Global Ten Investments Limited v Kanorero River Farm Limited & another (Environment & Land Case 745 of 2011) [2024] KEELC 5432 (KLR)
The bottom line
#A Nairobi land buyer got back its Kshs. 9 million deposit after the court found the seller hid a police boundary dispute on the property.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the 1st Defendant breached the contract.
- 2.Whether the Plaintiff lawfully rescinded the contract.
- 3.Whether the 1st Defendant's counterclaim is merited.
Key legal issues
#Whether the 1st Defendant breached the sale agreement
Yes. The court found an indubitable boundary dispute with Muthangari Police Station existed, contrary to the vendor's warranties in Clauses 8.4, 8.6 and 8.7 of the sale agreement.
The minutes of the 7th June 2011 meeting at Muthangari Police Station, produced by PW3, recorded a boundary dispute and the 1st Defendant's letter to the Inspector General of Police seeking boundary determination. The 1st Defendant's director failed to impeach the validity of the minutes, and the institution of ELC No. 460 of 2018 for encroachment confirmed the dispute. The court's own site visit confirmed police occupation of structures on the suit property and a diminished acreage.
Whether the Plaintiff lawfully rescinded the contract
Yes. Applying the Law Society Conditions of Sale (1989) incorporated into the agreement, the purchaser was entitled to rescind on discovery of the undisclosed adverse claim and misdescription, and the notice of 21st July 2011 validly rescinded the agreement.
The sale agreement made no provision for rescission, so the incorporated Law Society Conditions 1989 applied. Condition 15 required disclosure of all liabilities affecting the property; Condition 18(2) permitted rescission on misdescription. The Plaintiff's advocates raised the police claim and acreage discrepancy by letters dated 30th June and 13th July 2011, and by notice dated 21st July 2011 rescinded the agreement, which the court held to be lawful.
Whether the 2nd Defendant was properly sued and liable on his professional undertaking
Yes. The 2nd Defendant gave a written professional undertaking to hold the deposit as stakeholder and to refund it within three days should the search reveal any adverse position or the sale fail on the vendor's part; since the sale failed on the vendor's fault, he is jointly and severally liable to refund.
The court rejected the submission that there was no privity or that only the Plaintiff's advocate could enforce the undertaking, holding that under the sale agreement the 2nd Defendant had a professional obligation to hold the deposit as stakeholder and had promised so in writing. Under clause 4.2 he was obligated to refund the deposit should the sale fail on the fault of the vendor, which it did.
Whether the 1st Defendant's counterclaim was merited
No. The counterclaim for Kshs. 26,810,200/- was dismissed because the breach was the 1st Defendant's and the expenses it incurred were not chargeable to the Plaintiff.
Having found the 1st Defendant in breach and the Plaintiff's rescission valid, clause 7.4 entitled the Plaintiff to a refund of the deposit without any deductions whatsoever. The agreement did not provide that the vendor's costs of perfecting the transaction would be borne by the Plaintiff, so the claimed expenses (agent's commission, legal fees, fencing, guarding, directors' expenses) could not be attributed to the Plaintiff.
Legal principles established
#- A court of law cannot rewrite a contract between the parties; parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.
- Where the vendor warrants in the sale agreement that there is no adverse claim or dispute regarding the property and such a dispute exists and is not disclosed, the vendor is in breach and the purchaser may lawfully rescind and recover the deposit.
- An advocate who gives a professional undertaking to hold a deposit as stakeholder and to refund it should the sale fail on the part of the vendor is properly sued alongside the vendor and is jointly liable to refund the deposit.
Court orders
#- 1.The Defendants to jointly and severally refund the Plaintiff, through its advocate on record, the sum of Kshs. 9,000,000.
- 2.The Defendants to jointly and severally pay the Plaintiff, through its advocate on record, interest on the above sum at court rates from the date of filing this suit until payment in full.
- 3.The 1st Defendant's counter claim is dismissed with costs.
- 4.The 1st Defendant to pay the costs of the suit.
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original civil jurisdiction of the Environment and Land Court over a dispute relating to the sale of land (L.R. Number 209/14310, Nairobi)
Relief refused
#The 1st Defendant's counterclaim of Kshs. 26,810,200/- with interest and costs
The court found that it was the 1st Defendant who breached the agreement and the expenses incurred in completing the sale could not be attributed to the Plaintiff; the agreement did not provide that such costs would be paid by the Plaintiff.
Costs
The 1st Defendant to pay the costs of the suit; the 1st Defendant's counterclaim dismissed with costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The Defendants to jointly and severally refund the Plaintifi, through its advocate on record, the sum of Kshs. 9,000,000.
This court is persuaded that there indubitably exists a boundary dispute between the 1st Defendant and Muthangari Police Station.
It is apparent that the 1st Defendant warranted that there was no existing boundary dispute with respect to the suit property, which was manifestly untrue.
Considering the circumstances and the evidence before this court, it is the finding of the court that the sale agreement was lawfully rescinded by the Plaintifi.
Consequently, this court makes a finding that the said deposit of Kshs. 9,000,000 should be paid by the Defendant jointly and severally to the Plaintifi's advocate, for onward transmission to the Plaintifi.
The expenses incurred by the 1st Defendant in the process of completing the sale agreement cannot be attributed to the Plaintifi.
Issues in the judgment
#The suit property is referred to inconsistently as L.R. Number 209/14310 in the pleadings section and L.R No. 209/4310 in PW1's testimony.
The date of the rescission notice is given as 21st July 2011 but the judgment also records it as 21st July, 20211, an evident typographical error.
The fencing expense is pleaded by the 1st Defendant as Kshs. 1,368,2008/- (an apparent typographical error) while the 2nd Defendant pleads Kshs. 1,388,200 for the same item.
The 1st Defendant's director is recorded as instituting ELC No. 460 of 2018 on 27th April 2022, a date inconsistent with the case year.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Global Ten Investments Limited v Kanorero River Farm Limited & another (Environment & Land Case 745 of 2011) [2024] KEELC 5432 (KLR)", Case Analysis (2024). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/5432/eng@2024-07-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.