The Plaintiff commenced this suit vide Plaint dated 5th June, 2018, amended on 20th July, 2018 and further amended on 15th July, 2019. The Plaintiff avers that at all relevant and material times, the Defendant was for all purposes and intent the owner/proprietor of all the parcel of land known as Nakuru Municipality Block 5/133 situated within Nakuru town and was issued with a certificate of lease on 18th July 1986 for a lease term of 99 years from 1st February, 1945.
The Plaintiff further avers that on or about the 31st July, 2013, the deceased and the defendant entered into a sale agreement where the defendant sold to the deceased all that parcel of land known as Nakuru Municipality Block 5/133 situated within Nakuru Town at an agreed purchase price of Kenya Shillings 75,000,000/=. The Plaintiff avers that it was a term of the aforesaid agreement that Kenya Shillings Ten million (Ksh 10,000,000/=) has been paid to the Defendant on execution of the said agreement, receipt of which was acknowledged by the defendant by executing the said agreement on or before 31st July, 2013.
The Plaintiff further avers that it was a further term of the aforesaid agreement that a further Kenya Shillings Ten Million (Ksh 10,000,000/=) shall be paid to the vendor within ninety (90) days from the date of execution of the said agreement.
The Plaintiff avers that on or before the 1st November, 2013 in compliance with the 90 days’ clause, the deceased (deposited) Kenya Shillings Ten Million to the defendant’s account. The Plaintiff avers that the said agreement contained other conditions and an addendum executed by both the deceased and the defendant on 30th July, 2013 and witnessed by David N. Ikua Advocate giving the deceased unlimited possession of the suit property and collection of rent from tenants as from the month of August 2013.
The Plaintiff avers that it was a further term of the said agreement that even though the said property was charged to Barclays Bank of Kenya Limited for a loan facility granted to the defendant, the defendant undertook to arrange for appropriate professional undertaking to be issued to the Barclays Bank Ltd through Messer Koleyo & Company Advocate was acting for the vendor Barclays Bank of Kenya Ltd to release the original title document and duly execute discharge of charge documents.
The Plaintiff avers that the said agreement contained among other conditions a clause that the balance of the purchase price would be financed by First Community Bank Nakuru branch and the balance of the purchase price to say Kenya Shillings 55,000,000/= prior to which the defendant was to furnish the following documents:
a. Original title being title number NAKURU MUNICIPALITY BLOCK 5/133.
b. Duly executed and undated discharge of charge forms over the title number NAKURU MUNICIPALITY BLOCK 5/133 situated within Nakuru Town.
c. An instrument of transfer in triplicate duly executed by the vendor.
d. Three coloured passport size photographs of the vendor.
e. Copies of the vendor’s pin certificate and identification Card/passport.
f. Any other document in possession of the vendor and necessary for completion of this matter.
The Plaintiff further avers that the defendant did not comply with the terms of the sale agreement but has instead been seeking for the extension of time to which the deceased obliged and waited for the defendant to obtain all the relevant completion document so as to discharge the entire agreement. The Plaintiff avers that on several occasions, the Defendant through their lawyers have purported to renege on completing part of their bargain on unreasonable and lame excuses as to frustrate the completion of the conveyance.
The Plaintiff avers that by their letter dated 25th May, 2017 the Defendant intimidated their desire to rescind the said agreement and refund the deposit paid. The Plaintiff further avers that by their further letter dated 1st August 2017, the defendant purported to rescind the contract agreement dated 31st July, 2013 and the defendant threatened to take possession of the suit premises, an action the deceased has strongly resisted to date.
The Plaintiff avers that the conduct and intended action by the Defendant to rescind the said contract and attempt to take possession of the suit premises is and should be declared illegal, unlawful, null and void on the ground that:
a. The defendant has not obtained any Court order to regain possession.
b. The plaintiff has not breached any term of the contact.
c. The plaintiff has strongly resisted any illegal move to regain peaceful possession.
d. No lawful notice has been served upon the plaintiff to regain possession.
The Plaintiff avers that the Defendant’s purported rescission of the contact is in utter and flagrant of breach of the sale agreement and the desire to unjustly enrich himself at the expense of the deceased estate by purportedly being ready to refund the deposit of Ksh 20,000,000/= that has been with him for over six years notwithstanding the fact that there is in existence a valid and binding contract between the parties herein.
The Plaintiff further avers that the deceased filed Nakuru High Court E.L.C number 178 of 2015 that was struck out by the court on 15th May, 2018 as incompetent. The Plaintiff avers that a counter-claim and set off of the same suit premises by the Defendant is still pending for hearing and determination.
The Plaintiff prays for judgement against the defendant for:
a. A mandatory and permanent injunction restraining the defendant by himself, servant, agent, assigns and or any other persons acting on his behest from selling, transferring, alienating, disposing, interfering with the plaintiff’s quiet possession and rent collection or in any way howsoever from disposing, or dealing or interfering with all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 and the premises thereon situated within Nakuru Town.
b. Declaration that the defendant purported (sic) to rescind contact dated 31st July 2013 vide letter of 1st August 2017 is illegal, null and void.
c. An order for specific performance directing the defendant to fully comply with the terms of the sale agreement dated 31st July, 2013 and to order the defendant provide all the completion documents of all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 in compliance with the said agreement.
d. Any other relief this Honourable Court consider just and expedient to grant as to meet the end of justice.
e. The Defendant to meet costs of this suit with interest thereon.
The Defendant filed an amended defence, counterclaim and set off dated 27th July, 2018. In the amended defence, the Defendant denies the allegations in the amended plant. The Defendant denies that he sold to the Plaintiff all that parcel of land known as Nakuru Municipality Block 5/133 situated within Nakuru Town at an agreed Purchase price of Ksh 75,000,000/=.
In the Counter-claim, the Defendant avers that there is no valid agreement at law between the parties. The Defendant avers that he has been paying for the security of the premises to date, even as the Plaintiff is in illegal occupation of the premises.
The Defendant avers that he has incurred loss following the Plaintiff’s action of breaking into his office in the suit premises and changing the locks without notifying him. The Defendant avers that to the extent that there is an agreement, he is entitled to rescind the same on the grounds of:
a. Want of execution and/or attestation
b. Unverified additions
c. Frustration
The Defendant further avers that he counterclaims on account of rent collected by the Plaintiff from 1st August, 2013 to date.
In respect of the set off, the Defendant states that the Plaintiff has collected rent for forty-four months or thereabout amounting to approximately Ksh 28,000,000/= (Twenty-eight million shillings). The Defendant states that the Plaintiff having paid Ksh 20,000,000/= as deposit and having collected Ksh 28,000,000/= as rent from the suit premises by set-off, his claim is satisfied but so that the Plaintiff is liable to the Defendant in the sum of Ksh 8,000,000/= and/or such further or other sum as should be duly adjudicated hereafter. The Defendant stated that by striking out “Amended” at the head of the Plaint, the purported amendments are rendered otiose.
The Defendant prays that:
a. The Plaintiff’s suit be dismissed with costs.
b. Judgment be entered in his favour for:
i. A permanent injunction restraining the Plaintiff, by himself, his servants or agents from remaining on, or entering onto, or in any other manner dealing with or interfering with the Defendant’s ownership or possession of Nakuru Municipality Block 5/133.
ii. An account by the Plaintiff in terms of the counterclaim.
iii. Set-off.
iv. Possession of his property.
v. Rescission of the Sale Agreement.
vi. Damages.
vii. Mesne profits.
c. Costs incidental; to this suit; upon the Amended Plaint, and upon the Defence, Counter-claim and Set-Off.
d. Interest upon such sum, or sums, as shall, by this court, be adjudged, due to the Defendant.
Plaintiff’s evidence
Feisal Said testified as PW1. It was his testimony that he is the Plaintiff and he represented the estate of Said Abdalla Azubedi who passed away in 2019. He testified that after the death of his father, he went to court and obtained a limited grant. He further testified that he has filed the plaintiff’s further statement dated 15th July, 2019 which was adopted by the court as his evidence in chief. The statement of Said Abdula was also adopted as evidence in chief by the court.
PW1 further testified that he has listed documents in support of his claim dated 5th June, 2018 which he produced as exhibits. The court marked them as PEX 1,2,3,13,14, 15,16, as they appear in the list of the documents. The reports are numbered as PMFI 1,4-12 17-40. PW1 also produced the limited grant as PEX 41. PW1 testified that he is claiming prayer a,b and c in the plaint
Upon cross-examination, PW1 stated that he is a son of the deceased. He stated that he was aware of the transaction and he is familiar with the property. He stated that the purchase price was Kshs 75,000,000/=. He stated that Kshs 20,000,000/= was paid and completion was to be in 90 days. He stated that they had not paid by the 90 days’ period because the papers were not done.
PW1 stated that he is not aware that the papers were available. He stated that after 90 days, they did not receive any documents. PW1 further stated that currently nobody is in occupation. He stated that they have been collecting rent since 2013 until 2023. He stated that he does not know how much rent is received per month.
PW1 further stated that he did not know what would happen in the event there was failure to comply within 90 days. He stated that they were supposed to pay the full amount once they receive the papers. He stated that they were to take rent. PW1 stated that the property has shops. He stated that the defendant’s office has never been opened and the defendant has never offered to refund the money. PW1 stated that they are willing to pay the balance. PW1 confirmed that they started collecting rent in 2013.
Upon re-examination he testified that he still willing to pay.
Raphael Maina Irungu testified as PW2. He testified that he is a property agent of an entity by the name Muiru property Investment Ltd. PW2 testified that he has filed a witness statement dated 22nd June, 2018 which was adopted by the court as his evidence in chief.
Upon cross-examination, PW2 stated that his role was that of an agent and he knew both parties. He stated that Samuel Mbugua was brought to him by another person. PW2 stated that they agreed on a price of Kshs 75,000,000/=. He further stated that Kshs 20,000,000/= was paid. He further stated that the first instalment of Kshs 10,000,000/= was to be paid on signing of the agreement. He stated that another Kshs 10,000,000/= after 90 days.
PW2 stated that the balance of Kshs 55,000,000/= was to be funded by First Community Bank. He stated that the full amount has not been paid and there is a balance of Kshs 55,000,000/=.He stated that the property is in possession of Said Abdala Azubedi and he was to take possession from 1st August, 2013. He stated that he has been collecting rent until the court stopped him three months ago. PW2 stated that he wrote to the purchaser that he was ready to refund and he wanted to refund Kshs 20,000,000 less what we had collected.
Upon re-examination, PW2 testified that on 30th June, 2013, the vendor came to him and informed him that one of the properties being auctioned. He testified that he gave money to secure the property. He testified that he talked to Azubedi and he wanted the money the same day. He testified that Azubedi proposed a banker’s cheque of Kshs 10,000,000/= and they were not in agreement on rent. PW2 testified that he was to start in March 2013 and the did amendments. He testified Azubedi has the statement showing collection of rent. He testified that rent was to be collected from 1st August, 2013 and both parties signed.
David Tonge Ikua testified as PW3 and he informed the court that he is an Advocate of High court practising in Nakuru. He testified that he was retained by the plaintiff to represent him in respect of an agreement of sale for title known Nakuru/Municipality/Block 5/133. He testified that the vendor was Samuel Mbugua Ikumbu and the purchaser was Said Abdala. He further testified that the parties entered into the agreement and he referred to PEX6. He testified that the agreement was prepared by the advocate for the vendor who was Sichangi & Company advocates.
PW3 testified that he was acting for the purchaser and the negotiations were between the parties. He testified that he witnessed the agreement for purchaser and the purchaser signed the agreement. He testified that the defendant signed before his advocate and the money was paid. He testified that the controversy arose because of the acquisition of the documents.
He testified that Clause No.5 of the agreement was not adhered to and it indicated that the property had been charged to Barclays Bank of Kenya by the vendor. PW3 further testified that the vendor was to take steps for profession undertaking to the advocate of Barclays bank and it was not done. He testified that he engaged the advocate in various correspondences and he has the letter dated 8th July, 2013 which he produced the documents number 5,7-38 which were marked by the court as PEX 5 PEX 7-PEX 38
PW3 testified that there were documents from the other advocate and the documents of 11th July, 2014 to advocates from the vendor rescinded the agreement. He testified that the reason was that the transaction had been frustrated. PW3 further testified that they were referring to a case in court which was yet to be concluded. PW3 testified that they urged them to let them know whether their client was agreeable. He testified that they responded on 4th September, 2014 and their client’s position was that he was willing to wait and conclude the transaction. PW3 went on to testify that the condition for cancellation or rescission on the part of the defendant is at page 6 of the sale agreement. He testified that Clause 15 was very clear. He testified that in case he failed to comply he was to give the purchaser 21 days’ notice. He testified that if the purchaser failed to comply the vendor was entitled to a refund. He testified that the vendor was to refund the 10%.
PW3 testified that there was no change or alteration to the agreement and there was no addition to the agreement and the issue never arose by any party. PW3 testified that after the agreement was given to the parties for signing, the purchaser raised the issue and indicated that it had been agreed that he takes possession. PW3 testified that his client told him that they had agreed to ouster the clause and had the new arrangement which they counter- signed and he also counter- signed. PW3 testified that there was no frustration as the vendor’s advocates were to give undertaking. PW3 testified that the purchaser entered the premises and he is entitled to the documents. PW3 testified that the purchaser had paid Ksh20,000,000/=.
He testified that the purchaser had not shown unwillingness to pay to balance and the court adopted his statement which is undated and filed on 4th December, 2018 as his evidence in chief.
Upon cross examination, PW3 stated that he witnessed the signing of the agreement for the purchaser. He testified that the addendum was added after the agreement was taken to him on 30th July, 2013 and it was added by hand and the parties signed the same. PW3 informed the court that the parties agreed Kshs 10,000,000/= which had been paid and another Kshs 10,000,000/= was to be paid. He testified that the balance was not paid. PW3 testified that the documents were to be released or discharge of charge to conclude the agreement. He stated that the vendor did not have the documents and the letter dated 11th July, 2014 shows that the defendant was willing to refund the Kshs 20,000,000/=.
PW3 stated that the transaction had an agreement and the agreement was signed by the vendor and proprietor on 30th July, 2013. He stated that the plaintiff started collecting rent in August 2013. PW3 stated that he had been receiving rent for over ten years and had the defendant provided the documents, he could have cleared to full purchase price. He testified that both parties were fighting on the ground on possession.
PW3 informed the court that the purchaser came with an order and he wrote a letter with a copy of an order which was addressed to Barclays bank. PW3 stated that an affidavit of service was drawn by himself and it was served upon Samuel Mbugua Ikumbu. He stated that it was commissioned by Ann N Mbugua. He stated that he knows Mungai Mbugua and he can’t remember when he passed away.
Defendant’s Evidence
Samuel Mbugua Ikumbu testified as DW1 and he informed the court that he is the defendant. He informed the court that he has a statement which is undated and filed on 1st March, 2018 which was adopted by the court as his evidence in chief. DW1 further testified that he has a list of documents and he produced a valuation report which was marked as DEX2.
DW1 testified that he knows the plaintiff and he was introduced to said Abdala Azubedi by Mr. Paul Muthaura as an agent. DW1 testified that he was selling his property Nakuru/Municipality/Block5/133 and the transaction did not come to conclusion. He testified that there was a pending matter in court and the pending case was with Barclays Bank. He testified that he wanted to pay for the bank and the case number was C.A No.32 of 2015 in Nakuru. DW1 testified that the property was closed. DW1 testified that when they entered into agreement the case was on- going.
DW1 testified that the case has not been determined to date and it is High Court case number 147 of 2002. He testified that the suit was dismissed and they appealed. He testified that the appeal is pending. DW1 testified that he entered into the agreement and the requirement was that they wait for the case to be determined. DW1 testified that the plaintiff became impatient. He testified that he later realized that there were ex-parte orders.
DW1 testified that at the time of agreement, the balance was Kshs 777,000/=. He testified that the purchase price was Kshs 75,000,000/= and he has received Kshs 20,000,000/=. DW1 testified that he had another matter involving Block 2/257 and he has a report of Block/2/257. DW1 testified that the amount owing for block 2/257 to Housing finance was between Kshs12,000,000 – Ksh 15,000,000. DW1 further confirmed that he was paid Kshs 20,000,000/= and it was paid in 2 instalments.
DW1 further testified that Azubedi was collecting rent from 2013 and it is about Kshs 700,000/= per month. He testified that they have been collecting from 30th August, 2013 to 2023. He testified that the total is over Kshs 70,000,000/=. DW1 testified that he instructed his advocate to rescind the contract produced as DEX2. DW1 went on to testify that the court gave orders that he was not supposed to step in the property. DW1 testified that they were never served and the orders were lifted. DW1 testified that they offered to repay the Ksh 20,000,000/= plus expenses as per the agreement. DW1 testified that they resisted to move and they were not patient because they were still collecting the rent.
DW1 testified that the case was ongoing but they were collecting rent. DW1 testified that he has been paying for security for more than 20 years. And he pays Kshs17,000 per month and the company is called Wangombe Security Company. DW1 testified that the office was vandalized in 2017. DW1 testified that the report to the police was made on the same date in 2017. DW1 testified that he went to his agent, Mr. Paul Mutua and together they went to see to Mr. Azubedi who did not deny breaking into his office. DW1 testified that he has a claim and he prayed for his property to be retrieved and there be a set-of.
Upon cross examination, DW1 stated that the agreement is dated 31st July, 2013 and it is between the plaintiff and defendant. He stated that he signed the agreement in the presence of an advocate by the name of Sichangi. DW1 stated that the entry was an agreed term of the sale agreement and taking possession did not have an expiry date. He stated that he had taken a loan and the outstanding amount was Kshs 777,000/=. DW1 stated that the property was earmarked and they agreed on how to deal with the loan charge and discharge. DW1 stated that his lawyers gave the professional undertaking and he does not have the letter of undertaking. DW1 stated that the purchaser was to blame for not pursuing a professional undertaking.
DW1 informed the court that he gave his lawyer the instructions for undertaking. He stated that the Ksh 55,000,000/= was not given because there was failure to give professional undertaking. He stated that he instructed his advocate to rescind the agreement and the purchaser breached the terms by filing the case.DW1 stated that he broke into his office in 2017 and tried to evict him. DW1 stated that he changed the locks.
DW1 stated that he was willing to complete the sale and the instructions had been given to his lawyers, to give security. He stated that he was willing to refund the Kshs 20,000,000/=. DW1 informed the court that there was no clause for set-off. DW1 confirmed that he was paid Kshs 20,000,000/= in 2013. DW1 stated that he is willing to refund the Kshs 20,000,000/=. He stated that the purchaser was also using his rental properties.
DW1 informed the court that he can account for Ksh 20,000,000/=. He stated that before 2013, he was collecting rent. He stated that was earning Kshs 400,000/= and the documents are in the file. DW1 stated that the matter was frustrated by the pending cases. He stated that the case was finalized in the High Court and judgment was delivered in 2014. DW1 stated that he had sued the bank and he is a banker by profession. He stated that he had the properties charged to the bank. DW1 stated that the accounts were consolidated and he does not have a statement from the bank. DW1 stated that the matter is pending in the court of appeal.
Upon re-examination, DW1 testified that the additional clause was added on 30th July, 2013 and it was when they were signing the agreement. He testified that he instructed his lawyer to rescind the agreement and he found that a suit had been filed against him. He testified that he was willing to complete the sale. DW1 testified that he ready to refund the Ksh 20,000,000/=.
Plaintiff’s Submissions
The Plaintiff filed submissions on 17th April, 2024 and identified the following issues for determination:
a. Whether there was a valid agreement of sale between the parties?
b. Whether the plaintiff complied with terms & conditions of the said agreement?
c. Whether the defendant breached terms of the said contract?
d. Whether the defendant is entitled to claim for rescission?
e. Whether the defendant is entitled to relief for possession?
f. Whether the defendant is entitled to claim for account & set-off?
g. Whether the Plaintiff is entitled to relief sought?
h. Costs.
The Plaintiff submits that it is not disputed that on or about 31st July, 2013, the Plaintiff and the Defendant entered into an agreement for sale of L.R Title No. Nakuru Municipality Block 5/133 for consideration of Ksh 75,000,000/=. The Plaintiff further submits that it is not disputed that he paid the agreed deposit of Kshs 20,000,000/= as per clause 6 (b) (i) (ii) of the said agreement. The Plaintiff also submits that it is not disputed that on 30th July, 2013, the parties themselves, added an addendum signed by both the parties in the presence of David N. IKua advocate that gave the plaintiff the right to take possession of the suit premises and collection of rent from 1st August, 2013.
On the first issue identified for determination by the Plaintiff, he relies on Section 2(1) and Section 3 (3) of the Law of Contract Act and Section 38 (1) of the Land Act, 2012 and submits that the contract between the Plaintiff and the Defendant was valid in that; both the agreement and the addendum are in writing, both the agreement and the addendum were signed by the plaintiff and the defendant, and attested by advocates who were present when the contract was signed by the parties. The Plaintiff submitted that during the hearing of the suit, the Defendant admitted he signed the agreement and addendum in the presence of the advocates.
On the second issue identified for determination by the Plaintiff, he submitted that he fulfilled all pre-requisite terms and conditions of the contract. The Plaintiff submitted that the completion date was frustrated by acts and breach of the terms of sale by the defendant. The Plaintiff submits that he is ready and willing to comply with remaining terms of the contract once the defendant avails the conveyancing documents and agrees to extend completion period as provided under clause 1(b) & 17 of the said sale agreement.
On the third issue identified for determination by the Plaintiff, the Plaintiff relied on Section 2 of the Law of Contract Act and the case of National Bank of Kenya Ltd vs PipePlastic Samkolit (K) Ltd & Another [2001] eKLR- Civil Appeal 305 of 2015 and submitted that the Defendant breached clear terms of the agreement and having achieved the sole purpose of securing his other plot Nakuru Municipality Block 2/257 from public auction had no further interest to complete the sale.
On the fourth issue identified for determination by the Plaintiff, he submitted that on 1st August, 2017, the defendant served the Plaintiff with purported letter of rescission. He submitted that it failed to give the plaintiff a minimum of 21 days’ notice containing information that: the defendant was ready to complete the sale in all respects, specify the default committed by the plaintiff and specify the period the remedy should be undertaken before the expiry period on 21 days. The Plaintiff submitted that the notice of 1st August, 2017 did not comply with a valid notice envisaged under clause 16 (a) of the said sale agreement with resultant effect that the letter of rescission dated 15th August, 2017 is unprocedural and incapable of terminating any legal rights under the agreement for sale. The Plaintiff submitted that had the Defendant given the 21 days’ notice and confirmed his willingness and readiness to complete the sale in all respect inclusive extension of completion period within a reasonable time, the sale transaction could have been completed.
The Plaintiff further submitted that the Defendant has failed to prove relief for rescission in the counterclaim in that: the defendant has failed to produce any evidence to support averment that the agreement was not properly executed and/or attested. He submitted that the evidence on record clearly demonstrates the agreement was voluntary executed by both the parties in presence of an advocate. The Plaintiff submitted that the defendant has failed to particularize and prove what he refers as unverified addition.
The Plaintiff further submitted that during the hearing of the suit, the Defendant alleged that the completion of the contract of sale was frustrated by pending litigation between the Defendant and Barclays Bank (K) Ltd. He submitted that this is not a valid ground as the sale agreement required the Defendant to give Barclays Bank Professional undertaking to release the original title deed & discharge of charge. The Plaintiff submitted that the relief of rescission being an equitable remedy, the court should decline to exercise its discretion in favour of the defendant on the ground that he is coming to court with dirty hands and against equitable maxim of “he who comes to equity must come with clean hands.” The Plaintiff relied on Section 39 of the Land Act 2012 and the cases of Ann Mumbi Hinga vs William Mwangi Gathuma & Another [2017] eKLR and Precepts Holdings Ltd vs Ngeno Kipyegon Johana [2022] eKLR.
On the fifth issue identified by the Plaintiff for determination, he submitted that his possession of the premises was founded on a valid clause of the addendum to the agreement and unless by an order of the court as provided under Section 41 of the Land Act, 2012 the defendant payment of security and occupation of any part of the premises is illegal. The Plaintiff submitted that the Defendant’s letter of rescission of 31st July, 2017 is incompetent as it did not inform the plaintiff the nature and extent of the breach. The Plaintiff submitted that the Defendants counter-claim for possession should fail because: it is incompetent for want of proper pleadings, the same did not comply with mandatory procedure under Section 41 of the Land Act, 2012, the possession of the suit premises as a licence is irrevocable and the Defendant has failed to prove claim for possession and the same should be dismissed.
On the sixth issue identified for determination by the Plaintiff, he submittted that under common law & law society condition of sale 1989 clause 10.2.1, the relationship between the plaintiff and the defendant after the plaintiff took possession before completion date is not one of principal and agent but landowner and licensee. He submitted that in such a relationship the licensee retains right to collect rent until the vendor exercises its contractual right to rescind the contact under Section 39 of the Land Act, 2012.
The Plaintiff submitted that the right to account further and rent collection does not exist either under any term or condition of the sale agreement of 31st July, 2013 or under common law and or under the Land Act, 2012 as collection of rent from August 2013 was a clear term of the addendum signed by both the parties in the presence of an advocate. The Plaintiff further submitted that the claim for accounts and set off should fail as the defendant has failed to prove that as of February 2018, monthly rent collected was Kshs 700,000/= or at all. The Plaintiff submitted that the valuation report listed in the defendants list of documents is in respect of Nakuru Municipality Block 2/257 freehold estate which has no relationship or relevance with the suit property Title No. Nakuru Municipality Block 5/133 and the claim for accounts and set off has not been proved and should be dismissed with cost.
On the seventh issue identified for determination the Plaintiff submitted that he has proved his claim on a balance of probabilities and he is entitled to costs of this suit and the costs of the Defendant’s counter-claim and set-off.
Defendant’s Submissions
The Defendant filed submissions dated 8th June, 2024 and identified the following issues for determination:
a. Was there a valid agreement?
b. Were the elements of a contact met?
c. Frustration?
d. Was the Defendant entitled to rescind the contract?
e. Specific performance
f. Is the Defendant entitled to the reliefs sought in the Counterclaim?
The Defendant submitted that the agreement is incompetent as the parties only signed the last pages of the alleged agreement. He submitted that the execution is not connected to the body of the agreement and the Defendant questions what the Plaintiff Said Abdalla was signing for? The Defendant submitted that the signature is hanging and appears on a solitary page independent of the agreement. The Defendant submitted that it is not clear what the parties are appending their signatures to.
The Defendant submitted that the additional clause that was handwritten was an afterthought and this is not a proper addendum. The Defendant submitted that the Plaintiff knew that the Defendant was desperate to sell the subject property so as to settle his issues arising from the charge with Barclays Bank Limited and the pending court case relating to the said charge. The Defendant submitted that he was coerced in a subtle manner to sign the agreement which brings into question the issue of free will.
The Defendant further submitted that there is no evidence that the parties sought the consent of Barclay’s Bank Limited as the property was encumbered. He submitted that the Plaintiff was aware that the property was encumbered and proceeded to purport to contact over the same property with full knowledge of the status.
The Defendant submitted that the hand written clause did not vary clause 15 of the agreement which states that: “The parties agree that the vendor shall give vacant possession to the Purchaser on payment of the full purchase price and the Vendor shall continue collecting rent from the tenants on the property until the full purchase price is paid.”
The Defendant further submitted that the three key elements of a contract/agreement are: offer, acceptance and consideration. He submitted that there was undisputedly an offer. He submitted that on the issue of acceptance, the Plaintiff did accept although he did purport to add an additional clause. The Defendant further submitted that on the question whether the element of consideration was fulfilled, the money that the Plaintiff ought to have paid the Defendant is Kshs 75,000,000/= and Ksh 20,000,000/= as deposit was already paid but there is still an outstanding amount.
The Defendant submitted that for a contract to be valid, all of the above elements have to be met and it is clear that the consideration aspect was not fully met. He submitted that this therefore means that all the elements of the contact have not been met and the contact fails. The Defendant relied on the case of William Muthee Muthami vs Bank of Baroda (2014) eKLR. The Defendant submitted that these three elements do not exist and the Plaintiff was wrong in lodging the suit against the Defendant.
The Defendant further submitted that frustration occurs when one party or both are unable to fulfil their obligations in a contract. The Defendant submitted that it was the intention of both parties to proceed with the sale but due to unforeseen circumstances, the sale could not be completed as the vendor was unable to procure the necessary completion documents by reason of the court case relating to the subject property. The Defendant submitted that this is shown in the letter dated 11th July, 2014 where the Defendant explains his reasons for being unable to guarantee completion. The Defendant relies on the case of Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] eKLR.
The Defendant submitted that through no fault of his own, he was unable to determine how quickly the case regarding his property would take therefore was unable to provide completion documents. The Defendant submitted that the agreement was also frustrated by the Plaintiff’s failure to make alternative arrangements to provide for payment of the balance of the Purchase price within the stipulated period.
The Defendant submitted that he was willing to make restitution of the partial performance of the deposit of Kshs 20,000,000/= to the Plaintiff, thereby restoring parties to their pre-contractual positions and this is what is required where a party rescinds an agreement. The Defendant submitted that the Plaintiff’s premature reaction to this was to sue, culminating in these proceedings and thereby denying the parties an opportunity to resolve this issue in a less adversarial manner. The Defendant relies on the case of William Sila Mutiso v Peter Maingi Kaati ELC Appeal No E036 of 2022.
The Defendant submitted that the Plaintiff’s sought order for specific performance should fail because there is no valid or competent contact to be enforced. The Defendant relied on the case of Chirchir Arap Kuto v Nancy Cherotich Koech & Another Nairobi ELCC No 642 of 2017. The Defendant submitted that the relief of specific performance will avail where: there is a valid and enforceable contract and no other adequate alternative remedy is available. The Defendant submitted that the relief of specific performance sought by the Plaintiff should fail because the court ought not to grant this relief if the question of validity of the agreement arises. The Defendant submitted that there is no valid agreement and therefore one cannot seek specific performance based on an incompetent agreement. The Defendant submitted that before specific performance can be considered, the court must evaluate whether other remedies are available to the Plaintiff. The Defendant relied on the case of Sabine Christel Kihumbu v George Ngure Kariuki, Kwale ELCC No E002 of 2021.
The Defendant submitted that with regards to the reliefs sought by the Plaintiff, the Plaintiff cannot be legally entitled to have possession of the premises having not paid the full amount for the said premises. The Defendant submitted that the fact that the Plaintiff has been collecting rent does not amount to possession and the purported agreement did not at any point state that the Plaintiff was to be in possession of the subject property.
The Defendant submitted that he is entitled to full possession of his property. The Defendant submitted that the current status is that although the Plaintiff has not fully paid for the property, the Defendant has been denied access to the property since July, 2013. The Defendant submitted that the Plaintiff has been collecting rent for over ten (10) years amounting to over Ksh 70,000,000/= meaning that not only has he recouped what he spent as deposit but continues to benefit from a property that does not legally belong to him.
The Defendant submitted that he is owed such rent that has been collected for the ten years between 2013 and 2023 over Ksh 70,000,000/= and this amount ought to be set off against the deposit (Ksh 20,000,000/=) paid by the Plaintiff. The Defendant submitted that this sum ought to factor in the security charges that the Defendant has paid religiously from the date of the agreement to date. The Defendant submitted that in the absence of a contrary figure, the court should accept the sum of Ksh 70,000,000/= between 2013 and 2023.
The Defendant submitted that the Plaintiff has not proved his case to the required standard and the Defendant prays that the Plaintiff’s suit be dismissed with costs. The Defendant further prayed that the court considers the prayers set out in the Defendant’s Defence and counter-claim and allow them as prayed.
Analysis and Determination
In the court’s considered opinion, the issues for determination in this matter are:
i. Whether the sale agreement dated 31st July, 2013 is valid and binding as between the parties?
ii. Whether there was any breach of the sale agreement dated 31st July, 2013 between the parties?
iii. Whether the Plaintiff is entitled to the prayers sought?
iv. Whether the Defendant is entitled to the orders sought in the Counterclaim?
v. Who should bear the costs of the suit and the counterclaim?
I shall now proceed to analyze the issues sequentially. It is the Plaintiff’s case that on or about 31st July, 2013, he and the Defendant entered into a sale agreement for the purchase of the suit property referred to as Title No. Nakuru Municipality Block 5/133. It is the Plaintiff’s case that he paid the agreed deposit of Kshs 20,000,000/= within the stipulated time line. It is his case that on 7th January, 2014, the advocates for the financer- The First Community Bank through the firm of M/s Omwancha Mukiri & Onyango Advocates issued the Defendant’s advocates M/s Sichangi Partners Advocates an irrevocable professional undertaking for the payment of the remaining purchase price of Kshs 55,000,000/=.
It is the Plaintiff’s case that the agreement acknowledged that the suit property was charged to Barclays Bank (K) Ltd for a loan facility to the Defendant and there was a dispute between the parties regarding the outstanding amount of Kshs 777,000/= that was yet to be determined. It is the Plaintiff’s case that in order to overcome the challenge, part of clause 5 of the agreement provided that the Defendant shall arrange for an appropriate professional undertaking to be issued to Barclays Bank for the payment of the outstanding amount for the release of original Title deed of the suit property that was to act as security to secure the remaining balance of Kshs 55,000,000/= and duly executed discharge of charge documents.
It is the Plaintiff’s case that it was a further term of the sale agreement that the Defendant shall furnish the Plaintiff with all necessary conveyancing document to enable completion of the transaction. It is the Plaintiff’s case that after the Defendant received the agreed deposit of Kshs 20,000,000/= on 1st November, 2013, he became un-cooperative and frustrated the completion of the sale agreement. It is the Plaintiff’s case that by a letter dated 22nd January, 2015, the Defendant purported to cancel the said agreement dated 31st July, 2013 and threatened forceful takeover of the suit premises. It is the Plaintiff’s case that he fulfilled all pre-requisite conditions of the sale agreement.
It is the Defendant’s case that he is the registered proprietor of Nakuru Municipality Block 5/133. It is his case that that the subject property was charged to Barclays Bank of Kenya Limited. It is the Defendants case that he intended to sell the property to the Plaintiff and the agreement indicated an encumbrance at clause 5. It is his also his case that the agreement contained an additional hand written clause which stated that the Plaintiff would start collecting rent upon receipt of Kshs 10,000,000/=. It is the Defendant’s case that the purchase price for the said property was Kshs 75,000,000/=.
It is the Defendant’s case that the Plaintiff paid a sum of Kshs 20,000,000/= as deposit and started collecting rent at the premises from August 2013 to June 2023. It is the Defendants case that this rental income is estimated at Kshs 700,000/= per month and since the date of the agreement, the Plaintiff has not made any efforts to pay the balance of the said purchase price.
It is the Defendant’s case that thereafter, he was unable to obtain completion documents as there was a pending case involving the charge with Barclays Bank Limited that had not been resolved. It is the Defendant’s case that he offered to repay the deposit paid by the Plaintiff, an offer that was not accepted by the Plaintiff. It is the Defendant’s case that he has had no access to the said property.
It is the Defendants case that until the court issued an order dated 21st March, 2023 directing that rent in respect of the premises be paid to a Joint Property Management Agency, the Plaintiff had been collecting rent for over ten (10) years without having paid the full purchase price. The Defendant informed the court that there is no valid agreement at law between the parties, he is entitled to rescind the agreement and is also entitled to rent collected by the Plaintiff from the date of the incompetent agreement. The Defendant also informed the court that he is entitled to a refund of monies paid by the Defendant in respect of security charges.
This court is guided by the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR, where the Court of Appeal stated as hereunder;
A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.
As was stated by Shah JA in the case of Fina Bank Limited vs Spares & Industries Limited (Civil Appeal No 51 of 2000) (unreported):
“It is clear beyond peradventure that save for those special cases where equity might be prepared to relieve a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain”.
The Defendant has informed this court that the agreement is incompetent as the parties only signed the last pages of the agreement. However, based on the testimony of the Defendant, he received Kshs 20,000,000/= pursuant to the very terms of the sale agreement that he informs the court as being incompetent. The court has looked at the agreement dated 31st July, 2013 and clause 6 states as follows:
a. The Purchase Price for the Property shall be the sum of Kenya Shillings Seventy-Five Million Only (Kshs 75,000,000/=)
b. The deposit shall be paid to the Vendor as follows:
i. Kenya Shillings Ten Million (Kshs 10,000,000/=) has been paid to the vendor on execution of this agreement receipt of which is acknowledged by the vendor.
ii. Kenya Shillings Ten Million (Kshs 10,000,000/=) shall be paid to the Vendor on or before the lapse of Ninety (90) days from the date of execution of this agreement.
iii. The Purchaser is being financed to purchase the property by First Community Bank Nakuru Branch (“The Financier”) and the balance of the Purchase Price that is to say the sum of Kenya Shillings Fifty Five Million (Kshs 55,000,000/=) shall be paid to the Vendor in accordance with the provisions of Clause 10 below provided that before the completion date, the Vendor shall give or arrange for the Advocates acting for the Financier to provide an irrevocable professional undertaking to pay the balance of the purchase price.
Clause 10 of the sale agreement goes on to provide:
Within Fourteen (14) days of receipt by the Financier’s Advocates from the Nakuru District Land Registry of the duly registered Transfer in favour of the Purchaser and Charge in favour of the Financer, the Financier’s Advocates shall pay or procure payment to the Vendor or the Advocates on account of the Vendor by way of Real Time Gross Settlement (RTGS) the balance of the Purchase Price (that is to say the sum of Kenya Shillings Fifty-Five Million (Kshs 55,000,000/=)
The Financer’s Advocates shall obtain the account details from the Vendor upon registration of the Transfer and Charge.
The Defendant has further relied on the doctrine of frustration and has informed the court that through no fault of his own, he was unable to determine how quickly the case regarding his property would take and therefore was unable to provide the completion documents. The Defendant also informed the court that the agreement was frustrated by the Plaintiff’s failure to make alternative arrangements to provide the balance of the purchase price within the stipulated period.
This court notes that whenever a party seeks to rely on the Doctrine of frustration, such a party is obliged to provide and/or the particulars of frustrations and/or facts that are sought to be relied on in a bid to prove frustration.
In the case of Billey Oluoch Orinda VS Ayub Muthiee M’igwetta and 2 others [2017] eKLR, the Court of Appeal held as hereunder:
“A party who wishes to rely on a frustrating event cannot as in this case simply mention it in passing as was done in paragraph 11 of the Amended Plaint that I have set above. Particular facts which they seek to rely on resulting in the frustration of the contract must be clearly set out in the pleadings to enable the other side to prepare and defend the same. This not having been done, the learned Judge was clearly wrong.”
The Doctrine of Frustration and the circumstances that can lead to the invocation of same, were further dealt with and analyzed by the Court of Appeal in the case of Lucy Njeri Njoroge VS Kalyahe Njoroge [2015] eKLR where the Court observed as follows:
“For frustration to be held to exist, there are certain factors that require to be taken into consideration. One factor is whether the frustration was caused by the default of the parties. It is trite that the frustrating event cannot arise from default of the parties. In Maritime National Fish vs Ocean Trawlers [1935] AC 524., self-induced frustration was held to have occurred where a party elected to allocate a fishing licence to three of their other trawlers leaving no licence to operate the contracted trawler.
In Davis Contractors Ltd vs Farehum U.D.C. (supra), it was stated thus,
“The doctrine of frustration is in all cases subject to the important limitation that the frustrating circumstances must arise without fault of either party, that is, the event which a party relies upon as frustrating his contract must not be self-induced.”
The Defendant himself relied on the decision in the case of Charles Muirigi Miriti VS Thananga Growers Sacco Limited and Others [2014]eKLR, where the Honourable Court held as follows:
“As subsequently developed, the doctrine of frustration operates to excuse from further performance where: (1) it appears from the nature of the contract and the surrounding circumstances that the parties have contracted on the basis that some fundamental thing or state of things will continue to exist, or that some particular person will continue to be available, or that some future event which forms the basis of the contract will take place; and (2) before breach, an event in relation to the matter stipulated in head (1) above renders performance impossible or only possible in a very different way from that contemplated. This assessment has been said to require a \'multi-factorial\' approach. Five propositions have been set out as the essence of the doctrine. First, the doctrine of frustration has evolved to mitigate the rigour of the common law\'s insistence on literal performance of absolute promises so as to give effect to the demands of justice. Secondly, the effect of frustration is to discharge the parties from further liability under the contract, the doctrine must not therefore be lightly invoked but must be kept within very narrow limits and ought not to be extended. Thirdly, the effect of frustration is to bring the contract to an end forthwith, without more and automatically. Fourthly, the essence of frustration is that it should not be due to the act or election of the party seeking to rely upon it, but due to some outside event or extraneous change of situation. Fifthly, that event must take place without blame or fault on the side of the party seeking to rely upon it; nor does the mere fact that a contract has become more onerous allow such a plea”
This court finds that the Defendant did not attempt to bring his case to fit within the legal prescriptions contained in the above judicial decision and even to exonerate himself from the fact that the failure to complete the contract was a deliberate act or election on his part and not otherwise. The sale agreement under clause 5 contemplates the dispute with Barclays Bank Limited and even provides for issuance of a professional undertaking to be issued between the Defendant’s advocates and Barclays Bank Limited. Consequently, the Defendant’s claim that he was entitled to rescind the contact fails.
The Defendant has informed the court that he has been paying the security charges in respect of the suit property from the date of the agreement. It is trite law that he who alleges must prove. This is set out under Section 107(1)(2) of the Evidence Act which provides as follows:
1. Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
2. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
The Defendant in his testimony in court stated that he has been paying for security for more than 20 years and he pays Kshs 17,000/= per month to a company called Wangombe Security Company. There is however no exhibit of payment receipts produced.
The upshot of this Court’s findings is that the Plaintiff’s suit succeeds and the Defendant’s counterclaim is found to have no merit. Judgment is hereby entered in the following terms:
a. An order for specific performance is hereby issued directing the defendant to fully comply with the terms of the sale agreement dated 31st July, 2013.
b. It is hereby ordered that the Plaintiff shall pay to the Defendant Kshs 55,000,000/= within 14 days after a duly registered transfer in favour of the Plaintiff is registered.
c. An order is hereby issued that the defendant shall provide all the completion documents of all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 in compliance with the sale agreement dated 31st July, 2013.
d. A mandatory and permanent injunction is hereby issued restraining the defendant by himself, servant, agent, assigns and or any other persons acting on his behest from selling, transferring, alienating, disposing, interfering with the plaintiff’s quiet possession and rent collection or in any way howsoever from disposing, or dealing or interfering with all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 and the premises thereon situated within Nakuru Town.
e. A declaration is hereby made that the defendant purported rescission of the contact dated 31st July 2013 vide letter of 1st August 2017 is illegal, null and void.
f. The Defendant shall meet the costs of this suit with interest thereon.
g. The Defendant’s counterclaim is hereby dismissed with costs.
It is so ordered.
DATED AND DELIVERED VIRTUALLY AT NAKURU THIS 9TH DAY OF OCTOBER, 2024
The Plaintiff further avers that on or about the 31st July, 2013, the deceased and the defendant entered into a sale agreement where the defendant sold to the deceased all that parcel of land known as Nakuru Municipality Block 5/133 situated within Nakuru Town at an agreed purchase price of Kenya Shillings 75,000,000/=. The Plaintiff avers that it was a term of the aforesaid agreement that Kenya Shillings Ten million (Ksh 10,000,000/=) has been paid to the Defendant on execution of the said agreement, receipt of which was acknowledged by the defendant by executing the said agreement on or before 31st July, 2013.
The Plaintiff further avers that it was a further term of the aforesaid agreement that a further Kenya Shillings Ten Million (Ksh 10,000,000/=) shall be paid to the vendor within ninety (90) days from the date of execution of the said agreement.
The Plaintiff avers that on or before the 1st November, 2013 in compliance with the 90 days’ clause, the deceased (deposited) Kenya Shillings Ten Million to the defendant’s account. The Plaintiff avers that the said agreement contained other conditions and an addendum executed by both the deceased and the defendant on 30th July, 2013 and witnessed by David N. Ikua Advocate giving the deceased unlimited possession of the suit property and collection of rent from tenants as from the month of August 2013.
The Plaintiff avers that it was a further term of the said agreement that even though the said property was charged to Barclays Bank of Kenya Limited for a loan facility granted to the defendant, the defendant undertook to arrange for appropriate professional undertaking to be issued to the Barclays Bank Ltd through Messer Koleyo & Company Advocate was acting for the vendor Barclays Bank of Kenya Ltd to release the original title document and duly execute discharge of charge documents.
The Plaintiff avers that the said agreement contained among other conditions a clause that the balance of the purchase price would be financed by First Community Bank Nakuru branch and the balance of the purchase price to say Kenya Shillings 55,000,000/= prior to which the defendant was to furnish the following documents:
a. Original title being title number NAKURU MUNICIPALITY BLOCK 5/133.
b. Duly executed and undated discharge of charge forms over the title number NAKURU MUNICIPALITY BLOCK 5/133 situated within Nakuru Town.
c. An instrument of transfer in triplicate duly executed by the vendor.
d. Three coloured passport size photographs of the vendor.
e. Copies of the vendor’s pin certificate and identification Card/passport.
f. Any other document in possession of the vendor and necessary for completion of this matter.
The Plaintiff further avers that the defendant did not comply with the terms of the sale agreement but has instead been seeking for the extension of time to which the deceased obliged and waited for the defendant to obtain all the relevant completion document so as to discharge the entire agreement. The Plaintiff avers that on several occasions, the Defendant through their lawyers have purported to renege on completing part of their bargain on unreasonable and lame excuses as to frustrate the completion of the conveyance.
The Plaintiff avers that by their letter dated 25th May, 2017 the Defendant intimidated their desire to rescind the said agreement and refund the deposit paid. The Plaintiff further avers that by their further letter dated 1st August 2017, the defendant purported to rescind the contract agreement dated 31st July, 2013 and the defendant threatened to take possession of the suit premises, an action the deceased has strongly resisted to date.
The Plaintiff avers that the conduct and intended action by the Defendant to rescind the said contract and attempt to take possession of the suit premises is and should be declared illegal, unlawful, null and void on the ground that:
a. The defendant has not obtained any Court order to regain possession.
b. The plaintiff has not breached any term of the contact.
c. The plaintiff has strongly resisted any illegal move to regain peaceful possession.
d. No lawful notice has been served upon the plaintiff to regain possession.
The Plaintiff avers that the Defendant’s purported rescission of the contact is in utter and flagrant of breach of the sale agreement and the desire to unjustly enrich himself at the expense of the deceased estate by purportedly being ready to refund the deposit of Ksh 20,000,000/= that has been with him for over six years notwithstanding the fact that there is in existence a valid and binding contract between the parties herein.
The Plaintiff further avers that the deceased filed Nakuru High Court E.L.C number 178 of 2015 that was struck out by the court on 15th May, 2018 as incompetent. The Plaintiff avers that a counter-claim and set off of the same suit premises by the Defendant is still pending for hearing and determination.
The Plaintiff prays for judgement against the defendant for:
a. A mandatory and permanent injunction restraining the defendant by himself, servant, agent, assigns and or any other persons acting on his behest from selling, transferring, alienating, disposing, interfering with the plaintiff’s quiet possession and rent collection or in any way howsoever from disposing, or dealing or interfering with all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 and the premises thereon situated within Nakuru Town.
b. Declaration that the defendant purported (sic) to rescind contact dated 31st July 2013 vide letter of 1st August 2017 is illegal, null and void.
c. An order for specific performance directing the defendant to fully comply with the terms of the sale agreement dated 31st July, 2013 and to order the defendant provide all the completion documents of all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 in compliance with the said agreement.
d. Any other relief this Honourable Court consider just and expedient to grant as to meet the end of justice.
e. The Defendant to meet costs of this suit with interest thereon.
The Defendant filed an amended defence, counterclaim and set off dated 27th July, 2018. In the amended defence, the Defendant denies the allegations in the amended plant. The Defendant denies that he sold to the Plaintiff all that parcel of land known as Nakuru Municipality Block 5/133 situated within Nakuru Town at an agreed Purchase price of Ksh 75,000,000/=.
In the Counter-claim, the Defendant avers that there is no valid agreement at law between the parties. The Defendant avers that he has been paying for the security of the premises to date, even as the Plaintiff is in illegal occupation of the premises.
The Defendant avers that he has incurred loss following the Plaintiff’s action of breaking into his office in the suit premises and changing the locks without notifying him. The Defendant avers that to the extent that there is an agreement, he is entitled to rescind the same on the grounds of:
a. Want of execution and/or attestation
b. Unverified additions
c. Frustration
The Defendant further avers that he counterclaims on account of rent collected by the Plaintiff from 1st August, 2013 to date.
In respect of the set off, the Defendant states that the Plaintiff has collected rent for forty-four months or thereabout amounting to approximately Ksh 28,000,000/= (Twenty-eight million shillings). The Defendant states that the Plaintiff having paid Ksh 20,000,000/= as deposit and having collected Ksh 28,000,000/= as rent from the suit premises by set-off, his claim is satisfied but so that the Plaintiff is liable to the Defendant in the sum of Ksh 8,000,000/= and/or such further or other sum as should be duly adjudicated hereafter. The Defendant stated that by striking out “Amended” at the head of the Plaint, the purported amendments are rendered otiose.
The Defendant prays that:
a. The Plaintiff’s suit be dismissed with costs.
b. Judgment be entered in his favour for:
i. A permanent injunction restraining the Plaintiff, by himself, his servants or agents from remaining on, or entering onto, or in any other manner dealing with or interfering with the Defendant’s ownership or possession of Nakuru Municipality Block 5/133.
ii. An account by the Plaintiff in terms of the counterclaim.
iii. Set-off.
iv. Possession of his property.
v. Rescission of the Sale Agreement.
vi. Damages.
vii. Mesne profits.
c. Costs incidental; to this suit; upon the Amended Plaint, and upon the Defence, Counter-claim and Set-Off.
d. Interest upon such sum, or sums, as shall, by this court, be adjudged, due to the Defendant.
Plaintiff’s evidence
Feisal Said testified as PW1. It was his testimony that he is the Plaintiff and he represented the estate of Said Abdalla Azubedi who passed away in 2019. He testified that after the death of his father, he went to court and obtained a limited grant. He further testified that he has filed the plaintiff’s further statement dated 15th July, 2019 which was adopted by the court as his evidence in chief. The statement of Said Abdula was also adopted as evidence in chief by the court.
PW1 further testified that he has listed documents in support of his claim dated 5th June, 2018 which he produced as exhibits. The court marked them as PEX 1,2,3,13,14, 15,16, as they appear in the list of the documents. The reports are numbered as PMFI 1,4-12 17-40. PW1 also produced the limited grant as PEX 41. PW1 testified that he is claiming prayer a,b and c in the plaint
Upon cross-examination, PW1 stated that he is a son of the deceased. He stated that he was aware of the transaction and he is familiar with the property. He stated that the purchase price was Kshs 75,000,000/=. He stated that Kshs 20,000,000/= was paid and completion was to be in 90 days. He stated that they had not paid by the 90 days’ period because the papers were not done.
PW1 stated that he is not aware that the papers were available. He stated that after 90 days, they did not receive any documents. PW1 further stated that currently nobody is in occupation. He stated that they have been collecting rent since 2013 until 2023. He stated that he does not know how much rent is received per month.
PW1 further stated that he did not know what would happen in the event there was failure to comply within 90 days. He stated that they were supposed to pay the full amount once they receive the papers. He stated that they were to take rent. PW1 stated that the property has shops. He stated that the defendant’s office has never been opened and the defendant has never offered to refund the money. PW1 stated that they are willing to pay the balance. PW1 confirmed that they started collecting rent in 2013.
Upon re-examination he testified that he still willing to pay.
Raphael Maina Irungu testified as PW2. He testified that he is a property agent of an entity by the name Muiru property Investment Ltd. PW2 testified that he has filed a witness statement dated 22nd June, 2018 which was adopted by the court as his evidence in chief.
Upon cross-examination, PW2 stated that his role was that of an agent and he knew both parties. He stated that Samuel Mbugua was brought to him by another person. PW2 stated that they agreed on a price of Kshs 75,000,000/=. He further stated that Kshs 20,000,000/= was paid. He further stated that the first instalment of Kshs 10,000,000/= was to be paid on signing of the agreement. He stated that another Kshs 10,000,000/= after 90 days.
PW2 stated that the balance of Kshs 55,000,000/= was to be funded by First Community Bank. He stated that the full amount has not been paid and there is a balance of Kshs 55,000,000/=.He stated that the property is in possession of Said Abdala Azubedi and he was to take possession from 1st August, 2013. He stated that he has been collecting rent until the court stopped him three months ago. PW2 stated that he wrote to the purchaser that he was ready to refund and he wanted to refund Kshs 20,000,000 less what we had collected.
Upon re-examination, PW2 testified that on 30th June, 2013, the vendor came to him and informed him that one of the properties being auctioned. He testified that he gave money to secure the property. He testified that he talked to Azubedi and he wanted the money the same day. He testified that Azubedi proposed a banker’s cheque of Kshs 10,000,000/= and they were not in agreement on rent. PW2 testified that he was to start in March 2013 and the did amendments. He testified Azubedi has the statement showing collection of rent. He testified that rent was to be collected from 1st August, 2013 and both parties signed.
David Tonge Ikua testified as PW3 and he informed the court that he is an Advocate of High court practising in Nakuru. He testified that he was retained by the plaintiff to represent him in respect of an agreement of sale for title known Nakuru/Municipality/Block 5/133. He testified that the vendor was Samuel Mbugua Ikumbu and the purchaser was Said Abdala. He further testified that the parties entered into the agreement and he referred to PEX6. He testified that the agreement was prepared by the advocate for the vendor who was Sichangi & Company advocates.
PW3 testified that he was acting for the purchaser and the negotiations were between the parties. He testified that he witnessed the agreement for purchaser and the purchaser signed the agreement. He testified that the defendant signed before his advocate and the money was paid. He testified that the controversy arose because of the acquisition of the documents.
He testified that Clause No.5 of the agreement was not adhered to and it indicated that the property had been charged to Barclays Bank of Kenya by the vendor. PW3 further testified that the vendor was to take steps for profession undertaking to the advocate of Barclays bank and it was not done. He testified that he engaged the advocate in various correspondences and he has the letter dated 8th July, 2013 which he produced the documents number 5,7-38 which were marked by the court as PEX 5 PEX 7-PEX 38
PW3 testified that there were documents from the other advocate and the documents of 11th July, 2014 to advocates from the vendor rescinded the agreement. He testified that the reason was that the transaction had been frustrated. PW3 further testified that they were referring to a case in court which was yet to be concluded. PW3 testified that they urged them to let them know whether their client was agreeable. He testified that they responded on 4th September, 2014 and their client’s position was that he was willing to wait and conclude the transaction. PW3 went on to testify that the condition for cancellation or rescission on the part of the defendant is at page 6 of the sale agreement. He testified that Clause 15 was very clear. He testified that in case he failed to comply he was to give the purchaser 21 days’ notice. He testified that if the purchaser failed to comply the vendor was entitled to a refund. He testified that the vendor was to refund the 10%.
PW3 testified that there was no change or alteration to the agreement and there was no addition to the agreement and the issue never arose by any party. PW3 testified that after the agreement was given to the parties for signing, the purchaser raised the issue and indicated that it had been agreed that he takes possession. PW3 testified that his client told him that they had agreed to ouster the clause and had the new arrangement which they counter- signed and he also counter- signed. PW3 testified that there was no frustration as the vendor’s advocates were to give undertaking. PW3 testified that the purchaser entered the premises and he is entitled to the documents. PW3 testified that the purchaser had paid Ksh20,000,000/=.
He testified that the purchaser had not shown unwillingness to pay to balance and the court adopted his statement which is undated and filed on 4th December, 2018 as his evidence in chief.
Upon cross examination, PW3 stated that he witnessed the signing of the agreement for the purchaser. He testified that the addendum was added after the agreement was taken to him on 30th July, 2013 and it was added by hand and the parties signed the same. PW3 informed the court that the parties agreed Kshs 10,000,000/= which had been paid and another Kshs 10,000,000/= was to be paid. He testified that the balance was not paid. PW3 testified that the documents were to be released or discharge of charge to conclude the agreement. He stated that the vendor did not have the documents and the letter dated 11th July, 2014 shows that the defendant was willing to refund the Kshs 20,000,000/=.
PW3 stated that the transaction had an agreement and the agreement was signed by the vendor and proprietor on 30th July, 2013. He stated that the plaintiff started collecting rent in August 2013. PW3 stated that he had been receiving rent for over ten years and had the defendant provided the documents, he could have cleared to full purchase price. He testified that both parties were fighting on the ground on possession.
PW3 informed the court that the purchaser came with an order and he wrote a letter with a copy of an order which was addressed to Barclays bank. PW3 stated that an affidavit of service was drawn by himself and it was served upon Samuel Mbugua Ikumbu. He stated that it was commissioned by Ann N Mbugua. He stated that he knows Mungai Mbugua and he can’t remember when he passed away.
Defendant’s Evidence
Samuel Mbugua Ikumbu testified as DW1 and he informed the court that he is the defendant. He informed the court that he has a statement which is undated and filed on 1st March, 2018 which was adopted by the court as his evidence in chief. DW1 further testified that he has a list of documents and he produced a valuation report which was marked as DEX2.
DW1 testified that he knows the plaintiff and he was introduced to said Abdala Azubedi by Mr. Paul Muthaura as an agent. DW1 testified that he was selling his property Nakuru/Municipality/Block5/133 and the transaction did not come to conclusion. He testified that there was a pending matter in court and the pending case was with Barclays Bank. He testified that he wanted to pay for the bank and the case number was C.A No.32 of 2015 in Nakuru. DW1 testified that the property was closed. DW1 testified that when they entered into agreement the case was on- going.
DW1 testified that the case has not been determined to date and it is High Court case number 147 of 2002. He testified that the suit was dismissed and they appealed. He testified that the appeal is pending. DW1 testified that he entered into the agreement and the requirement was that they wait for the case to be determined. DW1 testified that the plaintiff became impatient. He testified that he later realized that there were ex-parte orders.
DW1 testified that at the time of agreement, the balance was Kshs 777,000/=. He testified that the purchase price was Kshs 75,000,000/= and he has received Kshs 20,000,000/=. DW1 testified that he had another matter involving Block 2/257 and he has a report of Block/2/257. DW1 testified that the amount owing for block 2/257 to Housing finance was between Kshs12,000,000 – Ksh 15,000,000. DW1 further confirmed that he was paid Kshs 20,000,000/= and it was paid in 2 instalments.
DW1 further testified that Azubedi was collecting rent from 2013 and it is about Kshs 700,000/= per month. He testified that they have been collecting from 30th August, 2013 to 2023. He testified that the total is over Kshs 70,000,000/=. DW1 testified that he instructed his advocate to rescind the contract produced as DEX2. DW1 went on to testify that the court gave orders that he was not supposed to step in the property. DW1 testified that they were never served and the orders were lifted. DW1 testified that they offered to repay the Ksh 20,000,000/= plus expenses as per the agreement. DW1 testified that they resisted to move and they were not patient because they were still collecting the rent.
DW1 testified that the case was ongoing but they were collecting rent. DW1 testified that he has been paying for security for more than 20 years. And he pays Kshs17,000 per month and the company is called Wangombe Security Company. DW1 testified that the office was vandalized in 2017. DW1 testified that the report to the police was made on the same date in 2017. DW1 testified that he went to his agent, Mr. Paul Mutua and together they went to see to Mr. Azubedi who did not deny breaking into his office. DW1 testified that he has a claim and he prayed for his property to be retrieved and there be a set-of.
Upon cross examination, DW1 stated that the agreement is dated 31st July, 2013 and it is between the plaintiff and defendant. He stated that he signed the agreement in the presence of an advocate by the name of Sichangi. DW1 stated that the entry was an agreed term of the sale agreement and taking possession did not have an expiry date. He stated that he had taken a loan and the outstanding amount was Kshs 777,000/=. DW1 stated that the property was earmarked and they agreed on how to deal with the loan charge and discharge. DW1 stated that his lawyers gave the professional undertaking and he does not have the letter of undertaking. DW1 stated that the purchaser was to blame for not pursuing a professional undertaking.
DW1 informed the court that he gave his lawyer the instructions for undertaking. He stated that the Ksh 55,000,000/= was not given because there was failure to give professional undertaking. He stated that he instructed his advocate to rescind the agreement and the purchaser breached the terms by filing the case.DW1 stated that he broke into his office in 2017 and tried to evict him. DW1 stated that he changed the locks.
DW1 stated that he was willing to complete the sale and the instructions had been given to his lawyers, to give security. He stated that he was willing to refund the Kshs 20,000,000/=. DW1 informed the court that there was no clause for set-off. DW1 confirmed that he was paid Kshs 20,000,000/= in 2013. DW1 stated that he is willing to refund the Kshs 20,000,000/=. He stated that the purchaser was also using his rental properties.
DW1 informed the court that he can account for Ksh 20,000,000/=. He stated that before 2013, he was collecting rent. He stated that was earning Kshs 400,000/= and the documents are in the file. DW1 stated that the matter was frustrated by the pending cases. He stated that the case was finalized in the High Court and judgment was delivered in 2014. DW1 stated that he had sued the bank and he is a banker by profession. He stated that he had the properties charged to the bank. DW1 stated that the accounts were consolidated and he does not have a statement from the bank. DW1 stated that the matter is pending in the court of appeal.
Upon re-examination, DW1 testified that the additional clause was added on 30th July, 2013 and it was when they were signing the agreement. He testified that he instructed his lawyer to rescind the agreement and he found that a suit had been filed against him. He testified that he was willing to complete the sale. DW1 testified that he ready to refund the Ksh 20,000,000/=.
Plaintiff’s Submissions
The Plaintiff filed submissions on 17th April, 2024 and identified the following issues for determination:
a. Whether there was a valid agreement of sale between the parties?
b. Whether the plaintiff complied with terms & conditions of the said agreement?
c. Whether the defendant breached terms of the said contract?
d. Whether the defendant is entitled to claim for rescission?
e. Whether the defendant is entitled to relief for possession?
f. Whether the defendant is entitled to claim for account & set-off?
g. Whether the Plaintiff is entitled to relief sought?
h. Costs.
The Plaintiff submits that it is not disputed that on or about 31st July, 2013, the Plaintiff and the Defendant entered into an agreement for sale of L.R Title No. Nakuru Municipality Block 5/133 for consideration of Ksh 75,000,000/=. The Plaintiff further submits that it is not disputed that he paid the agreed deposit of Kshs 20,000,000/= as per clause 6 (b) (i) (ii) of the said agreement. The Plaintiff also submits that it is not disputed that on 30th July, 2013, the parties themselves, added an addendum signed by both the parties in the presence of David N. IKua advocate that gave the plaintiff the right to take possession of the suit premises and collection of rent from 1st August, 2013.
On the first issue identified for determination by the Plaintiff, he relies on Section 2(1) and Section 3 (3) of the Law of Contract Act and Section 38 (1) of the Land Act, 2012 and submits that the contract between the Plaintiff and the Defendant was valid in that; both the agreement and the addendum are in writing, both the agreement and the addendum were signed by the plaintiff and the defendant, and attested by advocates who were present when the contract was signed by the parties. The Plaintiff submitted that during the hearing of the suit, the Defendant admitted he signed the agreement and addendum in the presence of the advocates.
On the second issue identified for determination by the Plaintiff, he submitted that he fulfilled all pre-requisite terms and conditions of the contract. The Plaintiff submitted that the completion date was frustrated by acts and breach of the terms of sale by the defendant. The Plaintiff submits that he is ready and willing to comply with remaining terms of the contract once the defendant avails the conveyancing documents and agrees to extend completion period as provided under clause 1(b) & 17 of the said sale agreement.
On the third issue identified for determination by the Plaintiff, the Plaintiff relied on Section 2 of the Law of Contract Act and the case of National Bank of Kenya Ltd vs PipePlastic Samkolit (K) Ltd & Another [2001] eKLR- Civil Appeal 305 of 2015 and submitted that the Defendant breached clear terms of the agreement and having achieved the sole purpose of securing his other plot Nakuru Municipality Block 2/257 from public auction had no further interest to complete the sale.
On the fourth issue identified for determination by the Plaintiff, he submitted that on 1st August, 2017, the defendant served the Plaintiff with purported letter of rescission. He submitted that it failed to give the plaintiff a minimum of 21 days’ notice containing information that: the defendant was ready to complete the sale in all respects, specify the default committed by the plaintiff and specify the period the remedy should be undertaken before the expiry period on 21 days. The Plaintiff submitted that the notice of 1st August, 2017 did not comply with a valid notice envisaged under clause 16 (a) of the said sale agreement with resultant effect that the letter of rescission dated 15th August, 2017 is unprocedural and incapable of terminating any legal rights under the agreement for sale. The Plaintiff submitted that had the Defendant given the 21 days’ notice and confirmed his willingness and readiness to complete the sale in all respect inclusive extension of completion period within a reasonable time, the sale transaction could have been completed.
The Plaintiff further submitted that the Defendant has failed to prove relief for rescission in the counterclaim in that: the defendant has failed to produce any evidence to support averment that the agreement was not properly executed and/or attested. He submitted that the evidence on record clearly demonstrates the agreement was voluntary executed by both the parties in presence of an advocate. The Plaintiff submitted that the defendant has failed to particularize and prove what he refers as unverified addition.
The Plaintiff further submitted that during the hearing of the suit, the Defendant alleged that the completion of the contract of sale was frustrated by pending litigation between the Defendant and Barclays Bank (K) Ltd. He submitted that this is not a valid ground as the sale agreement required the Defendant to give Barclays Bank Professional undertaking to release the original title deed & discharge of charge. The Plaintiff submitted that the relief of rescission being an equitable remedy, the court should decline to exercise its discretion in favour of the defendant on the ground that he is coming to court with dirty hands and against equitable maxim of “he who comes to equity must come with clean hands.” The Plaintiff relied on Section 39 of the Land Act 2012 and the cases of Ann Mumbi Hinga vs William Mwangi Gathuma & Another [2017] eKLR and Precepts Holdings Ltd vs Ngeno Kipyegon Johana [2022] eKLR.
On the fifth issue identified by the Plaintiff for determination, he submitted that his possession of the premises was founded on a valid clause of the addendum to the agreement and unless by an order of the court as provided under Section 41 of the Land Act, 2012 the defendant payment of security and occupation of any part of the premises is illegal. The Plaintiff submitted that the Defendant’s letter of rescission of 31st July, 2017 is incompetent as it did not inform the plaintiff the nature and extent of the breach. The Plaintiff submitted that the Defendants counter-claim for possession should fail because: it is incompetent for want of proper pleadings, the same did not comply with mandatory procedure under Section 41 of the Land Act, 2012, the possession of the suit premises as a licence is irrevocable and the Defendant has failed to prove claim for possession and the same should be dismissed.
On the sixth issue identified for determination by the Plaintiff, he submittted that under common law & law society condition of sale 1989 clause 10.2.1, the relationship between the plaintiff and the defendant after the plaintiff took possession before completion date is not one of principal and agent but landowner and licensee. He submitted that in such a relationship the licensee retains right to collect rent until the vendor exercises its contractual right to rescind the contact under Section 39 of the Land Act, 2012.
The Plaintiff submitted that the right to account further and rent collection does not exist either under any term or condition of the sale agreement of 31st July, 2013 or under common law and or under the Land Act, 2012 as collection of rent from August 2013 was a clear term of the addendum signed by both the parties in the presence of an advocate. The Plaintiff further submitted that the claim for accounts and set off should fail as the defendant has failed to prove that as of February 2018, monthly rent collected was Kshs 700,000/= or at all. The Plaintiff submitted that the valuation report listed in the defendants list of documents is in respect of Nakuru Municipality Block 2/257 freehold estate which has no relationship or relevance with the suit property Title No. Nakuru Municipality Block 5/133 and the claim for accounts and set off has not been proved and should be dismissed with cost.
On the seventh issue identified for determination the Plaintiff submitted that he has proved his claim on a balance of probabilities and he is entitled to costs of this suit and the costs of the Defendant’s counter-claim and set-off.
Defendant’s Submissions
The Defendant filed submissions dated 8th June, 2024 and identified the following issues for determination:
a. Was there a valid agreement?
b. Were the elements of a contact met?
c. Frustration?
d. Was the Defendant entitled to rescind the contract?
e. Specific performance
f. Is the Defendant entitled to the reliefs sought in the Counterclaim?
The Defendant submitted that the agreement is incompetent as the parties only signed the last pages of the alleged agreement. He submitted that the execution is not connected to the body of the agreement and the Defendant questions what the Plaintiff Said Abdalla was signing for? The Defendant submitted that the signature is hanging and appears on a solitary page independent of the agreement. The Defendant submitted that it is not clear what the parties are appending their signatures to.
The Defendant submitted that the additional clause that was handwritten was an afterthought and this is not a proper addendum. The Defendant submitted that the Plaintiff knew that the Defendant was desperate to sell the subject property so as to settle his issues arising from the charge with Barclays Bank Limited and the pending court case relating to the said charge. The Defendant submitted that he was coerced in a subtle manner to sign the agreement which brings into question the issue of free will.
The Defendant further submitted that there is no evidence that the parties sought the consent of Barclay’s Bank Limited as the property was encumbered. He submitted that the Plaintiff was aware that the property was encumbered and proceeded to purport to contact over the same property with full knowledge of the status.
The Defendant submitted that the hand written clause did not vary clause 15 of the agreement which states that: “The parties agree that the vendor shall give vacant possession to the Purchaser on payment of the full purchase price and the Vendor shall continue collecting rent from the tenants on the property until the full purchase price is paid.”
The Defendant further submitted that the three key elements of a contract/agreement are: offer, acceptance and consideration. He submitted that there was undisputedly an offer. He submitted that on the issue of acceptance, the Plaintiff did accept although he did purport to add an additional clause. The Defendant further submitted that on the question whether the element of consideration was fulfilled, the money that the Plaintiff ought to have paid the Defendant is Kshs 75,000,000/= and Ksh 20,000,000/= as deposit was already paid but there is still an outstanding amount.
The Defendant submitted that for a contract to be valid, all of the above elements have to be met and it is clear that the consideration aspect was not fully met. He submitted that this therefore means that all the elements of the contact have not been met and the contact fails. The Defendant relied on the case of William Muthee Muthami vs Bank of Baroda (2014) eKLR. The Defendant submitted that these three elements do not exist and the Plaintiff was wrong in lodging the suit against the Defendant.
The Defendant further submitted that frustration occurs when one party or both are unable to fulfil their obligations in a contract. The Defendant submitted that it was the intention of both parties to proceed with the sale but due to unforeseen circumstances, the sale could not be completed as the vendor was unable to procure the necessary completion documents by reason of the court case relating to the subject property. The Defendant submitted that this is shown in the letter dated 11th July, 2014 where the Defendant explains his reasons for being unable to guarantee completion. The Defendant relies on the case of Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & another [2014] eKLR.
The Defendant submitted that through no fault of his own, he was unable to determine how quickly the case regarding his property would take therefore was unable to provide completion documents. The Defendant submitted that the agreement was also frustrated by the Plaintiff’s failure to make alternative arrangements to provide for payment of the balance of the Purchase price within the stipulated period.
The Defendant submitted that he was willing to make restitution of the partial performance of the deposit of Kshs 20,000,000/= to the Plaintiff, thereby restoring parties to their pre-contractual positions and this is what is required where a party rescinds an agreement. The Defendant submitted that the Plaintiff’s premature reaction to this was to sue, culminating in these proceedings and thereby denying the parties an opportunity to resolve this issue in a less adversarial manner. The Defendant relies on the case of William Sila Mutiso v Peter Maingi Kaati ELC Appeal No E036 of 2022.
The Defendant submitted that the Plaintiff’s sought order for specific performance should fail because there is no valid or competent contact to be enforced. The Defendant relied on the case of Chirchir Arap Kuto v Nancy Cherotich Koech & Another Nairobi ELCC No 642 of 2017. The Defendant submitted that the relief of specific performance will avail where: there is a valid and enforceable contract and no other adequate alternative remedy is available. The Defendant submitted that the relief of specific performance sought by the Plaintiff should fail because the court ought not to grant this relief if the question of validity of the agreement arises. The Defendant submitted that there is no valid agreement and therefore one cannot seek specific performance based on an incompetent agreement. The Defendant submitted that before specific performance can be considered, the court must evaluate whether other remedies are available to the Plaintiff. The Defendant relied on the case of Sabine Christel Kihumbu v George Ngure Kariuki, Kwale ELCC No E002 of 2021.
The Defendant submitted that with regards to the reliefs sought by the Plaintiff, the Plaintiff cannot be legally entitled to have possession of the premises having not paid the full amount for the said premises. The Defendant submitted that the fact that the Plaintiff has been collecting rent does not amount to possession and the purported agreement did not at any point state that the Plaintiff was to be in possession of the subject property.
The Defendant submitted that he is entitled to full possession of his property. The Defendant submitted that the current status is that although the Plaintiff has not fully paid for the property, the Defendant has been denied access to the property since July, 2013. The Defendant submitted that the Plaintiff has been collecting rent for over ten (10) years amounting to over Ksh 70,000,000/= meaning that not only has he recouped what he spent as deposit but continues to benefit from a property that does not legally belong to him.
The Defendant submitted that he is owed such rent that has been collected for the ten years between 2013 and 2023 over Ksh 70,000,000/= and this amount ought to be set off against the deposit (Ksh 20,000,000/=) paid by the Plaintiff. The Defendant submitted that this sum ought to factor in the security charges that the Defendant has paid religiously from the date of the agreement to date. The Defendant submitted that in the absence of a contrary figure, the court should accept the sum of Ksh 70,000,000/= between 2013 and 2023.
The Defendant submitted that the Plaintiff has not proved his case to the required standard and the Defendant prays that the Plaintiff’s suit be dismissed with costs. The Defendant further prayed that the court considers the prayers set out in the Defendant’s Defence and counter-claim and allow them as prayed.
Analysis and Determination
In the court’s considered opinion, the issues for determination in this matter are:
i. Whether the sale agreement dated 31st July, 2013 is valid and binding as between the parties?
ii. Whether there was any breach of the sale agreement dated 31st July, 2013 between the parties?
iii. Whether the Plaintiff is entitled to the prayers sought?
iv. Whether the Defendant is entitled to the orders sought in the Counterclaim?
v. Who should bear the costs of the suit and the counterclaim?
I shall now proceed to analyze the issues sequentially. It is the Plaintiff’s case that on or about 31st July, 2013, he and the Defendant entered into a sale agreement for the purchase of the suit property referred to as Title No. Nakuru Municipality Block 5/133. It is the Plaintiff’s case that he paid the agreed deposit of Kshs 20,000,000/= within the stipulated time line. It is his case that on 7th January, 2014, the advocates for the financer- The First Community Bank through the firm of M/s Omwancha Mukiri & Onyango Advocates issued the Defendant’s advocates M/s Sichangi Partners Advocates an irrevocable professional undertaking for the payment of the remaining purchase price of Kshs 55,000,000/=.
It is the Plaintiff’s case that the agreement acknowledged that the suit property was charged to Barclays Bank (K) Ltd for a loan facility to the Defendant and there was a dispute between the parties regarding the outstanding amount of Kshs 777,000/= that was yet to be determined. It is the Plaintiff’s case that in order to overcome the challenge, part of clause 5 of the agreement provided that the Defendant shall arrange for an appropriate professional undertaking to be issued to Barclays Bank for the payment of the outstanding amount for the release of original Title deed of the suit property that was to act as security to secure the remaining balance of Kshs 55,000,000/= and duly executed discharge of charge documents.
It is the Plaintiff’s case that it was a further term of the sale agreement that the Defendant shall furnish the Plaintiff with all necessary conveyancing document to enable completion of the transaction. It is the Plaintiff’s case that after the Defendant received the agreed deposit of Kshs 20,000,000/= on 1st November, 2013, he became un-cooperative and frustrated the completion of the sale agreement. It is the Plaintiff’s case that by a letter dated 22nd January, 2015, the Defendant purported to cancel the said agreement dated 31st July, 2013 and threatened forceful takeover of the suit premises. It is the Plaintiff’s case that he fulfilled all pre-requisite conditions of the sale agreement.
It is the Defendant’s case that he is the registered proprietor of Nakuru Municipality Block 5/133. It is his case that that the subject property was charged to Barclays Bank of Kenya Limited. It is the Defendants case that he intended to sell the property to the Plaintiff and the agreement indicated an encumbrance at clause 5. It is his also his case that the agreement contained an additional hand written clause which stated that the Plaintiff would start collecting rent upon receipt of Kshs 10,000,000/=. It is the Defendant’s case that the purchase price for the said property was Kshs 75,000,000/=.
It is the Defendant’s case that the Plaintiff paid a sum of Kshs 20,000,000/= as deposit and started collecting rent at the premises from August 2013 to June 2023. It is the Defendants case that this rental income is estimated at Kshs 700,000/= per month and since the date of the agreement, the Plaintiff has not made any efforts to pay the balance of the said purchase price.
It is the Defendant’s case that thereafter, he was unable to obtain completion documents as there was a pending case involving the charge with Barclays Bank Limited that had not been resolved. It is the Defendant’s case that he offered to repay the deposit paid by the Plaintiff, an offer that was not accepted by the Plaintiff. It is the Defendant’s case that he has had no access to the said property.
It is the Defendants case that until the court issued an order dated 21st March, 2023 directing that rent in respect of the premises be paid to a Joint Property Management Agency, the Plaintiff had been collecting rent for over ten (10) years without having paid the full purchase price. The Defendant informed the court that there is no valid agreement at law between the parties, he is entitled to rescind the agreement and is also entitled to rent collected by the Plaintiff from the date of the incompetent agreement. The Defendant also informed the court that he is entitled to a refund of monies paid by the Defendant in respect of security charges.
This court is guided by the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] eKLR, where the Court of Appeal stated as hereunder;
A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.
As was stated by Shah JA in the case of Fina Bank Limited vs Spares & Industries Limited (Civil Appeal No 51 of 2000) (unreported):
“It is clear beyond peradventure that save for those special cases where equity might be prepared to relieve a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain”.
The Defendant has informed this court that the agreement is incompetent as the parties only signed the last pages of the agreement. However, based on the testimony of the Defendant, he received Kshs 20,000,000/= pursuant to the very terms of the sale agreement that he informs the court as being incompetent. The court has looked at the agreement dated 31st July, 2013 and clause 6 states as follows:
a. The Purchase Price for the Property shall be the sum of Kenya Shillings Seventy-Five Million Only (Kshs 75,000,000/=)
b. The deposit shall be paid to the Vendor as follows:
i. Kenya Shillings Ten Million (Kshs 10,000,000/=) has been paid to the vendor on execution of this agreement receipt of which is acknowledged by the vendor.
ii. Kenya Shillings Ten Million (Kshs 10,000,000/=) shall be paid to the Vendor on or before the lapse of Ninety (90) days from the date of execution of this agreement.
iii. The Purchaser is being financed to purchase the property by First Community Bank Nakuru Branch (“The Financier”) and the balance of the Purchase Price that is to say the sum of Kenya Shillings Fifty Five Million (Kshs 55,000,000/=) shall be paid to the Vendor in accordance with the provisions of Clause 10 below provided that before the completion date, the Vendor shall give or arrange for the Advocates acting for the Financier to provide an irrevocable professional undertaking to pay the balance of the purchase price.
Clause 10 of the sale agreement goes on to provide:
Within Fourteen (14) days of receipt by the Financier’s Advocates from the Nakuru District Land Registry of the duly registered Transfer in favour of the Purchaser and Charge in favour of the Financer, the Financier’s Advocates shall pay or procure payment to the Vendor or the Advocates on account of the Vendor by way of Real Time Gross Settlement (RTGS) the balance of the Purchase Price (that is to say the sum of Kenya Shillings Fifty-Five Million (Kshs 55,000,000/=)
The Financer’s Advocates shall obtain the account details from the Vendor upon registration of the Transfer and Charge.
The Defendant has further relied on the doctrine of frustration and has informed the court that through no fault of his own, he was unable to determine how quickly the case regarding his property would take and therefore was unable to provide the completion documents. The Defendant also informed the court that the agreement was frustrated by the Plaintiff’s failure to make alternative arrangements to provide the balance of the purchase price within the stipulated period.
This court notes that whenever a party seeks to rely on the Doctrine of frustration, such a party is obliged to provide and/or the particulars of frustrations and/or facts that are sought to be relied on in a bid to prove frustration.
In the case of Billey Oluoch Orinda VS Ayub Muthiee M’igwetta and 2 others [2017] eKLR, the Court of Appeal held as hereunder:
“A party who wishes to rely on a frustrating event cannot as in this case simply mention it in passing as was done in paragraph 11 of the Amended Plaint that I have set above. Particular facts which they seek to rely on resulting in the frustration of the contract must be clearly set out in the pleadings to enable the other side to prepare and defend the same. This not having been done, the learned Judge was clearly wrong.”
The Doctrine of Frustration and the circumstances that can lead to the invocation of same, were further dealt with and analyzed by the Court of Appeal in the case of Lucy Njeri Njoroge VS Kalyahe Njoroge [2015] eKLR where the Court observed as follows:
“For frustration to be held to exist, there are certain factors that require to be taken into consideration. One factor is whether the frustration was caused by the default of the parties. It is trite that the frustrating event cannot arise from default of the parties. In Maritime National Fish vs Ocean Trawlers [1935] AC 524., self-induced frustration was held to have occurred where a party elected to allocate a fishing licence to three of their other trawlers leaving no licence to operate the contracted trawler.
In Davis Contractors Ltd vs Farehum U.D.C. (supra), it was stated thus,
“The doctrine of frustration is in all cases subject to the important limitation that the frustrating circumstances must arise without fault of either party, that is, the event which a party relies upon as frustrating his contract must not be self-induced.”
The Defendant himself relied on the decision in the case of Charles Muirigi Miriti VS Thananga Growers Sacco Limited and Others [2014]eKLR, where the Honourable Court held as follows:
“As subsequently developed, the doctrine of frustration operates to excuse from further performance where: (1) it appears from the nature of the contract and the surrounding circumstances that the parties have contracted on the basis that some fundamental thing or state of things will continue to exist, or that some particular person will continue to be available, or that some future event which forms the basis of the contract will take place; and (2) before breach, an event in relation to the matter stipulated in head (1) above renders performance impossible or only possible in a very different way from that contemplated. This assessment has been said to require a \'multi-factorial\' approach. Five propositions have been set out as the essence of the doctrine. First, the doctrine of frustration has evolved to mitigate the rigour of the common law\'s insistence on literal performance of absolute promises so as to give effect to the demands of justice. Secondly, the effect of frustration is to discharge the parties from further liability under the contract, the doctrine must not therefore be lightly invoked but must be kept within very narrow limits and ought not to be extended. Thirdly, the effect of frustration is to bring the contract to an end forthwith, without more and automatically. Fourthly, the essence of frustration is that it should not be due to the act or election of the party seeking to rely upon it, but due to some outside event or extraneous change of situation. Fifthly, that event must take place without blame or fault on the side of the party seeking to rely upon it; nor does the mere fact that a contract has become more onerous allow such a plea”
This court finds that the Defendant did not attempt to bring his case to fit within the legal prescriptions contained in the above judicial decision and even to exonerate himself from the fact that the failure to complete the contract was a deliberate act or election on his part and not otherwise. The sale agreement under clause 5 contemplates the dispute with Barclays Bank Limited and even provides for issuance of a professional undertaking to be issued between the Defendant’s advocates and Barclays Bank Limited. Consequently, the Defendant’s claim that he was entitled to rescind the contact fails.
The Defendant has informed the court that he has been paying the security charges in respect of the suit property from the date of the agreement. It is trite law that he who alleges must prove. This is set out under Section 107(1)(2) of the Evidence Act which provides as follows:
1. Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
2. When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
The Defendant in his testimony in court stated that he has been paying for security for more than 20 years and he pays Kshs 17,000/= per month to a company called Wangombe Security Company. There is however no exhibit of payment receipts produced.
The upshot of this Court’s findings is that the Plaintiff’s suit succeeds and the Defendant’s counterclaim is found to have no merit. Judgment is hereby entered in the following terms:
a. An order for specific performance is hereby issued directing the defendant to fully comply with the terms of the sale agreement dated 31st July, 2013.
b. It is hereby ordered that the Plaintiff shall pay to the Defendant Kshs 55,000,000/= within 14 days after a duly registered transfer in favour of the Plaintiff is registered.
c. An order is hereby issued that the defendant shall provide all the completion documents of all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 in compliance with the sale agreement dated 31st July, 2013.
d. A mandatory and permanent injunction is hereby issued restraining the defendant by himself, servant, agent, assigns and or any other persons acting on his behest from selling, transferring, alienating, disposing, interfering with the plaintiff’s quiet possession and rent collection or in any way howsoever from disposing, or dealing or interfering with all that parcel of land known as NAKURU MUNICIPALITY BLOCK 5/133 and the premises thereon situated within Nakuru Town.
e. A declaration is hereby made that the defendant purported rescission of the contact dated 31st July 2013 vide letter of 1st August 2017 is illegal, null and void.
f. The Defendant shall meet the costs of this suit with interest thereon.
g. The Defendant’s counterclaim is hereby dismissed with costs.
It is so ordered.
DATED AND DELIVERED VIRTUALLY AT NAKURU THIS 9TH DAY OF OCTOBER, 2024