Kenya Re-Insurance Corporation Limited & another v Ng’ok & 2 others (Environment & Land Case 5 of 2023 & Civil Case 515 of 2007 (Consolidated)) [2024] KEELC 4004 (KLR)
The bottom line
#Kenya's Environment and Land Court ordered Kenya Re to complete a 1996 Karen house sale, cancel a fraudulent transfer, and evict no one.
What this practically means
#Executive summary
#Key legal issues
#Existence and validity of the sale agreement dated 10th December 1996
The sale agreement dated 10th December 1996 remained valid, lawful and binding on the parties, save for the limited variation introduced by the agreement dated 6th August 1999.
The court traced the letter of offer, acceptance, payment of the full deposit and the further sum of Kes.205,522/=, and the agreement that the balance would be financed by a mortgage to be created by the Plaintiff. The Plaintiff conceded the Defendant had complied with clauses 7 and 9 at the time of the agreement, so clause 10's termination mechanism could not be invoked. The rental income of Kes.3,360,000/= received from Investment Promotion Centre was also to be credited to the purchase price, further negating any default.
Rescission of the contract
The Plaintiff's purported rescission via the letter dated 13th May 2003 was invalid; the contract was never rescinded in accordance with clause 10 or at all.
Clause 10 permitted termination only upon default in payments under clauses 7 and 9. The Defendant had paid the deposit and a further instalment, and the balance was to be advanced by the Plaintiff itself through a mortgage which it never created. The court found it curious and improper for the Plaintiff to invoke a default of its own making, describing its conduct as an attempt to frustrate the contract in collusion with its Finance Director.
Entitlement to specific performance
The Defendant established the requisite ingredients for specific performance; the Plaintiff had failed to create and perfect the mortgage and had fraudulently sold the property to Rockhound Properties Ltd during the pendency of the suit.
The Defendant performed her part - paying the deposit, applying for and obtaining acceptance of the mortgage facility, and being placed in possession as purchaser. PW1 conceded no mortgage was ever created and the property was never transferred. The Plaintiff's sale and transfer of the property to Rockhound Properties Ltd on 8th December 2005, during the subsistence of both the contract and the suit, breached the doctrine of lis pendens and warranted cancellation of the transfer.
Validity of the transfer to Rockhound Properties Ltd
The transfer and registration of the suit property to M/s Rockhound Properties Ltd was fraudulent and vitiated by illegality, and was cancelled, revoked and nullified.
The transfer was effected during the pendency of the suit, contrary to the doctrine of lis pendens, and in abuse of office by the Plaintiff's Finance Director who had an interest in Rockhound Properties Ltd and who was convicted in criminal proceedings arising from the transfer. The court held such an offensive and fraudulent transfer merited revocation and cancellation.
Balance of purchase price payable
The Defendant is to pay the balance of Kes.4,263,000/- being the purchase price less the deposit and rental income received by the Plaintiff, within 180 days, failing which the contract is nullified and the Plaintiff must refund Kes.7,772,200/- without interest.
The court found the Plaintiff was holding Kes.7,772,200/- (deposit plus rental income of Kes.3,360,000/= agreed to be credited towards the purchase price). Interest on the deposit was excluded as the contract made no provision for it, and any attempt to include it would amount to a unilateral variation of the contract, which the law frowns upon.
Legal principles established
#- A court of law cannot re-write a contract between the parties; parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.
- A contract for the sale of land can only be changed with the agreement of both parties and not unilaterally.
- The doctrine of lis pendens remains applicable in Kenya under common law notwithstanding the repeal of section 52 of the ITPA by the Land Registration Act, 2012.
- The jurisdiction of specific performance is based on the existence of a valid, enforceable contract and it will not be ordered where there is an adequate alternative remedy.
- An order of eviction can only issue in favor of a person who demonstrates lawful and legal rights to the property.
Court orders
#- 1.The Plaintiff's suit be and is hereby Dismissed.
- 2.The sale agreement dated the 10th December 1996 declared lawful, valid and binding on the Plaintiff and the Defendant.
- 3.The Defendant is entitled to an order of specific performance as pertains to the suit property namely, L.R No. 1160/613 House No. 8 Ndege Road, Karen Nairobi.
- 4.The fraudulent transfer and registration of the suit property in the name of M/s Rockhound Properties Ltd cancelled, revoked and nullified.
- 5.The Plaintiff to execute the requisite transfer instruments to facilitate transfer and registration of the suit property in favor of the Defendant [Harriet Chebet Ngok] to hold on trust for the Estate of Dr. Joseph N K Arap Ngok, now deceased.
- 6.Before transfer, the Defendant shall pay the Plaintiff the balance of the purchase price amounting to Kes.4,263,000/= within 180 days from the date hereof.
- 7.In default of payment within the stipulated timeline, the Sale Agreement shall stand nullified and the Plaintiff shall refund to the Defendant the entire monies so far paid, namely Kes.7,772,200/= only without any interest.
- 8.Costs of the Plaintiff's suit awarded to the Defendant.
- 9.Costs of the counterclaim awarded to the Defendant/Counter-claimer.
- 10.Costs of Nairobi HCC No. 515 of 2007 awarded to the Plaintiff in the said suit.
- 11.All costs to be taxed and certified by the taxing officer in the usual manner.
- 12.Any other order not expressly granted is declined.
- Jurisdiction invoked
- Original civil jurisdiction transferred from the High Court to the Environment and Land Court on 26th October 2023
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Re-Insurance Corporation Limited & another v Ng’ok & 2 others (Environment & Land Case 5 of 2023 & Civil Case 515 of 2007 (Consolidated)) [2024] KEELC 4004 (KLR)", Case Analysis (2024). Nairobi HCC No. 776 of 2003 (transferred to ELC, heard with HCC No. 515 of 2007). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/4004/eng@2024-05-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.