Andrew Murugu Maina & another v Johnson Ngarari Mwaura [2019] KEELC 4008 (KLR)
The bottom line
#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
#Executive summary
#Key legal issues
#Whether the agreement for sale was valid and enforceable for want of consideration
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.
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.
Whether the defendant lawfully rescinded the agreement
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.
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.
Whether the plaintiffs were entitled to specific performance
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.
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.
Legal principles established
#- 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
#- 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.The defendant's counter-claim against the plaintiffs is dismissed.
- 3.The defendant shall pay the plaintiffs' costs of the suit and the counter-claim.
- 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
#Practical implications
#Frequently asked questions
#Cite this brief
#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.