Orion East Africa Limited v Ite Farmers Co-operative Society Limited [2019] KEELC 3973 (KLR)
The bottom line
#A Kenyan court ordered a seller to complete a land sale after its rescission failed, but the winning buyer still walked away without costs.
What this practically means
#Executive summary
#Key legal issues
#Lawfulness of the defendant's rescission of the agreement for sale
The rescission was unlawful. The first completion notice dated 10th February 2010 was waived by acceptance of Kshs. 1,900,000/- after the notice expired; the second notice dated 28th June 2010 breached clause 12 of the agreement (which required a fresh 21-day notice) and was unjustified because the plaintiff was not in default, having paid the full deposit and secured the balance by an unwithdrawn professional undertaking.
The court found that by accepting the late payment the defendant waived the first completion notice and rescission. Any fresh notice had to comply with clause 12 of the agreement, not clause 4(7)(g) of the LSK Conditions of Sale. The notice of 28th June 2010 demanded confirmation of a professional undertaking that was not limited in time and had not been withdrawn; the plaintiff had performed all its obligations, leaving the defendant as the party in default. The rescission founded on that notice therefore failed.
Whether the plaintiff was entitled to specific performance and other reliefs
Yes. The plaintiff performed its obligations and met the conditions for specific performance; no valid reason such as severe hardship or transfer to a third party was shown to decline the discretionary remedy.
The court applied the principle that a party seeking specific performance must show performance or willingness to perform. The plaintiff had paid the full deposit and provided an undertaking covering the balance. The alleged sale to Mr. and Mrs. Kinyua had not been completed and the third parties could be refunded their deposit. No evidence of hardship in transferring the property was adduced, so the discretion was exercised in the plaintiff's favour.
Costs of the suit
Although costs normally follow the event, the plaintiff was denied costs because its advocates' failure to confirm the professional undertaking contributed to the dispute.
The court held that costs follow the event unless there is good reason otherwise. The plaintiff's failure to simply confirm the undertaking when asked caused the litigation that could have been avoided. The plaintiff therefore won the suit but was denied costs, with each party bearing its own costs.
Legal principles established
#- A party who accepts payment after the expiry of a completion notice and rescission waives its rights under the notice and rescission
- A completion notice can only be issued to a party in default under the agreement
- A professional undertaking is not limited in time and need not be affirmed unless withdrawn; failure by an advocate to withdraw it leaves the counterparty obliged to complete
- A party seeking specific performance must show it has performed or is willing to perform all the terms of the agreement, and the remedy is discretionary
Court orders
#- 1.Declaration that there was a binding agreement for sale between the plaintiff and the defendant and that the defendant was contractually bound to complete the sale and transfer of the suit property to the plaintiff (prayer (a))
- 2.Declaration that the purported rescission of the agreement for sale by the defendant is illegal and/or unlawful and/or had been waived (prayer (b))
- 3.Order of specific performance directing the defendant to complete the sale and transfer of Plot No. L.R 12672/47 I.R 47800 to the plaintiff free from all encumbrances (prayer (c))
- 4.Permanent injunction restraining the defendant from interfering with the plaintiff's ownership and quiet possession of the suit property (prayer (d))
- 5.Each party shall bear its own costs of the suit
- Jurisdiction invoked
- Original civil jurisdiction over a claim for specific performance and declaratory reliefs relating to land
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Orion East Africa Limited v Ite Farmers Co-operative Society Limited [2019] KEELC 3973 (KLR)", Case Analysis (2019). The plaint dated 13th June 2011, instituted on 14th June 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/3973/eng@2019-03-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.