Lacton Murithi Njoka v Trustees National Social Security Fund [2021] KEELC 4489 (KLR)
The bottom line
#A Kenyan court ruled a bank wrongly tried to repossess a house it had sold, ordering it to complete the sale and pay the buyer's legal costs.
What this practically means
#Executive summary
#Key legal issues
#Existence of the sale agreement
A written tenant purchase agreement existed between the parties despite the defendant's claim that no signed agreement existed
The court reasoned that correspondence referring to specific clauses of an agreement, statements of account tied to the tenant purchase scheme, the plaintiff's possession and payments, and the defendant's execution of an instrument of transfer all proved the agreement. It could not be seriously contended that all engagements rested on an unsigned standard agreement. Once the plaintiff showed the agreement existed, the evidential burden shifted to the defendant.
Variation of the agreement and breach
The agreement was varied to permit lump-sum payment, and the defendant, not the plaintiff, breached it by failing to furnish completion documents
The court found as common ground that CBK offered a loan, the plaintiff's advocates gave an irrevocable undertaking for Kshs. 4,348,802/- after the account was frozen, the defendant accepted the undertaking and the frozen balance, yet never supplied the completion documents that were a condition precedent to registration and release of funds. The defendant therefore could not claim default on monthly instalments or unilaterally unfreeze the account without notice proved to have been delivered.
Repossession notice and injunctions
The repossession notice was illegal; prohibitory and mandatory injunctions were warranted
Since instalments and interest had been frozen and the defendant held a professional undertaking for the whole outstanding sum, it had no right to repossess on account of default. The defendant also failed to show delivery of the 19 February 2010 activation letter. Having withheld the completion documents without lawful cause, the defendant could be compelled by mandatory injunction to release them.
Counter-claim
The counter-claim failed; the court cannot order parties into a fresh agreement and the defendant proved no entitlement to alternative reliefs
The principal relief sought an order compelling execution of a fresh agreement at market rate after payment of alleged rent, but a court has no power to force parties into an agreement. The claims for accrued loan balances, interest and rent lacked basis because the account had been frozen at an agreed figure and no further payments were contemplated under the freezing correspondence.
Legal principles established
#- Where a party who denies the existence of a written agreement has issued demands and statements of account referencing its clauses, the burden shifts to it to disprove the agreement once the plaintiff shows it existed
- A court has no power to compel parties to enter into an agreement
- A party cannot unilaterally reactivate a frozen account or rely on an activation notice not proved to have been delivered
- Costs follow the event
Court orders
#- 1.An injunction restraining the defendant, its servants or agents from alienating, disposing, charging, selling and/or dealing with Nairobi/Block146/40 Hazina estate, subject to the subsequent orders.
- 2.The plaintiff to give, within 45 days, a fresh undertaking from CBK or its advocates to pay the defendant Kshs. 4,348,802/- within 14 days of registration of the property in his favour and a charge in favour of CBK.
- 3.Upon receipt of that undertaking, the defendant to release within 60 days the completion documents (original certificate of lease, original lease, executed transfer, rent and rates clearance certificates subject to payment of accrued amounts, consent to transfer, passport photographs of authorised signatories, and a copy of the defendant's PIN certificate).
- 4.If the plaintiff fails to comply with order 2 within the prescribed time, the injunction stands discharged without further reference to the court.
- 5.The defendant's counter-claim is dismissed.
- 6.The defendant shall pay the plaintiff's costs of the suit.
- Jurisdiction invoked
- Original civil suit by plaint (first-instance trial of claim and counter-claim; specific enabling provision not stated in judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Lacton Murithi Njoka v Trustees National Social Security Fund [2021] KEELC 4489 (KLR)", Case Analysis (2021). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/4489/eng@2021-01-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.