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ELCPartially Allowed· [2019] KEELC 4008 (KLR)

Andrew Murugu Maina & another v Johnson Ngarari Mwaura [2019] KEELC 4008 (KLR)

Environment and Land Court
28 March 2019
6,242 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~25 min to read original · ~4 min brief

The bottom line

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A Runda seller who failed to provide a rates clearance certificate could not cancel the sale — the buyer won an order forcing the transfer.

What this practically means

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Executive summary

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The plaintiffs sued for specific performance of an agreement for sale dated 12th June, 2008 over L.R No. 7785/897, Runda, purchased at Kshs. 5,500,000/-, plus injunction, general and special damages. The defendant admitted the agreement but contended it was void for lack of consideration, that time was of the essence, and that the 60 days completion period lapsed on 11th August, 2008, entitling him to rescind; he counterclaimed for declarations that the agreement had lapsed and was incapable of specific performance. The court framed five issues. On validity, it held that the plaintiffs' executory promise to pay the purchase price, secured by an unconditional professional undertaking, constituted sufficient consideration; the agreement was valid and enforceable. On rescission, the court found the purchase price was payable only 7 days after registration of the transfer, and that registration failed solely because the defendant, who bore the obligation to pay land rates and provide the rates clearance certificate, never procured one. Being in breach, the defendant had no right to rescind; moreover, no 21 days completion notice was issued as required by the incorporated Law Society Conditions of Sale, rendering the rescission ineffective. The plaintiffs having fully performed their obligations, the court exercised its discretion in favour of specific performance, finding no hardship or other equitable ground to refuse it. Judgment was entered in terms of prayer (b) of the plaint; the injunction, general damages and special damages claims were overtaken by or subsumed in that order. The counter-claim was dismissed with costs to the plaintiffs.

Key legal issues

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01

Whether the agreement for sale was valid and enforceable for want of consideration

Holding

The agreement was valid and enforceable; the plaintiffs' executory promise to pay the purchase price, secured by a professional undertaking, was sufficient consideration notwithstanding that no money had been paid to the defendant.

Reasoning

Relying on authority on executed and executory consideration, the court held that a promise to be performed in future is sufficient consideration. The plaintiffs had promised to pay the full purchase price within 7 days of completion of registration of the transfer, and had deposited the entire purchase price with their advocates and secured it by an unconditional, irrevocable professional undertaking. The absence of actual payment to the defendant did not invalidate the contract.

p. 5
02

Whether the defendant lawfully rescinded the agreement

Holding

The purported rescission was unlawful. It was the defendant who breached the agreement by failing to provide the rates clearance certificate, and a defaulting party has no right to rescind; the rescission also failed for non-compliance with clause 4(7)(b) of the LSK Conditions of Sale requiring a 21 days completion notice.

Reasoning

The purchase price was payable only 7 days after registration of the transfer, and registration was impossible for want of the rates clearance certificate which the defendant was obliged to procure under clause 7 and clause 3 of the Special Conditions of Sale. Clause 10 on apportionment of outgoings did not shift the obligation to pay rates to the plaintiffs, and no written variation of the agreement existed. The defendant, being in breach, had no right to rescind, and no completion notice was issued as required by the incorporated LSK Conditions of Sale.

p. 5
03

Whether the plaintiffs were entitled to specific performance

Holding

Yes. The plaintiffs had performed their obligations and satisfied the conditions for specific performance; the court exercised its discretion in their favour and entered judgment in terms of prayer (b) of the plaint.

Reasoning

The law requires a party seeking specific performance to demonstrate performance or willingness to perform. The plaintiffs had deposited the purchase price and issued an unconditional undertaking, and the defendant adduced no evidence of hardship or difficulty in transferring the property. Increased value of the property was not a valid ground to deny the relief, as that would reward the defaulting vendor. Specific performance is discretionary but the discretion must be governed by fixed principles, and no reason existed to refuse it.

p. 6

Legal principles established

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  • A purchaser's executory promise to pay the purchase price, backed by a professional undertaking to pay on registration of the transfer, constitutes sufficient consideration for a vendor's agreement to sell.
  • A party in breach of a contract for sale has no right to rescind it; a purported rescission by a defaulting party is unlawful.
  • Where an agreement incorporates the Law Society Conditions of Sale, rescission requires a 21 days completion notice under clause 4(7)(b); rescission without such notice is ineffective.
  • A party seeking specific performance must show that he has performed or is willing to perform all the terms of the agreement.
  • A plaintiff may claim general damages for breach of contract as an alternative to, or in addition to, specific performance.
  • Costs follow the event unless the court, for good reason, orders otherwise.

Court orders

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  1. 1.Judgment is entered for the plaintiffs against the defendant in terms of prayer (b) in the plaint dated 22nd December, 2008 (specific performance).
  2. 2.The defendant's counter-claim against the plaintiffs is dismissed.
  3. 3.The defendant shall pay the plaintiffs' costs of the suit and the counter-claim.

Authorities

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Legislation

  • Civil Procedure ActSection 27
  • Law Society Conditions of Sale (1989 Edition)Clause 4(7)(b)

Cases cited (13)

  • Anne Murambi v John Munyao & another
    [2018] eKLR
  • Taylor Fashions Ltd v Liverpool Victoria Trustees Co. Ltd
    [1981] QB 133
  • Constance Tunda Vuko v Kenya Power & Lighting Co. Ltd & another
    [2018] eKLR
  • Marine Management Association & another v National Maritime Authority
    [2012] 18 NWLR 504
  • Akash Himatlal Dodhia v Dorothy Margaret Wanjiku Kungu & another
    [2017] eKLR
  • Kukal Properties Development Ltd v Maloo & 3 others
    [1993] KLR 52
  • Sagoo v Dourado
    (1982-88) 1 KAR 64
  • George Mwangi Wakangu v Samuel Mackenzie Kyhalo & 3 others
    [2014] eKLR
  • Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another
    [2014] eKLR
  • Gurdev Singh Birdi and Marinder Singh Ghatora v Abubakar Madhubuti
    CA No. 165 of 1996
  • Amina Abdulkadir Hawa v Rabinder Nath Anand & Another
    [2012] eKLR
  • Manzoor v Baram
    [2003] 2 E.A 580
  • Thrift Homes Limited v Kays Investment Limited
    [2015] eKLR
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court over a dispute relating to land (contract for sale of L.R No. 7785/897, Runda); no specific constitutional or statutory jurisdictional provision is cited

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, "Andrew Murugu Maina & another v Johnson Ngarari Mwaura [2019] KEELC 4008 (KLR)", Case Analysis (2019). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/4008/eng@2019-03-28

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