Peter K. Kiplagat & another v Telposta Pension Scheme Trustees Registered [2020] KEELC 1160 (KLR)
The bottom line
#The court dismissed the buyers' case because the purchaser never paid the balance of the purchase price, so the seller could lawfully cancel the land sale and keep the deposit.
What this practically means
#Executive summary
#Key legal issues
#Which party breached the agreement of sale dated 29th November, 2005
The 1st plaintiff breached the agreement by failing to pay the balance of the purchase price on the completion date and after a 21-day completion notice; the defendant was entitled to rescind and forfeit the deposit
Condition 4 of the Law Society Conditions of Sale (1989 Edition), which governed the agreement, places the obligation on the purchaser to pay the purchase price (or provide a satisfactory undertaking) on completion, and on the vendor to deliver completion documents only against such payment. The 1st plaintiff admitted he did not pay the balance of Kshs. 1,665,000/- on the completion date of 27th February, 2006. A completion notice dated 12th April, 2006 was served and not complied with, and further time given was not used. The plaintiff's non-compliance with a court order to deposit the balance in a joint interest-earning account cast doubt on his readiness and ability to pay.
Whether the defendant was a party to the 18th November, 2005 agreement between the plaintiffs
The defendant was not a party to, and could not be bound by, that agreement
There was no evidence that the defendant was a party to, consented to, or approved the sale by the 1st plaintiff to the 2nd plaintiff. At the date of that agreement the 1st plaintiff had not even contracted with the defendant and had no proprietary interest to transfer. The letter of 27th January, 2007 relied on by the plaintiffs post-dated the completion date and the rescission and evidenced awareness at most, not consent.
Whether the 2nd plaintiff has a cause of action against the defendant
The 2nd plaintiff has no cause of action against the defendant under either agreement
The 2nd plaintiff was not a party to the defendant's agreement with the 1st plaintiff, and the defendant was not a party to the plaintiffs' agreement. The 2nd plaintiff's agreement was conditional on successful completion of the defendant's agreement with the 1st plaintiff, which failed through the 1st plaintiff's default and not through any fault of the defendant. Privity therefore barred enforcement of either agreement against the defendant.
Whether the plaintiffs are entitled to specific performance and a permanent injunction
The plaintiffs failed to meet the conditions for specific performance; the injunction as prayed could not be granted in a final judgment
Citing the Court of Appeal in Gurdev Singh Birdi and Marinder Singh Ghatora v Abubakar Madhubuti, the court held that specific performance requires that it be just and equitable and that the plaintiff have performed all his own obligations. The 1st plaintiff had not performed; the 2nd plaintiff had no agreement with the defendant to enforce. The injunction as framed sought relief pending the hearing of the suit, which was inconsistent with a final judgment.
Legal principles established
#- Under the Law Society Conditions of Sale, the purchaser is obliged to pay the balance of the purchase price on completion, and only against such payment (or a satisfactory undertaking) is the vendor obliged to furnish completion documents
- A purchaser in breach who fails to comply with a valid completion notice entitles the vendor, subject to Condition 4(7) of the Law Society Conditions of Sale, to rescind the agreement and forfeit the deposit
- Specific performance is a discretionary equitable remedy granted only where it is just and equitable and where the plaintiff has performed all his own obligations under the contract
- A party cannot be bound by an agreement to which it was not a party and to which it did not consent
- Costs follow the event unless the court sees reason to depart from that general rule
Court orders
#- 1.The plaintiffs' suit is dismissed
- 2.The defendant shall have the costs of the suit
- Jurisdiction invoked
- Original civil suit instituted by plaint (first-instance trial of a contract/land dispute); no specific constitutional or statutory jurisdictional provision invoked in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Peter K. Kiplagat & another v Telposta Pension Scheme Trustees Registered [2020] KEELC 1160 (KLR)", Case Analysis (2020). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1160/eng@2020-09-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.