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ELCPartially AllowedNot stated in the judgment excerpt

Ali & another v APA Homes (K) Limited (Environment & Land Case 111 of 2018) [2024] KEELC 936 (KLR)

Environment and Land Court
27 February 2024
2,668 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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The plaintiffs purchased apartment E5 in the Sahel Apartments development in Nyali on Plot No. MN/I/2911 through a letter of offer dated 17th April 2013 signed by Hussein Sharifi Alwy and Khalid Sharifi Alwy for the defendant and by the 1st plaintiff as purchaser, for a consideration of Kshs. 16 million. Payment was completed on 27th November 2017 and counsel asked the defendant to effect a transfer to the 2nd plaintiff, but no transfer occurred. The defendant denied selling the property, disowned the signatories, denied receipt of monies, and asserted the apartment had been sold to a third party in March 2016. The court framed two issues: validity of the sale and the prayers grantable. It found the letter of offer met section 3(3) of the Law of Contract Act (in writing, signed, attested) and contained the essential terms, and was executed by directors of the defendant at the material time, as shown by notifications of change of directors. Even if the directors lacked internal authority, the plaintiffs were protected by the doctrine of indoor management. The court held the defendant received the full purchase price, proved by PW2's admission, bank statements and acknowledgements, and was in breach for failing to transfer. However, specific performance was refused because the apartment had been sold to a third party, rendering the equitable remedy impossible; mesne profits were not proved. The plaintiffs' case was proved on a balance of probabilities and partially allowed: the defendant was ordered to refund Kshs. 16 million with interest at court rates from filing within 90 days, and the plaintiffs were awarded costs of the suit. Delivered at Mombasa on 27th February 2024 by N.A. Matheka, J.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the sale of the suit property was valid?
  2. 2.What prayers can be granted?

Key legal issues

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01

Validity of the contract for sale of land under section 3(3) of the Law of Contract Act

Holding

The letter of offer, signed by the directors of the defendant and the 1st plaintiff, in writing and meeting statutory formalities, constituted a valid and binding contract of sale

Reasoning

The court applied section 3(3) of the Law of Contract Act requiring a contract for disposition of an interest in land to be in writing, signed by all parties and attested by a witness. The letter of offer contained the parties' names, property description, price and conditions, and by clause 11 was deemed a contract for sale pending execution of a formal agreement.

p. 3
02

Authority of PW2 and Khalid Sharifi Alwy to sell on behalf of the defendant

Holding

Even if the directors lacked internal authority, the plaintiffs were protected by the doctrine of indoor management (Turquand rule)

Reasoning

The defendant argued that PW2 had no authority to sell, relying on a nominee share transfer agreement. The court found the plaintiffs were dealing with directors shown in public records at the material time and, being bona fide purchasers without notice of internal arrangements, could not be prejudiced by internal irregularities.

03

Breach of the agreement by the defendant

Holding

The defendant received the full purchase price of Kshs. 16 million but failed to transfer the property, and was therefore in breach

Reasoning

PW2 admitted receipt of Kshs. 16 million, corroborated by bank statements and acknowledgements. Payment was completed by November 2017 yet no transfer was effected despite reminders. The court found the plaintiffs had proved their case on a balance of probabilities.

p. 5
04

Whether specific performance should be granted

Holding

Specific performance was refused as the property had been sold to a third party and the equitable remedy is discretionary

Reasoning

Relying on equitable principles, the court held that specific performance is discretionary and unavailable where the subject property is no longer available. The apartment had been sold to a third party in 2016, rendering the remedy impossible and inequitable.

p. 5

Legal principles established

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  • Outsiders dealing with a company in good faith are protected by the doctrine of indoor management and need not inquire into internal irregularities

Court orders

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  1. 1.The defendant is to refund the sum of Kshs 16 million to the plaintiffs plus costs and interest at court rates from the date of filing this suit within the next 90 (ninety) days from today
  2. 2.Costs of the suit to the plaintiffs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Original civil jurisdiction over the land dispute (Environment and Land Court); no specific provision cited

Relief refused

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Specific performance of the sale agreement dated 17th April 2013

The apartment had been sold to a third party and was no longer available, making specific performance impossible and inequitable

p. 5

Mesne profits at Kshs. 100,000/= per month from October 2017 until vacant possession

Not proved by the plaintiffs

p. 5

Costs

Costs of the suit to the plaintiffs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

That the defendant is to refund the sum of Kshs 16 million to the plaintifis plus costs and interest at court rates from the date of filing this suit within the next 90 (ninety) days from today.
p. 6Final orders - refund of purchase price
Costs of the suit to the plaintifis.
p. 6Final orders - costs
I find that this contract was properly executed by the Directors of the defendant at the material time and is valid and binding.
p. 3Validity of contract
the plaintifis are protected by the doctrine of indoor management or turquand rule which shields the plaintifis from the illegalities of the PW2 if any.
Turquand rule
I find that the plaintifis have proved their case on a balance of probabilities
p. 5Standard of proof / breach of contract
The issue of mesne profits was not proved and the same will not be awarded.
p. 5Mesne profits refused

Issues in the judgment

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minor

Judgment contains several garbled/typographical passages, e.g. a sentence asserting the opposite of the evidence about possession

minor

Internal inconsistency in the narrative about who bought the property - opening paragraph states the 2nd plaintiff purchased and the 1st plaintiff purchased through personal representative

minor

Inconsistent dates: judgment elsewhere says the agreement was dated 17th April 2013, but paragraph 18 refers to '17th April 2018'

minor

DW1's evidence narrative contains an apparent typographical error

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, "Ali & another v APA Homes (K) Limited (Environment & Land Case 111 of 2018) [2024] KEELC 936 (KLR)", Case Analysis (2024). Not stated in the judgment excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/936/eng@2024-02-27

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