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ELCPartially AllowedAppeal against judgment in Milimani Commercial Court Civil Case No. 1783 of 2009· [2021] KEELC 1488 (KLR)

Equity Bank Limited (Formerly Equity Building Society) v James Muraya Mahugu [2021] KEELC 1488 (KLR)

Environment and Land Court (sitting at Nairobi)
4 October 2021
4,715 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan court confirmed that a land buyer's claim survived decades of delay, but cut the interest award and removed unproven damages.

What this practically means

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Executive summary

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This is a first appeal against the judgment of Hon. R.A Oganyo (Mrs.), SPM delivered on 8th March 2013 in Milimani Commercial Court Civil Case No. 1783 of 2009, in which James Muraya Mahugu (plaintiff, now Respondent) succeeded against Equity Bank Limited (defendant, now Appellant) on a 1991 agreement for sale of Plot RUIRU/KIU BLOCK 9 (EQUITY). The lower court ordered specific performance, or in the alternative a refund of Kshs. 70,000/- with interest at 14% per annum from 16th November 1992, plus Kshs. 3,000/- per month as loss of use and mesne profits. The Appellant raised thirteen grounds, principal among them limitation of action, laches, want of proof of mesne profits, the rate and commencement of interest, absence of Land Control Board consent, and the Respondent's delay in seeking specific performance. Okong'o J found that the completion clause in the agreement was open ended, so breach occurred only after reasonable time and notice to complete; the cause of action accrued on 27th November 2007 when the Respondent's advocate sent a demand letter that went unanswered, and the suit filed in March 2009 was therefore not time barred. The court upheld specific performance (or refund in the alternative) but agreed with the Appellant that interest should run at the court rate of 12% per annum from the date of filing suit, 25th March 2009, not 14% from 1992, and that the mesne profits award had no basis, being unproved and lying only against a wrongful possessor. The appeal succeeded in part; each party was ordered to bear its own costs of the appeal.

Key legal issues

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01

When the cause of action accrued for limitation purposes

Holding

The cause of action arose on 27th November 2007 after the demand letter, so the suit filed in March 2009 was not time barred.

Reasoning

The completion clause had no time frame, making completion open ended. Breach could occur only after reasonable time and notice to complete. The Respondent waited for the determination of pending cases over the mother title, sent a demand on 27th November 2007 which went unanswered, and the cause of action accrued at that point, not in 1992 or 1995.

p. 5
02

Entitlement to specific performance

Holding

Specific performance was properly granted as the Respondent proved fulfilment of his obligations and the Appellant's breach, offering no evidence to the contrary.

Reasoning

The Respondent proved a valid agreement dated 4th December 1991, payment of the purchase price and loans, and the Appellant's failure to transfer. The Appellant adduced no evidence. Because of the passage of time, the alternative remedy of refund with interest was properly retained.

p. 5
03

Mesne profits and loss of use

Holding

The award of Kshs. 3,000/- per month was set aside as neither pleaded with proof nor founded on wrongful possession.

Reasoning

Mesne profits require proof and lie only against a trespasser or wrongful possessor. The Respondent did not prove the Appellant was in possession of the property, did not support the Kshs. 3,000/- figure with evidence, and the property had never been transferred to him. General damages for breach were not proved either.

p. 6
04

Rate and start date of interest on the refund

Holding

Interest at the court rate of 12% (not 14%) per annum to run from the date of filing suit, 25th March 2009, not from 1992.

Reasoning

No Practice Note or amendment raised the court rate above 12% fixed by Practice Note No. 1 of 1982. Backdating interest to 1992 had no basis because the Appellant was not under a duty to transfer on that date given the open-ended completion clause.

p. 5

Legal principles established

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  • In a contract with no fixed completion date, breach occurs only after reasonable time has elapsed and notice to complete has been given; limitation runs from that point.
  • Court interest rate is 12% per annum pursuant to Practice Note No. 1 of 1982; interest should run from the date of filing suit unless a basis for backdating is laid.
  • Mesne profits are payable only against a trespasser or person in wrongful possession, and must be sufficiently pleaded and proved.
  • A party who tenders uncontroverted evidence stands to have that evidence accepted, but a pleading is not evidence.

Court orders

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  1. 1.The order awarding the Respondent interest on Kshs. 70,000/- at the rate of 14% per annum is set aside and in place thereof the said amount shall attract interest at the rate of 12% per annum.
  2. 2.Interest shall accrue on the said sum of Kshs. 70,000/- from 25th March, 2009 until payment in full and not from 16th November, 1992.
  3. 3.The award of Kshs. 3000/- per month for loss of use and mesne profits is set aside.
  4. 4.The other parts of the judgment (specific performance or refund of Kshs. 70,000/- in the alternative) shall remain the same.
  5. 5.Each party shall bear its own costs of the appeal.

Authorities

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Legislation

  • Limitation of Actions Act, Chapter 22 Laws of KenyaSections 4(1), 4(1)(a), 7 and 17
  • Civil Procedure ActSection 2 (definition of mesne profits)
  • Practice Note No. 1 of 1982 (issued by Acting Chief Justice A.H. Simpson on 16th March 1982)Court interest rate of 12% per annum

Cases cited (21)

  • Deposit Protection Fund Board in Liquidation of Euro Bank Limited (In Liquidation) v Rosaline Njeri Macharia & another
    [2016] eKLR
  • Njuguna Githiru v Attorney General
    [2016] eKLR
  • Rosemary Wanjiru Kungu v Elijah Macharia Githinji & another
    [2014] eKLR
  • Equity Bank Ltd v Gerald Wang'ombe Thuni
    [2015] eKLR
  • Capital Fish Kenya Limited v The Kenya Power & Lighting Company Limited
    [2016] eKLR
  • Esther Nyamweru Waruhiu & another v George Kang'ethe Waruhiu
    [2019] eKLR
  • Stephen Wangai (Minor suing through next friend George Maina Wangai) v Paul Temu Nderemo and Camp Garbatulla Catholic Church
    unreported
  • Esther Ingolo v Swaleh Said Hamed Bilel & 2 others
    [2006] eKLR
  • Pyrethrum Board of Kenya & another v Kamau Njehia
    [2008] eKLR
  • Mbuthia Macharia v Annah Mutua Ndwiga & another
    [2017] eKLR
  • Solomon Ndegwa Kuria v Peter Nditu Gitau
    [2019] eKLR
  • Lydia Akelo Ochuka v Cecilia Mwikali Kaloki & Another
    [2019] eKLR
  • Marilyn Indombera Ayieko v Samarose Investments Ltd
    [2019] eKLR
  • Fredrick Korir v Soin United Women Group (Sued through Eunice Towett, Jane Mwolomet and Lucio Chebocho)
    [2018] eKLR
  • Amina Abdul Kadir Hawa v Rabinder Nath Anand & another
    [2012] eKLR
  • Attorney General v Halal Meat Products Limited
    [2016] eKLR
  • Rajan Shah T/A Rajan S. Shah & Partners v Bipin P. Shah
    [2016] eKLR
  • Peter Mwangi Mbuthia & another v Samow Edin Osman
    [2014] eKLR
  • Samuel Kamau Macharia v Kenya Commercial Bank Limited
    [2003] eKLR
  • South Nyanza Sugar Company Limited v Diskson Aoro Owuor
    [2017] eKLR
  • Karanja Mbugua & another v Marybin Holding Co. Ltd
    [2014] eKLR
On appeal from
Milimani Commercial Court (Chief Magistrate's Court)
Civil Case No. 1783 of 2009
Jurisdiction invoked
First appellate jurisdiction over the subordinate court (statutory appeal from the magistrate's court in a land/contract matter)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Equity Bank Limited (Formerly Equity Building Society) v James Muraya Mahugu [2021] KEELC 1488 (KLR)", Case Analysis (2021). Appeal against judgment in Milimani Commercial Court Civil Case No. 1783 of 2009. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/1488/eng@2021-10-04

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