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ELCPartially AllowedEnvironment & Land Case 296 of 2014· [2023] KEELC 16531 (KLR)

Zachariah Mburu Chege v Naku Dwellers Ltd & another

Environment and Land Court of Kenya
23 March 2023
4,265 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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A Nakuru court ordered a land seller and his agent to pay a buyer over Kshs 9.9 million after wrongfully refusing to complete a plot sale.

What this practically means

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Executive summary

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The plaintiff sued for Kshs 25,960,000/= arising from an agreement of March 17, 2005 with the 2nd defendant, trading as Pata Commercial Enterprises, for the purchase of proposed subdivisions (plots 6, 13 and 14) of Nakuru Municipality Block 7/7 owned by the 1st defendant. He paid a Kshs 1,000,000/= deposit; the balance was payable upon subdivision and change of user. The subdivision was approved but never completed; the parcel was later amalgamated and sold to a third party. Both defendants filed defences - the 1st denying ownership and agency, the 2nd asserting due authority as agent of a disclosed principal - but neither called evidence. The court held that the burden lay on the alleged principal to disprove authority, found valid agency, and held the 1st defendant liable for the 2nd's acts. The plaintiff's uncontroverted evidence established breach on a balance of probabilities. Adopting the measure of damages in Consoline Atieno Ononia and Philip Wanjohi Kariuki, the court awarded refund of the deposit (Kshs 1,000,000/=), the contractual 10% penalty (Kshs 260,000/=), and loss of bargain assessed at 38.46% of the discounted property value (Kshs 27,500,000/= less Kshs 5,000,000/= for developments not erected by the plaintiff), yielding Kshs 8,653,500/=. The claim for Kshs 300,000/= in performance costs was declined as unproved. Loss of bargain damages bear interest from judgment only. Judgment was entered jointly and severally against both defendants, who were also ordered to pay the plaintiff's costs.

Key legal issues

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01

Authority of the agent and liability of the principal

Holding

The 2nd defendant had valid authority from the 1st defendant, making the 1st defendant liable for the agent's acts

Reasoning

The 2nd defendant pleaded he was duly authorized; neither defendant called evidence. The court held the greater burden lay on the alleged principal to prove he gave no authority, which he failed to discharge. The plaintiff's evidence that he was shown a letter authorizing Kabage to sell also went uncontroverted.

p. 6
02

Measure of damages for wrongful refusal to complete a land sale

Holding

Plaintiff entitled to refund of deposit, contractual 10% penalty, and loss of bargain measured against property value at date of repudiation

Reasoning

Relying on Consoline Atieno Ononia and Philip Wanjohi Kariuki, the court adopted the measure of damages for a vendor's wrongful refusal to complete: deposit with interest, expenses, and loss of bargain where value at repudiation exceeded the purchase price. The valuation report of October 2014 fixed value at Kshs 27,500,000/=.

p. 6
03

Proportioning loss of bargain to the deposit paid

Holding

Loss of bargain limited to 38.46% (the proportion of purchase price actually paid) of the discounted property value, yielding Kshs 8,653,500/=

Reasoning

The plaintiff had paid only Kshs 1,000,000/= of the Kshs 2,600,000/= consideration. The court discounted the valuation by Kshs 5,000,000/= for developments the plaintiff did not erect, then applied the 38.46% payment ratio, reasoning a full-payment purchaser would merit a higher award.

Legal principles established

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  • Failure by a defendant to call evidence does not automatically result in judgment against him, but an uncontroverted plaintiff's case may still be judged on its merits
  • Where a vendor wrongfully refuses to complete, damages include return of deposit with interest, expenses incurred, and loss of bargain where property value at repudiation exceeded the purchase price
  • A principal who adduces no evidence to rebut an agent's assertion of authority bears the burden of proving no authority was given

Court orders

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  1. 1.The 1st and 2nd defendants shall pay the plaintiff Kshs 1,000,000/= being refund of the deposit paid to the 2nd defendant
  2. 2.The 1st and 2nd defendants shall pay the plaintiff Kshs 260,000/= being the prescribed penalty in the contract for termination without good reason
  3. 3.The 1st and 2nd defendants shall pay the plaintiff Kshs 8,653,500/= being damages for loss of bargain
  4. 4.The claim for costs incurred in performance of obligations under the contract is declined as unproved
  5. 5.Damages for loss of bargain shall bear interest at court rates only from the date of judgment until payment in full
  6. 6.The 1st and 2nd defendants shall pay the plaintiff the costs of the suit

Authorities

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Legislation

  • Limitation of Actions Act (Cap 22)section 4(1)(a)
  • Civil Procedure RulesOrder 3 Rule 2

Cases cited (3)

  • Serraco Limited v Attorney General
    [2016] eKLR

    Failure by a defendant to call evidence does not necessarily lead to automatic judgment against him

  • Consoline Atieno Ononia v Samuel Mulera Lukiri
    [2021] eKLR

    Measure of damages where vendor wrongfully refuses to complete a land sale contract

  • Philip Wanjohi Kariuki v Kennedy Njenga Nyambura & 2 others; Lazarus Sankori Karino (Interested Party)
    [2020] eKLR

    Measure of damages for vendor's repudiation, including deposit, expenses and loss of bargain

Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over disputes relating to land (sale of land/plots)

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, "Zachariah Mburu Chege v Naku Dwellers Ltd & another", Case Analysis (2023). Environment & Land Case 296 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/16531/eng@2023-03-23

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