Rael Moraa Ondika v Swanya Ltd & another [2022] KEELC 1059 (KLR)
The bottom line
#A Kenyan court cancelled a land sale after the buyer defaulted and stripped a fraudulently obtained title, awarding the seller costs and most of her deposit back.
What this practically means
#Executive summary
#Key legal issues
#Validity of the assignment of the sale agreement to the 2nd Defendant
The assignment was invalid - the Plaintiff was not party to it, it was unattested on her part and contrary to the non-amendment clause; the 2nd Defendant was a stranger to the contract
The Assignee Agreement of 6/6/2015 was disowned by the Plaintiff, unattested on her part, and provided no space for her identification. It breached condition 18 requiring amendments to be signed in the same manner as the agreement. A written agreement cannot be amended orally, and a contract cannot be enforced by or against a stranger under the privity rule as stated in Agricultural Finance Corporation v Lengetia.
Lawfulness of the Title held by the 2nd Defendant
The Title was acquired illegally, unprocedurally or through a corrupt scheme and therefore defeated by the proviso to Section 26 of the Land Registration Act
The land was agricultural; no Land Control Board consent for sub-division or transfer was obtained; the Plaintiff never signed transfer forms in favour of the 2nd Defendant and was unaware of the transfer. The court held that nothing short of collusion, fraud or misrepresentation between the transferee and the lands office could have enabled the transaction, meeting the strict threshold for proving fraud.
Breach of contract and rescission
The 1st Defendant breached the contract by failing to pay the balance of Kshs. 3,000,000/= and going into hiding; the Plaintiff lawfully rescinded under clauses 16 and 19(1) by her letters of 10/6/2016 and 8/8/2016
Payment of Kshs. 2,500,000/= was disbelieved for lack of deposit slips and arithmetic inconsistency; the balance was Kshs. 3,000,000/=. No notice of extension was ever given, and the alleged cash tendering at the Plaintiff's home was implausible. The completion date lapsed and the transfer to the 2nd Defendant on 2/10/2015 preceded any purported payment.
Refund of deposit though not pleaded
The court could order refund of the deposit less 10% forfeiture even though refund was not pleaded, because rescission and the default clause formed part of the substratum of the pleadings
Distinguishing Wambua Mwangangi and Philmark Systems, the court held that issues flowing from the pleadings in totality - not merely from the prayers - may be pronounced upon. Since the court was invited to give effect to the sale agreement whose clauses 10 and 16 governed rescission consequences, ignoring the refund would misinterpret the agreement in the Plaintiff's favour.
Legal principles established
#- A title certificate is challengeable where acquired illegally, unprocedurally or through a corrupt scheme, per proviso to Section 26 of the Land Registration Act
- A contract affects only the parties to it and cannot be enforced by or against a stranger to it
- Allegations of fraud must be strictly proved - something more than a mere balance of probabilities is required
- A written agreement cannot be amended orally
- A 'time not of the essence' clause does not entitle a party to indefinite delay in completing a contract
Court orders
#- 1.Dismissal of the Defendants' counterclaims with costs to the Plaintiff
- 2.A declaration that the sale agreement of 15/05/2015 is rescinded, repudiated and/or abandoned owing to material breach by the 1st Defendant
- 3.An order directing the Defendants to return the Title Deed issued to them in respect of L.R. GESIMA SETTLEMENT SCHEME/1075
- 4.The Land Registrar, Nyamira ordered to rectify the register in respect of L.R. GESIMA SETTLEMENT SCHEME/1075, revert and restore the Plaintiff's name and issue a Title Deed
- 5.Plaintiff ordered to refund Kshs. 1,800,000/= to the 1st Defendant being the deposit paid less Kshs. 200,000/= (10% forfeiture) upon rectification of the register
- 6.Costs of the suit and of the counterclaims awarded to the Plaintiff against the Defendants jointly and severally
- Jurisdiction invoked
- Environment and Land Court jurisdiction (Article 162(2)(b) Environment and Land Court Act); matter originally filed as Kisii ELC Case No. 240 of 2016 and transferred to Nyamira
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Rael Moraa Ondika v Swanya Ltd & another [2022] KEELC 1059 (KLR)", Case Analysis (2022). ELC Case No 69 of 2021 (formerly Kisii ELC Case No. 240 of 2016). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1059/eng@2022-02-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.