Ali v Faraj & 2 others (Environment and Land Case Civil Suit 154 of 2016) [2025] KEELC 1023 (KLR)

The court applied Sections 38 and 39 of the Land Act and Section 3 of the Law of Contract Act, requiring contracts for disposition of land to be in writing, signed by all parties and attested. The agreement was in writing, executed in the presence of the 3rd Defendant advocates, contained parties' names, the property, purchase price and conditions, and was attested. Following Nelson Kivuvani v Yuda Komora, such an agreement amounts to a valid contract.

The property was not registered in the 1st Defendant's name; records remained with the Settlement Fund Trustees and the DLASO letter showed no payments had been made against the plot. A Letter of Offer confers no proprietary rights. The 1st Defendant knowingly sold land he did not own, attracting the nemo dat principle. The 2nd Defendant, as broker/agent who introduced the 1st Defendant as owner, was liable because fraud is an exception to the disclosed-principal rule. Fraud was strictly proved to the required heightened standard.

The firm acted for both vendor and purchaser and was obliged to conduct due diligence: official search, drafting and explaining the agreement, witnessing execution, preparing transfers, stamp duty, registration and handing over title. Instead it only drafted the agreement and, after the complaint, merely wrote letters of inquiry. The court held this was a case of putting the cart before the horse, amounting to negligence and bad faith, though it noted the Plaintiff was also lax in due diligence.

Clause 15 of the agreement preserved cumulative remedies for breach including rescission. The Plaintiff sought refund of the purchase price plus interest; the court held interest was discretionary under Section 26 of the Civil Procedure Act and, the claim being liquidated, interest would compensate the Plaintiff for damage caused by the Defendants' actions.