Sung Rim Choi v Exotic Gates Limited [2020] KEELC 2460 (KLR)
The bottom line
#A Nairobi court ordered a developer to refund an off-plan apartment buyer's deposit with interest, holding that a developer who never started construction cannot blame the buyer.
What this practically means
#Executive summary
#Key legal issues
#Which party was in breach of the agreement of 8th November 2014
The Respondent was in breach; the Applicant's failure to pay the balance of deposit and subsequent instalments was excused by the Respondent's waiver and its failure to commence construction
The Applicant paid Kshs.3,000,000/= of the agreed Kshs.5,075,000/= deposit, which was accepted and receipted without demand for the balance, amounting to waiver/estoppel. The Respondent conceded the delay in construction was due to title issues, amounting to material non-disclosure. Five years after signing and three years past the June 2016 completion date, construction had not begun, so the Applicant was justified in withholding further payments.
Whether the Applicant is entitled to refund of the deposit and interest
Yes - refund of Kshs.3,000,000/= with interest at court rates from 12th November 2014, not conditional on completion or resale of the unit
The contract could not be salvaged since the project never commenced. The Respondent had enjoyed the Applicant's money for five years and it would be unfair to delay the refund by pegging it to completion of the project or sale of the unit to another purchaser. Interest was awarded at court rates from the date the deposit was received.
Whether the Respondent's counter-claim succeeds
The counter-claim fails and is dismissed with costs
The 2.5% refund policy fee did not apply because the Applicant was forced to back out, not willingly opting out. The late penalty fee of Kshs.1,064,900/= could not apply as the project never started. The 10% of sale price under the Law Society Conditions could only apply had a formal contract been executed and collapsed due to the Applicant's default; only an offer letter existed.
Whether the Applicant is entitled to general damages
No - general damages cannot be awarded in addition to special damages
Although the Applicant sought general damages for distress, the court held these could not be awarded in addition to special damages, and judgment was entered only for the refund, interest and costs.
Legal principles established
#- A party who accepts a part-payment without demanding the balance waives its right to insist on full payment and cannot later plead the shortfall as breach by the other party.
- A developer who enters a sale agreement without clean title is guilty of material non-disclosure and cannot blame the purchaser for the failure of the project.
- Where an off-plan project has not commenced years after the completion date, a purchaser is not bound to pay further instalments and is entitled to a refund of the deposit not pegged to completion or resale of the unit.
Court orders
#- 1.A declaration that the Respondent is in breach of the contract for sale of Apartment No. EGL/01/100/2014 in Block A, Hatheru Road entered with the Applicant on 8th November 2014
- 2.The Respondent to refund the Applicant Kshs.3,000,000/= together with interest at court rates from 12th November 2014 until payment in full
- 3.The Respondent to pay the Applicant costs of the suit
- 4.The Respondent's counter-claim dismissed with costs to the Applicant
- Jurisdiction invoked
- Articles 40, 64 and 159 of the Constitution; Sections 1, 1A, 1B, 3 and 3A of the Civil Procedure Act (Cap 21); Order 37 Rule 3 of the Civil Procedure Rules 2010; Section 10 of the Limitation of Actions Act (Cap 22)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Sung Rim Choi v Exotic Gates Limited [2020] KEELC 2460 (KLR)", Case Analysis (2020). ELC Case Number 155 of 2019 (OS). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/2460/eng@2020-05-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.