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ELCAllowed· [2017] KEELC 3683 (KLR)

James Muchangi Gachemi v Solio Ranch Limited & Chief Land Registrar [2017] KEELC 3683 (KLR)

Environment and Land Court
31 January 2017
LWL N Waithaka
1,776 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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A Kenyan court blocked a land seller from pulling out of a signed offer, confirming buyers can enforce property deals before formal contracts are completed.

What this practically means

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Executive summary

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By a plaint filed on 30th November, 2015, the plaintiff sued the 1st defendant seeking, inter alia, an order of specific performance compelling completion of an agreement dated 10th December, 2012 for the purchase of the suit property LR NO. 11571/36-7A at Kshs. 50 million, a permanent injunction restraining alienation or sale to third parties, damages in lieu of or in addition to specific performance, interest and costs. Together with the plaint he filed a notice of motion seeking an interim injunction pending hearing of the suit; interim orders were granted on 1st December, 2015. The 1st defendant, through the replying affidavit of its Chairman Fred N. Ojiambo, contended that the agreement had been rescinded after the plaintiff failed to accede to a collateral agreement to which the sale was allegedly tied, and that no contract complying with Section 38 of the Land Act and Section 3 of the Law of Contract Act existed. The only remaining issue was whether the interim orders should be confirmed. Applying the Giella v Cassman Brown principles and adopting the court's earlier ruling of 11th October, 2016, the court found no evidence that the sale of the suit property was conditional on the plaintiff buying a second property, and noted that clause 10 of the letter of offer made its terms binding upon execution. Persuaded by Eldo City Limited and Kenya Institution of Management, the court held that a party cannot withdraw once parties are at consensus ad idem, that damages would not adequately compensate for land, and that the balance of convenience favoured the plaintiff who had performed his obligations. The application dated 30th November, 2015 was allowed as prayed, confirming the injunction pending trial.

Key legal issues

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01

Whether the plaintiff established a prima facie case with a probability of success

Holding

Yes. There is no evidence supporting the 1st defendant's contention that the sale was conditional on the plaintiff buying a second property; the letters of offer created binding obligations and the plaintiff's case is arguable.

Reasoning

The court adopted its earlier ruling of 11th October, 2016 in the 1st defendant's striking-out application. It found no clause or correspondence supporting the alleged tying of the two properties. Clause 10 of the letter of offer made its terms binding upon execution. Relying on Eldo City Limited and Kenya Institution of Management, the court held a vendor cannot retract once parties are at consensus ad idem.

p. 3
02

Whether damages would be an adequate remedy and where the balance of convenience lies

Holding

Damages would not be an adequate remedy because the subject matter is land, and the balance of convenience tilts in favour of the plaintiff, who has fulfilled his obligations under the letter of offer.

Reasoning

Applying the second and third Giella v Cassman Brown conditions, the court held that land as the subject matter makes damages inadequate. Clause 10 of the letter of offer and the plaintiff's performance of his obligations under it tipped the balance of convenience in his favour.

p. 4

Legal principles established

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  • An applicant for a temporary injunction must demonstrate a prima facie case with a probability of success, irreparable harm not compensable in damages, and that the balance of convenience tilts in his favour (Giella v Cassman Brown)
  • Where a letter of offer provides that until a formal agreement is executed its terms are binding after execution, a party cannot walk out of the contract unilaterally
  • Once parties have reached consensus ad idem, the freedom to withdraw from a transaction comes to an end
  • Where the subject matter of the suit is land, damages may not be an adequate remedy

Court orders

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  1. 1.The application dated 30th November, 2015 is allowed as prayed, confirming the interlocutory orders issued on 1st December, 2015 restraining the 1st defendant from alienating, offering for sale, disposing of or selling the suit property pending the hearing and determination of the suit

Authorities

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Legislation

  • Land ActSection 38
  • Law of Contract ActSection 3

Cases cited (4)

  • Giella v. Cassman Brown
    (1973) E.A 358
  • Mrao v. First American Bank Ltd & 2 Others
    (2003) KLR 125
  • Eldo City Limited v Corn Products Kenya Limited & another
    (2013) eKLR
  • Kenya Institution of Management v. Kenya Reinsurance Corporation
    (2008) eKLR
Jurisdiction invoked
Not stated in the judgment; the court exercised original civil jurisdiction over a dispute relating to land (the suit property LR NO. 11571/36-7A)

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, "James Muchangi Gachemi v Solio Ranch Limited & Chief Land Registrar [2017] KEELC 3683 (KLR)", Case Analysis (2017). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3683/eng@2017-01-31

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