Sammy Ndungu Mungai v Daniel Macua Ndonga & 2 others [2019] KEELC 3660 (KLR)
The bottom line
#A buyer who fails to pay the balance on time loses the right to force the sale and forfeits a slice of the deposit.
What this practically means
#Executive summary
#Key legal issues
#Whether the 1st defendant breached the sale agreement by failing to sign the transfer and by colluding to hide the green card
No breach by the 1st defendant; no collusion with the 2nd defendant was proved and he could not be faulted for not signing the transfer without payment or assurance of the balance
The balance of KShs 15 million was to be borrowed from Equity Bank against a charge on the property. No loan application, letter of offer or undertaking was produced, so the court concluded no loan was offered. As vendor, the 1st defendant could not be expected to sign the transfer without receiving the balance or an acceptable assurance. PW2's own evidence showed a pre-contract search was conducted and no collusion evidence existed.
Whether the plaintiff breached the agreement
Yes - by failing to pay the balance of KShs 15 million by the end of 21st November 2011, and is liable for KShs 5 million liquidated damages (20% of the purchase price) under clause 6
Completion was to be within 90 days of the agreement, by 21st November 2011. The obligation to pay the balance rested squarely on the plaintiff, who could pay from his own pocket or borrow. The balance remained unpaid at the hearing, and no evidence of the availability of the KShs 15 million was placed before the court. Clause 6 provided liquidated damages of 20% of the purchase price for breach.
Whether specific performance should be granted
Refused, because the plaintiff was in breach of an essential term (payment of the balance) and had not performed it even at the date of the hearing
Applying the principles summarised by Gicheru JA in Gurdev Singh Birdi and Lord Esher MR in Coatsworth v Johnson, the underlying principle is that specific performance is granted where it is just and equitable, and a plaintiff in breach of essential terms cannot obtain the remedy. The plaintiff had not paid the balance and produced no evidence of funds, despite claiming willingness to complete.
What alternative relief should issue
Refund of the KShs 10 million deposit less KShs 5 million liquidated damages, i.e. KShs 5 million plus interest at court rates from filing until 20th April 2016 and at 35% per annum from 21st April 2016
The 1st defendant had failed to comply with successive consent orders (21st January 2014, 22nd October 2015 and 20th January 2016) directing him to deposit the KShs 10 million in a joint interest-earning account, the last order stipulating interest at 35% per annum on default. The plaintiff was therefore awarded interest at 35% per annum from 21st April 2016, and release of the original title documents on full payment.
Legal principles established
#- A plaintiff seeking specific performance must have performed his essential obligations under the contract; a plaintiff in breach of an essential term cannot obtain the equitable remedy
- Equity will refuse specific performance where the plaintiff himself is guilty of breach of the contract
Court orders
#- 1.The plaintiff's prayer for an order of specific performance requiring the 1st defendant to avail all transfer documents in relation to the suit property is dismissed
- 2.Judgment entered for the plaintiff against the 1st defendant for KShs 5 million plus interest at court rates from the date of filing suit until 20th April 2016 and at 35% per annum from 21st April 2016 until payment in full
- 3.Each of the plaintiff and the 1st defendant to bear their own costs
- 4.The plaintiff to release to the 1st defendant the original title documents for Nakuru Municipality Block 6/134 upon payment in full of the amounts ordered
- 5.The plaintiff's claim against the 2nd and 3rd defendants is dismissed with costs
- Jurisdiction invoked
- First-instance civil suit filed on 21st August 2013 and heard on its merits by the Environment and Land Court (specific performance and land sale contract dispute)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Sammy Ndungu Mungai v Daniel Macua Ndonga & 2 others [2019] KEELC 3660 (KLR)", Case Analysis (2019). ELC Case (Nakuru) - unnumbered on judgment face. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3660/eng@2019-04-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.