James Gichuhi Mutero & another v Lolldaiga Country Homes & Resort Limited & another [2019] KEELC 32 (KLR)
The bottom line
#A Kenyan court ordered a land developer to refund Ksh 2.5 million with interest after an unbuilt estate, but rejected large unproven damage claims.
What this practically means
#Executive summary
#Key legal issues
#Whether the directors were properly sued alongside the company
The Defendants were properly joined; joinder is not limited to parties to the contract and misjoinder does not defeat a suit
Order 1 rule 3 permits joining all persons against whom relief arises out of the same transaction. The leases were executed by the 1st Defendant as a limited liability company and by the 2nd Defendants as its directors, a fact uncontroverted. Order 1 rule 9 bars defeat of a suit for misjoinder. The court also noted the lifting of the corporate veil where corporate personality is used as a cloak for fraud or improper conduct.
Validity of the lease agreements
The lease agreements were valid and enforceable, having complied with section 3(3) of the Law of Contract Act
The leases were in writing, contained the names of the parties, description of the property, lease premium and conditions, and were signed by the parties, conforming to section 3(3) requirements for contracts disposing of an interest in land. They were not vitiated by any illegality.
Breach of the lease agreements
The Defendants were in breach; the Plaintiffs were entitled to rescind upon notice, and both agreements stood rescinded
Clause 10.5 entitled the lessee to rescind upon written notice where the lessor was in breach, with refund of monies within 45 days. The Plaintiffs paid Ksh 2,500,000 in full, the estate was never developed, notices of rescission and demands went unanswered, and the Defendants' email undertaking to refund was not honored.
Remedies: refund, loss of bargain, general damages, interest
Refund of Ksh 2,500,000 with interest granted; loss of bargain and general damages refused; nominal damages of Ksh 1,500,000 awarded
Damages for breach of contract must be pleaded and proved per Hadley v Baxendale; the Plaintiffs did not quantify or prove their alleged loss of Ksh 7,500,000 or general damages of Ksh 10,000,000. Every breach entitles the injured party to at least nominal damages. Interest was awarded under section 26 of the Civil Procedure Act.
Legal principles established
#- General damages are not recoverable in cases of alleged breach of contract; damages for breach of contract must be pleaded and proved
- A party whose rights have been infringed but who proves no actual loss is entitled to nominal damages
- A contract for disposition of an interest in land must comply with section 3(3) of the Law of Contract Act to be enforceable
- No suit shall be defeated by reason of misjoinder or non-joinder of parties
Court orders
#- 1.The contract between the Plaintiffs and the Defendants stands rescinded
- 2.The Defendants shall refund the purchase price paid by the Plaintiffs being a total sum of Ksh 2,500,000/-
- 3.Interest on the refund of Ksh 2,500,000/-
- 4.Nominal damages of Kshs. 1,500,000/- for breach of contract
- 5.Costs of the suit and interest on the damages awarded from the date of the judgment
- Jurisdiction invoked
- Pecuniary and subject-matter jurisdiction of the Environment and Land Court over disputes touching on land (the commercial court and magistrates' courts having declined jurisdiction)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "James Gichuhi Mutero & another v Lolldaiga Country Homes & Resort Limited & another [2019] KEELC 32 (KLR)", Case Analysis (2019). ELC Case No. 142 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/32/eng@2019-10-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.