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ELCDismissedELC No. 809 of 2012· [2018] KEELC 3747 (KLR)

Maureen Muthua v Nathan Kahara & another [2018] KEELC 3747 (KLR)

Environment and Land Court
19 April 2018
1,717 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Nairobi court ruled that a property buyer who demanded a refund and walked away from a sale cannot later sue the seller for breach.

What this practically means

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Executive summary

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The plaintiff sued the defendants, a vendor and its special purpose vehicle, seeking a permanent injunction restraining the sale or transfer of Apartment No. E4 on LR No. 5/55, Nairobi, specific performance of a sale agreement dated 31st March 2008, and damages for breach in lieu of or in addition to specific performance. Under the agreement the plaintiff was to purchase the apartment for Kshs. 7,250,000, paying a deposit of Kshs. 1,450,000, with completion tied to clause 3 - the 30th day after the vendor's letter confirming City Council authority to occupy. The project was delayed by disputes with contractors; the plaintiff was informed and accepted revised completion dates. By letter dated 24th February 2011, after learning completion would take some 70 weeks, she gave 14 days notice to complete failing which she would demand a refund of her deposit. The defendants later sold the apartment to a third party and offered to refund the deposit. The court framed four issues: the material terms, breach, entitlement to reliefs and costs. It held that clause 3 governed completion; that the plaintiff's letter of 24th February 2011 was an unambiguous rescission which the defendants accepted, discharging them from the contract; that without prejudice correspondence evidencing her change of mind was inadmissible; and that accordingly there was no breach by the defendants. The injunction would act in vain as the apartment had been sold, specific performance was unavailable to the rescinding party, and damages could not arise absent breach. The Singapore case cited by the plaintiff was of no assistance. The suit was dismissed with costs to the defendants.

Key legal issues

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01

Material terms of the sale agreement dated 31st March 2008

Holding

The material term was clause 3, making completion the 30th day after the vendor's letter confirming authority to occupy had been granted by the City Council of Nairobi, notwithstanding the shifting estimated completion dates

Reasoning

The estimated completion date of April 2009 kept changing due to problems with contractors, and the plaintiff was kept informed and accepted the new dates. However, the governing agreement remained that of 31st March 2008 since a draft new agreement incorporating a fresh completion date was never executed. Clause 3 tied completion to the Council's grant of authority to occupy, not the earlier estimates.

p. 2
02

Who was in breach of the sale agreement

Holding

The plaintiff, not the defendants, was in breach; her letter of 24th February 2011 amounted to rescission/renunciation which the defendants accepted

Reasoning

The plaintiff gave 14 days notice to complete failing which she would demand a refund; this was a plain refusal to continue with the contract. The defendants accepted the withdrawal, sought her account details for a refund, and pursuant to that rescission sold the apartment to a third party. Her later change of mind was communicated without prejudice and is inadmissible. There was thus no breach by the defendants.

p. 2
03

Entitlement to permanent injunction, specific performance and damages

Holding

All reliefs fail: the apartment had already been sold so an injunction would act in vain; specific performance is unavailable to a party who herself rescinded; and damages cannot follow absent breach

Reasoning

The court found the suit was concluded on the plaintiff's own rescission. Equitable relief cannot issue to a party whose own conduct discharged the contract, and damages for breach presuppose breach, which was not established against the defendants. The suit was therefore dismissed in its entirety with costs to the defendants.

p. 3

Legal principles established

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  • A party who by words or conduct evinces an intention not to perform, or absolutely refuses to perform, the contract entitles the other party to treat himself as discharged; a rescission once accepted discharges both parties.
  • Without prejudice correspondence that does not result in agreement is inadmissible in evidence.

Court orders

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  1. 1.The plaintiff's suit is dismissed
  2. 2.Costs of the suit awarded to the defendants

Authorities

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Cases cited (1)

  • Cheong Lay Yong Vs Muthukumaran S/O Varthan and another
    (2010) SGHC 59
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court over disputes relating to land (Environment and Land Court 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, "Maureen Muthua v Nathan Kahara & another [2018] KEELC 3747 (KLR)", Case Analysis (2018). ELC No. 809 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2018/3747/eng@2018-04-19

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