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ELCDismissedELC. Civil Suit No. 13 of 2009· [2019] KEELC 3615 (KLR)

Neptune Credit Management Limited & another v Jigisha P. Jani & another [2019] KEELC 3615 (KLR)

Environment and Land Court
18 March 2019
4,284 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court ruled that an unpaid land purchase offer gives you no ownership rights, and the buyer lost everything, including eviction.

What this practically means

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Executive summary

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The 1st Plaintiff claimed a purchaser's interest over L.R. No. 7471/269 pursuant to a sale agreement dated 26/6/2008, seeking specific performance, declarations that the agreement was binding, temporary and permanent injunctions, and Kshs. 11,836,095/- for goods allegedly carted away by auctioneers during a distress for rent on 4/9/2015. The 2nd Plaintiff was the tenant under a lease dated 12/2/2008 at Kshs. 150,000/- monthly, and claimed the Defendants' offer to sell at Kshs. 45 million altered the lease. The Defendants denied any valid sale agreement, maintaining the offer lapsed for non-payment of the 10% deposit of Kshs. 4.5 million within 90 days, and counterclaimed for vacant possession, a declaration that the lease was lawfully terminated, eviction, and mesne profits for rent arrears they computed at Kshs. 7,691,870/- as at 14/11/2018. The court framed four issues: existence of a valid sale contract and specific performance; novation of the lease by the sale agreement; rent arrears and termination of the lease; and the orders to grant. It held there was no acceptance, payment or performance of any sale contract, so no proprietary interest arose; there was no novation because the lease was never rescinded and substituted; the Plaintiffs became periodic tenants after February 2010 and the Defendants proved their rent arrears claim; and the claim for attached goods failed for want of an inventory, the goods having been returned after political intervention. The Plaintiffs' suit was dismissed with costs, and judgment was entered for the Defendants on their counterclaim, with costs of the counterclaim awarded to the Defendants.

Key legal issues

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01

Whether a valid contract of sale existed capable of specific performance

Holding

No valid contract of sale was concluded; the Plaintiffs failed to pay the deposit within the stipulated time and no consideration was paid

Reasoning

It was not in dispute that the deposit of Kshs. 4.5 million was not paid within the time stipulated in the offer. No evidence showed the Plaintiffs were ready, willing and able to complete. There was only an offer to sell, with no acceptance, payment or performance, and the essential terms had not been agreed and settled. An offer could not be expected to endure for eleven years on the same terms.

p. 3
02

Whether the sale agreement novated the lease agreement dated 12/2/2008

Holding

There was no novation as the lease was never rescinded nor substituted by a binding sale agreement

Reasoning

Applying the definition of novation in Commerce Bank Limited v Kukopesha Limited, novation requires a subsequent binding contract and the consent of all parties discharging the old contract. Here no binding contract was entered into after the lease, the parties never agreed to discharge the lease in consideration of the proposed sale, and the sale agreement was never performed.

p. 4
03

Whether the Plaintiffs were in rent arrears and entitled to resist the Defendants' counterclaim

Holding

The Defendants proved their claim for rent arrears; the Plaintiffs became periodic tenants after the lease expired in February 2010

Reasoning

The Plaintiffs did not deny owing rent. The court held they were bound to pay monthly rent after the lease expired in February 2010 as periodic tenants, and no agreement existed that the purchase price would be settled through monthly rent. The draft sale agreement itself set out payment timelines.

p. 4
04

Whether the Plaintiffs proved the loss of goods attached in the distress for rent

Holding

The claim failed for want of an inventory reconciling the goods carted away and those returned after political intervention

Reasoning

The auctioneer's letter stated the goods were released when a former Senator intervened during the distress. The 2nd Plaintiff did not deny the intervention. Without an inventory of goods carried away and those returned, the court could not ascertain whether some goods were not returned as alleged.

p. 4

Legal principles established

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  • A mere offer to purchase land, without acceptance, payment of the deposit or other performance, confers no proprietary interest and will not sustain specific performance
  • Novation requires rescission of the existing agreement and its substitution by a subsequent binding contract with the consent of all parties

Court orders

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  1. 1.Dismissal of the Plaintiffs' suit with costs to the Defendants
  2. 2.Judgment entered for the Defendants in terms of prayers (a), (b), (c), (d) and (e) of the 1st and 2nd Defendants' Amended Defence, Set-off and Counterclaim dated 29th November 2018
  3. 3.The Defendants awarded the costs of the Counterclaim

Authorities

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Cases cited (1)

  • Commerce Bank Limited v Kukopesha Limited
    [2008] eKLR
Jurisdiction invoked
Environment and Land Court jurisdiction 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, "Neptune Credit Management Limited & another v Jigisha P. Jani & another [2019] KEELC 3615 (KLR)", Case Analysis (2019). ELC. Civil Suit No. 13 of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3615/eng@2019-03-18

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