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ELCPartially AllowedEnvironment and Land Appeal 1 of 2021· [2023] KEELC 16089 (KLR)

Soiya v Mabwai

Environment and Land Court at Nakuru
2 March 2023
LOL. A. Omollo
3,339 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~13 min to read original · ~4 min brief

The bottom line

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A Kenyan land seller cannot cancel a sale without giving the buyer a proper completion notice with reasonable time to pay.

What this practically means

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Executive summary

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The Environment and Land Court at Nakuru (L. A. Omollo, J) allowed a first appeal against the decision of Hon. Y. I Khatambi SRM in Nakuru CMCC ELC No. 280 of 2019, which had dismissed Judy Chepngeno Soiya's suit for a declaration of ownership and specific performance of a sale agreement dated 14th March 2019 over parcel Njoro/Ngata Block 2/5673 (Kirobon), while partially allowing Jacquiline Chepkoech Mabwai's counterclaim. The parties agreed that Kshs 850,000 was paid on execution, the balance of Kshs 200,000 fell due within 90 days (lapsing 14th June 2019), and the Respondent later refunded Kshs 745,000, retaining Kshs 105,000 under the default clause. The court, re-evaluating the evidence as on a first appeal, held that time was not of the essence in the contract, so the Respondent could not automatically rescind; under the Law Society Conditions of Sale 2015 (not expressly excluded), a completion notice giving reasonable time was required. The letter of 1st October 2019, coupled with a same-day refund of the purchase price less 10%, gave the Appellant no opportunity to complete, rendering the rescission improper. The trial court's finding that the Appellant had not proved her case was erroneous. The court set aside the judgment and substituted judgment for the Appellant: completion within 60 days, transfer documents to be signed by the Respondent within 30 days (failing which the Deputy Registrar to sign), the Appellant to bear stamp duty and registration fees, the Respondent to retain Kshs 105,000 as a default penalty, rescission if the Appellant fails to complete, and costs of the appeal and suit to the Appellant.

Key legal issues

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01

Validity of the Respondent's rescission of the sale agreement

Holding

The rescission was improper because time was not of the essence and no valid completion notice granting reasonable time to complete was served; the letter of 1st October 2019 and same-day refund of the purchase price showed no intention to allow completion.

Reasoning

The 90-day period lapsed on 14th June 2019 without payment of the balance. Since the agreement did not make time of the essence, the Respondent could not automatically rescind. The Law Society Conditions of Sale 2015, not expressly excluded, required a completion notice. The purported notice of 1st October 2019 was accompanied by an immediate refund of the purchase price less 10%, denying the Appellant any opportunity to complete. Rescission was therefore invalid.

p. 6
02

Whether the Appellant proved her case on a balance of probabilities

Holding

The evidence on record supported the Appellant's claim; the trial magistrate's finding that she had not proved her case and the consequent dismissal were erroneous.

Reasoning

The common ground facts established the agreement, payment of Kshs 850,000, the default on the Kshs 200,000 balance, and the refund of Kshs 745,000 with Kshs 105,000 retained. Given the invalid rescission, the contract remained enforceable and the Appellant was entitled to complete it. The trial court's dismissal was therefore set aside and judgment entered for the Appellant with directions for completion and transfer.

03

Standard of review on a first appeal

Holding

The court on a first appeal must re-evaluate the evidence and reach its own conclusion, bearing in mind the trial court's advantage of seeing and hearing witnesses, and will seldom disturb findings of fact unless based on no evidence, misapprehension, or wrong principles.

Reasoning

Relying on China Zhingxing Construction Company Ltd v Ann Akuru Sophia and Peters v Sunday Post Limited, the court restated the three complementary principles governing first appeals: reconsider and re-evaluate the evidence, allow for the trial court's advantage, and do not reverse merely because the appellate court would have reached a different result.

Legal principles established

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  • On a first appeal the court is under a duty to re-evaluate the evidence and draw its own conclusions while giving due allowance to the trial court's advantage of seeing and hearing the witnesses
  • Where time is not of the essence in a contract for sale of land, the vendor must serve a completion notice giving reasonable time before rescinding
  • An appellate court will seldom interfere with findings of fact by a trial court unless based on no evidence, a misapprehension of it, or wrong principles

Court orders

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  1. 1.Judgment and decree in Nakuru CMCC ELC No. 280 of 2019 dated 9th December 2020 set aside and substituted with judgment in favour of the Appellant
  2. 2.Appellant to complete the agreement dated 14th March 2019 for purchase of Njoro/Ngata Block 2/5673 (Kirobon) within 60 days
  3. 3.Respondent to sign all conveyance documents for transfer within 30 days upon completion, failing which the Deputy Registrar shall sign all documents necessary to effect the transfer
  4. 4.Appellant to bear stamp duty and registration fees on the transfer
  5. 5.Respondent to retain Kshs 105,000 as a penalty for the Appellant's default
  6. 6.In the event of failure to comply with order (a), the agreement dated 14th March 2019 shall stand rescinded
  7. 7.Appellant to have costs of the Appeal and costs of the suit

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 159(2)(d)
  • Civil Procedure ActSections 1A, 1B and 3A
  • The Law Society Conditions of SaleCondition 3(b) and Condition 13.4.1

Cases cited (10)

  • Attorney General of Beliz Al v Belize Telecom Limited & another
    [2009] I WLR 1980

    Interpretation of the sale agreement remedies clause (cited by Appellant)

  • Union Eagle Ltd v Golden Achievement Ltd
    [1997] A.C 514

    Purchaser's obligation to pay balance within 90 days (cited by Respondent)

  • Thrift Homes Limited v Kays Investment Limited
    [2015] eKLR

    Party in breach not entitled to specific performance (cited by Respondent)

  • China Zhingxing Construction Company Ltd v Ann Akuru Sophia
    [2020] eKLR

    Standard of review on a first appeal - re-evaluation of evidence

  • Peters v Sunday Post Limited
    [1958] EA 424

    Caution in disturbing findings of fact on appeal

  • Watt v Thomas
    [1947] A.C. 484

    Referenced within Peters v Sunday Post on appellate review of facts

  • Mercy Nkirote v Lawrence Ngaku Bundi & 2 others
    [2022] eKLR

    Time of the essence; rescission available on failure to complete within notice

  • J.T.M. Construction & Equipment Ltd v Circle B. Farms Ltd
    claim Number 2007 Hcr 05110

    Where time is of the essence, failure to complete is breach and all remedies including rescission are available

  • Stickney v Keeble

    Notice limiting time where time not of the essence in land sale contract

  • Anne Murambi v John Munyao Nyamu & another
    [2018] eKLR

    Failure to complete within 90 days does not terminate contract where time not of the essence

On appeal from
Chief Magistrate's Court at Nakuru
Nakuru CMCC ELC No. 280 of 2019
Jurisdiction invoked
First appellate jurisdiction over the magistrates' court; Article 159(2)(d) of the Constitution and Sections 1A, 1B and 3A of the Civil Procedure Act invoked to proceed with the appeal

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, "Soiya v Mabwai", Case Analysis (2023). Environment and Land Appeal 1 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/16089/eng@2023-03-02

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