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ELCPartially AllowedEldoret ELC No. 71 of 2017 (originally Eldoret HCC No. 22 of 2006; transferred to Kitale as ELC No. 12 of 2013 and retransferred to Eldoret)· [2020] KEELC 3098 (KLR)

Simba Hills Farm Ltd v Sultan Hasham Lalji & 5 others [2020] KEELC 3098 (KLR)

Environment and Land Court of Kenya
4 March 2020
10,222 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~41 min to read original · ~4 min brief

The bottom line

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A buyer who took possession of land decades ago can enforce an unwritten land sale in Kenya, but must still pay any unpaid purchase price.

What this practically means

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Executive summary

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The plaintiff, Simba Hills Farm Limited, sued for temporary and permanent injunctions and, in the alternative, an order compelling the 1st to 3rd defendants to transfer to it the title deed of LR No. 8304, Eldoret North (1680 acres), contending it had purchased the entire parcel under an oral agreement of 1969/1976, paid the purchase price, obtained Land Control Board consent in 1979 and been in possession since. The 1st defendant denied a full sale, asserting an oral agreement for 400 acres later rescinded, an offer for 840 acres, a fraudulent procurement of consent for 1680 acres, and a fresh 1997 written agreement for Kshs. 35 million which the plaintiff breached; he counterclaimed for general damages, vacant possession, eviction and mesne profits. The 4th to 6th defendants, claiming to be the company's lawful directors, supported the 1997 agreement. The court framed six issues and held the oral agreement valid under the part-performance proviso to section 3(3) of the Law of Contract Act, the plaintiff having taken and continued possession; that the 1997 parallel agreement with the plaintiff's own shareholders was null and void; that fraud in obtaining the consent was not distinctly pleaded and proved; and that the plaintiff, having a valid subsisting agreement and possession, was entitled to specific performance, damages being inadequate. The court however found the full purchase price was not proved to have been paid. Judgment was entered for the plaintiff with a permanent injunction and an order compelling transfer of the title deed, but the plaintiff was ordered to pay the 1st defendant the balance of Kshs. 1,000,000 with interest; the counterclaim was dismissed with costs and the defendants were ordered to pay the costs of the suit with interest.

Key legal issues

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01

Validity of the oral sale agreement of 1969 under section 3(3) of the Law of Contract Act

Holding

The oral agreement was valid because the plaintiff took and continued possession of the suit land in part performance, satisfying the proviso to section 3(3)

Reasoning

The court noted the dispute was not the existence but the validity of the oral agreement. The plaintiff took possession with the 1st defendant's permission, remained in possession, and developed the land, which was an act in furtherance of the contract. Relying on Peter Mbiri Michuki v Samuel Mugo Michuki, the court held that part performance saved the oral contract from the writing requirement.

p. 10
02

Validity of the 1997 written agreement between the 1st defendant and the 4th, 5th and 6th defendants

Holding

The 1997 agreement was null and void as the plaintiff's earlier agreement was subsisting and the 4th-6th defendants were the plaintiff's own shareholders

Reasoning

The 4th, 5th and 6th defendants were shareholders of the plaintiff company and members of its finance committee. Having sold the land and not rescinded the first agreement after the plaintiff took uninterrupted possession, the 1st defendant could not enter a parallel sale with the plaintiff's own shareholders.

03

Whether fraud vitiated the Land Control Board consent

Holding

No fraud was proved; the allegation failed for want of evidence and for failure to plead and prove fraud to the required standard

Reasoning

The defendants claimed fraud in obtaining consent for 1680 acres instead of 840 but led no evidence, never reported the matter to investigating agencies, and never impeached the consent. Relying on Vijay Morjaria and R.G. Patel v Lalji Makanji, the court held fraud must be distinctly pleaded and proved above a mere balance of probabilities.

p. 11
04

Whether the plaintiff was entitled to specific performance

Holding

Specific performance was granted as damages would be inadequate, the plaintiff being in possession with the vendor's permission and the consent having issued

Reasoning

The court applied Reliable Electrical Engineers v Mantrac and Gurdev Singh Birdi, holding that where it is just and equitable and the underlying contract is valid, specific performance lies. The plaintiff was in possession, the consent had issued over 40 years prior, and damages would not be an adequate remedy. However, as full payment was not proved, the plaintiff was ordered to pay the outstanding balance with interest.

p. 12

Legal principles established

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  • An oral contract for the disposition of an interest in land is enforceable under the proviso to section 3(3) of the Law of Contract Act where the purchaser has taken and continued possession in part performance of the contract
  • Fraud must be specifically pleaded and distinctly proved; it cannot be left to be inferred from the facts
  • A second agreement over land already sold and in the purchaser's possession, entered into with the purchaser's own shareholders, is null and void

Court orders

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  1. 1.A permanent injunction restraining the defendants, their servants and agents from interfering with, trespassing onto, surveying, subdividing, alienating, selling, transferring or in any other way doing anything over LR No. 8304 situated at Eldoret North, Moiben Division in Uasin Gishu District measuring 1680 acres
  2. 2.An order compelling the 1st, 2nd and 3rd defendants to transfer to the plaintiff the title deed of the suit property
  3. 3.The 1st defendant's counterclaim is dismissed with costs
  4. 4.The plaintiff to pay the 1st defendant Kshs. 1,000,000 being the balance of the purchase price with interest from the date of filing the suit
  5. 5.Defendants to pay costs of this suit and interest

Authorities

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Legislation

  • Law of Contract Act (Cap 23)Sections 3(3), 3(7)
  • Companies Act (Repealed) Cap 486Sections 77, 185
  • Land Control Act (Cap 302)Sections 6(1), 8(1)
  • Limitation of Actions Act (Cap 22)Section 4
  • Evidence Act (Cap 80)Sections 109, 110
  • Land ActSections 39, 40, 41, 42, 42(3), 161(2)
  • Civil Procedure ActSection 27(1)

Cases cited (21)

  • Arthi Highway Developers v West End Butcheries Ltd
    Nairobi CACA 246 of 2013
  • Macharia Mwangi v Maina & 7 Others Davidson Mwangi Kagin
    (2014) eKLR, Nyeri CACA 6, 46 and 27 of 2011
  • Gatimu Kinguru v Muya Gathangi
    (1976) KLR 253
  • Steadman v Steadman
    (1976) AC 536, 540
  • Daudi Ledama Morintat v Mary Christine Karie & 2 others
    [2017] eKLR
  • Silverbird Kenya Limited v Junction Ltd & 3 Others
    [2013] eKLR
  • Patrick Tarzan Matu & Another v Nassim Shariff Abdulla & 2 Others
    [2009] eKLR
  • Gladys Waniiru Ngacha v Teresia Chepsaat & 4 Others
    [2008] eKLR
  • Schon Noorani v Damji Ramji Patel & 2 others
    [2006] eKLR
  • Mikooh Exquisite Limited v Simple Homes Development Consortium Limited & 2 others
    [2019] eKLR
  • Vijay Morjaria v Nansingh Madhusingh Darbar & another
    [2000] eKLR, Civil Appeal No. 106 of 2000
  • Rose Wakanyi Karanja & 3 others v Geoffrey Chege Kirundi & another
    2016 eKLR
  • Hiram Ngaithire Githire v Wanjiku Munge
    [1979] KLR 50
  • Reliable Electrical Engineers Ltd v Mantrac Kenya Limited
    (2006) eKLR
  • Gurdev Singh Birdi & Anor v Abubakar Madhbuti
    C.A. No. 165 of 1996
  • Peter Mbiri Michuki v Samuel Mugo Michuki
    [2014] eKLR
  • Hendrik Potgieter Road Ruimsig Pty v Gobel (No. 246/10)
    [2011] ZASCA 105
  • Mohoney v East Holyford Mining Co
    [1875] L.R. 7 HL 869
  • R. G. Patel v Lalji Makanji
    [1957] EA 314
  • Koinange & 13 Others v Koinange
    [1986] eKLR
  • Mutsonga v Nyati
    [1984] EA 425
Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over a claim concerning title to land (LR No. 8304), the suit having been transferred from the High Court

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, "Simba Hills Farm Ltd v Sultan Hasham Lalji & 5 others [2020] KEELC 3098 (KLR)", Case Analysis (2020). Eldoret ELC No. 71 of 2017 (originally Eldoret HCC No. 22 of 2006; transferred to Kitale as ELC No. 12 of 2013 and retransferred to Eldoret). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3098/eng@2020-03-04

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