(Being an appeal from the Judgment of Hon. V. Karanja delivered on 17th July 2023 in Iten PMC ELC Case No. 30 of 2020-Jane Jemutai Rono vs. James Arusei)
Introduction
1. By a plaint dated 10th October 2020, the plaintiff (now respondent), instituted a suit in the lower court to wit Iten PMC ELC Case No. 30 of 2020 seeking judgment against the defendant (now appellant) for a permanent injunction restraining the defendant, his agents or servants, employees and/or agents from entering, developing, building, trespassing, encroaching, ploughing, planting or dealing in any way with the parcel of land known as Chepkurmum Market plot No. 18; an eviction order; mesne profits, costs of the suit; interest; any other relief that the court may deem just and fit to grant.
2. The plaintiff’s suit was premised on the grounds that at all times material to the suit, the plaintiff was the lawful owner of plot No.18 at Chepkurmum market, (hereinafter referred to as the suit property); that the defendant without any colour of right, encroached on the suit property and forcefully deposited building materials thereon thereby depriving her of her right to utilize the suit property.
3. The plaintiff further pleaded that there had never been any privity of contract between her and the defendant.
4. The defendant filed a statement of defence and counterclaim in which he pleaded that he purchased the suit property from the plaintiff on 21st October 2003 at a consideration of Kshs. 40,000/- and that after paying the purchase price, he took possession of the suit property.
5. The defendant further pleaded that his occupation of the suit property had been uninterrupted, without secrecy or force for over 12 years hence he had become entitled to it by adverse possession.
6. By way of counterclaim, the defendant prayed that he be declared the owner of the suit property by virtue of having been in adverse possession thereof; an order of permanent injunction restraining the plaintiff from trespassing and/or interfering with his quiet possession of the suit property; costs of the suit and the counterclaim.
7. The plaintiff did not file a reply to defence and a defence to the counterclaim.
EVIDENCE
8. When the case came up for hearing, the plaintiff acknowledged that he entered into an arrangement with the defendant that would have resulted in the plaintiff transferring the suit property to the defendant at a consideration of Kshs. 40,000/-. The plaintiff acknowledged that she received Kshs. 25,000/- in respect of that transaction from the defendant and gave the defendant a form of transfer document (Dexbt 1). Claiming that she gave the form of transfer to the defendant in order to go and conduct a search at the council in respect of the suit property, the plaintiff claimed that the defendant did not pay her the balance of the purchase price, being Kshs. 15,000/-.
9. The plaintiff acknowledged that she signed the form of transfer, Dexbt 1, but denied having done so in the presence of witnesses.
10. In cross examination, the plaintiff inter alia acknowledged that she has not pleaded that the defendant paid Kshs. 25,000/- only.
11. In re-examination, the plaintiff maintained that she had given the defendant the transfer form to go and conduct a search in respect of the suit property and that the defendant did not involve her in filling the details in the transfer form. She further stated that she was not there when the witnesses filled their details in the transfer form.
12. The defendant who testified as D.W.1, restated the averments in his statement of defence and counterclaim that he bought the suit property from the plaintiff at Kshs. 40,000/-.
13. Contrary to the plaintiff’s claim that he only paid her Kshs. 25,000/-, the defendant informed the court that he paid the plaintiff the whole of the purchase price being Kshs. 40,000/- and that upon payment of the purchase price, the defendant gave him the transfer form but later on refused to transfer the suit property to him leading to refusal by the council to approve the transfer.
14. In spite of the fact that the suit property was not transferred to the defendant, the defendant informed the court that he took possession of the suit property and had been in occupation since 2003.
15. In support of his case the defendant produced the transfer form signed between him and the plaintiff as Dexbt 1.
16. The defendant acknowledged that no sale agreement was signed between him and the plaintiff but explained that the form of transfer form signed between him and the plaintiff is enough to prove existence of the agreement between them.
17. The defendant also availed his brother, David Arusei (D.W.2), who informed the court that he was present when the agreement between the plaintiff and the defendant over the suit property was entered into. He signed the transfer form as a witness, in the presence of the parties.
18. As to whether the purchase price was paid, D.W.2 stated that it was paid.
19. It is on the basis of the foregoing pleadings and evidence, that the learned trial magistrate entered judgment in favour of the plaintiff and against the defendant. In doing so, the learned trial magistrate inter alia observed/held: -
“I have carefully considered the evidence adduced by both the plaintiff and the defendant. I have also considered the documents in support of their cases.
I have further considered the filed written submissions together with the authorities. The issues for determination are: -
1. Whether or not there was a valid contract;
2. Whether or not to grant an order of injunction;
3. Whether or not adverse possession has been established;
4. Who is to bear the costs?
On issue 1
Section 3 of the Law of Contract Act provides: .............
In this case both the plaintiff and the defendant stated that they never signed any agreement. The plaintiff stated that the defendant had paid her Kshs. 25,000/- and he failed to settle the balance of Kshs. 15,000/-.
On his part, the defendant stated that he paid the whole of the consideration of Kshs. 40,000/-. None of the parties produced written agreement and this offends the mandatory provisions of section 3(3) of the Law of Contract Act. I therefore hold that there was no valid contract between the parties.
On issue 2
.....I did find that there was no valid contract between the parties and further the defendant did not complete his part of the deal. It was stated he did not complete paying the purchase price and therefore the court has to restrain him from using the plaintiff’s land if at all he is utilizing it. The plaintiff is an owner as per the allotment letter, Dexbt 1 and Pexbt 1.
On issue 3
The Defendant has stated that he took possession of the suit land in 2003. The application for transfer (Dexbt 1), dated 21.10.2003, was never approved and it did not show the plot number. The defendant in his counterclaim sought orders of adverse possession....
From the allotment letter, dexbt 2(a) this land belongs to the county council of Keiyo Marakwet. I do agree with the plaintiff’s submissions that adverse possession does not apply to government land pursuant to section 41 of the Limitation of Actions Act. The prayer for adverse possession therefore fails....
The upshot of the foregoing is that the plaintiff has proved her case on a balance of probabilities...I grant her prayer (a) and (b) of the plaint together with costs and interest from the date of the judgment until payment in full.
The defendant’s counterclaim lacks merit and the same is dismissed with costs to the plaintiff.”
APPEAL
20. Aggrieved by the decision of the trial court, the defendant appealed to this court on the grounds that the learned trial magistrate erred by: -
i) Faulting the transaction between him and the respondent for failure to produce a sale agreement which is not a requirement under the provisions of the Law of Contract Act;
ii) Finding that there was no valid contract between the appellant and the respondent over the suit property;
iii) Finding that the respondent had proved her case on a balance of probabilities;
iv) Failing to find that the memorandum of transfer signed between him and the respondent did constitute a contract envisaged by section 3 of the Law of Contract Act;
v) Making conclusions and addressing herself to issues that were neither pleaded nor canvassed at trial;
vi) Dismissing the appellant’s counterclaim;
vii) Failing to take into account matters she ought to have taken into consideration; and
viii) Exercising her discretion injudiciously.
21. The appellant prays that the judgment of the lower court be set aside and in its place be substituted with orders that:
i) The order of eviction against the appellant be set aside and in its place be substituted with an order dismissing the respondent’s suit;
ii) An order allowing the appellant’s counterclaim to the extent that the respondent be restrained from interfering with the suit property being Chepkurmum/18;
iii) The respondent be condemned to pay the costs both at the lower court and of the appeal.
22. The appeal was disposed off by way of written submissions.
Appellant’s submissions
23. In his submissions filed on 24th May 2024, the appellant gives an overview of the parties pleaded cases and the evidence adduced in support thereof and submits that the application for transfer form, Dexbt 1, which he produced in evidence meets the conditions set out under section 3(3) of the Law of Contract Act in that it was reduced into writing and attested by witnesses.
24. The appellant points out that the document clearly captures the fact that what was in issue was the suit property. He also points out that the document captures the consideration paid, Kshs. 40,000/- and that it was fully paid.
25. The appellant points out that in his evidence, he informed the court that they used the form of transfer as the agreement, a fact which was also confirmed by his witness, David Arusei, D.W.2.
26. The appellant further points out that the respondent admitted that she sold the suit property to him and admitted that she signed the form of transfer.
27. Terming the respondent’s claim that he only paid Kshs. 25,000/- toward the agreement false, the appellant faults the trial magistrate for misapprehending the evidence produced by the parties and acting on wrong principles in reaching her decision.
28. Arguing that the learned trial magistrate failed on some material point and failed to take into account circumstances or probabilities material to the estimate of the evidence like the demeanor of the respondent, the appellant urges the court to find the appeal meritorious and to allow it as prayed.
Respondent’s submissions
29. In her submissions, the respondent frames two issues for the court’s determination. These are:-
i. Whether the trial court erred by allowing the respondent’s suit and dismissing the appellant’s defence and counterclaim;
ii. What is the order as to costs.
30. With regard to the first issue, it is pointed out that the appellant based his case on an alleged contract of sale of the suit property entered into himself and the respondent and based on the fact that no sale agreement executed between the appellant and the respondent was produced in evidence, it is submitted that the transaction entered between the appellant and the respondent, if any, is incapable of enforcement for want of compliance with the provisions of section 3(3) of the Law of Contract Act.
31. The respondent acknowledges that the appellant produced in evidence an unapproved application for transfer of the suit property but submits that the application cannot be equated to a sale agreement.
32. Based on the decisions in the cases of Patrick Tarzan Matu & Another vs. Nassim Shariff Abdulla & 2 Others (2009)e KLR; Silverbird Kenya Limited vs. Junction Ltd & 3 others (2013)e KLR and Metra Investment Ltd vs. Gakweli Mohamed Wawaka Nairobi Milimani HCC No.54 of 2006, the respondent maintains that the application for transfer relied upon by the appellant is not an agreement within the provisions of section 3(3) of the Law of Contract Act.
Analysis and Determination
33. In exercise of the duty vested in this court as a first appellate court, I have re-evaluated the evidence adduced before the lower court with a view of reaching my own conclusion on it. I have reminded myself that a first appellate court will not ordinarily interfere with findings of fact by the trial court unless they were based on no evidence at all, or were based on misapprehension of the evidence or unless it is demonstrated that the trial court acted upon wrong principles in reaching the finding. In that regard, see the case of Selle & Another vs. Associated Motor Boat Co. Ltd (1968)E.A 123 and Mwanasokoni vs. Kenya Bus Service Ltd (1982-88)1 KAR and Kiruga vs. Kiruga & Another (1988)KLR 348.
34. As pointed out herein above, the plaintiff/respondent instituted the suit hereto seeking judgment against the respondent for what he termed unlawful occupation of the suit property by the defendant/respondent.
35. In her pleadings, the plaintiff/respondent did not indicate whether there was a sale agreement or agreement executed between herself and the defendant/appellant for sale or transfer of the suit property by her to the defendant/appellant. Instead, she pleaded that there was no privity of contract between her and the defendant/appellant.
36. In his pleadings, the defendant/appellant pleaded that he acquired the suit property by way of purchase of the same from the plaintiff/respondent at Kshs. 40,000/-.
37. As pointed out herein above, the plaintiff/respondent did not file a reply to defence or defence to the defendant/appellant’s contention that he purchased the suit property from her at Kshs. 40,000/-.
38. When the case come up for hearing, the plaintiff admitted/acknowledged that she entered into a contract for sale/transfer of the suit property to the defendant/appellant at Kshs. 40,000/- but claimed that she was not paid the whole of the purchase price.
39. Given that the plaintiff did not raise the issue of payment of the purchase price in her pleadings, I do find the claim that she was not paid the balance of the purchase price to be a departure from her pleadings. That claim is also not supported by the evidence adduced before court, namely the form of transfer executed between the plaintiff/respondent and the defendant/appellant. The conduct of the plaintiff/ respondent of allowing the defendant/appellant to be in use and occupation of the suit property without any complaint or claim for over 15 years also makes the plaintiff’s allegation that she was not paid the whole of the consideration unbelievable.
40. On whether there was a valid contract entered into between the plaintiff/respondent and the defendant /appellant, in the circumstances of this case, where there is a document executed by the parties and attested by witnesses showing the parties to the agreement; the nature of agreement; the consideration involved; the property involved and witnesses to the agreement, I find and hold that despite the document having been described as a form of transfer as opposed to a sell agreement, the document meets the rationale for the amendment of the Law of Contract Act to require that no suit shall be brought upon a contract for the disposition of an interest in land unless-the contract upon which the suit is founded-
i. is in writing;
ii. is signed by the parties thereto; and
iii. the signature of each party signing has been attested by a witness who is present when the contract was signed by such party.
41. The rationale of the above amendment of the Law of Contract Act is captured in the case of Leo Investment Ltd v. Estuarine Estate Ltd (2017) e KLR thus: -
“...the legal framework in section 3(3) of the Law of Contract Act was informed by the desire to settle the uncertainty surrounding pre 2003 framework which hitherto permitted written memoranda and part performance as saving elements in a non-compliant land disposition contracts. In my view, section 3(3) of the Law of Contract Act makes a strict formal requirement whose legal ramification is to completely preclude the cognizance of any non-compliant contract for disposition of interest in land...”
42. Arising from the foregoing statement of the law, the question to answer is whether the contract hereto strictly met the requirements of section 3(3) of the Law of Contract Act.
43. In answering that question, I begin by pointing out that the section requires that a contract for disposition of an interest in land be in writing. That contract need not be in the form of a sale agreement as argued by the plaintiff/respondent. This is so because a plain reading of section 3(3) does not require that the contract be in form of a sale agreement but merely a contract for disposition of an interest in land. In my view that contract can be in the form of a transfer as was the case hereto.
44. A review of the form of transfer admittedly executed between the plaintiff/respondent and the defendant /appellant clearly shows that it was for disposition of an interest in land between the plaintiff/respondent and the defendant/appellant; the agreement is by the parties thereto; which fact was acknowledged by the plaintiff/respondent. The only issue arising from the agreement is whether it was attested by a witness who was present when the contract was signed by such a party.
45. Concerning that issue, the document shows that it was attested by three witnesses, among them D.W.2. D.W.2, informed the court that he was present when the plaintiff/respondent signed the agreement. There being no evidence given by the plaintiff/respondent capable of forming a reasonable ground for accepting her claim that she was not present when the witnesses signed the form of transfer, I find and hold that the agreement was witnessed as by law required.
46. The upshot of the foregoing is that the learned trial magistrate erred by determining that there was no valid contract executed between the plaintiff/respondent and the defendant/appellant in the circumstances.
47. Contrary to the finding by the learned trial magistrate that the document signed between the plaintiff and the defendant does not indicate the plot number, the form transfer does in fact, indicate the plot number.
48. As the appeal turns on the question of validity or otherwise of the contract allegedly executed between the plaintiff/respondent and the defendant/appellant, having determined that the contract was valid, I find that the appeal has merit and l allow it in the following terms: -
i. The order of eviction against the appellant be and is hereby set aside and in its place substituted with an order dismissing the respondent’s suit;
ii. An order allowing the appellant’s counterclaim to the extent that the respondent be restrained from interfering with the suit property being Chepkurmum/18 be and is hereby issued;
iii. The respondent be and is hereby condemned to pay the costs of the suit in the lower court and of the appeal.
49. Orders accordingly.
Judgment dated, signed and delivered at Iten this 2nd day of October, 2024.
Judgment delivered virtually in the presence of:-
Mr. Korir for the appellant
Mr. Kibii for the respondent
Alex: Court Assistant