Philip Wanjohi Kariuki v Kennedy Njenga Nyambura & 2 others; Lazarus Sankori Karino (Interested Party) [2020] KEELC 3753 (KLR)
The bottom line
#A Kenyan court ordered land sellers to refund KShs 6.25 million with 20% interest after they failed to complete a sale, rejecting their attempt to invoke arbitration too late.
What this practically means
#Executive summary
#Key legal issues
#Whether the Defendants breached the Sale Agreement dated 25th August 2015
The Defendants breached the agreement by failing to complete the transaction within the stipulated 180 days despite receiving most of the purchase price
The court noted that the Defendants could not complete the transaction because a restriction still subsisted over the suit land following their failure to pay the third party the balance of the purchase price. The Defendants had entered a consent judgment with the third party acknowledging the debt. Having received Kshs. 6,250,000 of the purchase price and having ignored the completion notice, their failure to transfer the land or refund the monies constituted breach.
Whether the arbitration clause in the Sale Agreement ousted the Court's jurisdiction
The Defendants waived their right to arbitration by entering appearance and filing a defence without applying for a stay under Section 6(1) of the Arbitration Act
Section 6(1) of the Arbitration Act 1995 requires a party seeking a stay to apply not later than the time of entering appearance. The Defendants filed a Memorandum of Appearance, Statement of Defence and Witness Statements without seeking a reference to arbitration. Following Adrec Limited v Nation Media Group Limited, the option to arbitrate was sealed upon entry of appearance and filing of defence, so the court retained jurisdiction.
Whether the Plaintiff was entitled to the orders sought in the Plaint
The Plaintiff was entitled to a refund of Kshs. 6,250,000 with interest at 20% per annum, but not to specific performance, declaration or damages
Having found breach, the court held that Clause 6.3 of the Sale Agreement provided for refund of the purchase price with interest at 20% upon failure to complete. Reliance was placed on Hadley v Baxendale, Millicent Perpetua Atieno v Louis Onyango Otieno and Manjit Singh Sethi to hold the purchaser entitled to a refund with interest. Specific performance was unavailable because the restriction prevented completion, and damages were refused for lack of evidence.
Legal principles established
#- A party who enters appearance and files a defence without applying for a stay under Section 6(1) of the Arbitration Act waives the right to refer the dispute to arbitration
- Where a vendor wrongfully refuses or is unable to complete a sale of land, the purchaser is entitled to a refund of the purchase price paid, with interest, as damages
Court orders
#- 1.The Defendants be and are hereby directed to refund all sums paid by the Plaintiff towards the Sale Agreement dated 25th August, 2015 being Kshs. 6,250,000/= plus interest at 20% per annum from the date of filing the suit
- 2.The Plaintiff is awarded the Costs of the Suit with Interest until payment in full
- Jurisdiction invoked
- Article 162(2)(b) of the Constitution establishing the Environment and Land Court (implied by the court's jurisdiction over land); no express provision cited
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Philip Wanjohi Kariuki v Kennedy Njenga Nyambura & 2 others; Lazarus Sankori Karino (Interested Party) [2020] KEELC 3753 (KLR)", Case Analysis (2020). ELC Case No. 3 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3753/eng@2020-01-29
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.