Clive Mutiso & another v Mitundu Holdings Limited [2019] KEELC 1185 (KLR)
The bottom line
#A Kenyan developer who failed to finish a house could not rescind the sale, and had to refund the buyer's deposit with 19% interest.
What this practically means
#Executive summary
#Key legal issues
#Whether the Defendant lawfully rescinded the sale agreement for non-payment of the balance of the purchase price
No - rescission was unlawful because the balance was payable only at completion and the Defendant had not completed the house
The agreement provided that the balance of Kshs. 2,730,000/= was payable on completion, and possession was to be granted on or before completion. The court found the agreement contemplated the Defendant completing the house before the substantial 70% payment fell due. Since the house was never completed, the Defendant was not ready and able to transfer, and its completion notice and purported rescission were ineffective.
Whether the Defendant proved its counterclaim for damages of Kshs. 1,585,825/= for loss on re-sale
No - the counterclaim was dismissed
The Defendant blamed the Plaintiffs for the failure to complete, but its own witness conceded the house was not completed and that the Defendant sold it to a third party at a lower price. The court found the Defendant failed to prove its counterclaim and dismissed it, awarding the Plaintiffs costs of the suit and counterclaim.
Whether the Plaintiffs proved their claim for refund of the deposit of Kshs. 780,000/= with interest
Yes - on a balance of probabilities, with 19% interest from the date of filing suit
The first two instalments of Kshs. 390,000/= each were paid, and the third instalment of Kshs. 390,000/= paid late was returned to the Plaintiffs. The court found the Plaintiffs proved their case on a balance of probabilities and ordered a refund of Kshs. 780,000/= plus interest at 19% from 31/5/2002 until payment in full.
Legal principles established
#- A vendor who is not ready and able to complete (here, had not completed construction of the house) cannot issue a valid completion notice and rescind the contract against the purchaser.
- The balance of the purchase price was only payable at completion, so the purchaser's failure to pay the balance before completion was not a breach.
Court orders
#- 1.The Defendant's counterclaim is dismissed
- 2.The Defendant to refund the Plaintiffs Kshs. 780,000/= plus interest at 19% from the date of filing suit, 31/5/2002, until payment in full
- 3.The Plaintiffs to have the costs of the suit and the counterclaim
- Jurisdiction invoked
- Environment and Land Court jurisdiction (originating suit, ELC Case No. 1527 of 2016; the plaintiffs abandoned HCCC No. 977 of 2002 which was never adjudicated here)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Clive Mutiso & another v Mitundu Holdings Limited [2019] KEELC 1185 (KLR)", Case Analysis (2019). ELC Case No. 1527 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/1185/eng@2019-10-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.