Kitonga & 2 others v Hashtag Biz Hub Company Ltd [2024] KEELC 1598 (KLR) | Sale Of Land Contracts | Esheria

Kitonga & 2 others v Hashtag Biz Hub Company Ltd [2024] KEELC 1598 (KLR)

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Kitonga & 2 others v Hashtag Biz Hub Company Ltd (Environment and Land Appeal 67 of 2019) [2024] KEELC 1598 (KLR) (14 March 2024) (Judgment)

Neutral citation: [2024] KEELC 1598 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Environment and Land Appeal 67 of 2019

OA Angote, J

March 14, 2024

Between

Titus Mulandi Kitonga

1st Appellant

Nasimu Mulandi Kitonga

2nd Appellant

Shem Onyango

3rd Appellant

and

Hashtag Biz Hub Company Ltd

Respondent

(Being an appeal from the entire ruling of Hon. G. Mmasi in the Chief Magistrates Court at Milimani, Nairobi delivered on 11th September 2019 in Nairobi Civil Suit No. 4665 of 2019)

Judgment

1. The Appellants in this suit, being dissatisfied with the ruling of the Honourable magistrate, Hon. Mmasi, made on 11th September 2019 in Milimani CMCC 4665 of 2019 have appealed against the said decision.

2. The Appellants’ grounds for the appeal are that the learned trial magistrate erred in law and in fact in allowing the Respondent’s application dated 27th June 2019 for the following reasons:a.The court exercised non-existent jurisdiction because the suit is statute-barred by Section 3(3) of the Law of Contract Act which expressly bars a suit to be brought to the court for disposition of an interest in land if the contract is not witnessed and attested by an independent party.b.The court arrived at a finding that the Appellants’ application had no merit when it was the Respondent who had in fact failed to comply with the sale agreement.c.The court issued restraining orders against the Appellants who are in possession of the suit property by virtue of being the registered owners and when there was no evidence in court to show that the Respondent ever had possession of the suit property.d.The court arrived at a finding that the balance of convenience favoured the Respondent and failed to consider that the Respondent had breached the fundamental terms of the sale agreement such as the payment of the requirement deposit, payment of the balance of the agreement price as well as the interest thereof for delay of payments as required in the sale agreement.e.The court failed to consider that the 3rd Appellant is a tenant of the 1st and 2nd Appellants, and that the Respondent is not in possession of the suit property.f.That the court upheld the Respondent’s argument that there is a threat to sell the suit property without such evidence on record.g.That the court did not provide a reasoned and detailed ruling that addresses the Appellants’ replying affidavit and their submissions.

3. The appeal was canvassed by way of submissions.

The Appellants’ Submissions 4. Counsel for the Appellants submitted that the Respondent/Plaintiff sought mandatory injunction orders to restrain the Appellants/ Defendants from entering, selling, leasing, registering in their name, building or causing to be put structures, giving as security, wasting or in any manner whatsoever interfering with the suit property.

5. It was submitted that the Defendants/Appellants opposed the application on the grounds that the suit was statute-barred as the sale agreement dated 15th November 2015 is not enforceable because the signatures of the parties were not witnessed or attested as required by Section 3(3) of the Law of Contract Act.

6. According to counsel, it is the Respondent who was in breach of the sale agreement and had come to court with unclean hands; and that the Respondent had not met the tenets for granting of an interlocutory injunction.

7. The Appellants submitted that the fact that the contract was not signed by any witness who was present when parties were signing makes the contract unenforceable and ousts the jurisdiction of the Chief Magistrate’s court from adjudicating any matter relating to the contract.

8. The Appellants’ Counsel relied on the cases of Patrick Tarzan Matu & Another vs Nassim Shariff Abdulla & 2 Others (2009) eKLR, Giro Commercial Bank Ltd vs Eccon Construction & Engineering Ltd & Another Civil Appeal No. 93 of 2004 and Silverbird Kenya Limited vs Junction Ltd & 3 Others (2013) eKLR.

9. Counsel further submitted that the definition of the word ‘suit’ in Section 3(3) of the Law of Contract Act includes interlocutory applications, proceedings and decisions and that the Respondent did not meet the required conditions for granting a temporary injunction.

10. It was the Appellants’ advocates submissions that the National Social Security Fund confirmed that the Appellants are the rightful beneficial owners of the suit property according to their records; that the Appellants were and are still in possession of the suit property and that the Respondent failed to present any evidence to confirm its allegations of possession of the land.

11. The Appellants’ Counsel submitted that the Respondent has never been in possession of the suit property; that the purpose of temporary injunction is to preserve the status quo and that the status quo is that the Appellants are in possession.

12. Counsel urged that the Respondent did not show that there was any right that was violated or threatened to be violated by the Appellants and that the trial court misdirected itself in issuing an interlocutory order which failed to preserve the status quo.

13. It was submitted by counsel for the Appellant that the Respondent made a partial deposit of KShs. 5,500,000 to the Appellants leaving a balance of Kshs. 1, 500,000 and that the balance of the purchase price of KShs. 1,500,000 which was to be paid within one year, by 15th November 2016, has not been paid more than eight years later.

14. Counsel submitted that given the Respondent did not pay the required deposit in the manner required and never paid the balance of the purchase price, the 1st and 2nd Appellants were not under an obligation to provide the required clearances and were freed from the contract as the same was not completed by the Respondent by 15th N0vember 2016.

The Respondent’s Submissions 15. Counsel for the Respondent submitted that the trial court had the jurisdiction to grant the injunctive orders; that the trial magistrate appropriately did not go into the merits and demerits of the suit and that whether or not the Respondent breached the terms of the Agreement are issues to be determined upon evidence being tendered.

16. The Respondent’s Counsel submitted that the Respondent satisfied the principles for temporary injunctions, set out in Pius Kipchirchir Kogo vs Frank Kimeli Tenai [2018] eKLR and in Nguruman Limited vs Jan Bonde Nielsen & 2 Others (2014) eKLR and that the trial court was well guided in law and in fact in granting the temporary injunction against the Appellants.

17. It was submitted that the court considered the fact that the Respondent had paid a total of KShs. 5. 5 million yet the 1st and 2nd Appellants still held the original title of the parcel and that the court also considered that the 1st and 2nd Appellants went ahead to illegally lease the parcel of land to the 3rd Appellant even after selling the land to the Respondent.

18. According to the Respondent’s counsel, the Respondent demonstrated a prima facie case with a probability of success; that the Respondent took possession of the suit property on 15th June 2015 and had been operating a bar, restaurant and a car wash business until June 2018 when the business went down and that even though the business closed, there was a caretaker present on the property all the time.

Analysis and Determination 19. Upon consideration of the pleadings and submissions of the parties to this appeal, the following issues arise for this court’s determination:a.Whether the trial court had the jurisdiction to grant the injunctive orders.b.Whether the trial court properly exercised its discretion in granting injunctive orders.

20. The basis of this appeal is the ruling delivered by Hon. Mmasi, the trial court, on 11th September 2019. Upon consideration of the Respondent’s application, the Court partially allowed the same as follows:“A temporary injunction is herewith issued restraining the defendants, their servants, agents or anybody working upon their instruction from interfering with parcel number Nairobi/block Tassia 11-97/0794/088 until this suit is heard and determined.Secondly, this court declines to issue a mandatory injunction at this stage the same can only be issued when the case has been heard and evidence tendered.The OCPD Embakasi Police Station is orders to ensure that the court order is complied with the costs shall be in the cause.”

21. The Appellants have appealed against this decision on the grounds that the trial court lacked jurisdiction as the sale agreement was not attested as required under Section 3(3) of the Law of Contract Act; that the trial court failed to consider that the Plaintiff/ Respondent was in breach of the sale agreement and that the Appellants/ Defendants were in occupation of the suit property, with the 3rd Appellant being a tenant of the 1st and 2nd Appellants.

22. This being a first appeal, it is the duty of the Court to review the evidence adduced before the lower court and satisfy itself that the decision was well-founded. In Selle & Another vs Associated Motor Boat Co. Ltd & Others [1968] EA 123, this principle was enunciated thus:“...this court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect...”

23. The Appellant has rightly referred this court to the case of China Zhongxing Construction Company Ltd vs Ann Akuru Sophia [2020] eKLR, where the court further set out the standard of review for a first appellate court:“From these cases, the appropriate standard of review to be established can be stated in three complementary principles:i.That on first appeal, the Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions;ii.That in reconsidering and re-evaluating the evidence, the first appellate court must bear in mind and give due allowance to the fact that the trial court had the advantage of seeing and hearing the witnesses testify before it; andiii.That it is not open to the first appellate court to review the findings of a trial court simply because it would have reached different results if it were hearing the matter for the first time.”

24. The Appellants have averred that the court erroneously found that the Respondent has established that it has a prima facie case, that it stood to suffer irreparable injury and that the balance of convenience tilts in favor of the Respondent.

25. It is trite that the remedy of specific performance will only be granted on the basis of the existence of a valid enforceable contract. This was aptly stated in Reliable Electrical Engineers vs Mantrac Kenya Limited (2006) eKLR where Justice Maraga (as he then was) stated:“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. In this respect damages are considered to be an adequate alternative remedy…”

26. The Appellants argue that the Respondent’s case is based on a sale agreement which was not duly attested as required under Section 3(3) of the Law of Contract Act. They therefore assert that the lower court had no jurisdiction to determine the suit or issue the orders of injunction.

27. In this case, as has been robustly argued by the Appellants, the sale agreement has not satisfied the formal requirements set out in Section 3(3) of the Law of Contract Act, which provides that:“No suit shall be brought upon a contract for the disposition of an interest in land unless-(a)the contract upon which the suit is founded-(i)is in writing;(ii)is signed by all the parties thereto; and(b)the signature of each party signing has been attested by a witness who is present when the contract was signed by such party”

28. It is clear from the sale agreement that was annexed that neither the Respondent’s Directors’ signatures nor the 1st and 2nd Appellants signatures have been attested by a witness. This anomaly, prima facie, renders the agreement unenforceable.

29. A consideration of the sale agreement in this case shows that a deposit of KShs. 6,000,000 was to be paid by the Respondent upon execution of the agreement entered into on 15th November 2015. The Respondent has admitted that it only paid Kshs. 5. 5 million, paid in three instalments, on 12th, 18th November 2015 and 12th January 2016.

30. The reason for the failure to pay the deposit in full was not explained by the Respondent. The impact of this failure is that the Respondent failed to meet the terms of the contract. The status of the contract therefore remains incomplete. The 1st and 2nd Appellants have not surrendered the completion documents to the Respondent because the Respondent has never paid the balance of the purchase price.

31. This omissions and commissions by the Respondent shows that it not have a prima facie chance of success in the trial court, contrary to the findings of the court.

32. As to the question of occupation, the Respondent deponed that he entered occupation of the suit property immediately upon executing the sale agreement, and ran a bar, restaurant and car wash business from December 2015 up to June 2018, when the business went down. It averred that it thereafter got a tenant who stayed on the suit property for three months before the Respondent evicted him.

33. The Respondent stated that the property remained idle thereafter and they came to learn in January 2019 that the Appellant had gained access to the suit property through the 1st and 2nd Appellants. The Respondent also stated that previously, in October 2018, the 3rd Appellant approached them seeking to lease the property.

34. Therefore, at the time the application was filed, the Respondent admitted that the 3rd Appellant was resident on the suit property as a tenant of the 1st and 2nd Appellants. This being the case, the prohibitive orders issued by the trial court were inappropriate given the circumstances.

35. Upon review of the Respondent’s application and evidence attached to support the same before the trial court, it cannot be said that the Respondent established that it had a prima facie case with a likelihood of success, or that it would suffer irreparable loss that cannot be compensated in damages if the injunctive order does not issue.

36. Indeed, the balance of convenience tilts in favour of the Appellants who have leased the suit property. Allowing the Respondent’s application puts the 3rd Appellant at risk of being evicted from the suit property before trial.

37. In conclusion, this court finds that the Appeal is meritorious. Consequently, this court allows the Appeal as follows:a.The Ruling and orders of the Honourable Magistrate delivered on 11th September 2019 be and are hereby set aside.b.The application dated 27th June, 2019 in CMCC No. 4665 of 2019 is hereby dismissed with costs.c.The Respondent to pay the costs of this Appeal.

DATED, SIGNED AND DELIVERED VIRTUALLY IN NAIROBI THIS 14TH DAY OF MARCH, 2024. O. A. ANGOTEJUDGEIn the presence of;Mr. Onindo for AppellantNo appearance for RespondentCourt Assistant – Tracy