https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6648

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT NAIROBI** **COMMERCIAL AND TAX DIVISION** **HCCOMM NO. 135 OF 2010** **TENNAH REDHILL LIMITED …………………………………PLAINTIFF** **VERSUS** **GIMALU ESTATES LIMITED ……………………………….DEFENDANT** **JUDGMENT** 1. The Plaintiff instituted this suit by a Plaint dated 9th March 2010 and filed on 10th March 2010 seeking judgment against the Defendant for: 2. *Kshs. 29 Million being the subject matter of this suit together with interest at court rates.* 3. *General and exemplary damages.* 4. *Costs of the suit and interest thereof.* 5. The Plaintiff’s case was that by an agreement dated 28th May 2009, the Defendant agreed to sell to it L.R. No. 167/9 measuring approximately 145 acres at a purchase price of Kshs. 290 Million, which amount was fully paid through escrow agents. The Plaintiff further averred that part of the purchase price was applied towards settlement of the Defendant’s liabilities owed to National Bank of Kenya and International Finance Corporation, the suit property having been charged to the said institutions. 6. The Plaintiff contended that the Defendant failed to disclose material facts affecting the acreage and status of the property, including portions occupied by a church, power lines, a highway and an access road, with the result that only 128 acres were available for sale instead of the contracted 145 acres. According to the Plaintiff, upon discovery of the discrepancy and request for renegotiation, the Defendant declined to proceed with the transaction and thereby repudiated the agreement. 7. The Plaintiff further pleaded that although the Defendant refunded the purchase price on 29th January 2010, it failed to pay liquidated damages equivalent to 10% of the purchase price as provided for under the agreement where completion failed without fault on the part of the purchaser. The Plaintiff maintained that the Defendant’s conduct amounted to breach of contract and sought payment of the agreed liquidated damages together with general and exemplary damages. 8. In its Reply to Defence and Defence to Counterclaim dated 11th May 2010, the Plaintiff maintained that the agreement expressly authorized application of the Kshs. 58 Million deposit towards settlement of the Defendant’s loans. The Plaintiff further contended that the Defendant denied it and its surveyors’ access to the property prior to execution of the agreement, and that a subsequent survey revealed a shortfall of 17 acres which had not been disclosed by the Defendant. 9. The Plaintiff asserted that clauses 5 and 10.1 of the agreement did not absolve the Defendant from its obligation to disclose material facts affecting the property. It maintained that the acreage dispute was genuine and not an excuse to withdraw from the transaction, and that it was the Defendant’s conduct which frustrated completion of the sale and constituted a fundamental breach of the agreement. The Plaintiff nevertheless admitted receipt of the refunded purchase price but maintained that it remained entitled to liquidated damages of Kshs. 29 Million. 10. The Defendant filed a Statement of Defence and Counterclaim dated 28th April 2010, admitting the existence of the sale agreement but denying liability for the Plaintiff’s claims. The Defendant admitted receipt of Kshs. 58 Million through the escrow agents but denied knowledge that the funds were utilized to settle liabilities owed to National Bank of Kenya and International Finance Corporation. It maintained that the Plaintiff had agreed to purchase the entire 145 acres and was contractually obligated to undertake due diligence regarding the property, including its acreage, easements and encumbrances. 11. The Defendant further averred that shortly before completion, the Plaintiff raised concerns regarding the acreage after a resurvey allegedly established that only 128 acres were available and sought renegotiation of the agreement. According to the Defendant, the Plaintiff thereby unilaterally rescinded the transaction and introduced extraneous issues that led to the collapse of the sale. The Defendant denied allegations of concealment and non-disclosure, contending that the matters complained of were apparent upon inspection and discoverable through due diligence. 12. The Defendant stated that it refunded all monies paid by the Plaintiff and denied liability for liquidated damages or any other relief sought. By way of Counterclaim, the Defendant maintained that it was the Plaintiff who breached the agreement for sale and sought general damages, interest and costs. **The trial** 1. Pw1 - Samuel Kimani Maigwa, testified on behalf of the Plaintiff. He stated that he was the Chairman of the Plaintiff company and had been duly authorized to testify in the matter. He adopted his witness statement and the documents filed by the Plaintiff as part of his evidence. 2. Pw1 testified that the Plaintiff entered into an agreement with the Defendant for the purchase of L.R. No. 167/9 (original No. 167/3/15) situated near Limuru Town at a consideration of Kshs. 2 Million per acre, translating to a total purchase price of Kshs. 290 Million. He stated that the Plaintiff paid a deposit of Kshs. 58 Million and thereafter completed payment of the purchase price in accordance with the Sale Agreement. 3. It was Pw1’s evidence that although the Plaintiff inspected the property prior to purchase, a subsequent survey revealed that portions of the land were occupied by a church, power lines, a road and an earth road, thereby reducing the usable acreage by approximately 17 acres. He stated that those matters had not been disclosed by the Defendant before execution of the agreement and relied on the Surveyor’s Report and site visit report dated 22nd September 2009. 4. Pw1 further testified that upon discovery of the acreage discrepancy, the Plaintiff requested the Defendant to either vary the agreement to reflect the acreage available or refund part of the purchase price. According to him, the Defendant declined the request, leading to cancellation of the transaction. He maintained that the Defendant knowingly offered for sale 145 acres despite being aware that the entire acreage was unavailable. 5. He testified that although the Defendant eventually refunded the purchase price, it failed to pay the agreed 10% liquidated damages stipulated under the Sale Agreement in the event of breach. The Plaintiff therefore sought payment of the said liquidated damages together with damages for breach of contract and costs of the suit. 6. Upon cross-examination, Pw1 acknowledged receipt of the Defendant’s letter dated 15th May 2009 setting out the terms of acceptance of the offer and confirmed that the Sale Agreement was executed on 28th May 2009. He admitted that the agreement granted the Plaintiff an opportunity to inspect the property and further acknowledged clause 20.2 of the agreement under which the purchaser confirmed that it had inspected the property and agreed to purchase it in its existing condition. 7. Pw1 however explained that the inspection was conducted in the company of the Defendant’s farm manager, one Mr. Nyoro, who allegedly lacked knowledge of the property’s beacons and measurements. According to Pw1, the Plaintiff relied on the fact that the property had been advertised through National Bank of Kenya and believed the acreage description contained in the title documents to be accurate. He stated that the Plaintiff was not provided with a surveyor or any competent person capable of identifying the actual boundaries and acreage of the property. 8. Pw1 further testified that after execution of the agreement, the Plaintiff discovered discrepancies relating to the acreage and wrote several letters through its advocates raising concerns regarding non-disclosure of material facts, particularly the alienated road reserve which reduced the usable acreage. He stated that despite payment of Kshs. 230 Million to Hamilton Harrison & Mathews Advocates, the Defendant failed to substantively address the boundary dispute. 9. He testified that the Plaintiff initially sought a deed of variation to account for the reduced acreage and at one stage remained willing to proceed with the transaction on the basis of the land as it stood. He however confirmed that the purchase price was ultimately refunded to the Plaintiff on 29th January 2010 following demand by the Plaintiff’s advocates. 10. Pw1 admitted that the road complained of physically existed on the property at the time the agreement was executed, although he maintained that he could not ascertain whether the road reserve formed part of the suit property or whether portions had been reserved for public purposes. He further admitted that he personally inspected the property before signing the agreement and acknowledged that the Plaintiff ultimately received a full refund of the purchase price. 11. Upon re-examination, Pw1 reiterated that although the Plaintiff was permitted to inspect the property, no surveyor or director of the Defendant accompanied the Plaintiff to identify the property beacons and boundaries. He stated that Mr. Nyoro merely conducted a general tour of the property and did not point out the actual measurements on the ground. 12. Pw1 further testified that the Plaintiff wrote letters dated 28th September 2009 and subsequent reminders regarding the acreage discrepancy, but received no response from the Defendant. He maintained that the Plaintiff complied with its obligations under the agreement and denied breaching the contract. According to Pw1, the claim for 10% liquidated damages arose from the Defendant’s breach and the prolonged retention of the Plaintiff’s funds, which denied the Plaintiff an opportunity to acquire alternative property. 13. Pw2 - Gibson Waweru Muervaia, testified as a licensed land surveyor. He stated that he held a degree in Surveying from the University of New Brunswick, Canada, obtained in 1971, and had previously served in the Civil Service before retiring as an Assistant Director of Survey and Provincial Surveyor based in Nakuru. He further testified that he had been in private practice since 1986. 14. Pw2 testified that he was instructed by the Plaintiff to undertake a survey of L.R. No. 167/9 in order to confirm the boundaries, acreage and developments on the land for purposes of subdivision amongst members of the Plaintiff company. He visited the property on 18th September 2009 and was shown the boundaries by persons on the ground, including one Mr. Nyoro. 15. According to Pw2, his survey established that a substantial portion of the land was affected by existing developments and public utilities. He testified that the Limuru–Nairobi Road occupied approximately 12 acres, a power line occupied 1.4 acres, an internal road occupied about 2 acres and a church compound occupied approximately 1.6 acres. In his assessment, the acreage unavailable for subdivision totalled about 17 acres, leaving only 128 acres available out of the stated 145 acres. He prepared and signed a report dated 22nd September 2009 which he produced as an exhibit. 16. Upon cross-examination, Pw2 stated that he had been instructed to prepare a professional report on the condition and acreage of the land and was not informed that the parties had already executed a sale agreement dated 28th May 2009. He confirmed that according to the title documents, the property measured 145 acres, but maintained that his task was to confirm whether the acreage on the ground corresponded with the title documents. 17. Pw2 further testified that he spent one day on the property and relied on visible boundaries shown to him on the ground. He admitted that he was not privy to correspondence exchanged between the parties and could not state whether his report caused the transaction to collapse. He nevertheless maintained that his report accurately reflected the position on the ground and that his findings were professionally made. 18. Dw2 - Johnson Ndumia Ndirangu, testified on behalf of the Defendant. He described himself as an agent of the Defendant company, Gimalu Estate Ltd, involved in the process of selling the suit property. He stated that he was familiar with the Plaintiff company, Tennah Redhill Ltd, and participated in the transaction between the parties, including facilitating the Plaintiff’s inspection of the land. He adopted his witness statement dated 2nd March 2018, together with the documents filed in court. 19. Dw2 testified that the parties entered into a sale agreement dated 25th May 2009 in respect of the suit property and that there was no other agreement concerning the land. According to him, the transaction collapsed because the Plaintiff formed the view that the Defendant had failed to disclose certain matters affecting the property, following which the Plaintiff requested a refund of the purchase price through a letter dated 26th January 2010. 20. It was his evidence that the purchase price was refunded in full and that upon refund, the Plaintiff could not maintain any further claim against the Defendant. He, however, stated that if there existed any information requiring disclosure, the same ought to have been disclosed to the Plaintiff. He further testified that cancellation of the transaction followed the Plaintiff’s request for a refund of the purchase price. 21. Upon cross-examination by Ms. Mwangi, Dw2 admitted that he had not produced a company resolution authorizing him to testify on behalf of the Defendant. He stated that his role in the transaction was limited to showing the Plaintiff the land and that he was not involved in preparation of the contractual documentation. He further stated that possession of the property was to be granted upon completion of payment. 22. Dw2 confirmed that he personally took representatives of the Plaintiff to view the property before execution of the agreement. He stated that he was unaware whether a formal tour had been arranged but maintained that the Plaintiff inspected the property prior to execution of the agreement in accordance with the contractual terms. 23. Referring to correspondence exchanged between the parties, Dw2 stated that from the letter dated 25th November 2009, his understanding was that the Plaintiff wished to proceed with the transaction on the basis of reduced acreage. He further referred to the letter dated 11th December 2009, which addressed the issue of the reduced acreage and indicated that the Defendant would refund the purchase price together with interest at 10% should the Defendant decline to proceed with the transaction. He nevertheless confirmed that the 10% amount was never paid. According to Dw2, the Defendant remained willing to complete the transaction from the outset. 24. Upon re-examination by Mr. Mbaabu, Dw2 referred to the Letter of Acceptance and maintained that the Plaintiff had been granted unrestricted access to inspect the property before execution of the agreement. He further referred to clause 10.2 of the Sale Agreement under which the purchaser acknowledged having inspected the property and agreed to purchase it in its existing condition. 25. Dw2 reiterated that by the letter dated 26th January 2010, the Plaintiff expressly requested refund of the purchase price and that the full amount was subsequently refunded. He further stated that the acreage reflected in the title documents was 145 acres and maintained that the Defendant did not conceal any material facts from the Plaintiff, who had inspected the property before execution of the agreement. According to Dw2, it was the Plaintiff’s refusal to proceed on the basis of the revised acreage that ultimately caused the transaction to collapse. **Submissions** 1. The Plaintiff filed final submissions dated 6th October 2025 in support of its case. Counsel submitted that the Defendant agreed to sell to the Plaintiff L.R. No. 167/9 South East of Limuru Township measuring 145 acres at a purchase price of Kshs. 290 Million but failed to disclose that approximately 17 acres had already been alienated or affected by public utilities and developments including a church, roads and power lines, leaving only 128 acres available for sale. 2. The Plaintiff submitted that the purchase price was negotiated on the basis of 145 acres and that the Defendant’s conduct amounted to material misrepresentation and non-disclosure. It was further argued that although the Plaintiff sought to renegotiate the terms of the agreement in good faith after discovery of the acreage discrepancy, the Defendant declined to engage in negotiations and instead repudiated the agreement. 3. Counsel submitted that the Plaintiff engaged a surveyor who prepared a report confirming the acreage discrepancy and that the report was forwarded to the Defendant through its advocates without response. According to the Plaintiff, although the Defendant refunded the purchase price of Kshs. 290 Million, it failed to pay the agreed liquidated damages equivalent to 10% of the purchase price as provided under clause 7.2 of the Sale Agreement. 4. Reliance was placed on the decision in *Rift Electrical Hardware and Spares Limited v Kipkaliny* *[2025] KEHC 13630 (KLR),* where the court held that non-disclosure of material facts affecting the property constituted a breach going to the root of the contract. 5. The Plaintiff further submitted that clause 12.3 of the Sale Agreement obligated the parties to negotiate in good faith where any term of the agreement became invalid or unenforceable, but that the Defendant was unwilling to negotiate after the acreage discrepancy was discovered. It was contended that the Defendant’s letter dated 11th December 2009 amounted to repudiation of the contract. 6. Counsel also relied on clause 7.2 of the Sale Agreement, which provided that where the vendor failed to complete the sale without fault on the part of the purchaser, the vendor would refund the deposit together with a penalty of 10% of the purchase price. It was submitted that the Plaintiff fully performed its obligations under the agreement by paying the purchase price in full and that the Defendant’s refusal to complete the transaction entitled the Plaintiff to the contractual liquidated damages claimed in the suit. 7. The Plaintiff relied on the decisions in *Kantet Matteu v Kiriaine Ole Luka* *[2022] KEHC 698 (KLR)* and *Ogutu v Anjichi* *[2025] KEHC 3875 (KLR)* for the propositions that parties are bound by the terms of their contract and that where a contract provides for penalties or liquidated damages upon breach, the court ought to enforce the contractual terms agreed upon by the parties. 8. In conclusion, the Plaintiff submitted that it had proved its case on a balance of probabilities and urged the Court to find that the Defendant breached the Sale Agreement by repudiating the transaction after receipt of the full purchase price. The Plaintiff therefore prayed for judgment in terms of the plaint and dismissal of the Defendant’s counterclaim with costs. 9. The Defendant submitted that the suit property, L.R. No. 167/9 measuring 145 acres, was offered for sale to the Plaintiff at a purchase price of Kshs. 290 Million and that before execution of the Sale Agreement dated 28th May 2009, the Plaintiff had been granted full opportunity to inspect the property, verify the boundaries and conduct due diligence. The Defendant maintained that the Plaintiff inspected the property and expressly acknowledged under clause 10.2 of the Agreement that it was purchasing the property in its existing condition and with full knowledge of its state and condition. 10. The Defendant contended that the transaction proceeded smoothly until September 2009 when the Plaintiff raised complaints regarding the acreage, alleging that the usable acreage had reduced from 145 acres to 128 acres due to the existence of roads, a church and power lines. According to the Defendant, the Plaintiff relied on a survey report prepared after execution of the Agreement and subsequently sought a deed of variation to alter the acreage. The Defendant argued that such request amounted to an attempt to renegotiate the contract after execution and outside the completion period. 11. It was further submitted that the Plaintiff had sufficient time before execution of the Agreement to inspect the property, confirm the beacons and satisfy itself as to the acreage and condition of the land. The Defendant maintained that any roads, power lines or easements complained of were visible on the ground and constituted matters the Plaintiff accepted upon executing the Agreement. The Defendant therefore denied any concealment, misrepresentation or non-disclosure of material facts. 12. The Defendant also submitted that the Plaintiff was estopped, by virtue of clause 10.2 of the Agreement and section 120 of the Evidence Act, from alleging that it had not inspected the property or that it was unaware of its actual condition. It maintained that the Plaintiff unilaterally raised issues concerning acreage after execution of the Agreement and thereby frustrated completion of the transaction. 13. According to the Defendant, by a letter dated 26th January 2010, the Plaintiff demanded refund of the purchase price together with Kshs. 29 Million as liquidated damages. The Defendant refunded the full purchase price as requested and contended that the Plaintiff could not thereafter sustain any further claim arising from the transaction. 14. The Defendant maintained that it acted in good faith throughout the transaction, remained ready and willing to complete the sale within the contractual period and never indicated inability to transfer the property. It therefore urged the Court to find that it was the Plaintiff who breached and frustrated the Agreement by seeking to vary the acreage after execution of the contract and after carrying out its own survey. **Analysis and determination** 1. After considering the pleadings and the evidence adduced together with the submissions rendered, the only questions arising for determination are: 2. *whether the Defendant breached the Sale Agreement dated 28th May 2009 and, if so,* 3. *whether the Plaintiff is entitled to the liquidated damages claimed.* 4. It is not in dispute that the parties entered into a Sale Agreement for the purchase of L.R. No. 167/9 measuring approximately 145 acres at a purchase price of Kshs. 290 Million. It is equally not disputed that the Plaintiff paid the purchase price in full and that the Defendant subsequently refunded the entire sum upon collapse of the transaction. The dispute revolves around the circumstances that led to the collapse of the sale and whether liability for breach can properly be attributed to either party. 5. The Plaintiff’s case is that the Defendant failed to disclose material facts affecting the suit property, namely that portions thereof were already occupied by roads, power lines and a church, thereby reducing the usable acreage from 145 acres to approximately 128 acres. The Plaintiff contends that such non-disclosure amounted to a fundamental breach of the Agreement and entitled it to liquidated damages under clause 7.2 thereof. 6. Clause 7.2 provided that: *“If the Vendor fails to complete the sale due to no default on the part of the Purchaser, the Vendor shall refund to the Purchaser forthwith the deposit paid in accordance with Clause 3.1 hereinabove together with a penalty of ten per centum (10%) of the purchase price which shall be paid together with the refund of the deposit made within 21 days of the date the Vendor communicates to the Purchaser its inability to complete the sale. If the deposit and the penalty is paid, the Purchaser shall have no further rights against the Vendor.”* 1. On its part, the Defendant maintains that the Plaintiff inspected the property before execution of the Agreement and expressly acknowledged under clause 10.2 that it was purchasing the property with full knowledge of its actual state and condition and takes the property as it is. The Defendant further contends that the Plaintiff failed to undertake proper due diligence before executing the Agreement and cannot thereafter shift blame to the Defendant. 2. It is an established principle of law that parties are bound by the terms of their contracts and courts do not rewrite contracts between parties. This principle was restated by the Court of Appeal in **Rus Kimaiyo Langat v Co-operative Bank of Kenya Ltd (2017) eKLR** where the Court stated: ***“We are alive to the hallowed legal maxim that it is not the business of the courts to rewrite contract between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved.”*** 1. Further, the Court of Appeal in **National Bank of Kenya Ltd v Pipe Plastic Samkolit (K) Ltd (2011) eKLR** stated thus: ***“It is clear beyond peradventure that save for those special cases where equity might be prepared to release a party from a bad bargain, it is ordinarily no part of equity’s function to allow a party to escape from a bad bargain.”*** 1. It is also trite law that contractual obligations voluntarily assumed by parties are enforceable according to their terms. In **William Kazungu Karisa v Cosmus Angore Chanzera (2006) eKLR** the Court held thus: ***“The basic rule of law of contract is that the parties must perform their respective obligation in accordance with the terms of the contract executed by them. For instance, the contract must be performed at the time and place agreed upon…”*** 1. I have carefully considered clause 10.2 of the Sale Agreement, under which the Plaintiff expressly acknowledged that it had inspected the property and purchased it with full knowledge of its actual state and condition. Pw1 admitted during cross-examination that he personally visited the property prior to execution of the Agreement and that the roads complained of physically existed on the land at the material time. 2. Further, the evidence of Pw2, the surveyor, was that the roads, power lines and church were visible developments existing on the ground. His evidence did not establish concealment of the developments by the Defendant but rather confirmed the physical existence of those features upon inspection of the land. 3. In my view, the Plaintiff had both the contractual opportunity and sufficient time to undertake proper due diligence before execution of the Sale Agreement. Indeed, the Defendant’s letter dated 15th May 2009 expressly granted the Plaintiff liberty to inspect and verify the property boundaries before execution of the Agreement. If the Plaintiff failed to engage a surveyor prior to execution of the Agreement, that omission cannot be visited upon the Defendant. 4. In the case of **Jackline Njeri Kariuki v Moses Njung’e [2021] eKLR,** the court stated thus: **“*In my understanding, a breach of contract is committed when a party, without lawful excuse, fails or refuses to perform what is due from him under the contract, or performs defectively, or incapacitates himself from performing.”*** 1. I am therefore unable to agree with the Plaintiff’s contention that the Defendant breached the contract by fraudulently concealing material facts affecting the property. The features complained of were not latent defects incapable of discovery. They were visible developments and easements discoverable upon proper inspection and survey of the land. 2. The correspondence exchanged between the parties further demonstrates that after receipt of the survey report, the Plaintiff sought renegotiation of the acreage and proposed a deed of variation to alter the terms of the Agreement. The Defendant declined the proposal and the Plaintiff thereafter demanded refund of the purchase price through the letter dated 26th January 2010. The refund was subsequently made and accepted. 3. In the circumstances, I find that it was the Plaintiff who initiated variation of the Agreement after execution thereof and ultimately elected not to proceed with the transaction on the agreed terms. The Defendant remained ready and willing to complete the sale on the basis of the original Agreement. 4. The Plaintiff has urged the Court to enforce clause 7.2 of the Agreement relating to liquidated damages. However, that clause could only operate where failure to complete the transaction arose without fault on the part of the purchaser. In the present case, I am not satisfied that the Plaintiff has established breach on the part of the Defendant. 5. The Defendant having refunded the entire purchase price demanded by the Plaintiff, and there being no proof of fraud, concealment or breach attributable to the Defendant, I find no legal basis upon which the Plaintiff can recover the liquidated damages claimed. Equally, no basis was laid for the award of general or exemplary damages. 6. With regard to the Counterclaim, although the Defendant alleged breach by the Plaintiff, no specific evidence was tendered to prove the loss or damage allegedly suffered. The Counterclaim therefore, equally fails for want of proof. 7. In the result, I find that the Plaintiff has failed to prove its case on a balance of probabilities. Accordingly, the suit is without merit and is hereby dismissed. The Defendant’s Counterclaim is likewise dismissed. 8. Given the circumstances of the matter, and considering that the purchase price was refunded in full, each party shall bear its own costs. **JUDGMENT** delivered virtually, dated and signed at **NAIROBI** This **14th** day of **May** 2026. **P.M. MULWA** **JUDGE** **In the presence of:** *Ms. Mwangi* for Plaintiff *Ms. Nasambu h/b for Mr. Mbaabu* for Defendant Court Assistant*: Lispa*