
  • Davis –v- Mistry
    [1973] EA 453
  • Crescent Contraction Co. Ltd –v- Delphs Bank
    [2007] 2 EA 119
  • Nitin Properties Ltd –v- Kalsi & another
    [1995] 2 EA 257, 259
  • D.T. Dobie (K) & Co. Ltd –v- Muchiga
    [1982] KLR 1
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court; dispute on preliminary objection as to jurisdiction under Section 3(3) of the Law of Contract Act (Cap 23) and Sections 36 and 44 of the Land Registration Act

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Nyeri Teachers Investmetn Company Limted v Solio Ranch Limited & another [2015] KEELC 571 (KLR)", Case Analysis (2015). Not stated in the judgment (filed 11th December, 2014; Notice of Preliminary Objection dated 18th December, 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2015/571/eng@2015-03-16

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