[2024] KEMC 23 (KLR)

Mutua (Suing as the Legal Representative and Administrator of the Estate of James Mutua Muange – Deceased) v Maingi & 2 others (Sued as the Legal Administrators of the Estate of Mwangangi Wambua Nguta) (Environment & Land Case 42 of 2020) [2024] KEMC 23 (KLR) (17 September 2024) (Judgment)

Neutral citation: [2024] KEMC 23 (KLR)

Republic of Kenya

In the Machakos Law Courts

Environment & Land Case 42 of 2020

CN Ondieki, PM

September 17, 2024

Between

Priscilla Nzisa Mutua (Suing as the Legal Representative and Administrator of the Estate of James Mutua Muange – Deceased)

Plaintiff

and

Mutua Maingi

1st Defendant

Kanini Mwangangi

2nd Defendant

Rebecca Ndukumbithi Maingi

3rd Defendant

Sued as the Legal Administrators of the Estate of Mwangangi Wambua Nguta

Judgment

Part I: Introduction 1. Contracts facilitate commerce and globalization. Effective enforcement of contracts is one of the ten indicators which bear a direct impact on Ease of Doing Business Index1 (which has now transited into Business Enabling Environment - BEE) and an indirect vote on economic development. Although the term contract assumes diverse facets gravitated by circumstances, an agreement or promise or set or promises between two or more parties creating obligations enforceable at law in personam and a breach of which the law provides a remedy is what in legal parlance is known as a contract. A (valid) contract draws life from the presence of the following eight intrepid pillars: (a) offer; (b) acceptance; (c) intention of the parties to be bound (to create a legally binding relationship); (d) contractual capacity; (e) either consideration or the contract is under deed; (f) freedom of entry and consensus ad idem (demonstrated by absence of misrepresentation of facts, mistake, duress and/or undue influence; (g) the object is lawful; and (h) compliant with requisite formalities. The validity of a contract is thus affected by the absence or presence of any of the eight pillars afore-listed.1A World Bank initiative which ranks countries using ten indicators namely: (i) starting business (procedures, time, cost, and minimum capital to open a new business); (ii) dealing with construction permits (procedures, time, and cost to build a warehouse); (iii) getting electricity (procedures, time, and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse); (iv) registering property (procedures, time, and cost to register commercial real estate); (v) getting credit (strength of legal rights, depth of credit information); (vi) protecting investors (extent of disclosure, the extent of director liability, and ease of shareholder suits); (vii) paying taxes (number of taxes paid, hours per year spent preparing tax returns, and total tax payable as a share of gross profit); (viii) trading across borders (number of documents, cost, and time necessary to export or import); (ix) enforcing contracts (procedures, time, and cost to enforce a debt contract); and (x) resolving insolvency (time, cost, and recovery rate).

2. One of the remedies available to a purchaser of land who has paid the full purchase price, as against a vendor or his personal representative who has failed to transfer the purchased property to the purchaser is specific performance. The impetus to grant a remedy of specific performance is based on the existence of a valid enforceable contract. It follows that this remedy is not and cannot be available if the contract suffers from some defect, such as failure to comply with the formal requirements or mistake or illegality which vitiates the contract and makes it invalid or unenforceable. Further, being an equitable remedy, the principles which govern equitable remedies are applicable chief of them being that the remedy of specific performance is granted upon exercise of a discretionary power of the Court and that a Court of law will ordinarily not grant this remedy if there is another adequate remedy available to the aggrieved party, either in statute or common law.

3. Except where it is a gift, the doctrines of equity frown on unjust enrichment. In such cases, these doctrines impose an implied or constructive (involuntary) trust upon that person who has obtained property unwarrantedly or by wrongdoing or by voluntary conferment of benefit for total failure of consideration.

PART II: The Plaintiff’s Case 4. In her Plaint dated 6th March 2020 and filed on 9th March 2020, the Plaintiff brought an action against the Defendants primarily seeking Judgment for: a declaration that the estate of James Mutua Muange is the bonafide beneficial purchaser of a plot measuring 126feet by 30 feet (hereinafter “the suit property”) to be excised from the parcel of land known as Machakos/Kiandani/224; an order of specific performance; a permanent injunction; and costs of this suit.

5. The Plaintiff claims that her husband, James Mutua Muange, now deceased, purchased the suit property from the 1st Defendant which was registered in the name of his brother Mwangangi Wambua Nguta also deceased - to be excised from the parcel of land known as Machakos/Kiandani/224 - on 2nd August 1993 at a purchase price of Kshs. 40,000. It is averred that the 1st Defendant was paid the full purchase price. It is averred that the late Mwangangi died before he facilitated transfer thereof to the late James Mutua and the administrators of the estate of Mwangangi have refused to transfer the suit property to the Plaintiff.

6. At the hearing of the Plaintiff’s case, the Plaintiff adopted her witness statement dated 6th March 2020 as her evidence-in-chief. In her said statement, the Plaintiff rehashes the material facts in the Plaint. In addition, she stated that the 2nd and 3rd Defendants are administrators of the estate of Mwangangi.

7. In buttressing her case, the Plaintiff exhibited the following documents:(i)a sale agreement dated 2nd August 1993 as the Plaintiff’s Exhibits 1;(ii)acknowledgement of payment dated 11th November 2018 as the Plaintiff’s Exhibit 2;(iii)a demand letter dated 11th November 2018 as the Plaintiff’s Exhibit 3;(iv)a certificate of confirmation of grant in respect to the estate of James Mutua Muange as the Plaintiff’s Exhibit 4;(v)a certificate of confirmation of grant in respect to the estate of Mwangangi Wambua Nguta as the Plaintiff’s Exhibit 5;(vi)a RIM as the Plaintiff’s Exhibit 6; and(vii)a demand letter as the Plaintiff’s Exhibit 7.

8. In cross-examination, the Plaintiff stated that she is using the suit property. She stated that Patrick Mwaka Mwende did not purchase the same suit property from the 1st Defendant. She stated that the late Mwangangi was alive when the 1st Defendant sold the suit property. She stated that she was not sure whether the late Mwangangi signed the sale agreement. She stated that they late entered into a further agreement for additional payment of Kshs. 15,000.

9. PW2, Richard Nzioki Joel, a retired assistant chief, identified the Plaintiff’s Exhibit 2 and stated that he witnessed the transaction where the parties were settling the balance of the purchase price. He stated that there was a dispute about Kshs. 5,000 but the Plaintiff paid Kshs. 10,000 and that the parties signed the agreement.

10. In cross-examination, PW2 stated that the agreement was not done by him. He stated that he only stamped it to acknowledge that he witnessed it.

11. In her written Submissions dated 2nd April 2024 and filed on the even date, learned Counsel Ms. Isika instructed by the Firm of Messieurs Isika & Associates Advocates representing the Plaintiff submits that the Plaintiff has proved her case on a balance of probabilities.

12. Reliance is placed upon Omar Gorhan vs. Municipal Council of Malindi (Council Government of Kilifi) vs. Overlook Management Kenya Ltd [2020] eKLR; and Garrey vs. Richards [2011] JMCA 16

13. Finally, it is submitted that the Plaintiff is entitled to the prayers sought.

PART III: The Defendants’ Case 14. In their joint Statement of Defence dated 9th June 2021 and filed on even date, the Defendants denied all material facts in the Plaint save the descriptive parts of the Plaintiff and the Defendants.

15. It is averred that at all material times, Machakos/Kiandani/224 has always been registered in the name of Mwangangi Wambua Nguta and it has never been owned by the 1st Defendant.

16. It is averred that the purported sale agreement dated 2nd August 1993 is non-existent and that explains why it was not exhibited.

17. It is averred that upon confirmation of the grant, the estate of Mwangangi and specifically, the parcel of land known as Machakos/Kiandani/224 was distributed among the children thereof and new title deeds issued, the title number Machakos/Kiandani/224 no longer exists.

18. Further, the Defendants raised a preliminary objection that this claim is time-barred; if at all the portion of land was sold, then the 1st Defendant had no capacity to sell it; the 1st Defendant had no grant of letters of administration and this Court lacks jurisdiction.

19. At the hearing of the Defendants’ case, the 3rd Defendant adopted her witness statement dated 13th November 2021 and filed on 19th January 2022 as her evidence-in-chief. In her said statement, the 3rd Defendant states that the late Mwangangi Wambua was her father. She rehashed the material facts in the Statement of Defence.

20. In cross-examination, 3rd Defendant stated that the late James purchased a portion of land from the 1st Defendant who is her uncle (her father’s brother) and not from her father. She conceded that the portion which was sold to the late James was initially plot number 2902 which borders the land of the late Mwangangi and that at the time of sale, it was not surveyed.

21. DW2, Mutua Maingi, the 1st Defendant adopted his witness statement dated 13th November 2021 and filed on 19th January 2022 as his evidence-in-chief. In his said statement, the 1st Defendant states that the Plaintiff has been trying to ‘grab’ their land. He states that he does not own the land in question. He states that the land in question was owned by his late mother. He states that the late James Mutua Muange purchased a portion of land measuring 50 feet by 100 feet in 1993 from him, which was to be excised from Machakos/Kiandani/224 which was registered in the name of his mother, now deceased. He states that the Plaintiff’s late husband died after he had only paid Kshs. 35,000 our of the total purchase price of Kshs. 40,000. He states that at the time of sale, he had no capacity to sell. He states that sometimes in 2018, the Plaintiff came with intention to pay the balance of Kshs. 5,000 and that before the assistant chief, he negotiated and accepted Kshs. 15,000 and they signed an agreement to that effect dated 6th February 2018. He states that he advised the administrator of his mother’s estate to transfer the plot but the administrator declined. He denied that he sold an additional plot measuring 21 feet by 30 feet in 1993.

22. In cross-examination, 1st Defendant denied ever selling the additional plot to the late James. He conceded that he sold to Patrick Mwaka a plot. He acknowledged that there were agreements dated 2nd august 1993 and 6th February 2018.

23. DW3, the 2nd Defendant adopted her witness statement dated 13th November 2021 and filed on 19th January 2022 as her evidence-in-chief. In her said statement, the 2nd Defendant states that the late Mwangangi Wambua was her husband. She rehashed the material facts in the Statement of Defence.

24. In cross-examination, 2nd Defendant stated that the late James purchased a portion of land from the 1st Defendant who is her brother-in-law (her husband’s brother) and not from her husband. She conceded that the portion which was sold to the late James was initially plot number 2902 which borders the land of the late Mwangangi and that at the time of sale, it was not surveyed.

25. DW4, Veronicah Mbithe Mutua, adopted her witness statement dated 13th November 2021 and filed on 19th January 2022 as her evidence-in-chief. In her said statement, DW4 states that she a wife of the 1st Defendant. She rehashed the material facts in the Statement of Defence. In addition, her statement mirrors that of her husband DW2.

26. In cross-examination, DW4’s answers mirror those of her husband, DW2.

27. In his written Submissions dated 16th January 2024 and filed on even date, learned Counsel Mr. Muumbi instructed by the Firm of Messieurs D.M. Muumbi & Company Advocates representing the Defendants, has restated the substance of both the statement of defence and testimonies of all witnesses, and holds a position that the claim lacks merit.

28. It is submitted that this suit being a suit for recovery of land should have been brought before 12 years expired and the agreement having been entered on 2nd August 1993, the period expired in 2005 and this suit is consequently time-bared under section 7 of the Limitation of Actions Act. It is further submitted that actions based on contract too, should be brought before a period of 6 years expire. Reliance is placed upon Gathoni vs. Kenya Co-operative Creameries Ltd [1982] KLR 104; Iga vs. Makerere University [1972] EA; Dennis Nyandu vs. Francis Aburi Oyaro [2021] eKLR; and Sohanlaldurgadas Rajput & another vs. Divisional Integrated Development Programmes Co. Ltd [2021] eKLR.

29. On the question of capacity, it is submitted that the 1st Defendant had no capacity to sell the portion of land to the late James, since the registered proprietor of Machakos/Kiandani/224 was Nduku maingi. It is thus submitted that the agreement was based on intermeddling and an illegality and thus unenforceable. Reliance is placed upon In Re The Matter of the Estate of David Julius Nturibi M’’Ithini [Deceased] [2012] eKLR; Gitau & 2 others vs Wandai & 5 others [1989] KLR 23; and Macvoy vs. United Africa Co. Ltd [1961] 3 ALL ER 1169.

30. Finally, it is submitted that the agreement dated 2nd August 1993 does not meet the formalities set out under section 3(3) of the Law of Contract Act and thus invalid, having not been attested by a witness who was presented when the parties signed the agreement. The holding in Silverbird Kenya Limited vs. Junction Limited & 3 others [2013] eKLR, is cited to buttress this proposition.

31. This Court is thus asked to dismiss the claim.

PART IV: Questions For Determination 32. Gleaning from the Plaint; the Statement of Defence; and the rival written Submissions, this Court has distilled five questions for determination as follows:i.Whether this claim is time-barred.ii.Whether there is a valid contract of purchase/sale of a portion of land (the suit property) to be hived from a parcel of land known as Machakos/Kiandani/224 and whether there is breach thereof by the Defendants. Two derivative questions being whether the 1st had capacity to sell the suit property; and whether the sale agreement dated 2nd August meets the mandatory requirements of law.iii.Whether the Plaintiff’s claim has met the requisite threshold for an order of specific performance.iv.If the answer to question (iii) is in the negative, is the Plaintiff entitled to restitution?v.Which party should shoulder the costs of this suit?

PART V: Analysis Of The Law; Examination Of Facts; Evaluation Of Evidence And Determination 33. This Court now embarks on analysis, interrogation, assessment and evaluation of each of the five issues, in turn.

(i) Whether this claim is time-barred 34. This is a question of both law and fact. For the Defendants, it was argued urged that this suit being a suit for recovery of land should have been brought before 12 years expired and the agreement having been entered on 2nd August 1993, the period expired in 2005 and this suit is consequently time-bared under section 7 of the Limitation of Actions Act. Further, it is further submitted that actions based on contract too, should be brought before a period of 6 years expire. Reliance was placed upon Gathoni vs. Kenya Co-operative Creameries Ltd [1982] KLR 104; Iga vs. Makerere University [1972] EA; Dennis Nyandu vs. Francis Aburi Oyaro [2021] eKLR; and Sohanlaldurgadas Rajput & another vs. Divisional Intergrated Development Programmes Co. Ltd [2021] eKLR.

35. Foremost, this suit is not about recovery of land, but enforcement of a contract of sale of land. Such actions should be brought within 6 years. See section 4(1) (a) of the Limitation of Actions Act.

36. In respect to acknowledgement and part payment, sections 23 and 24 of the Limitation of Actions provides that the right to bring accrues afresh from the date of acknowledgement and part payment, on condition that the acknowledgement must be in writing and signed by the person acknowledging. Section 23(1) thereof provides that“(1)Where—

(a)a right of action (including a foreclosure action) to recover land; or(b)a right of a mortgagee of movable property to bring a foreclosure action in respect of the property, has accrued, and—(i)the person in possession of the land or movable property acknowledges the title of the person to whom the right of action has accrued; or(ii)in the case of a foreclosure or other action by a mortgagee, the person in possession of the land or movable property or the person liable for the mortgage debt makes any payment in respect thereof, whether of principal or interest, the right accrues on and not before the date of the acknowledgement or payment.”And section 24 thereof provides that“(1)Every acknowledgement of the kind mentioned in section 23 of this Act must be in writing and signed by the person making it.

(2)The acknowledgement or payment mentioned in section 23 of this Act is one made to the person, or to an agent of the person, whose title or claim is being acknowledged, or in respect of whose claim the payment is being made, as the case may be, and it may be made by the agent of the person by whom it is required by that section to be made.”

37. The mind of this Court is persuaded that the agreement dated 6th February 2018 has passed the requirements of sections 23(1) and 24 of the Limitation of Actions Act.

38. It follows that since this suit was filed on 9th March 2020, it was within the 6 years limitation period and thus not time-barred.

(ii) Whether there is a valid contract of purchase/sale of a portion of land (the suit property) to be hived from a parcel of land known as Machakos/Kiandani/224 and whether there is breach thereof by the Defendants. Two derivative questions being whether the 1st had capacity to sell the suit property; and whether the sale agreement dated 2nd August meets the mandatory requirements of law 39. Whereas the Plaintiff asserts (in his Plaint) that there is a valid contract which was executed in two parts – and thus enforceable by way of specific performance - on the other hand, the Defendants repulse this position arguing that the said contract is null and void, on account of the 1st Defendant lacking capacity to sell the suit property; and on further account that the sale agreement dated 2nd August meets the mandatory requirements of law, having not been attested by a witness who saw the parties sign the agreement.

40. This is a question of both fact and law. Before this Court opens the discussion on validity of the alleged contract, it is imperative to underline the rationale behind determining the issue of validity from the onset. It is now an established principle of law that the jurisdiction to grant a remedy of specific performance is based on the existence of a valid enforceable contract. In Reliable Electrical Engineers Ltd vs. Mantrac Kenya Limited [2006] eKLR, Maraga, J. (as he then was) had this to say about specific performance remedy:“The Jurisdiction of specific performance is based on the existence of a valid enforceable contract. It will not be ordered if the contract suffers from some defect, such as failure to comply with the formal requirements or mistake or illegality, which makes the contract invalid or enforceable. Even when a contract is valid and enforceable, specific performance will however not be ordered where there is an adequate alternative remedy. In this respect damages are considered to be an adequate alternative remedy where the claimant can readily get the equivalent of what he contracted for from another source. Even when damages an adequate remedy specific performance may still be refused on the ground of undue influenced or where it will cause severe hardship to the Defendant.”It follows that this remedy is not and cannot be available if the contract suffers from some fatal defect, such as failure to comply with the formal requirements or mistake or illegality which vitiates the contract and makes it invalid or unenforceable. It is thus imperative for any Court, when this remedy is under consideration, to foremost consider the validity of the contract in question.

41. The approach by a Court in considering whether an agreement or contract exists is an objective one as opposed to a subjective one. See Caleb Onyango Adongo vs. Bernard Ouma Ogur [2020] eKLR, per A.C. Mrima, J.

42. First things first. What is a contract? Henry Campbell Black, the learned author of the now locus classicus Dictionary in legal definitions popularly known as the Black’s Law Dictionary (Black’s Law Dictionary, Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern by Henry Campbell Black, M. A., Ninth Edition) defines a ‘contract’ in the following terms at page 365:“An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law…2. The writing that sets forth such an agreement… is valid if valid under the law of the residence of the party wishing to enforce… 3. A promise or set of promises by a party to a transaction, enforceable or otherwise recognizable at law; the writing expressing that promise or set of promises… 4. Broadly, any legal duty or set of duties not imposed by the law of tort; esp., a duty created by a decree or declaration of a Court… 7. Loosely, a sale or conveyance…. 8. Loosely, an enforceable agreement between two or more parties to do or not to do a thing or set of things; a compact.”

43. According to William R. Anson, Principles of the Law of Contract, at page 2,“The term contract has been used indifferently to refer to three different things: (1) the series of operative acts by the parties resulting in new legal relations; (2) the physical document executed by the parties as the lasting evidence of their having performed the necessary operative acts and also as an operative fact in itself; (3) the legal relations resulting from the operative acts, consisting of a right or rights in personam and their corresponding duties, accompanied by certain powers, privileges, and immunities. The sum of these legal relations is often called ‘obligation.’ The present editor prefers to define contract in sense (3) …”And according to Samuel Williston, A Treatise on the Law of Contracts, at pages 1-2,“A contract is a promise, or a set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. This definition may not be entirely satisfactory since it requires a subsequent definition of the circumstances under which the law does in fact attach legal obligation to promises. But if a definition were attempted which should cover these operative facts, it would require compressing the entire law relating to the formation of contracts into a single sentence.”The promissory element present in every contract is stressed in a widely all the quoted definitions. And in the words of John D. Calamari &Joseph M. Perillo, The Law of Contracts § 1. 1, at pages 1-2 (4th ed. 1998), a“A contract is a promise, or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.' [1 Samuel Williston, Contracts § 1. 1 (4th ed. 1990).] This, like similar definitions, is somewhat misleading. While it is true that a promise, express or implied, is a necessary element in every contract, frequently the promise is coupled with other elements such as physical acts, recitals of fact, and the immediate transfer of property interests. In ordinary usage the contract is not the promise alone, but the entire complex of these elements.”The same author, at page 3, draws parallels with the application in law and application by law persons as follows:“The term 'contract' is also used by lay persons and lawyers alike to refer to a document in which the terms of a contract are written. Use of the word in this sense is by no means improper so long as it is clearly understood that rules of law utilizing the concept ‘contract’ rarely refer to the writing itself. Usually, the reference is to the agreement; the writing being merely a memorial of the agreement.” And according to John Edward Murray Jr., Murray on Contracts § 2, at page 5 (2d ed. 1974), “Sometimes the word ‘contract’ is used to designate a transaction involving the exchange of goods or land for money. When money is exchanged for goods, this constitutes a sale. When money is exchanged for land, this constitutes a conveyance. Sales and conveyances may be the result of a previous contract but they are not the contracts in themselves. There is no undertaking or commitment to do or refrain from doing anything in the future. This indispensable element of contract is missing.”

44. How is the theory of formation of a contract? A contract can be formed, orally or in writing or expressly or impliedly. Regarding formation of a contract, in Caleb Onyango Adongo vs. Bernard Ouma Ogur [2020] eKLR, A.C. Mrima, J. had the following to say: “23. The foregone reveal several legal imperatives. They include that a contract may be in writing or implied, that whether a contract is in writing or is implied the elements of offer, acceptance and consideration must be proved, in implying a contract the conduct of the parties remain paramount, that an objective approach in contract interpretation is to be adopted, among others. 24. In this case there was no written contract. Therefore, this Court is enjoined to ascertain whether the pleadings, the evidence and the general conduct of the parties reveal any contract. If that tour yields in the affirmative, then a contract may be implied.” The reasoning in Caleb Onyango Adongo vs. Bernard Ouma Ogur [2020] eKLR, was echoing the reasoning in G. Percy Trentham Ltd vs. Archital Luxfer Ltd (1993) 1 Lloyds Rep. 25, Lord Steyn had the following to say:“... it is important to consider briefly the approach to be adopted to the issue of contract formation… It seems to me that four matters are of importance. The first is that …. law generally adopts an objective theory of contract formation. That means that in practice our law generally ignores the subjective expectations and the unexpressed reservations of the parties. Instead the governing criterion is the reasonable expectations of honest men…. that means that the yardstick is the reasonable expectations of sensible businessmen. Secondly it is true that the coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance. See Brogden v Metropolitan Railway [1877]2 AC 666; New Zealand Shipping Co ltd v A M Satterhwaite & Co ltd. [1974] 1 Lloyd’s Rep. 534 at p. 539 col. 1 [1975] AC 154 at p. 167 D-E; Gibson v. Manchester City Council [1979] 1 WLR 294. The third matter is the impact of the fact that the transaction is executed rather than executory. It is a consideration of the first importance on a number of levels. See British Bank for Foreign Trade Ltd v. Novinex [1949] 1 KB 628 at p. 630. The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or alternatively, it may make it possible to treat a matter not finalized in negotiations as inessential. In this case fully executed transactions are under consideration. Clearly, similar considerations may sometimes be relevant in partly executed transactions. Fourthly, if a contract only comes into existence during and as a result of performance of the transaction it will frequently be possible to hold that the contract impliedly and retrospectively covers pre-contractual performance. See Trollope & Colls Ltd v. Atomic Power Constructions Ltd. [1963]1 WLR 33. ”

45. What constitutes a valid contract in Kenya? The Law of Contract Act does not define the term contract. But the Act sets out some of salient features which go to the root of validity of a contract. The features which affect validity of a contract are as follows:(a)Rules of formation or the primary elements/ingredients of a contract (which include offer and acceptance; intention to be legally bound; and consideration);(b)Capacity to make a contract (which include age, state of mind, authority et alia);(c)Formalities (which include writing, attestation et alia).In precis, a (valid) contract draws life from the presence of the following eight intrepid pillars:(a)offer;(b)acceptance;(c)intention of the parties to be bound (to create a legally binding relationship);(d)contractual capacity;(e)either consideration or the contract is under deed;( f)freedom of entry and consensus ad idem (demonstrated by absence of misrepresentation of facts, mistake, duress and/or undue influence; (g) the object is lawful; and(h)compliant with requisite formalities.The validity of a contract is thus affected by the absence or presence of any of the eight pillars afore-listed. For instance, a contract can be vitiated for lack of consideration. See Charles Mwirigi Miriti vs. Thananga Tea Growers Sacco Ltd [2014] eKLR.

46. And what constitutes a binding contract? In RTS Flexible Systems Ltd vs. Molkerel Alois Muller GmbH & Co, KG (UK Production) (2010) UKSC14, the Supreme Court of the United Kingdom stated that“[45]…The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. even if certain terms of economic or other significance to the parties have not been finalized, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.” A binding contract is gleaned from the intention of parties to be bound. In Rose and Frank Co. vs. J R Crompton & Bros Ltd (1923) 2 KB it was held that “To create a contract there must be a common intention of the parties to enter into legal obligations, mutually communicated expressly or impliedly.”In this regard, the learned authors of Chesire, Fifoot and Formstons, The Law of Contract, 14th Edition, state at pages 34 - 35 that“The first task of the Plaintiff is to prove the presence of a definite offer made…. Proof of an offer to enter into legal relations upon definite terms must be followed by the production of evidence from which the Courts may infer an intention by the offeree to accept that offer.”And in the Court of Appeal decision in William Muthee Muthami vs. Bank of Baroda (2014) eKLR, where Kihara, Ouko and Mohhamed JJ. A stated that“…In the law of contract, the aggrieved party to an agreement must, in addition, prove that there was offer, acceptance and consideration. It is only when those three elements are available that an innocent party can bring a claim against the party in breach.”

47. The Law of Contract Act is not a one-stop Act. Subject to other written law in force in Kenya, the Law of Contract Act supplants and applies the common law of England relating to contract, as modified by the doctrines of equity and by the Acts of Parliament of the United Kingdom applicable in Kenya as prescribed by that Act. It however makes a seal, which was a requirement of the common law, not mandatory in Kenya. It can thus be concluded that contracts in Kenya are largely regulated by common law of England relating to contract, as modified by the doctrines of equity and by the Acts of Parliament of the United Kingdom applicable in Kenya as prescribed by the Law of Contract Act. English common law of contract to Kenya. In this regard, reference to the meaning assigned in common law and doctrines of equity will be indispensable.

48. Although the law does not require that all contracts to be in writing, the evidential value of having contracts in writing was restated by the Court of Appeal in Abdulkadir Shariff Abdirahim & Another vs. Awo Sharriff Mohammed t/a. S. Mohammed Investments (2014) eKLR, where the Court of Appeal held that“There is no general rule of law that all agreements must be in writing. The numerous advantages of a written agreement notwithstanding, all that the law requires is that certain specific agreements must be in writing or witnessed by some written note or memorandum. Section 3(1) of the Law of Contract Act is one such provision.”

49. The validity of a contract largely depends on the law where it was formed and the nature of the contract. For instance, section 3(3) of the Law of Contract Act requires that a (valid) contract for disposition of an interest in land must be: (a) in writing; (b) signed by all the parties thereto; and (c) the signature of each party signing has been attested by a witness who is present when the contract was signed by such party. See section 3(3) of the Law of Contract.

50. This Court concurs with the Defendants that the 1st Defendant lacked capacity to sell the suit property; and that the sale agreement dated 2nd August was failed the mandatory requirement of section 3(3) of the Law of Contract Act, having not been attested by a witness who saw the parties sign the agreement.

51. It is common cause that the 1st Defendant sold the suit property in 1993 while the registered proprietor of the larger parcel of land namely Machakos/Kiandani/224 was alive on basis that he was a beneficial owner thereof. If at all the 1st Defendant was a beneficial owner thereof, there is no evidence that the consent of the registered proprietor was sought and granted to enable the beneficial owner pass a good title to the late James Mutua Muange and his successor, the Plaintiff herein.

52. It follows that the 1st Defendant was a stranger – who had no capacity to sell the said portion to the late James Mutua Muange - and the transaction is thus tainted with illegality.

53. Besides, this suit is built on parcel title number Machakos/Kiandani/224 which no longer exists, having been sub-divided upon distribution of the estate of Mwangangi Wambua. The prayer is untenable on basis of impossibility.

54. Furthermore, there was no evidence that the late James purchased a portion of land from the late Mwangangi Wambua. The estate of Mwangangi Wambua cannot legally so be compelled to transfer any portion of land in the circumstances.

55. Consequently, the foregoing findings yield only one conclusion that there is no valid contract for purchase/sale of the suit property.

(iii) Whether the Plaintiff’s claim has met the requisite threshold for an order of specific performance. 56. What is the nature of specific performance remedy? Under what circumstances is it appropriate to grant this remedy? One of the remedies available to a purchaser of land who has paid the full purchase price, as against a vendor or his personal representative who has failed to transfer the purchased property to the purchaser is specific performance. The impetus to grant a remedy of specific performance is based on the existence of a valid enforceable contract. The remedy of specific performance is tailored at protecting and realizing the legitimate expectation of an innocent and evidently loyal purchaser. In this connection, the conscience of equity will not settle and leave a purchaser who has faithfully invested in a contract of purchase to suffer injustice at the hands of the merciless vendor, conditioned on the following principles/parameters.

57. First, being an equitable remedy, the principles which govern equitable remedies are applicable as follows: (i) the remedy of specific performance is granted upon exercise of a discretionary power of the Court; (ii) a Court of law will ordinarily not grant this remedy if there is another adequate remedy available to the aggrieved party, either in statute or common law. It is the last resort. The very last port of call. It follows that wherever an alternative and adequate remedy like damages or an injunction is available, this remedy should be avoided. See Lumley vs. Wagner (1852) 64 ER 1209. In Reliable Electrical Engineers Ltd vs. Mantrac Kenya Limited [2006] eKLR, Maraga, J. (as he then was) had this to say about the order of specific performance:“Specific performance like any other equitable remedy is discretionary and the Court will only grant it on well principles… The Jurisdiction of specific performance is based on the existence of a valid enforceable contract. It will not be ordered if the contract suffers from some defect, such as failure to comply with the formal requirements or mistake or illegality, which makes the contract invalid or enforceable. Even when a contract is valid and enforceable, specific performance will however not be ordered where there is an adequate alternative remedy. In this respect damages are considered to be an adequate alternative remedy where the claimant can readily get the equivalent of what he contracted for from another source. Even when damages an adequate remedy specific performance may still be refused on the ground of undue influenced or where it will cause severe hardship to the Defendant.”In the same vein, in Amina Abdul Kadir Hawa vs. Rabinder Nath Anand & Anor [2012] eKLR, R.N. Nambuye, J. (as she then was) laid the following guiding parameters for specific performance to be availed to the Plaintiff:(a)The remedy is an equitable remedy meaning that the Court has to satisfy itself that on the facts presented to it (the Court) it is equitable in the interests of both parties to grant the reliefs;(b)It is available where damages will not be an adequate compensation meaning that if damages are adequate, even if all the other prerequisites have been met and favour the granting of the relief of specific performance the Court can withhold it and award damages instead;(c)It is a discretionary relief which discretion should not be exercised arbitrarily but on the basis of applicable principles. The guiding principles applicable to the Courts exercise of its discretion which is trite and which this Court has judicial notice of is that the discretion has to be exercised judiciously with a reason;(d)Even if the facts of the case demonstrate that a specific performance is a proper remedy to grant in the circumstances, it may none the less be withheld in circumstances where it is likely to cause hardship to the Defendant even if circumstance giving rise to the hardship to be suffered by the Defendant were not contributed to by the contracting parties and may have arisen even after the conclusion of the contract; and(e)The party entitled to earn the relief has to demonstrate that he/she has fulfilled all his/her obligations under the terms of the contract. Or alternatively that there is demonstrated proof that he/she is ready and willing to fulfill the same.

58. Second, the discretionary power in this regard should be exercised to aid a purchaser who has fulfilled his part of the bargain under the contract, to allow the purchaser benefit from the contract without impediment. In Ole Meikoki vs. Ole Sirere [1981] KLR 593, the Court of Appeal had this to say about the guiding ray in considering appropriateness of the remedy of specific performance:“When a party fulfills his obligation under a contract, he must be allowed to benefit from the contract without impediment.” See also Amina Abdul Kadir Hawa vs. Rabinder Nath Anand & Anor [2012] eKLR, per R.N. Nambuye, J. (as she then was).

59. Third, the remedy cannot avail to the purchaser if the contract was unconscionable.

60. Fourth, the remedy will ordinarily not be available to the purchaser is execution of this remedy is impossible.

61. Fifth, this remedy cannot avail to the purchaser if performance consists of a personal service. The underpinning rationale being that granting this remedy in such circumstances will then offend the constitutional probation against servitude. See Lumley vs. Wagner (1852) 64 ER 1209. Instead, in such cases, an injunctive relief is more appropriate. In this case, Wagner wanted to severe a contract of performance at will. Lord St Leonards LC held that although an order of specific performance cannot not issue in the circumstances, an injunctive relief did not constitute indirect specific performance reasoning that “Wherever this Court has not proper jurisdiction to enforce specific performance, it operates to bind men's consciences, as far as they can be bound, to a true and literal performance of their agreements; and it will not suffer them to depart from their contracts at their pleasure, leaving the party with whom they have contracted to the mere chance of any damages which a jury may give. The exercise of this jurisdiction has, I believe, had a wholesome tendency towards the maintenance of that good faith which exists in this country to a much greater degree perhaps than in any other; and although the jurisdiction is not to be extended, yet a Judge would desert his duty who did not act up to what his predecessors have handed down as the rule for his guidance in the administration of such an equity. It was objected that the operation of the injunction in the present case was mischievous, excluding the Defendant J. Wagner from performing at any other theatre while this Court had no power to compel her to perform at Her Majesty's Theatre. It is true that I have not the means of compelling her to sing, but she has no cause of complaint if I compel her to abstain from the commission of an act which she has bound herself not to do, and thus possibly cause her to fulfil her engagement. The jurisdiction which I now exercise is wholly within the power of the Court, and being of opinion that it is proper case for interfering, I shall leave nothing unsatisfied by the judgment I pronounce. The effect, too, of the injunction in restraining J. Wagner from singing elsewhere may, in the event of an action being brought against her by the Plaintiff, prevent any such amount of vindictive damages being given against her as a jury might probably be inclined to give if she had carried her talents and exercised them at the rival theatre: the injunction may also, as I have said, tend to the fulfilment of her engagement; though, in continuing the injunction, I disclaim doing indirectly what I cannot do directly.”

62. Sixth, it will not avail to the purchaser if the contract is too vague to be enforced.

63. Seventh, it will not avail to the purchaser if the contract was terminable at will.

64. Eighth, it will not be available to the purchaser if consensus ad idem was missing ab initio or in instances where the contract was built on a mistake or misrepresentation of facts actuated by the purchaser. See Tamplin vs. James (1880) 15 Ch D 215. In Reliable Electrical Engineers Ltd vs. Mantrac Kenya Limited [2006] eKLR, Maraga, J. (as he then was) had this to say about the order of specific performance:“Specific performance like any other equitable remedy is discretionary and the Court will only grant it on well principles… The Jurisdiction of specific performance is based on the existence of a valid enforceable contract. It will not be ordered if the contract suffers from some defect, such as failure to comply with the formal requirements or mistake or illegality, which makes the contract invalid or enforceable. Even when a contract is valid and enforceable, specific performance will however not be ordered where there is an adequate alternative remedy. In this respect damages are considered to be an adequate alternative remedy where the claimant can readily get the equivalent of what he contracted for from another source. Even when damages an adequate remedy specific performance may still be refused on the ground of undue influenced or where it will cause severe hardship to the Defendant.” See also Amina Abdul Kadir Hawa vs. Rabinder Nath Anand & Anor [2012] eKLR, per R.N. Nambuye, J. (as she then was).

65. Ninth, it will not avail to the purchaser if the contract was made for no consideration. See Reliable Electrical Engineers Ltd vs. Mantrac Kenya Limited [2006] eKLR, per Maraga, J. (as he then was), cited supra. See also Amina Abdul Kadir Hawa vs. Rabinder Nath Anand & Anor [2012] eKLR, per R.N. Nambuye, J. (as she then was).

66. Tenth, it will not avail to the purchaser if the contract is void or unenforceable. See Reliable Electrical Engineers Ltd vs. Mantrac Kenya Limited [2006] eKLR, per Maraga, J. (as he then was), cited supra. See also Amina Abdul Kadir Hawa vs. Rabinder Nath Anand & Anor [2012] eKLR, per R.N. Nambuye, J. (as she then was).

67. On force of the reasons and findings thereon entered in question (ii) - that the subject contract is not only invalid on account of illegality, but also impossible to enforce - the facts cannot sustain an order of specific performance.

(iv) If the answer to question (iii) is in the negative, is the Plaintiff entitled to restitution? 68. Gleaning from the Plaint, it is evident that the Plaintiff did not seek the remedy of restitution.

69. Remedies should comport with and serve the unique circumstances of each case. This explains why a Court of law is clothed with inherent power to fashion remedies in a manner that not only best suits the circumstances but also best suits equity and justice of the case. It follows that even where a specific remedy has not been pleaded, it falls upon the Court to fashion one that best serves the circumstances, equity and justice of the case. See Local Empowerment for Good Governance & 6 others vs. Community Executive Committee Member Finance & Economic Planning - County Government of Mombasa & 2 others [2021] eKLR, per E.K. Ogola, J. See also the Supreme Court of Kenya decision in Mitu-Bell Welfare Society vs. Kenya Airports Authority & 2 others; Initiative for Strategic Litigation in Africa (Amicus Curiae) (Petition 3 of 2018) [2021] KESC 34 (KLR) (11 January 2021) (Judgment), per DK Maraga, CJ & P (as he then was), PM Mwilu, DCJ & V-P, MK Ibrahim, SC Wanjala & NS Ndungu, SCJJ.; Kenya Country Bus Owners Association vs. Cabinet Secretary for Transport and Instructure [2014] eKLR, per Odunga, J. et alia.

70. Besides, where circumstances, equity and justice so demand, a Court can then fashion new remedies in addition to the ones sought. In Nation Media Group Limited vs. Attorney General [2007] 1 EA 261, the Court took a judicial view that “While protecting fundamental rights, the Court has power to fashion new remedies as there is no limitation on what the Court can do. Any limitation of its powers can only derive from the Constitution itself. Not only can the Court enlarge old remedies, it can invent new ones as well if that is what it takes or is necessary in an appropriate case to secure and vindicate the rights breached. Anything less would mean that the Court itself, instead of being the protector, defender, and guarantor of the constitutional rights would be guilty of the most serious betrayal.” See also Republic vs. Independent Electoral and Boundaries Commission (I.E.B.C.) Ex parte National Super Alliance (NASA) Kenya & 6 others [2017] eKLR; Sollo Nzuki vs. Salaries and Remuneration Commission & 2 others [2019] eKLR, per Odunga, J. (as he then was); Republic Ex Parte Chudasama vs. The Chief Magistrate’s Court, Nairobi and Another [2008] 2 EA 311, per Rawal, J.; Wanjuguna vs. Republic [2004] KLR 520, et alia.

71. Actually, the Court of Appeal has had occasion to caution Courts below it against the practice of merely lamenting without offering an appropriate remedy in LTI Kisii Safari Inns Ltd & 2 others vs. Deutsche Investitions-Und Enwicklungsgellschaft (‘Deg’) & others [2011] eKLR, where Githinji, JA (as he then was) held as follows (with Onyango Otieno and Tunoi, JJA, as they then were, concurring):“It is regrettable that despite these lamentations, the learned Judge did not render justice between the parties according to law. It is not enough for a Court of law to tell a victim of injustice that a wrong had been perpetrated against him without offering a remedy. It is a maxim of equity that Equity will not suffer a wrong to be without a remedy. The idea expressed in this maxim is that no wrong should be allowed to go unredressed if it is capable of being remedied by Courts of justice.”

72. This case presents a conundrum – and in my very deeply considered judicial assessment – has re-opened the classical deliberations around the doctrines of equity and in this sense lurched this Court into the deep waters of the then Chancery Court for the reasons to be evident hereinafter.

73. The Plaintiff was seeking aid of this Court to be declared a beneficial owner of the suit property. This is a remedy housed in the doctrines of equity. In determining this derivative question, this Court will be guided by the following five principles of equity.

74. First, equitable remedies are discretionary. The discretion always and gladly turns in the direction of serving justice to both parties to the suit and avoiding injustice or hardship which will otherwise occur resulting from inadvertence or excusable mistake or error. In exercising the discretionary power, it should always be borne in mind that it frowns and will, certainly, not assist that party who has deliberately sought to obstruct or delay the course of justice. See the principles of exercising discretionary power of the Court as enunciated in the cause celebre and locus classicus case of Mbogo and another vs. Shah [1968] 1 EA 93, per Sir Charles Newbold P, Law JA & Sir Clement De Lestang, V-P (as they then were).

75. Second, one of the causative explanations of the doctrines if equity is good conscience. And so, the good conscience of equity will, certainly, be most troubled with undue hardship visited upon an innocent party. And so, when faced with imminent undue hardship, equity will do everything - within the range and scale of justice and fairness - to avoid the undue hardship, provided that circumstances point to the direction that the party who will suffer the said hardship, did not participate or contribute to the mistake or error or inadvertence that founded the hardship.

76. Third, one of the key pillar-stones of equity is that it trains its keen eye on substantive justice as opposed to technical and procedural justice. See the Court of Appeal decision in Macharia Mwangi Maina & 87 others vs. David son Mwangi Kagiri [2014] eKLR, where the Court restated this principle in the following words: “This Court is a Court of equity; equity shall suffer no wrong without remedy. No man shall benefit from his own wrong doing... This Court is bound to deliver substantive rather than technical and procedural justice.”

77. Fourth, ubi jus ibi remedium. Where there is a right there must be a remedy for equity will not suffer a wrong without a remedy.

78. Fifth, in his witness statement, the 1st Defendant admitted that he had no capacity to sell the suit property to the Plaintiff. He repeated this in his testimony in Court. The 1st Defendant is estopped by both the maxim of ex turpi causa non oritur actio (from a dishonourable or illegal conduct, an action does not arise) and the maxim of nemo auditur propriam turpitudinem allegans (no one can be heard to invoke his own turpitude or no one shall be heard, who invokes his own guilt). In other words, whether in tort or contract, an illegality begets an illegality and no Court should lend its hand in enforcement of an illegality. This common law norm founds the doctrine of prevention which estops a party from reaping from his own illegality, by founding an action on his own illegality. In one of the oldest decisions of the House of Lords on this doctrine in Holman vs. Johnson (1775) 1 Cowp 341, Lord Mansfield CJ laid down the substance of this doctrine in the following words: “The objection, that a contract is immoral or illegal as between Plaintiff and Defendant, sounds at all times very ill in the mouth of the Defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the Defendant has the advantage of, contrary to the real justice, as between him and the Plaintiff, by accident, if I may say so. The principle of public policy is this; ex dolo malo non oritur actio (“no action arises from deceit”). No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the Plaintiff's own standing or otherwise, the cause of action appears to arise ex turpi causa [“from an immoral cause”], or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the Defendant, but because they will not lend their aid to such a Plaintiff. So if the Plaintiff and Defendant were to change sides, and the Defendant was to bring his action against the Plaintiff, the latter would then have the advantage of it; for where both were equally in fault, potior est conditio defendentis "stronger is the position of the Defendant.” Similarly, in Scott vs. Brown, Denning & Mcnab Company (3) [1892] 2QB 724, at page 728, Lindley LJ restated the doctrine of ex turpi non oritur actio as follows:“Ex turpi causa non oritur actio. This old and well known legal maxim is founded in good sense, and expresses a clear and well recognized legal principle, which is not confined to indictable offences. No Court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal if illegality is duly brought to the notice of the Court, and if the person invoking the aid of the Court is himself implicated in the illegality. It matters not whether the Defendant has paraded the illegality or whether he has not. If the evidence adduced by the Plaintiff proves the illegality, the Court ought not to assist him.” This position of the House of Lords and the Court of Appeal of England has been adopted and accepted in Kenya as the true reflection of the law in Kenya. See Kenya Ports Authority vs. Fadhil Juma Kisuwa [2017] eKLR, per Makhandia, Ouko & M’inoti, JJ.A.; County Government of Uasin Gishu vs. George Njoroge Njogu [2019] eKLR, per O. Sewe, J.; Virginia Wangechi Wachira vs. Wanjohi [1988] eKLR, per Mbaluto, J.; Michael Mwaura Njoroge vs. Peter Kamau Munene; Beatrice Kori (Interested Party) [2019] eKLR, per Kasango, J.; and Republic vs. Ministry of Roads & another Ex Parte Vipingo Ridge Limited & another [2016] eKLR, per A. Emukule, J., et alia. In this connection, from those days, the catalogue of such illegal acts has never and will certainly never close. Certainly, selling a parcel of land when you are aware that you lack capacity to do and proceeding to receive the purchase price is one of the long catalogue of illegal acts, since it renders the contract void and as Lord Denning elegantly put it in Benjamin Leonard Mcfoy vs. United African Company Limited (UK) [1962] AC 152, “If an act is void, then it is in law a nullity. It is not only bad …and every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”

79. In this case, therefore, this Court will endevour to do what the doctrines of equity will most reasonably expect from a Court of equity. I now turn to consider remedies in the context of the said maxims of equity, in the context of the collective effect of the five principles set out supra.

80. Ubi jus ibi remedium. Where there is a right there must be a remedy for equity will not suffer a wrong without a remedy. As against the 1st Defendant, having admitted that he proceeded without capacity and actually recived a total sum of Kshs. 50,000, in two installments of Kshs. 35,000 on 2nd August 1993 and Kshs. 15,000, on 6th February 2018, this Court finds a protectable equitable right in the Plaintiff’s claim against the 1st Defendant only.

81. Except where it is a gift, the doctrines of equity frown on unjust enrichment. In such cases, these doctrines impose an implied or constructive (involuntary) trust upon that person who has obtained property unwarrantedly or by wrongdoing or by voluntary conferment of benefit for total failure of consideration. In such circumstances, the doctrines of equity afford the innocent party a right known as restitution interest and prescribed therefor the remedy of restitution (also known as recuperation or restitutionary redress or restitutory right) as the appropriate chiefly guided by its sufficiency. But what amounts to a constructive trust? Henry Campbell Black, the learned author of the now locus classicus Dictionary in legal definitions popularly known as the Black’s Law Dictionary (Black’s Law Dictionary, Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern by Henry Campbell Black, M. A., Ninth Edition) defines the term ‘constructive trust’ in the following terms at page 1649: “constructive trust. (18c) An equitable remedy that a Court imposes against one who has obtained property by wrongdoing. A constructive trust, imposed to prevent unjust enrichment, creates no fiduciary relationship. Despite its name, it is not a trust at all. — Also termed implied trust; involuntary trust; trust de son tort; trust ex delicto; trust ex maleficio; remedial trust; trust in invitum. See trustee de son tort under TRUSTEE. Cf. resulting trust. [Cases: Trusts G~: 91-111. ] “A constructive trust is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.” Beatty v. I Guggenheim Exploration Co., 122 N.E. 378, 380 (N.Y. 1919) (Cardozo, J.). "It is sometimes said that when there are sufficient grounds for imposing a constructive trust, the Court ‘constructs a trust.’ The expression is, of course, absurd. The word ‘constructive’ is derived from the verb ‘construe,’ not from the verb ‘construct.’... The Court construes the circumstances in the sense that it explains or interprets them; it does not construct them.” 5 Austin W. Scott & William F. Fratcher, The Law of Trusts % 462. 4 (4th ed. 1987).” An implied trust, contra-distinguished from an express trust, is inferred by operation of law. It is imposed by law to situations either presuming an intention of the parties to create a trust or simply because of facts at hand. A constructive trust, which is one of the implied trusts, is an equitable remedy imposed by a Court to benefit a party who has been wrongfully deprived of his rights due to many reasons including situations where a person obtains or holds a property right which they should not hold in the first place due to unjust enrichment of interference or due to breach of a fiduciary duty. By extension, the law on unjust enrichment provides remedies, principally of restitution, in circumstances where person had acquired a benefit at the expense of another in circumstances which are unjust.

82. And what is restitution? Henry Campbell Black, the learned author of the now locus classicus Dictionary in legal definitions popularly known as the Black’s Law Dictionary (Black’s Law Dictionary, Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern by Henry Campbell Black, M. A., Ninth Edition) defines the term ‘restitution’ in the following terms at page 1428:“1. A body of substantive law in which liability is based not on tort or contract but on the Defendant's unjust enrichment…

2. The set of remedies associated with that body of law, in which the measure of recovery is usually based not on the Plaintiff's loss, but on the Defendant's gain…

3. Return or restoration of some specific thing to its rightful owner or status.

4. Compensation for loss; esp., full or partial compensation paid by a criminal to a victim, not awarded in a civil trial for tort, but ordered as part of a criminal sentence or as a condition of probation…”

83. It is imperative to appreciate the historical background of the doctrine of unjust enrichment and restitutory claims. In Samuel Kamau Macharia vs. Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR, R. Kuloba, J. had occasion to discuss the historical background, the justification of the remedy of restitution and issues kindred to unjust enrichment and I wish to quote His Lordship in extenso: “Forming the foundation of quasi-contractual claims, such as actions for money had and received, and for money paid to a third party from which the Defendant has derived a benefit, and equitable relief from undue influence and catching bargains, amongst other restitutionary claims, the idea of unjust enrichment or unjust benefit is intended to prevent a person from retaining money or some benefit derived from another which it is against conscience that he should keep it, and he should, in justice, restore it to the Plaintiff. The gist is that a Defendant, upon the circumstances of the case is obliged by the ties of natural justice and equity to make restitution. As Lord Goff of Chieveley and Professor Gareth Jones state in their monumental treatise, The Law of Restitution, 5th edn (1998), at pp 11-12: “Most mature systems of law have found it necessary to provide, outside the fields of contract and civil wrongs, for the restoration of benefits on grounds of unjust enrichment.” This statement is founded on the observation of Lord Wright in the English case of Fibrosa Spolka Akeyjna v Fairbairn Lawson Combe Barbour, Ltd, [1943] AC 32, at p 61 where he said:“It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit … Such remedies … are generically different from remedies in contract or in tort, and are now recognized to fall within a third category of the common law which has been called quasi - contract or restitution.”And, indeed, as a remedy attracting wrong, unjust enrichment was well-known in our Courts fairly early. Thus, as far back as 1957, we see it spoken of by the then Court of Appeal for Eastern Africa comprising of Judges of eminence, namely, Sir Newnham Worley, P, Sir Ronald Sinclair, V-P, and Briggs, J A, in the case of Saleh bin Ghaleb v Hussein al Qu’aiti, [1957] EA 55, at p 73, where one finds this passage, vis, "so far as the allowances are concerned, this was a clear case of unjust enrichment” leading to a suffering of wrongful loss of which equity would provide a remedy. Broadly founded upon the aim of equity to do justice between parties, the doctrine of unjust enrichment and the remedy of restitution to counter unjust benefit proceed upon the realization that to allow a Defendant to retain such a benefit would result in his being unjustly enriched at the Plaintiff’s expense, and this, subject to certain defined limits, will not be tolerated by the law, and owing to the importance and aim of this doctrine in every advanced and civilized system of justice: “Woe unto the day when it is lost sight of in Kenya, which would also be contrary to the spirit of Section 3(c) of the Judicature Act. I trust that in future, in appropriate cases, there will be less smothering of just equitable rights” on the basis of technical objections and artificial distinctions oblivious to justice and substance. This was the emphatic language of Madan, JA (as he then was), in the Court of Appeal of Kenya, in the case of Chase International Investment Corporation and another v Laxman Keshra and others [1978] Kenya LR 143, at p 154, where it was firmly and unequivocally laid down that in Kenya a claim may properly be founded for restitution where it would be unjust to allow a party to retain the benefits of an unjust enrichment.”

84. What are the elements of unjust enrichment? In the same case (Samuel Kamau Macharia vs. Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR), R. Kuloba, J. continued to render himself and in particular set out the elements of unjust enrichment as follows:“And, on the authorities approved by Madan and Wambuzi, JJA (as they then were) in the Chase International Investment Corporation case (supra), the basic elements presupposed by the doctrine of unjust enrichment are (1) that the Defendant has been enriched by the receipt of a benefit; (2) that he has been so enriched at the expense of the Plaintiff; and (3) that it would be unjust to allow the Defendant to retain the benefit in the circumstances of the case.These subordinate principles of the general principle of unjust enrichment are interrelated. They clearly show the nature of restitutionary claims, and how people incur restitutuionary obligations. A full exposition of the general and subordinate principles is not practically possible within the compass of a judgement. Awesome in its comprehensiveness and insight, the widely acclaimed work of Lord Goff of Chieveley and Professor Gareth Jones, The Law of Restitution , 5th edn (1998), which is a masterly integration of principles drawn from many different branches of law, provides a good guide on the issue raised in the instant case. In particular, pages 16-41, are instructive on the issue before us. Leading restitutionists, particularly those in a thriving restitution group in academia, headed by Professor Peter Birks (whose works range from his famous An Introduction to the Law of Restitution , 1985, reprinted 1996 in paperback, with revisions; to numerous scholarly articles), among others like Professor Richard Sutton, Professor S M Waddams, not to mention Ewan McKendrick, Andrew Burrows, Professor Roy Goode and Professor Samuel Stoljar, outside the American, Canadian and Australian restitution lawyers, have drawn together a mass of cases from apparently disparate areas of the law and provided compedia on the law of restitution based on the underlying and unifying principle of reversing unjust enrichment. From the now abundantly available literature on the subject of restitution on account of unjust enrichment and in North America and the common law diaspora established judicial recognition and exposition, and a vibrant academic scholarship shown in esteemed monographs and stream of learned articles in world class journals and reviews whose citation is encouraged by the Courts as helpful guides one sees that the law on unjust enrichment or unjust benefit is aimed at preventing a person from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. From these sources, it is possible to highlight, albeit in summary for in this space of a judgement, some of the common unjust factors which the law recognizes as calling for restitution. You may call them grounds which form the basis of a restitutionary claim.”

85. How does it arise? In the same case (Samuel Kamau Macharia vs. Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR), R. Kuloba, J. proceeded to enunciate a sample of scenarios where unjust enrichment arises thus:“At the moment I sample the following: 1. non-voluntary conferment of a benefit, such as through mistake or on account of compulsion, necessity, or in ignorance, or due to an unequal condition between the payor and payee; 2. voluntary conferment of benefit for total failure of consideration; 3. benefit conferred in consequence of a wrongful act, such as where a trustee benefits from a breach of trust; 4. ultra vires demand; 5. abuse of a power entrusted to the Defendant by Parliament or by a contractual instrument such as a debenture or other agreement; 6. illegitimate use of self-help sanctions; 7. vindication of equitable title to property.” {Emphasis supplied}

86. It’s imperative to underline at this point that the circumstances herein fall under the second scenario.

87. And what is the guiding ray in determining whether unjust enrichment has been established and what is the Plaintiff expected to demonstrate? In the same case (Samuel Kamau Macharia vs. Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR), R. Kuloba, J. had this to say:“In short, on the part of the Plaintiff there must be found, in truth, factors which negative the voluntary character of the transfer of benefit to the Defendant. The Plaintiff must be found to have had a qualified or vitiated intent that the Defendant should be enriched. On the side of the Defendant, there must have been free acceptance of the transfer, in the sense that the Defendant had a choice whether to accept or reject, and had sufficient knowledge of the facts to make that choice a real one. The Defendant must know that a benefit is being offered to him non-gratuitously, and having the opportunity to reject, elects to accept. Those are some of the most outstanding restitution-yielding events. I am not forgetting situations where the Defendant has behaved unconscionably; for we all know equity’s long established jurisdiction to set aside a bargain if there is “some impropriety, both in the conduct of the stronger party and in the terms of the transaction itself……. Which in the traditional phrase ‘shocks the conscience of the Court’, and makes it against equity and good conscience for the stronger party to retain the benefit of a transaction he has unfairly obtained”:per Millet, J in Alec Lobb, Ltd v Total Oil GB, Ltd, [1983] 1WLR 87, at 94-95. On the part of the Plaintiff seeking restitution one finds his judgement, in parting with the enrichment to the Defendant, vitiated by either not known that the Defendant was being enriched at his (Plaintiff’s) expense, or by being disabled by a mistake or pressure or inequality, to prevent the enrichment of the Defendant; and, as it were, his transfer was non-voluntary, in that when surrending the benefit to the Defendant he did not form an unimpaired intent to give up what he gave up at his expense or to his detriment. So, when these things or any of them occur and the Defendant unjustly gets the benefit, restitution is the law’s response thereto, consisting in causing the Defendant to give up to the Plaintiff the enrichment received at the Plaintiff’s expense or its value in money. That is how the law responds to cases of non-voluntary transfers of benefits, arising out of vitiated judgment (impaired intent), or failure of condition for transfer. As it is already clear, in vitiated judgment the Plaintiff would be saying either, that he did not know that the Defendant was being undeservedly enriched at his (Plaintiff’s) expense, or that he knew but he was disabled by a mistake, illegitimate pressure or compulsion or unconscionable coercion, or inequality or lack of choice, to give up the enrichment to the Defendant. He says, in short, that properly considered in fairness, at no time did he properly intend the Defendant to be enriched in the circumstances then obtaining. On the other hand, failure of condition involves an exercise of judgment with a fundamental qualification. Here the Plaintiff has exercised his judgment to the full, but in addition, he has taken pains to qualify the transfer of the enrichment, making it clear that although he wanted the Defendant to have the enrichment, his intent to that effect was not absolute but conditional; and then, as events have turned out, the condition has failed; so that with its failure the transfer has become non-voluntary. His case is that indeed he initially formed an unimpaired intent that the Defendant be enriched, but only in events other than those which have occurred. That is to say, he specified the basis of his giving, and, therefore, the events in which his intent to give would become absolute; and he never wanted to benefit the Defendant except on the basis of the events which have not happened. This is the vocabulary of restitution, for the traditional terminology in common law, of “total failure of consideration”. I wish to point out that because of the facts of the instant case, I am dealing with the law only as it concerns the case of a Plaintiff who has himself unofficiously conferred a benefit on the Defendant, and he now complains that he was mistaken, or that he acted under compulsion, or that he intervened as a matter of necessity, or that he conferred the benefit under an ineffective transaction. This case does not give rise to a situation where I should consider restitution based on a Defendant having received the benefit from a third party; or where he has acquired the benefit through his own wrongful act such as a crime, a tortuous act or a breach of fiduciary relationship or a breach of confidence. But one cannot entirely rule out the element of overlap, for, as it is common, the rubrics of the law are not watertight compartments.

88. What is the remedy to unjust enrichment and are there valid defences in law or vitiating factors? In the same case (Samuel Kamau Macharia vs. Kenya Commercial Bank Limited, Kenya Commercial Finance Company Limited [2003] eKLR), R. Kuloba, J. had this to say:“On establishing one of the grounds of a restitutionary claim, the Plaintiff is prima facie entitled to restitution. But circumstances may be present which may constitute a valid defence to defeat the claim. There are limits to restitutionary claims. For instance, a restitutionary claim may fail (1) if the Plaintiff has entered into a compromise or made a payment meaning to waive all inquiry into it, in pursuance of the Defendant’s honest claim (unless, of course, such payment was induced by misrepresentation or made under duress or undue influence or grudgingly under protest); (2) if public policy precludes restitution (such as in case of res judicata , statutes of limitation and laches, illegality, statutory bar); (3) if the Defendant cannot be restored to his original position (such as that there can be no restitutio in integrum , or that there has been a total failure of consideration), or that he is a bona fide purchaser for value without notice; (4) if the Defendant has so changed his position which has cancelled out his unjust enrichment, that it would be inequitable in all the circumstances to require him to make restitution at all or in full, and restitution should either be terminated or diminished pro tanto (i.e. that he acted to his detriment on the faith of the validity of the receipt of the enrichment); (5) if the Defendant not having requested or acquiesced in the payment, the Plaintiff has conferred the benefit as a mere volunteer, i.e. that the Plaintiff was officious, or thrust himself on the Defendant, or intervened without adequate justification in short, that he made an unwanted benefit or an uninvited payment when not acting under legal compulsion or necessity; (6) if the Plaintiff conferred a benefit on the Defendant while acting in his own self interest in the absence of compelling factors like compulsion, necessity or request; (7) if the Plaintiff conferred the benefit as a valid gift or in pursuance of a valid common law, equitable or statutory obligation which he owed to the Defendant; or (8) if the money received was paid out and given by the Defendant as a charitable donation. These, and many other defences are fully discussed in all the standard works on restitution, e.g. in Goff & Jones, op cit, at pp 46-72; and Burrows, The Law of Restitution, (1993), Chapter 15, pp 420 – 477. ”

89. And so, the conscience of equity will be troubled until and it cannot gleefully sit and spectate as unjust enrichment unfolds. The Court of Appeal decision in Macharia Mwangi Maina & 87 Others vs. Davidson Mwangi Kagiri (2014) eKLR, held that the appellant’s action of receiving the full purchase price and putting the respondent in possession created a constructive trust in favour of the respondent, dismissed the appellant’s claim and granted an order of specific performance in favour of the respondent the absence of the LCB consent notwithstanding.

90. It follows that payment of any amount of money to another person, in expectation of a consideration, which does not forth-come, renders the receiver a trustee of the payer. See Jackson Kamau Kanyuru vs. Stephen Githinji Weru [2018] eKLR; and Jerusha Wangari Mwangi vs. Beatrice Muthoni Karanja & 2 others [2018] eKLR.

91. For instance, in Willy Kimutai Kitilit vs. Michael Kibet [2018] eKLR, Obaga, J. had imposed a constructive trust upon the vendor who had received the full purchase price but failed to transfer two acres of land on the pretext that the LCB consent had not been obtained. In affirming this position, Githinji, JA (as he then was), Okwengu and Mohammed, JJA held as follows:“[25]The word equity broadly means a branch of law denoting fundamental principles of justice. It has various meanings according to the context but three definitions from Black’s Law Dictionary, Ninth Edition will suffice for our purpose: “1… 2. The body of principles constituting what is fair and right. 3. The recourse to principles of justice to correct or supplement the law as applied to particular circumstances… 4. The system of law or body of principles originating in the English Court of Chancery and superseding the common and statute law (together called “Law” in the narrower sense) when the two conflict” Thus, since the current Constitution has by virtue of Article 10(2) (b) elevated equity as a principle of justice to a Constitutional principle and requires the Courts in exercising judicial authority to protect and promote that principle, amongst others, it follows that the equitable doctrines of constructive trust and proprietary estoppel are applicable to and supersede the Land Control Act where a transaction relating to an interest in land is void and enforceable for lack of consent of the Land Control Board.

[26]For the reasons in paragraphs 20, 21, 22, 23, 24 and 25 above, we are in agreement with the Macharia Mwangi Maina decision that the equitable doctrines of constructive trust and proprietary estoppel are applicable and enforceable to land subject to the Land Control Act, though this is subject to the circumstances of the particular case. Upon the application of the equitable doctrines, the Court in its discretion may award damages and where damages are an inadequate remedy grant the equitable remedy of specific performance.

[27]Turning to the present appeal, the learned Judge made the findings of fact in terms of paragraph 3 above and also made a finding of law that the appellant created a constructive trust in favour of the respondent. It was not in dispute that the appellant sold a 2-acre portion of his land comprising of 2. 440 Hectares to the respondent in 2008. He gave possession of the land to the respondent who fenced the land and developed a portion of half an acre by planting trees. The respondent paid the last instalment of the purchase price in 2010. However, the appellant did not transfer the 2 acres to the respondent and instead caused the whole land to be Registered in his name on 4th December, 2012, and filed a suit for the eviction of the respondent thereafter. By the time the appellant caused himself to be Registered as the proprietor of the whole piece of land he was a constructive trustee for the respondent and it would be unjust and inequitable to allow the appellant to retain the 2 acres that he had sold to the respondent in the circumstances of the case. As we have held in essence that, the lack of the consent of Land Control Board does not preclude the Court from giving effect to equitable principles, in particular the doctrine of constructive trust, we find that the trial Court reached the correct decision and therefore the appeal has no merit. [28] For the foregoing reasons, the appeal is dismissed with costs to the respondent.”

92. In this regard, therefore, the Plaintiff is expected by law to prove that first, the Defendants have been enriched. Second, the enrichment is at the Plaintiff's expense. Third, the enrichment at the Plaintiff’s expense is unjust. And fourth, there is no justifiable and an unassailable bar or Defence.

93. There was evidence, which passed the standard of balance of probabilities, that the late James Mutua Muange transacted with the 1st Defendant and the 1st Defendant was initially paid Kshs. 35,000 on 2nd August 1993 and later on 6th February 2018, he was again paid Kshs. 15,000. The late James Mutua Muange and indeed his wife, the Plaintiff herein, did not get the portion of land. There is a total failure of consideration, therefore.

94. It follows that all the elements of unjust enrichment have thus been ticked.

95. The next question to consider is whether the Plaintiff is entitled to interest on the principal amount?

96. And what purpose does interest on the principal sum and costs serve? The purpose of interest finds its place in the principle of restitutio in integrum. Put in English, a successful party should be compensated for the deprivation the person suffered for being denied the money at an earlier stage when time for the entitlement started to run. In the Court of Appeal decision in Later vs. Mbiyu (1965) EA 592, it was held that“In both these cases the successful party was deprived of the use of goods or money by reason of the wrongful act on the part of the Defendant, and in such as case, it is clearly right that the party who has been deprived of the use of goods or money to which he is entitled should be compensated for such deprivation by the award of interest.”Similarly, on interest, the Court of Appeal in Supermarine Handling Services Ltd vs. Kenya Revenue Authority [2010] eKLR, the Court of Appeal gave the following rationale of interest:“It is trite law that the justification for an award of interest on the principal sum is, generally speaking, to compensate a Plaintiff for the deprivation of any money, or specific goods through the wrong act of a Defendant… The Plaintiff was deprived of the use of its money since 4/11/1999 and it was only fair that it should be compensated for such deprivation by the award of interest…The Plaintiff was deprived of the use of its money since 4/11/1999 and it was only fair that it should be compensated for such deprivation by the award of interest…. We are, satisfied, therefore, that the learned Judge’s order in denying the Plaintiff interest was erroneous and was not in consonance with the normal practice and was plainly and obviously a wrong exercise of discretion. See New Tyres v Kenya Alliance Insurance Company Ltd (1987) KLR 380. ”

97. Which leads me to the determinant question. What is the legal position applicable where a party prays for interest with or without a certain rate of interest on the principal sum? In a Decree for payment of money, unless parties are bound by an agreement which fixes the rate of interest applicable, the Court may at its discretion set the rate of interest on the principal sum adjudged from the date of the suit to the date of the Decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit. In the event the Court is silent, the Court shall be deemed to have ordered interest at 6 per cent per annum. Section 26 of the Civil Procedure Act provides for interest applicable in diverse circumstances. It states thus:“(1)Where and in so far as a Decree is for the payment of money, the Court may, in the Decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the Decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit, with further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged from the date of the Decree to the date of payment or to such earlier date as the Court thinks fit.

(2)Where such a Decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the Decree to the date of payment or other earlier date, the Court shall be deemed to have ordered interest at 6 per cent per annum.”

98. At its own discretion, the Court may order payment of interest on costs and at its discretion too, the Court may set the rate of interest thereon provided it does not exceed 14%. Section 27 of the Civil Procedure Act is germane to this and it reads thus:“(1)Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the Court or Judge, and the Court or Judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the Court or Judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the Court or Judge shall for good reason otherwise order.

(2)The Court or Judge may give interest on costs at any rate not exceeding fourteen per cent per annum, and such interest shall be added to the costs and shall be recoverable as such.”

99. Where a certain rate of interest has been prayed for either on the principal sum or costs, when Court is setting the rate of interest, there must be an empirical justification behind the prayer often canvassed by the party asking for that specific rate of interest. In the absence of a clear empirical justification for a higher or lower rate of interest prayed, then the safe default fall-back is the Court rate which has been 12% since the 16th day of March, 1982. In the Practice Note No. 1 of 1982, dated 16. 3.1982, the Chief Justice then (Simpson Ag. CJ) addressed this question of reasonable rate of interest in the following words:“The Civil Procedure Act (cap 21 laws of Kenya) section 26 enables the Court to order interest to be paid at such rate as the Court deems reasonable. In the absence of any valid reason for ordering a higher or lower rate of interest, the rate of interest should now be 12%.” The reasoning in the Practice Note No. 1 of 1982 was applied in Rose Kaume & Another vs. Stephen Gitonga Mbaabu & Another [2016] eKLR, where for the determination of the Court was the issue of costs and interest raised by the Plaintiffs pursuant to the consent entered by the parties for the settlement of the Plaintiffs’ claim. The particulars of the Plaintiffs’ claim were set out in the Plaint dated 16th May 2013, which was followed by an Application for summary Judgment. The issues therein were not canvassed, but the suit was compromised by the Defendant conceding to the settlement of the Plaintiffs’ claim by repaying the monetary claim of Kshs. 8,060,000/- on diverse dates as per the consent. It was the Plaintiffs’ contention that the Defendant settled the amount as stated in their claim, and that as such, there were costs and interests that follow the event. Further, it was contended that the consent that was entered was with regard to a monetary claim, and that as such, costs followed the event once the Defendant agreed to the settlement of the same. In opposing the Plaintiffs’ contention, the Defendant pointed out that settlement was with regards to an Agreement, and in which the issue of breach thereof had not been determined. As such, it was argued, there was no event to be followed by costs, and that therefore, the fact that the Defendant agreed to the consent was not a reason for them to be condemned to costs. While holding that costs and interest are at the discretion of the Court, C. Kariuki, J. held thus: “12. In the Plaint at prayer (b), the Plaintiffs had prayed for interest at 19% with effect from 27th January 2012. Although there is no specific reference as to the where the Plaintiffs may have derived the rate of interest of 19%, the 2ndDefendant at para. 10 had alleged to have borrowed money on his credit card, which money was further transmitted to the 1st Defendant. No evidence has been adduced before the Court to show that the 2nd Defendant had borrowed these facilities for the purpose of remitting to the Defendant. In the absence of such evidence, the Court would be hard strung to award such interest at the rate as prayed for by the Plaintiffs. As such, the Court would allow interest pegged at Court rates, as from the date of filing the instant suit to date of payment of decretal amount. 13. In summation of the foregoing, the upshot is that the Court accordingly awards costs to the Plaintiffs, with interest charged at Court rates in accordance with the provisions of Section 27(2) of the Civil Procedure Act, from the date of filing of the suit to date of payment.”

100. What kind of interest is applicable? Compound or simple? Section 26(1) of the Civil Procedure Act is silent as to the method of computing interest (whether simple or compounded). Courts have come in handy in distinguishing which mode to apply in diverse circumstances. In the Supreme Court of Canada in Bank of America Canada vs. Mutual Trust Co (2002) 2 SCR 601, cited in Veleo (K) Ltd vs. Barclays Bank of Kenya Ltd (2013) eKLR by Havelock, J (as he was then) said that“[T]here seems in principle no reason why compound interest should not be awarded. Had prompt recompense been made at the date of the wrong, the Plaintiff would have had a capital sum to invest; the Plaintiff would have received interest on it at regular intervals and would have invested those sums also.”But what is the difference between simple and compound interest? The difference is that compound interest reflects the time-value component to interest payment while simple interest does not in the sense that simple interest is deployable in circumstances where money is owed as a principal sum and while compound is deployable in circumstances where money is owed as interest. Put differently, interest owed today but paid in the future will have decreased in value and thus compound interest compensates the creditor for the decrease in value of the interest money which was due but remained unpaid while simple interest compensates the creditor for the decrease in value of the principal sum. In the case cited above of Bank of America Canada vs. Mutual Trust Co (2002) 2 SCR 601, cited in Veleo (K) Ltd vs. Barclays Bank of Kenya Ltd (2013) eKLR by Havelock, J (as he was then), the Court had held that“Simple interest and compound interest each measure the time value of the initial sum of money, the principal. The difference is that compound interest reflects the time-value component to interest payment while simple interest does not. Interest owed today but paid in the future will have decreased in value in the interim just as the dollar example described in paras. 21-22. Compound interest compensates a lender for the decrease in value of all the money which is due but as yet unpaid because unpaid interest is treated as unpaid principal. Simple interest makes an artificial distinction between money owed as principal and money owed as interest. Compound interest treats a dollar as a dollar and is therefore a more precise measure of the value of possessing money for a period of time. Compound interest is the norm in the banking and financial systems in Canada and the western world and is the standard of practice of both the Appellant and the Respondent...where the parties have earlier agreed on a compound rate of interest, or there are circumstances warranting it, it seems fair that a Court has the power to award compound post Judgment interest as damages to enable the Plaintiff to be fully compensated when the award is finally paid…The opportunities lost by the Plaintiff in this instance would only be compensated by applying a rate of interest that would reflect the time-value component to interest.”

101. Which rate is applicable when? Discussing the distinct rates applicable to a Decree for payment of money and costs in B.O.G Tambach Teachers Training College vs. Mary Kipchumba [2018] eKLR, E. Mureithi, J. had this to say:“5. The twin provisions on interest in the Civil Procedure Act provide for interest on the principal sum awarded by the Court and interest on costs of the suit, respectively under section 26(2) and 27 (2) of the Act, as follows:

26. Interests(1)Where and in so far as a Decree is for the payment of money, the Court may, in the Decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged from the date of the suit to the date of the Decree in addition to any interest adjudged on such principal sum for any period before the institution of the suit, with further interest at such rate as the Court deems reasonable on the aggregate sum so adjudged from the date of the Decree to the date of payment or to such earlier date as the Court thinks fit. (2) Where such a Decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the Decree to the date of payment or other earlier date, the Court shall be deemed to have ordered interest at 6 per cent per annum. 27. Costs(1)Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the Court or Judge, and the Court or Judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the Court or Judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the Court or Judge shall for good reason otherwise order.(2)The Court or Judge may give interest on costs at any rate not exceeding fourteen per cent per annum, and such interest shall be added to the costs and shall be recoverable as such…6. Over time the Chief Justice has by Practice Notes given guidance to Court as to the reasonable rate of interest that the Court may award under section 26(1) of the Act being “interest at such rate as the Court deems reasonable on the aggregate sum so adjudged from the date of the Decree to the date of payment”.For instance, in the Practice Note No. 1 of 1982, the Chief Justice addressed the question of reasonable rate of interest as follows: … The Civil Procedure Act (cap 21 laws of Kenya) section 26 enables the Court to order interest to be paid at such rate as the Court deems reasonable. In the absence of any valid reason for ordering a higher or lower rate of interest, the rate of interest should now be 12%.” 7. In the case law authority relied on by the Respondent, the applicable rate of interest as at 2006 [and so far as I know to date] is 14%. In the case the Court of Appeal, Highway Furniture Mart Limited v Permanent Secretary Office of The President & another [2006] eKLR, a claim for a higher rate of 36% claimed by the appellant and upheld the High Court Judge in her Application of 14% on the principal sum, and observed as follows: “It is apparent from the three grounds of appeal that the appeal is not against the merits of the decision particularly the findings of fact by the superior Court; that appellant did plead but did not pray for the interest rate at 36%; that the appellant did not state in the evidence of its managing director the basis of the rate of interest of 36%; that the Court did not award interest rate at 36%; that there was no error on the judgment and that the error was on the Decree which included an amount of Shs.30 million as claim for interest which was not prayed for or awarded in the judgment. The appeal concerns the jurisdiction of the Court to set aside the Decree and order the correction of the Decree so that it would agree with the judgment. That notwithstanding, it is necessary to determine the rate of interest awarded in the judgment because the appellant’s Counsel maintained in the superior Court and still maintains before us that the rate of interest at 36% was pleaded in paragraph 1 of the Plaint and that by the phrase: “Costs of this suit and interest as prayed in the Plaint” in the judgment the Judge indeed awarded that interest rate. It is also necessary to determine the validity of the rate of interest awarded because the jurisdiction of the superior Court largely depend on the nature of error or errors that the Judge assumed jurisdiction to correct. As a matter of pleadings and evidence it is true as found by the learned Judge that while the appellant pleaded in paragraph 1 of the Plaint for interest at the rate of 36% the appellant did not, however, pray for the rate of interest at 36% as a relief and did not give evidence at all concerning that rate of interest. By Order VII rule 6 of the Civil Procedure Rules (CP Rules) the Plaint should state specifically the relief which the Plaintiff claims. The relief claimed by the appellant was specifically pleaded in paragraph 3 (1) of the Plaint “as the principal sum of Shs. 11,257,118/= together with interest thereon at Court rate from the date of the Plaint until payment in full”. The Chief Justice from time to time fixes the ceiling of the Court rate interest under section 26 of the Civil Procedure Act. The prevailing Court rate is 14% p.a. which is the rate applied by Okwengu J. The justification for an award of interest on the principal sum is, generally speaking, to compensate a Plaintiff for the deprivation of any money, or specific goods through the wrong act of a Defendant. In Later v Mbiyu [1965] EA 592, the forerunner of this Court said at page 593 paragraph E: “In both these cases the successful party was deprived of the use of goods or money by reason of the wrongful act on the part of the Defendant, and in such a case it is clearly right that the party who has been deprived of the use of goods or money to which he is entitled should be compensated for such deprivation by the award of interest”. (See also the Uganda case of Lwanga v Centenary Rural Development Bank [1999] 1 EA 175). If the Plaintiff was indeed claiming interest on the principal sum at 36% it is surprising that Joseph Waitiki Ndegwa who gave evidence in support of the claim did not refer to that rate of interest or give evidence of circumstances which could have justified the award of interest above the Court rates. There was no explanation why the appellant had to wait for more than 7 years to file the suit. It is evident that the claim was incontestably unproved. The judgment delivered by Juma J. did not specifically deal with the claim for interest at 36%. That claim as computed in the Decree amounted to Shs. 30,119,467/68 which exceeded the principal sum by more than three times. It was undoubtedly a very large claim. It is inconceivable that Juma J could have allowed such a large claim without specifically saying so and without assigning any reasons. The award of interest at 36% cannot be simply implied from the judgment. We are satisfied that Okwengu J correctly construed the judgment of Juma J that Court did not award interest at the rate of 36%.” … 8. It is clear that the Chief Justice’s directions in the Practice Notes can only affect or guide the Court’s exercise of the power to order interest under section 26 (1) of the Act and not the statutory provision of the rate of interest under section 26(2) at 6 % per annum. The rate under section 26(2) being statutorily underpinned can only be amended by an Act of Parliament, through a statute Law Miscellaneous amendment or a special legislation in that behalf, and not by a Practice Note made by the Chief Justice. To be sure the 1982 Practice Note did not pretend to amend or guide Application of the rate of interest where the Court was silent on applicable interest rate. The Practice Note clearly affected only the power of “the Court to order interest to be paid at such rate as the Court deems reasonable”. This power to order reasonable rate of interest is provided for under section 26 (1) of the Act. Indeed, section 26 (2) of the Act applies to situations where the Decree of the Court is silent, that is where Court does not order any rate of interest, and this provision has not been amended. 9. When the opportunity to amend arose in 1985, amendment was only effected upon the provision on the interest on costs under section 27(2) of the Civil Procedure Act and not the provision on interest on the principal sum under section 26 (2) of the Act. Such course is not surprising considering that the principal sum is almost always higher that the amount of costs payable so that the 14% interest on costs does not have the same escalation effect on the amount payable as on the principal sum. It is understandable, therefore, that Parliament in its wisdom did not interfere with the rate of interest on the principal sum by the 1985 amendment. 10. Section 27(2) of the Civil Procedure Act on interest on costs was amended by the Statute Law (Miscellaneous Amendments) Act No. 19 of 1985 as follows: “Repeal the words "six per cent per annum" and substitute the words "fourteen per cent per annum".” 11. The provisions of section 26 (2) of the Civil Procedure Act on interest on the principal sum have remained unchanged as follows: “(2) Where such a Decree is silent with respect to the payment of further interest on such aggregate sum as aforesaid from the date of the Decree to the date of payment or other earlier date, the Court shall be deemed to have ordered interest at 6 per cent per annum.” 12. The Judgment of the Court of 1st April 2009 for the respective consolidated suits merely gave judgment in the various amounts for the respective suits “plus costs and interest” without indicating any rate of interest from the date of the Decree to the date of payment. Had the trial Court made provision for rate of interest on the principal sum, it would have been required to be guided by the Chief Justice’s Practice Note on interest under section 26(1) of the Act then set at 14% as observed in the Highway Furniture Mart decision, supra. In the present circumstances, there being no order on rate of interest by the Court, section 26 (2) of the Civil Procedure Act clearly stipulates the applicable rate of interest at 6% per annum. Interest on costs is, of course, separately provided for under section 27(2) of the Act at 14% per annum.”

102. My discernment of the law on interest payable on the principal sum is that parties are bound by the rate agreed in their contract. In fact, in National Bank of Kenya Ltd vs. Pipeplastic Samkolit (K) Ltd & another [2001] eKLR, Tunoi, Shah and Keuiwua, JJA (as the then were) held as follows on express agreements of parties on interest payable:“Having directed himself so far quite properly, the learned judge proceeded to assume (when there was no basis for such an assumption) that the appellant bank would be willing to waive some of the interest charged. Stepping into the shoes of the appellant bank the learned judge decided that a large part of the interest would or could be waived. This, in our view, is a serious misdirection on the part of the learned judge. 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.”

103. And so, in the absence of such agreement, the Court is reposed with discretion to set the rate thereon but if the Court elects silence, then the default rate is 6%. Regarding interest payable on costs, my discernment is that discretion has been reposed on the Court to first determine whether costs are payable and further, at its discretion set the rate payable thereon provided it does not exceed 14%. In respect to costs, if the Court chooses silence, then the default rate is 12%. My further discernment is that if a party prays for a certain higher or lower rate to apply, then the party must offer an empirical justification.

104. In this contract, I have seen not a specific rate of interest to govern a refund. It follows that this Court retains the discretion to order a refund and I hereby order a refund of Kshs. 50,000, at 12% from the respective dates the 1st Defendant received the two sums, that is to say, Kshs. 35,000 with interest at Court rates from 2nd August 1993 and Kshs. 15,000 with interest at Court rates with effect from 6th June 2018.

(v) Which party should shoulder the costs of this suit? 105. Upon considering the cause of action and circumstances unique to this case including but, this Court does not find a good cause to depart from the general proposition of the law that costs follow the event.

PART VI: Disposition 106. Wherefore this Court finds the Plaintiff’s claim against the 2nd and 3rd Defendants unmeritorious and dismisses it. This Court, however, finds the claim against the 1st Defendant with merit and accordingly enters Judgment for the Plaintiff against the 1st Defendant in the following terms:i.An order is hereby issued that the 1st Defendant shall refund the Plaintiff a principal sum of Kshs. 50,000. ii.The principal sum shall attract interest at Court rates as follows:i.Kshs. 35,000 with interest at Court rates with effect from 2nd august 1993; andii.Kshs. 15,000 with interest at Court rates with effect from 6th June 2018. iii.The costs of this suit incurred by the Plaintiff and the 2nd & 3rd Defendants shall be shouldered by the 1st Defendant, the primary cause of this suit.

107. It is so ordered.

DELIVERED, SIGNED AND DATED IN OPEN COURT AT MACHAKOS LAW COURTS THIS 17TH DAY OF SEPTEMBER, 2024….……………………C.N. ONDIEKIPRINCIPAL MAGISTRATEAdvocate for the Plaintiff:……..……………..….…………Advocate for the Defendants:..……………………Court Assistant:……………………………………