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ELCPartially AllowedEnvironment & Land Case 144 of 2014· [2023] KEELC 21596 (KLR)

Thuku v Kenya Ports Authority & another

Environment and Land Court of Kenya
6 November 2023
18,167 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~73 min to read original · ~4 min brief

The bottom line

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Kenya's Environment and Land Court ordered Kenya Ports Authority to pay a landowner Kshs 15.4 million more for Mombasa property bought under a breached sale agreement.

What this practically means

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Executive summary

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The Plaintiff, a Kenya Ports Authority employee and administrator of his late mother's estate, sued KPA and the National Land Commission seeking a declaration that he was inadequately compensated for L.R. No. 2823/VI/MN, acquired for the Kipevu West Container Terminal project, plus additional compensation of Kshs. 15,457,003/-. He was paid Kshs. 14,850,000/- in March 2012 based on his own 2007 valuation enhanced by 10%, while a Government Valuer's stamp duty valuation of January 2012 put the property at Kshs. 20,000,000/-. He alleged undue influence, material non-disclosure and coercion arising from his employment relationship with KPA. KPA maintained the transaction was a private treaty under a valid written agreement of 18th July 2011, that the price was mutually negotiated, and that a court cannot rewrite a contract. The NLC denied involvement, having been established after the transaction. The court framed three issues: merit, entitlement to prayers, and costs. It held a valid sale agreement existed under Section 3(3) of the Law of Contract Act read with Section 38 of the Land Act; that KPA breached it by paying five months after the completion date; that it could not rewrite the contract, yet found the special damages of Kshs. 15,457,003/- specifically pleaded and proved and awarded them with interest. The NLC was discharged as it was not party to the agreement. Judgment was entered against KPA only, with costs to the Plaintiff. The judgment contains notable internal contradictions, including declaring the contract null and void while enforcing it.

Key legal issues

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01

Validity of the sale agreement of 18th July 2011

Holding

A valid agreement of sale existed under Section 3(3) of the Law of Contract Act read with Section 38 of the Land Act 2012

Reasoning

The court examined the written sale agreement, noting it was in writing, signed by the parties and attested, satisfying the statutory formalities for contracts for disposition of interests in land. Paragraph 14 contained penalty/remedy provisions. The court therefore held a valid contract existed between the Plaintiff and the 1st Defendant.

p. 27
02

Breach of contract by late payment

Holding

The 1st Defendant breached the agreement by failing to pay the purchase price within the contractual timelines

Reasoning

Completion was due 18th October 2011 and payment was to be effected within 14 days of registration of the transfer (30th December 2011), yet payment was made on 8th/18th March 2012. The court found failure to pay on time constituted breach, proved on a balance of probability.

p. 28
03

Whether the court could award compensation beyond the agreed contract price

Holding

The court could not rewrite the contract, yet nonetheless awarded the pleaded special damages of Kshs. 15,457,003/- as specifically pleaded and proved

Reasoning

The court first held the additional payment could not be sustained as it was not part of the agreement, but then found the Plaintiff had pleaded and proved the specific figure as special damages (citing Hahn v Singh) and awarded it. The reasoning bridges these positions via the proved breach of contract.

04

Liability of the 2nd Defendant (National Land Commission)

Holding

The 2nd Defendant was discharged as it was not party to the agreement

Reasoning

The NLC was established in 2012 and operationalized in 2013, after the transaction; it played no role in the negotiations, agreement, sale or purchase. Judgment was entered against the 1st Defendant only.

p. 30

Legal principles established

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  • A court cannot rewrite a contract voluntarily entered into by parties; freedom of contract prevails
  • Special damages must be both specifically pleaded and specifically proved before award
  • Costs follow the event

Court orders

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  1. 1.Judgment entered in favour of the Plaintiff against only the 1st Defendant
  2. 2.A declaration that the Plaintiff was not paid adequate compensation by the Defendant for his property L.R. No. 2823/VI/MN in the process of acquisition of the same
  3. 3.A declaration that the 2nd Defendant is discharged of any liability in this suit
  4. 4.The 1st Defendant to pay the Plaintiff Kshs. 15,457,003/- with interest at court's rate from the date of filing suit until payment in full
  5. 5.The Plaintiff to have the costs of the suit to be paid by the 1st Defendant only

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 40(3)
  • Evidence ActSection 107
  • Land Registration Act, No. 3 of 2012Sections 24, 25 and 26
  • Land Act, 2012Section 38
  • Law of Contract ActSection 3(3)
  • Stamp Duty Act, Chapter 480Section 10A(1)
  • Kenya Ports Authority Act, Chapter 391Sections 3(2) and 13(1)
  • Civil Procedure Rules Cap. 21 (as cited in judgment; properly the Civil Procedure Act)Section 27(1)

Cases cited (22)

  • Basil Criticos v National Bank of Kenya Limited, National Capital Corporation Limited 'Kenyac' and Kenya National Capital Corporation
    Nairobi Civil Appeal No. 80 of 2017

    Courts may refuse to enforce unconscionable, unfair or oppressive contracts; undue influence (cited by Plaintiff)

  • Kenya Commercial Finance Co. Ltd v Ngeny
    [2002] 1 KLR

    Interference with unconscionable contracts (quoted within Basil Criticos)

  • Dodhia v National & Grindlays Bank Ltd and Another
    [1970] E.A. 198

    Principle of stare decisis (cited by Plaintiff)

  • National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd & another
    [2001] eKLR

    A court cannot rewrite a contract between parties (cited by 1st Defendant)

  • Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited
    [2017] eKLR

    It is not the business of courts to rewrite contracts (cited by 1st Defendant)

  • Housing Company of East Africa Limited v Board of Trustees National Social Security Fund & 2 others
    [2018] eKLR

    Contracts are voluntary undertakings; courts cannot substitute their judgment for parties' agreement (cited by 1st Defendant)

  • Ngere Tea Factory Company Ltd v Alice Wambui Ndome
    [2018] eKLR

    Courts enforce contracts; cannot rewrite parties' agreements (cited by 1st Defendant)

  • Shah v Guilders International Bank Ltd
    [2003] KLR

    Parties who execute a contract willingly are bound by it (cited within Ngere Tea quotation)

  • Solomon Ndegwa Kuria v Peter Nditu Gitau
    [2019] eKLR

    Requirements of a valid written sale agreement under Section 3(3) of the Contract Act (cited by 1st Defendant)

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

    Elements of a valid agreement for sale of land (cited within Solomon Ndegwa Kuria quotation)

  • Patel & another v MJC (Suing as the guardians of PJP)
    Civil Appeal 182 of 2019 [2022] KECA 364 (KLR)

    Undue influence, coercion and fraud must be specifically pleaded and proved by cogent evidence (cited by 1st Defendant)

  • Mohamed Guyo Boru v Richard Mwilaria Aritho
    [2022] eKLR

    Burden of proof under Sections 107-109 Evidence Act; evidence at variance with pleadings rejected (cited by 1st Defendant)

  • Were & another v Ongaro (Deceased) & 7 others
    Land Case 13 of 2013 [2022] KEELC 3829 (KLR)

    Stamp duty valuation discrepancies do not invalidate an agreement or transfer (cited by 1st Defendant)

  • Christopher Ndaru Kagina v Esther Mbandi Kagina & another
    [2016] eKLR

    Expert opinion worthless unless founded on proved substratum of facts (cited by 1st Defendant)

  • Machakos District Co-operative Union v Philip Nzuki Kiilu
    CA No. 112 of 1997

    Contracts for disposition of land must comply with statutory writing requirements (cited by court)

  • Kaoyeni Enterprises Limited v Unifresh Exotics
    ELC (Mombasa) No. 428 of 2017

    Same proposition on written contracts for land dispositions (cited by court)

  • Hussamudin Gulamhussein Pothiwalla (administrator, Trustee and Executor of the Estate of Gulamhussein Ebraihim Pothiwalla) v Kidogo Basi Housing Cooperative Society Limited and 31 Others
    Civil Appeal No. 330 of 2003

    A court cannot rewrite a contract; equity ordinarily will not relieve a party from a bad bargain (followed by court)

  • Photo Production v Securicor Limited
    (1980) AC 827

    Definition of breach of contract and secondary obligation to pay compensation (cited by court)

  • Hahn v Singh
    (1985) KLR 716

    Special damages must be specifically pleaded and proved (applied by court)

  • Harun Mutwiri v Nairobi City County Government
    [2018] eKLR

    Successful party typically entitled to costs (cited by court)

  • Kenya Union of Commercial, Food and Allied Workers v Bidco Africa Limited & Another
    [2015] eKLR

    Costs follow the event (cited by court)

  • Hussein Muhumed Sirat v Attorney General & Another
    [2017] eKLR

    Costs follow the event as a well-established principle (cited by court)

Jurisdiction invoked
Original civil jurisdiction of the Environment and Land Court over land and compensation disputes (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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Cite this brief

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Cite this brief

Caselaw, "Thuku v Kenya Ports Authority & another", Case Analysis (2023). Environment & Land Case 144 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/21596/eng@2023-11-06

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