[2020] KECA 451 (KLR)

IN THE COURT OF APPEAL

AT NAIROBI

CORAM: KARANJA, MAKHANDIA & SICHALE, JJA]

CIVIL APPEAL NO. 58 OF 2019

BETWEEN

JOSEPH MUTUA MUINDE..............................................1STAPPELLANT

DOMINIC MUSEI IKOMBO......................................... 2NDAPPELLANT

AND

GEOFFREY KITHUKA MWANGANGI........................1STRESPONDENT

HELLENA CHESEREM................................................ 2NDRESPONDENT

(Being an appeal from the judgment and decree of the Environment and Land Court at Machakos (O.A. Angote, J) dated 2ndMarch, 2018

IN

ENVIRONMENT AND LAND COURT

CASE NO. 112 OF 2009

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JUDGMENT OF THE COURT

The appellants, Joseph Mutua Muinde and Dominic Musei Ikombo filed theappeal herein against the decision of the Environment and Land Court (Angote J.)delivered on 2nd March, 2018.

Briefly, the background to this appeal revolves around the ownership of Title No. Mavoko Town Block 2/199 (the suit property). The appellants filed aplaint dated 20th April, 2009, in which they (the then plaintiffs suing as trusteesand on behalf of Mitaboni Katani Co. Ltd) (the Company) averred that by anagreement dated 7th December, 2007 between themselves and the respondentsherein (the then defendants), the suit property was sold to the respondents forKshs 3,420,000. 00. On execution of the agreement, the respondents paid a depositof Kshs 342,000. 00 leaving a balance of the purchase price of Kshs 3,078. 000. 00 tobe paid upon completion; that in anticipation of payment of the purchase price interms of the agreement, the appellants transferred the title of the suit property tothe respondents. The appellants further averred that the respondents havefundamentally breached the agreement by failing and /or refusing to pay thebalance of the purchase price upon completion.

The sale agreement was subject to the Law Society Conditions of Sale [1989].

In the plaint, the appellant prayed for:

“ (i) An order directing the Land Registrar Machakos to rectify the register in respect of title Mavoko town Block 2/199 by reinstating theplaintiffs as registered proprietors thereof as trustees of Mitaboni Katani Company Limited.

(ii) An order compelling the Defendants to avail the title deed in respect of title Mavoko Town Block 2/199 to the Land Registrar Machakos forcancellation failing which the Land Registrar be at liberty to effect the rectification notwithstanding that the title deed will not have been availed to him.

(iii) General damages for breach of contract and interest thereon at court rates.

(iv) Costs of this suit and interest on the decretal amount at court rates”.

On their part, the 1st and 2nd respondents filed a defence to the plaint as well as a counter-claim dated 2nd June, 2009. They blamed the appellants foreaching the sale agreement. The respondents asserted that it was theappellants who were in continuing breach of clause 14 (1) of the Law Societyconditions of sale [1989] as the respondents have “at all times been and are stillready and willing to pay the balance of the purchase price, which they havedeposited with their advocates, save only that vacant possession be given andbeacons be pointed out by the plaintiffs”. In the Counter-Claim, therespondents prayed for; inter alia “General damages for breach of contract, theplaintiffs be compelled to point out the beacons over MAVOKO TOWN BLOCK2/199 and the plaintiffs be compelled to issue vacant possession over MAVOKOTOWN BLOCK 2/199”.

Upon consideration of the evidence before him, the learned Judge (Angote, J.) found in favour of the respondents as follows:

“From the evidence before me it is obvious that the suit land is not free of encumbrances. It was a fundamental term of the agreement that the Plaintiffs were selling the suit land free of encumbrances. The Plaintiffs were required to hand to the Defendants vacant possession of the land before being paid the full purchase price.

Having not denied that the suit property is occupied by other third parties, and having not handed to the Defendants the suit land free of encumbrances, I find that it is the Plaintiffs who are in breach of the agreement of 7thDecember, 2007.

In any event, even if the Defendants are the ones who are in breach of the Sale Agreement, the Plaintiffs cannot rescind the agreement of sale before service on the Defendants the requisite completion notice as provided for under Clause 4 of the Law Society Conditions of Sale (1989). It is only upon service of a completion notice that it shall become a term of the contract that the transaction shall be completed within twenty one (21) days of service and, in respect of such period, time shall be of the essence of the contract. Having not done so, I find that the suit was a non-starter ab initio.

For those reasons, I find and hold that the Plaintiffs have failed to prove their case on a balance of probability. On the other hand, the Defendants have proved that it is the Plaintiffs, who are in breach of the agreement of 7thDecember, 2007”.

In his final orders, the judge dismissed the plaintiffs’ plaint dated 20th April, 2009and allowed the defendants’ counter-claim dated2nd June, 2009andrendered himself as follows:

“(i) The Plaintiffs be and are hereby compelled to point out the beacons of land known as Mavoko Town Block 2/199 to the Defendants.

(ii) The Plaintiffs be and are hereby compelled to grant to the Defendants vacant possession of land known as Mavoko town Block 2/199.

(iii) The Plaintiffs to pay the costs of the suit and the Counter-claim”.

Aggrieved with the findings of Angote, J, the appellants filed the appeal nowbefore us. In a Memorandum of Appeal dated 19th February, 2019, the appellantslisted 6 grounds of appeal faulting the judge for finding that the appellants wererequired to hand over vacant possession of the suit property before full paymentof the balance of the purchase price contrary to the express term of the saleagreement; for making a decision whose effect was allowing the respondents toown both the land and the purchase price after correctly making a finding thatthe respondents paid only Kshs 342,000. 00 out of the purchase price of Kshs3,420,000. 00; for holding that the appellants were in breach of the agreement onallegation of occupation of the suit property by third parties without verificationas to whether the alleged occupation was before or after registration of thetransfer in favour of the respondents; for failing to find that the persons whoallegedly repulsed the respondents from taking possession of the suit propertywere not members of the Mitaboni Katani Company as per the members’ registerand that the respondents’ alleged repulsion was long after the transfer in favourof the respondents; for misdirecting himself on the issue of rescission and theapplicability of completion notice since the appellants had complied with part ofthe agreement by transferring the suit property to the respondents whilst therespondents refused to pay the balance of the purchase price, and finally, forgoing against the weighty material evidence presented before him.

On 11th March, 2020, the appeal came up for plenary hearing before us. Mr.Mbaraklearned counsel holding brief forMr. Mulwaappeared for the appellantswhilst learned counsel Mr. Mungla appeared for the respondents. Both counselrelied on their written submissions and did not wish to make oral highlights.

In their written submissions filed on 15th July, 2019, the appellants faultedthe trial judge’s interpretation of the provisions of the sale agreement and the LawSociety Conditions of sale on which both parties were basing their respectivecases. They also faulted the judge’s finding that they were required to surrendervacant possession of the suit property to the respondents before the balance ofthe purchase price was paid in full, a finding which was contrary to the expressterms of the agreement contained in the Law Society Conditions of Sale to whichthe transaction was subject and which expressly provides that a purchaser shallnot be entitled to possession of the property until he has paid or (as the case maybe) unconditionally authorized the release of the whole of the purchase moneyto the vendor. Condition number 5 of the Law Society Conditions of Sale providesas follows: “save as provided in condition 6 the purchaser shall not be entitled topossession of the ….. until he has paid or (as the case may be) unconditionallyauthorized the release of the whole of the purchase money to the vendor”.Withregard to rescission, the appellants contended that the question of rescission couldnot arise at that stage since the transfer had already been effected and that theonly relief available to them was restitution of their property for total failure ofconsideration and payment of damages for breach of the sale agreement; that it isnot disputed that no further sums were paid other than the 10% of the purchaseprice and further, that the persons who have made it difficult for the respondentsto take possession are third parties who are not members of Mitaboni KataniCompany Ltd.

In opposing the appeal, the respondents filed written submissions on 23rd August, 2019and submitted that the appellants had guaranteed that the suitproperty is vacant and free from any encumbrance whatsoever; that after thetransfer of the suit property, the respondents severally asked the appellants forvacant possession vide letters dated 2nd, 10th and 15th July, 2008 in exchange ofthe balance of the purchase price to no avail; that they had been faced withunique circumstances in which transfer of title was done without vacantpossession; that while the respondents were under obligation to pay the balanceof the purchase price within the completion period, the appellants were equallyobliged to transfer and grant vacant possession of the suit property; that the issueof vacant possession was at the centre of the whole agreement and finally, thatthe respondents’ ability and /or willingness to settle the balance of the purchaseprice is a non-issue as they are ready and willing to pay the balance of thepurchase price, subject to the suit property being vacant.

We have considered the record, the rival written submissions, the authorities cited and the law.

The appeal before us is a first appeal. Our mandate as a 1st appellate court is well articulated in the case of Selle & Another versus Associated Motor BoardCompany Ltd and others [1968] 1 EA 123,wherein the Court of Appeal for Eastern

Africa set out the principles to be considered when determining an appeal from the High Court as follows:-

“An appeal from the High Court is by way of retrial and the Court of Appeal is not bound to follow the trial Judge’s findings of fact if it appears either that he failed to take account of particular circumstances or probabilities or if the impression of the demeanour of a witness is inhabited with the evidence generally.”

The undisputed facts of this appeal are that the parties entered into a sale agreement on 7th February, 2007. It is also not disputed that the total purchaseprice of the suit property was Kshs 3,420,000 out of which the respondents paid adeposit of Kshs 342,000. 00 (being the 10% of the purchase price). In paragraph 4of the sale agreement, it was provided that the sale was subject to the Law Societyof Kenya Conditions of Sale (1989). Further, the completion period “….shall bewithin Ninety (90) days from the date of execution of the agreement”. It was afurther term of the agreement that “The vendor guarantees that the property isvacant and free from any encumbrance whatsoever and he covenants that rates,land rent if any and electricity have been paid to date”.

It is also not in dispute that the respondents (although the transfer was registered in their favour) have to-date not taken possession of the suit property.

It is also not denied that the suit property is occupied by persons whom the appellants contend are not members of their Company.

The learned judge considered the matter in view of the terms of the sale agreement and concluded:

“From the evidence before me, it is obvious that the suit land is not free of encumbrances. It was a fundamental term of the agreement that the plaintiffs were selling the suit land free of encumbrances. The plaintiffs were required to hand to the defendants vacant possession of the land before being paid the full purchase price.

Having not denied that the suit property is occupied by other third parties, and having not handed to the defendants the suit land free of encumbrances, I find that it is the plaintiffs who are in breach of the agreement of 7thDecember, 2007”

We agree. In our view, the appellants cannot blow hot and cold. The sale agreement specifically provided that the suit property was in vacantpossession. The reality on the ground is that it is not in vacant possession. Itis occupied by persons whom the appellants contend are not their members.

That may well be so but it was a specific term of the sale agreement that the appellants were to grant vacant possession and that the sale was free fromencumbrances. The appellants have failed to grant the vacant possession andto this extent, they are in breach of the agreement of sale dated 7th February,2007.

In our view, the appellants who admit that the suit property is occupied by other persons, do not expect to be paid the balance of the purchase price andyet there are persons on the suit property. If vacant possession had beensecured, then the appellants had every right to blame the respondents forfailure to pay the balance of the purchase price and issue a completion noticeas provided in clause 4 of the Law Society Conditions of Sale.

The upshot of the above is that we find no merit in this appeal. It is hereby dismissed with costs.

Dated and Delivered at Nairobi this 7thDay of August, 2020.

W. KARANJA

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JUDGE OF APPEAL

A. MAKHANDIA

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JUDGE OF APPEAL

F. SICHALE

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JUDGE OF APPEAL

I certify that this is a true copy of the original.

Signed

DEPUTY REGISTRAR