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ELCPartially AllowedNot stated in judgment· [2022] KEELC 3149 (KLR)

Mahican Investments Limited v Liliana (Civil Suit 88 of 2010) [2022] KEELC 3149 (KLR)

Environment and Land Court
10 June 2022
2,308 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that signing a contract you don't fully understand still binds you, ordering the property owner to pay Euro 7,870 and give up possession.

What this practically means

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Executive summary

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By a plaint dated 31st October 2012, the plaintiff company sued the defendant seeking possession of Chalet No. 31 at Karibuni Villas, damages for breach of covenant, Euro 7,870.04, interest, and costs. The plaintiff's case was that the defendant, having taken a 999-year lease of the chalet from Caluwa Ltd in 1997, covenanted under clause 1(u) to perform a management and maintenance agreement in respect of the common areas, which she breached by non-performance, and that the plaintiff had acquired the investment from Caluwa Ltd. The defendant denied privity of contract with the plaintiff, contending that the 1999 English-language agreement she signed was voidable for misrepresentation because she believed it replicated the 1997 Italian agreement and did not understand English. She also challenged the plaintiff's authority to sue for want of a board resolution. The court framed two issues: whether a valid contract existed and whether the defendant breached it. Holding that the defendant voluntarily signed both agreements without coercion and that fraud must be specifically pleaded and proved, the court found a valid and enforceable agreement and that the defendant admitted non-payment. Damages were however refused because the plaintiff did not prove receipt of rental income. Judgment was entered for the plaintiff for possession, Euro 7,870.04, interest until possession is delivered, and costs of the suit.

Key legal issues

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01

Whether a valid and enforceable contract existed between the plaintiff and the defendant

Holding

A valid agreement existed and is enforceable; no coercion or fraud was proved to invalidate it, and the defendant voluntarily signed the agreements and admitted non-payment

Reasoning

The court applied the principles in Garvey v Richards and RTS Flexible Systems on contractual formation. The defendant admitted signing the 1997 and 1999 agreements voluntarily, though she claimed not to understand the English terms. The court held she was under no duty to sign what she did not understand and should have sought clarification; her willing signature bound her. Fraud was not pleaded, so the contract stood.

p. 5
02

Whether the defendant breached the management and maintenance covenant under clause 1(u) of the lease

Holding

The defendant breached clause 1(u) by non-performance of the management and maintenance agreement and owed the plaintiff Euro 7,870.04

Reasoning

It was common ground that the parties entered into a written lease agreement for management services. Clause 1(u) required the lessee to perform a management and maintenance agreement, and clause 3(a) provided consequences for non-payment. The defendant admitted she had not paid any amounts to the plaintiff, establishing the breach and the sum due.

p. 5
03

Whether the plaintiff was entitled to damages

Holding

Damages were refused because the plaintiff did not state whether it had received rental income for the villas

Reasoning

Although breach was established, the plaintiff failed to prove its loss. The court noted the plaintiff did not state whether it had received rental income for the villas, and on that basis declined to award general damages, awarding instead the specific sum of Euro 7,870.04 and possession.

p. 5

Legal principles established

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  • A party who voluntarily signs an agreement without coercion is bound by its terms even if they did not understand the language in which it was written
  • A court cannot rewrite the terms of a contract for the parties; allegations of fraud or coercion must be specifically pleaded and proved
  • Three basic rules underpin the formation of a contract: agreement, intention to enter contractual relations, and consideration

Court orders

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  1. 1.Possession of the suit premises
  2. 2.Payment of Euro 7,870.04
  3. 3.Interest on the Euro 7,870.04 until possession is delivered to the plaintiff
  4. 4.Costs of the suit

Authorities

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Legislation

  • Civil Procedure RulesOrder 21 [1]

Cases cited (12)

  • W J Blakeman Ltd vs Associated Hotel Management Services Ltd
    [1986] KLR
  • Souza Figneiredo v Moorings Hotel Co. Ltd
    [1960] EA
  • Chon Jeuk Suk Kim and Kim Jong Kyu Vs E.J. Austin And Others
    Civil Appeal No. 265 of 2010
  • National Bank of Kenya Ltd vs. Pipeplastic Samkolit (K) Ltd & Another
    (2001) eKLR
  • Securicor Courier (K) Ltd vs. Benson David Onyango & Another
    (2008)
  • Samuel Kamau Macharia vs. Daima Bank Ltd
    (2008) eKLR
  • Margaret Njeri Muiruri vs. Bank of Baroda (Kenya) Limited
    (2014) eKLR
  • Stanley Kamere & 26 Others vs. National Housing Corporation & 2 Others
    (2015) eKLR
  • Kenya Commercial Bank Limited vs Stage Coach Management
    (2014) eKLR
  • Bugerere Cofiee Growers Limited Vs Sebaduka and Another
  • Garvey v Richards
    [2011] JMCA 16
  • RTS Flexible Systems Ltd v Moikerei Alois Muller GMBH & Co K. G.
    [2010] UKSC 14
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court over a dispute relating to a lease of premises (Chalet No. 31, Karibuni Villas)

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, "Mahican Investments Limited v Liliana (Civil Suit 88 of 2010) [2022] KEELC 3149 (KLR)", Case Analysis (2022). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/3149/eng@2022-06-10

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