Felix Kelly Kiai v Joseph Waithaka Ndiang’ui & 1 other

(the Appellant herein) entered into a ten (10) year lease agreement by which the defendant leased to the plaintiff one-quarter (1/4) acre of the suit land and the plaintiff was permitted to construct semi-permanent rental houses on the said land. The rental was agreed at Kshs. 12,000/= per month for the ten (10) year period with effect from 1st August 2016. The parties further agreed that in the event the plaintiff wished to construct permanent structures on the land he would have to procure written consent from the defendant. 4. The lease commenced as agreed and the plaintiff proceeded to put up the semi-permanent structures as had been agreed. However it was alleged that the plaintiff began to erect permanent structures on the suit land without obtaining written authorization from the defendant. 5. The Defendant through his advocate wrote to the plaintiff demanding immediate cessation of the illegal construction. The plaintiff however failed to comply. 6. The parties approached the local chief in an attempt to solve their differences and thereafter entered into a second HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 2 of 23

page 2 of 23

agreement dated 17th October 2019. By this it was agreed that the defendant would purchase all the developments which had been put up on the suit land by the plaintiff. The value of the entire developments was given as Kshs. 2,200,000/- and it was agreed that the plaintiff would repay himself by taking sixty per cent (60%) of the rental income derived from the property whilst the Defendant would take forty per cent (40%). The plaintiff was permitted to construct an additional six (6) rental units in order to expand on the rental proceeds. 7. On his part the plaintiff alleged that after reaching this second agreement the defendant then entered into an agreement with a contractor allowing said contractor to dump soil on the suit land. That the loose soil gave way to giant gulleys and cracks on the land making it impossible for the plaintiff to continue constructing. That the loose soil also buried part of this walls of the existing rental houses and caused sewage blockages and electricity complications. That as a result of all this many of the tenants moved out of the premises causing financial loss. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 3 of 23

page 3 of 23

8. The plaintiff further complained that by the defendant consenting to the dumping of soil on the property he was unable to proceed with the construction of the six (6) extra rooms as had been agreed. 9. That the Plaintiff avers that the lease agreement as at determination had 9 years and 10 months left for occupation and that the tenants who vacated yielded a rental income of Kshs. 37,500/- per month in rent which the defendant has been pocketing all or part of it. That the lost income computed would be Kshs. 37500 x 9 years and 10 months x 60% = Kshs. 2,655,000 which the plaintiff claimed from the 1st Defendant. The Plaintiff claimed that the 1 st defendant owed him initial capital of Kshs. 2,200,000/- plus expected income of Kshs. 2,655,000 on his investment in ten years plus damages for breach of contract and trespass on the two defendants. 10. The Plaintiff then filed in the Magistrates Court Civil Suit No. 123 of 2020 seeking the following orders:- HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 4 of 23

page 4 of 23

“(i) A declaration that the 1st and 2nd defendants actions of dumping allowing the dumping, raising of dust, barring the plaintiff from the demised premises either singularly, jointly or severally by both defendants constituted trespass and/or breach of the lease/joint venture agreement and unlawful termination. (ii) General damages for breach of contract and trespass. (iii) Refund of Kshs. 2,200,000. (iv) Loss of income calculated at Kshs. 2,655,000/=. (v) Any other relief the court may deem fit. (vi) Costs plus interest.” 11. In his defence to the suit the defendant stated that it was the Plaintiff who reneged on their agreement when he proceeded to build permanent structures on the suit land without first obtaining approval of the defendant and that this is why he proceeded to bar the plaintiff from the property. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 5 of 23

page 5 of 23

12. The defendant admitted that the parties sought assistance from the local chief to resolve the dispute which discussions culminated in the second agreement of 17th October 2019. According to the defendant this second agreement superceded the lease agreement of 30th May 2016 and relinquished all rights which the plaintiff had to the suit land 13. Whilst admitting that he gave authority to a third party to dump soil on the land the defendant stated that the soil was being dumped far away from where the plaintiff was building. The defendant denied that any tenant had ever evacuated the property. The defendant denied the plaintiff’s claims and urged the court to dismiss the suit in its entirety. 14. The suit was heard in the lower court. On 26th July 2023, Hon. F. MUGUONGO PRINCIPAL MAGISTRATE, delivered a judgment in which she found in favour of the plaintiff and entered judgment against the 1st defendant for a refund of Kshs. 2,200,000. The trial court further awarded to the plaintiff interest at court rates. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 6 of 23

page 6 of 23

15. Being aggrieved by this decision the defendant (now the Appellant) filed the Memorandum of Appeal dated 23rd August 2023 which appeal is premised upon the following grounds:“1. The Honourable trial Magistrate erred in law and fact and misdirected herself by holding that the Respondent had established a cause of action against the Appellant, thus arriving at an erroneous decision. 2. The Honourable trial Magistrate erred in law and fact and misdirected herself by hold that it was the responsibility of the Appellant to ensure that tenants were in the demised premises to generate income. 3. The Honourable trial magistrate erred in law and fact by failing to find that both the Appellant and the Respondent had appointed an agent to collect rent on their behalf and distribute the same between themselves. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 7 of 23

page 7 of 23

4. The Honourable trial Magistrate erred in law and fact and misdirected herself by ordering the Appellant to refund the Respondent the sum of Kshs. 2,200,000/= when there was clear evidence that the Respondent had received part payments on account of the purchase price of Kshs. 2,200,000/=. 5. The Honourable trial Magistrate erred in law and fact by finding that the Appellant was in breach of the sale agreement dated 17/10/2019 despite the overwhelming evidence that the demised premised had been vacated. 6. That the Honourable trial Magistrate erred in law and fact by failing to find that the Respondent was responsible for the tenants vacating the demised premises. 7. That the Honourable trial Magistrate erred in law HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 8 of 23

page 8 of 23

and fact by finding that the Appellant was in breach of the sale agreement despite holding that the repayment period was 10 years. 8. That the Honourable trial Magistrate erred in law and fact by compelling the Appellant to refund the Respondent Kshs. 2,200,000/= despite the Appellant still having time within the 10-year period to refund the amount. 9. That the Honoruable trial Magistrate erred in law and fact by re-writing the sale agreement dated 17/10/2019 in favour of the Respondent. 10. That the Honourable trial Magistrate erred in law and fact by faulting the Appellant for not utilizing the proposal under MIN/2/2019 (e) of the Sale Agreement to refund the Respondent despite the Appellant still having time within the 10-year period to pay the amount.” ANALYSIS AND DETERMINATION 16. I have carefully considered this memorandum of appeal, the record of HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 9 of 23

page 9 of 23

Appeal filed in this matter, as well as the written submissions filed by both parties. 17. This is a first appeal. It is settled law that the duty of the first appellate court is to re-evaluate the evidence which was adduced in the subordinate court both on points of law and fact and come up with its own findings and conclusions [see Peters -vs- Sunday post limited [1958] E.A 424] 18. In SELLE and Another -vs- ASSOCIATED MOTOR BOAT COMPANY LTD & Others [1968] 1 E.A 123 it was stated as “……………………………….this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind [the fact] that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular this court is not bound necessarily to follow the trial judge’s findings of fact if it appears that he has clearly failed on some point to HIGH COURT CIVIL APPEAL CASE NO. E054/2023 take into JUDGEMENT account particular Page 10 of 23

page 10 of 23

circumstances or probabilities materially to estimate the evidence.” 19. Likewise in GITOBU IMANYARA & 2 Others -vsATTORNEY GENERAL [2016] eKLR, the Court of Appeal stated as follows:“An appeal to this court is by way of a retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put, they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect.” 20. It is common ground that the Appellant and the Respondent entered into a lease agreement dated 30th May 2016 whereby the Appellant agreed to lease out a quarter acre of the parcel of land known as AGUTHI/GATITU/1692 to the Respondent at an agreed rental of Kshs. 12,000/= per month for a period of ten (10) years payable on or before 10th of every month. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 A copy of this Lease Agreement JUDGEMENT Page 11 of 23

page 11 of 23

appears at Pages 27 to 29 of the Record of Appeal. The Respondent was authorized by that agreement to construct semi-permanent rental units on the leased land. 21. However some years later disagreements arose between the parties and in an effort to resolve those differences the parties entered into a second sale agreement dated 17th October 2019. (Copy of this Sale agreement appears at Pages 49-53 of the Record of Appeal). By this second agreement the Appellant was to buy out the Respondent for a sum of Kshs. 2,200,000. That payment would be secured by apportioning sixty percent (60%) of the rental income derived from the property for the next ten (10) years. The relevant portions of this sale agreement read as follows:“MIN/1/2019-SALE PRICE OF BUILDING STRUCTURES (VALUE) That both parties FELIX KELLY KIAI of ID/NO 10967301 and JOSEPH WAITHAKA NDIANGUI of ID/NO 3202018 agreed sale price of building structures on AGUTHI/GATITU/NYERI – Plot 1692 lease of 10 years value to be Kshs. 2,200,000/MIN 2/2019 – MODE OF PAYMENT HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 12 of 23

page 12 of 23

(a) That both parties agreed mode of repayment be 60% per month from the rent collected payable to JOSEPH WAITHAKA NDIANGUI and 40% payable to FELX KELLY KIAI after deduction of Rent collector (Agent) 10% effective from January 2020. (b) …………………….. (c) (d) ………………………… That effect from January 2020 FELIX KIAI will start paying JOSEPH WAITHAKA NDIANGUI 60% per month from the rent collected of five completed rooms and also if the other six remaining rooms will be completed until completion sale value agreement lease of ten (10) years.” 22. The fact that this contract of 17th October 2023 was entered into and executed by the parties is not in any doubt. parties concede to this. Both The Respondent complained that from November 2019 the Appellant stopped making any HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 13 of 23

page 13 of 23

payments to him and he was denied access to the premises. He argued that having purchased the developed structures the Appellant had a duty to ensure that 60% rental income was being paid to the Respondent as per the agreement. That the Appellant had the option of deriving funds from an alternative source. 23. The Appellant admitted that he did indeed agree to purchase the developments on the suit land for a price of Kshs. 2.2 Million and stated that he was ready and willing to make payments to the Respondent as set out in the agreement. 24. However the Appellant stated that from June 2021 there had been no tenants in the property and thus no rent was being collected the result being there was no rental income of which 60% could be forwarded to the Respondent. 25. The Respondent accused the Appellant of having breached the contract of 17th October 2023 and seeks damages for said breach. 26. Black’s Law Dictionary 8th Edition at Page 200 defines Breach HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 14 of 23

page 14 of 23

of contract as follows:“Violation of a contractual obligation by failing to perform one’s own promise, by repudiating it, or by interfering with another party’s performance. A breach may be one by non-performance, or by repudiation, or both. Every breach gives rise to a claim for damages, and may give rise to other remedies. Even if the injured party sustains no pecuniary loss or is unable to show such loss with sufficient certainty, he has at least a claim for nominal damages. If a court chooses to ignore a trifling departure, there is no breach and no claim arises.” 27. The duty of any court is to interpret and enforce a contract as it is Written contracts are taken to be self-contained and can only be construed and interpreted on the basis of the written contents. A court cannot alter review or re-write a contract voluntarily entered into by the parties. In the case of NATIONAL BANK OF KENYA LTD -VS- PIPEPLASTIC HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 15 of 23

page 15 of 23

SAMKOLIT (K) LTD & Another [2001] eKLR it was held that “A court of law cannot between the parties. rewrite a contract The parties are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved.” 28. In Fidelity Commercial Bank Limited vs Kenya Grange Vehicle Industries Limited [2017] eKLR the Court of Appeal held that:“This is what sometime is called the principle of four corners of an instrument, which insists that a document’s meaning should be derived from the document anything evidence), itself, outside such of without reference the document as the to (extrinsic circumstances surrounding its writing or the history of the party or parties signing it….” 29. Similarly the Court of Appeal in the case of Pius Kimaiyo Langat vs Cooperative Bank of Kenya Ltd (2017) eKLR stated that:HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 16 of 23

page 16 of 23

“We are alive to the hallowed legal maxim that it is not the business of Courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved.” 30. In Hydro Water Well (K) Limited vs Nelson Mankara & 2 others [2021] eKLR that; “To successfully claim for breach of contract, the plaintiff had to show that a contract was in existence, that the contract was breached by the defendant and that the plaintiff suffered (loss) as a result of the defendant’s breach. The plaintiff was not required to show a causal link between the breaches of an agreement and the damages with certainty. He was only required to establish that the wrongful conduct was probably a cause of loss. A plaintiff who at the time of trial can show no more than a probability that he would not have suffered loss if the contract had been properly performed, would succeed unless the HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 17 of 23

page 17 of 23

defendant could discharge the onus of proving that there was no such probability….” 31. The Respondent told the Court that the last payment he received from the Appellant was in May 2021. It seems that the Appellant did comply with the terms of the contract but he stopped making payments to the Respondent in May 2021. The Appellant readily admitted that he had stopped making payments as required but gave the reason as lack of tenants in the property. When asked by the trial court when he would make up the payments the Appellant stated that they would have to sit down and discuss. 32. There was by the admission of both parties that a contract was in place. What therefore was there to discuss? Each party had the duty to fulfil their obligations set out in the contract. The Appellant admitted that he had not made payments as set out in the contract. Thus he was in breach of said contract. No provision was made in the contract for situations where there were no tenants. If the Appellant wished to discuss and/or add in a clause to cover the eventuality of lack of tenants then he ought to have done HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 18 of 23

page 18 of 23

this at the time when the contract was being negotiated by including an addendum to the contract. As it is no such addendum existed. 33. In her judgment the learned trial magistrate found that the full amount of Kshs. 2,200,000 was due and owing to the Respondent. I find this to be an erroneous conclusion. The trial court failed to take into account the payments which had been made from October 2019 to May 2021 when the payments to the Respondent stopped. Furthermore the contract specifically indicated that the period of repayment was ten (10) years which period had not yet expired. The contract did not contain a clause to the effect that in default of any payment the full amount would become due and owing. The trial magistrate erred in imputing such a default clause into the contract – as stated earlier courts have no mandate to re-write contracts between parties. 34. In his submissions the Appellant accused the Respondent of being the one who breached the contract of 30th May 2016, by constructing permanent rental units on the suit land without first obtaining authorisation from the Appellant. HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 19 of 23

page 19 of 23

Whilst I do agree that the Respondent in this aspect did breach the terms of the first contract however it must be remembered that the parties proceeded to re-engage and came up with the second contract dated 17th October 2019. In this second contract the Appellant agreed to purchase all structures erected by the Respondent – this included the permanent and semi-permanent structures. The second contract replaced and superceded the first contract which was no longer applicable. By executing the sale agreement of 17th October 2019 the Appellant gave tacit approval to the construction of all the structures on the suit land. As such the Appellant has no right to make any claim under the first contract. Therefore this claim has no basis in law. The Respondent cannot be found liable for breaching a contract which had been overtaken bye vents. 35. I am satisfied that there was indeed a breach of contract by the Appellant for which breach the Respondent is entitled to nominal damages. In ANSONS Law of Contract 28th Edition at Page 589-590 it is stated as follows:- HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 20 of 23

page 20 of 23

“Every breach of a contract entitles the injured party to damages for the loss he or she has suffered. Damages for breach of contract are designed to compensate for the damage, loss or injury the claimant has suffered through that breach. A claimant who has not, in fact, suffered any loss by reason of that breach, is nevertheless entitled to a verdict but the damages recoverable will be purely nominal.” 36. Further in Halsbury’s Laws of England, Third Edition Vol. II defines nominal damages as follows: Where a plaintiff whose rights have been infringed has not in fact suffered any actual damage therefrom, or fails to prove that he has; or although the plaintiff has sustained actual damage, the damage arises not from the defendant’s wrongful act, but from the conduct of the plaintiff himself; or the plaintiff is not concerned to raise the question of actual loss, HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 21 of 23

page 21 of 23

but brings his action simply with the view of establishing his right, the damage which he is entitled to receive are called nominal….. Thus in actions for breach of contract nominal damages are recoverable although no actual damage can be proved. [Own emphasis] 37. In KENYAN BREWERIES LIMTIED –VS- NATEX DISTRIBUTORS LIMITED [2004] (as he then was) stated as follows:“…………..However a breach of contract should not count for nothing. In my judgment the defendant is entitled to nominal damages for breach of contract ……………….” 38. From the record it is obvious that the Appellant had reneged on the contract of 17th October 2019. He is liable to the Respondent for that breach. 39. Finally this appeal partially succeeds and court makes the following orders;- HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 22 of 23

page 22 of 23

(1) The judgment and orders of the trial court dated 26th July 2023 be and are hereby set aside. (2) The Appellant to pay to the Respondent nominal damages for breach of contract in the amount of Kshs. 150,000.00 (3) The Appellant is directed to pay all arrears due and owing to the Respondent under the terms of the Sale Agreement dated 17th October 2019 from May 2021 to date. (4) Each party to meet their own costs for this Appeal. Dated in Nyeri this 11th day of August 2026. ……………..………… MAUREEN A. ODERO JUDGE HIGH COURT CIVIL APPEAL CASE NO. E054/2023 JUDGEMENT Page 23 of 23

page 23 of 23