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ELCPartially AllowedNot stated in the judgment provided· [2020] KEELC 2273 (KLR)

Elijah Sadala Msagha v Benedict Mwakio Mchombo & another [2020] KEELC 2273 (KLR)

Environment and Land Court
7 May 2020
5,832 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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A Mombasa court used a constructive trust to transfer land 20 years after an unattested sale, showing equity can beat time limits when conduct proves ownership.

What this practically means

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Executive summary

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The plaintiff sued for specific performance of a sale agreement dated 11 April 1998 by which he purchased a portion of land parcel MN/V/729 from the 1st defendant, and for payment of rent from the 2nd defendant, a telecommunications company that erected a mast on the land. The 1st defendant denied the sale, alleging a lease to the plaintiff instead, and cross-claimed against the 2nd defendant for rent for 2014-2016. The court found, on the evidence of conduct including the survey, the plaintiff signing the lease as beneficial owner, and the 1st defendant's Rental Payment Form directing rent to the plaintiff, that the sale agreement was genuinely entered into. It held that the attestation requirement in Section 3(3) of the Law of Contract Act, introduced in 2002, did not apply retrospectively, so the unattested 1998 agreement was valid. However, the claim based on the contract was time-barred under Section 7 of the Limitation of Actions Act, the suit having been filed over 18 years after the agreement. Nevertheless, the court granted specific performance on the doctrine of constructive trust, holding that the 1st defendant's acknowledgment of the plaintiff's beneficial ownership precluded him from reneging. The 1st defendant was declared to hold the 0.0293 Ha portion in trust, ordered to subdivide and convey it, and to pay over all lease monies received, future rent to be paid directly to the plaintiff. The cross-claim was dismissed with costs; the 1st defendant bore the plaintiff's costs.

Key legal issues

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01

Whether the sale agreement of 11 April 1998 was entered into

Holding

It was validly entered into, proved by the 1st defendant's subsequent conduct

Reasoning

Though the 1st defendant denied signing, his conduct - commissioning the survey in the plaintiff's presence, having the plaintiff sign the lease as beneficial owner, and directing the 2nd defendant to pay rent into the plaintiff's account - evidenced acknowledgment of the sale. The tenancy theory was rejected as no tenancy agreement existed and no rent was ever demanded.

p. 3
02

Whether the unattested sale agreement is enforceable under Section 3(3) of the Law of Contract Act

Holding

Yes; the attestation requirement post-dates the agreement and cannot apply retrospectively

Reasoning

The pre-2002 Section 3(3) required only writing and signature. The agreement of 1998 complied with that regime, and the amendment introducing attestation does not operate retrospectively. The court followed Peter Mbiri Michuki vs Samuel Mugo Michuki in which an agreement of the earlier era was held enforceable without attestation.

p. 4
03

Whether the suit is time barred

Holding

Yes; the claim for specific performance based on the contract is out of time

Reasoning

The contract was made in 1998 and the suit filed in 2017, over 18 years later, beyond the 12-year period under Section 7 of the Limitation of Actions Act for recovery of land. Counsel for the plaintiff did not seriously address limitation. Specific performance based purely on the contract therefore fails.

p. 4
04

Whether specific performance is available on another basis

Holding

Yes, on the doctrine of constructive trust

Reasoning

The 1st defendant acknowledged the plaintiff as beneficial owner in the lease and by directing rent payments to him. Permitting him to renege would be grossly unjust; the court invoked equitable principles and a constructive trust, following Macharia Mwangi Maina & 87 Others vs Davidson Mwangi Kagiri, to grant specific performance notwithstanding limitation.

p. 4
05

Who is entitled to the rent under the lease

Holding

The plaintiff; the 1st defendant holds rent received from 2017 in trust for him, and the cross-claim is dismissed

Reasoning

Rent for 2014-2016 was properly paid to the plaintiff on the 1st defendant's own direction, defeating the fraud allegation and the cross-claim. The 2nd defendant cannot be made to pay twice for 2017; instead the 1st defendant holds those monies in trust, and future rent is payable directly to the plaintiff.

p. 5

Legal principles established

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  • The attestation requirement in Section 3(3) of the Law of Contract Act was introduced by the Statute Law (Miscellaneous Amendments) Act No. 2 of 2002 and does not apply retrospectively to contracts made before it came into force
  • A party who acknowledges another as beneficial owner and conducts himself accordingly may be found to hold the land on a constructive trust, entitling that other to specific performance notwithstanding that the underlying contract is time-barred
  • Rent paid by a lessee to the beneficial owner at the direction of the legal owner is held on trust for the beneficial owner and cannot be reclaimed on a claim of fraud

Court orders

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  1. 1.Declaration that the 1st defendant holds in trust for the plaintiff a portion of land measuring 0.0293 Ha out of MN/V/729 delineated in the survey plan dated 21 November 2013
  2. 2.Declaration that the 1st defendant entered into the lease with the 2nd defendant as trustee of the plaintiff
  3. 3.Declaration that all payments made by the 2nd defendant to the 1st defendant under the lease are held in trust for the plaintiff
  4. 4.Order that the 1st defendant forthwith pay the plaintiff all monies received under the lease, with interest at court rates
  5. 5.Order that the 2nd defendant henceforth pay all lease monies directly to the plaintiff
  6. 6.Order of specific performance directing the 1st defendant to register the proposed sub-division, subdivide MN/V/729 and convey 0.0293 Ha to the plaintiff at the plaintiff's cost
  7. 7.In default, the Deputy Registrar to effect the said order, costs borne by the 1st defendant
  8. 8.1st defendant to pay the plaintiff's costs of the suit and the 2nd defendant's costs of the dismissed cross-claim

Authorities

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Legislation

  • Law of Contract Act, Cap 23Section 3(3)
  • Statute Law (Miscellaneous Amendments) Act, No. 2 of 2002
  • Limitation of Actions Act, Cap 22Section 7
  • Auctioneers Act, Cap 526

Cases cited (3)

  • Peter Mbiri Michuki vs Samuel Mugo Michuki
    (2014) eKLR
  • Korir vs Soin United Women Group
    (2018) eKLR
  • Macharia Mwangi Maina & 87 Others vs Davidson Mwangi Kagiri
    (2014) eKLR
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court (Environment and Land Court Act)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Elijah Sadala Msagha v Benedict Mwakio Mchombo & another [2020] KEELC 2273 (KLR)", Case Analysis (2020). Not stated in the judgment provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2273/eng@2020-05-07

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