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ELCPartially AllowedEnvironment & Land Case 63 of 2021· [2023] KEELC 18605 (KLR)

Kunya & 2 others v Global Trucks Limited

Environment and Land Court
6 June 2023
MOM.A. ODENY
2,328 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 ordered a land buyer to pay the full purchase price balance plus 12% interest because once land is transferred, the seller cannot simply undo the sale.

What this practically means

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Executive summary

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The three Plaintiffs sold land parcel Mgumopatsa/Mazeras/45 to the Defendant for Kshs 22,100,000/- under a written sale agreement. The Defendant paid a deposit of Kshs 2,210,000/- and, after the transfer was registered on November 23, 2017, only a further Kshs 450,000/-, leaving the balance of Kshs 19,890,000/- unpaid despite demand. The Defendant filed a defence but did not attend the hearing, and its case was closed. The Plaintiffs sought a declaration of breach, payment of the balance with interest at commercial rates from December 1, 2017, or alternatively re-transfer of the title, plus costs. The court framed three issues: validity of the agreement, breach, and the orders to grant. It found the agreement complied with Section 3(3) of the Law of Contract Act and was valid and binding, and that no rescission notice had been issued. Relying on Mwangi v Kiiru, the court held that where the vendor has conveyed the land and handed over possession, rescission is unavailable and the remedy is to sue for the balance of the purchase price; the Defendant was therefore in breach. On interest, Clause 3 of the agreement incorporated the Law Society Conditions of Sale 1989, under which interest is two percentage points above the CBK base rate, yielding 12 per centum from December 1, 2017. The court found for the Plaintiffs, awarding the balance of the purchase price with interest at 12 per centum and costs of the suit.

Key legal issues

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01

Validity of the sale agreement

Holding

The agreement complied with Section 3(3) of the Law of Contract Act and was valid, legal and binding

Reasoning

The court perused the sale agreement produced as exhibit 1 and confirmed it was in writing, signed by all parties and attested by witnesses, satisfying Section 3(3) of the Law of Contract Act. Neither party had issued a notice of rescission, so the agreement remained subsisting.

02

Breach of the agreement

Holding

The Defendant breached the agreement by failing to pay the balance of the purchase price by November 30, 2017

Reasoning

The Plaintiffs' uncontroverted evidence showed transfer was registered on November 23, 2017, making the balance due by November 30, 2017. The Defendant paid only the deposit and Kshs 450,000/- and, having not attended court, adduced no contrary evidence.

03

Appropriate remedy and interest

Holding

Plaintiffs entitled to the balance of the purchase price plus interest at 12 per centum from December 1, 2017

Reasoning

Since the land had been transferred, rescission was not available; the remedy was payment of the balance. Clause 3 of the agreement adopted the Law Society Conditions of Sale 1989, whose Clause 8(3) entitles the vendor to interest; with the CBK base rate of 10% plus 2%, the rate was 12%.

Legal principles established

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  • Where the vendor has conveyed the land and handed over possession, rescission is unavailable and the remedy is to sue for the balance of the purchase price
  • A court will not re-write a contract freely entered into by parties absent coercion, fraud or undue influence

Court orders

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  1. 1.Payment of the balance of the purchase price of Kshs 19,890,000/- (less the Kshs 450,000/- paid) to the Plaintiffs
  2. 2.Interest on the balance at 12 per centum from December 1, 2017 until payment in full
  3. 3.Costs of the suit to the Plaintiffs

Authorities

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Legislation

  • Law of Contract ActSection 3(3)
  • Law Society Conditions of SaleClauses 2(1), 8(3)
  • Central Bank of Kenya ActSection 39
  • Auctioneers ActCap 526
  • Civil Procedure RulesOrder 21 [1]

Cases cited (7)

  • Samuel Murigi Waigwa v Francis Babu Mwang
    [2021] eKLR

    Breach of contract definition and payment of balance as appropriate remedy

  • Delilah Kerubo Otiso v Ramesh Chander Ndingra
    [2018] eKLR

    Entitlement to interest at commercial rates

  • Nelson Kivuvani v Yuda Komora & Another
    Nairobi HCCC No 956 of 1991

    What constitutes a valid agreement for sale of land

  • National Bank of Kenya Limited v Pipeplastic Samkolit (K) Ltd. and Another
    [2001] KLR 112

    Court cannot re-write a contract between parties

  • Fina Bank Limited v Spares & Industries Limited
    Civil Appeal No 51 of 2000 (unreported)

    Equity will not relieve a party from a bad bargain

  • Mwangi v Kiiru
    [1987] eKLR

    Vendor's remedy after transfer is damages/balance of purchase price, not rescission

  • Lydia Wanjiku Wanyee suing as the administrator of the estate of the Late George Wanyee v George Nyanja
    [2015] eKLR

    Award of interest on purchase price when it fell due

Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over disputes relating to land contracts (Article 162(2)(b) Constitution; ELC Act)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kunya & 2 others v Global Trucks Limited", Case Analysis (2023). Environment & Land Case 63 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/18605/eng@2023-06-06

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