Kobilo Farm Limited & another v Elfam Limited; Commodities Fund (Interested Party) (Environment & Land Case 24 of 2020) [2024] KEELC 1567 (KLR)
The bottom line
#A land buyer in Kenya who fails to pay the balance on time loses the deal, forfeits a 10% deposit, and can even pay damages for trespass.
What this practically means
#Executive summary
#Key legal issues
#Breach of the sale agreement
Kobilo was in breach by failing to clear the balance of Kshs 11,000,000/= on the completion date
Payments totalled Kshs 194,000,000/= against a price of 205,000,000/=. WhatsApp messages admitted without objection on 17.10.2022 showed Mr. Maina promising to clear the balance by end of October 2019 but going quiet. No evidence showed the balance had been deposited with plaintiffs' advocates. The defendant was ready to complete.
Payment subject to discharge of charge
The agreement contained no clause making payment conditional on discharge of the charge over the suit property
The court examined the agreement and found no stipulation that the balance was payable only upon discharge of the interested party's charge. The plaintiffs should have paid and then sought specific performance if the defendant refused completion documents.
Lawful rescission of the agreement
The agreement was lawfully rescinded time having been made of essence by the notice of 15.10.2019
A 21 days' default notice of 15.10.2019 and a termination letter of 27.11.2019 were addressed to Mr. Maina, who did not testify to deny receipt. The parties had conducted business outside strict contractual terms; the court gave effect to their intention as far as possible.
Trespass and damages
Defendant proved trespass and was awarded general damages of Kshs 10,000,000/=
Plaintiffs' director invaded the suit property, cut trees, destroyed dairy structures and erected structures and a pit latrine contrary to the status quo order; structures remained on the land. Considering the continuous trespass, cleared trees and land value, Kshs 10,000,000/= was adequate.
Legal principles established
#- A court of law cannot rewrite a contract between the parties; parties are bound by their contractual terms unless coercion, fraud or undue influence are pleaded and proved
- Specific performance is discretionary and will be refused where the plaintiff is not ready and willing, or where it would cause hardship to the defendant
- Failure to testify by a party who recorded a witness statement permits an adverse inference where the omitted evidence would be adverse
Court orders
#- 1.The Plaintiffs shall be refunded the amount paid in respect of the aborted agreement for LR No Sergoit/Koiwoptaoi Block 13/4 less the 10% deposit which is forfeited to the defendant
- 2.A declaration that the defendant is the legal, bonafide and indefeasible owner of LR Number Sergoit/Koiwoptaoi Block 13/4
- 3.A declaration that the plaintiffs breached the terms of the sale agreement dated 9th July, 2018 by failing to complete the purchase price
- 4.A declaration that the agreement between the plaintiffs and the defendant stands rescinded and the 10% deposit paid stands forfeited to the defendant together with the accrued interest at court rates
- 5.The defendant is at liberty to sell LR No Sergoit/Koiwoptaoi Block 13/4 pursuant to the aborted agreement
- 6.General damages of Kshs 10,000,000/= for trespass
- 7.A permanent injunction restraining the plaintiffs, their agents, servants and/or any person whatsoever from trespassing, entering, selling, transferring, charging and/or dealing in any manner with land parcel LR No Sergoit/Koiwoptaoi/Block 13/4
- 8.Costs of the suit and counter-claim to the defendant
- 9.Interest on the forfeiture, general damages and costs at court rates
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kobilo Farm Limited & another v Elfam Limited; Commodities Fund (Interested Party) (Environment & Land Case 24 of 2020) [2024] KEELC 1567 (KLR)", Case Analysis (2024). ELC Case at Eldoret (Environment and Land Court). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/1567/eng@2024-03-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.