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Court of AppealAllowedCivil Appeal No. 178 of 2008

Lydia Wanjiku Wanyee suing as the administrator of the estate of the Late George Wanyee v George Nyanja [2015] KECA 124 (KLR)

Court of Appeal of Kenya
18 December 2015
2,642 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled a land buyer who pays late owes interest, even if the seller kept possession and collected rent in the meantime.

What this practically means

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Executive summary

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The Court of Appeal at Nairobi (Okwengu, Warsame and Azangalala, JJ.A) allowed an appeal by the administrator of a deceased vendor against a decision of Osiemo, J of the High Court (9th June 2008) dismissing her claim for interest on a delayed balance of purchase price. The suit property, L.R. No. 7583/23 Muitu Drive, Karen, was sold in February 1990 for Kshs.4,850,000, with a completion date of 30th May 1990. The purchaser failed to pay the balance of Kshs.2,850,000 until 22nd March 2004, nearly fourteen years late, while the vendor lawfully remained in possession and received rent. The trial judge denied interest on the basis that the vendor had possession and rent. The Court of Appeal held that the judge erred by ignoring the written agreement incorporating the Law Society Conditions of Sale, clause 5 of which entitled the vendor to retain possession until the whole purchase money was paid, and clause 8(3) of which obliged the purchaser to pay interest on the delayed balance from the completion date until payment in full. The Court found the parties' correspondence showed a common understanding that 20% p.a. interest was payable, and held it inequitable for the defaulting purchaser to resist interest on the ground of the vendor's possession. The Court distinguished Mwangi -v- Kiiru and Harvela Investments on their facts. The High Court judgment was set aside and judgment substituted for the appellant for interest on Kshs.2,850,000 at 20% p.a. from 30th May 1990 to 22nd March 2004, with costs of both courts.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the vendor was entitled to interest on the delayed balance of the purchase price even though he received rent and retained possession of the suit property until the balance was paid

Key legal issues

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01

Whether retention of possession and receipt of rent by the vendor bars an award of interest on the delayed balance of the purchase price

Holding

No - the vendor's possession was lawful under clause 5 of the Law Society Conditions of Sale since he could not give up possession until the purchase money was paid in full, and the purchaser's admitted breach in delaying payment for nearly 14 years made interest payable.

Reasoning

The agreement incorporated the Law Society Conditions of Sale, under which the purchaser is not entitled to possession until the whole purchase money is released. The purchaser defaulted on the completion date of 30th May 1990 and did not pay the balance until 22nd March 2004. The vendor's continued possession and receipt of rent flowed lawfully from the purchaser's own default, and clause 8(3) expressly obliges the purchaser to pay interest on the delayed balance. Correspondence between the parties confirmed their shared understanding that 20% p.a. interest was payable. The trial judge erred by ignoring the agreement, the correspondence and the purchaser's breach.

p. 3
02

The correct scope of Mwangi -v- Kiiru as relied on by the purchaser

Holding

The Court held that the proposition drawn from Mwangi -v- Kiiru (that a vendor in possession gets only the balance without interest) was not the ratio decidendi of that case, and that the case was distinguishable because there the terms of the agreement had not been reduced into writing and the vendor claimed retransfer.

Reasoning

The Court distinguished the authority on its facts: the parties there had not recorded their terms, including the completion date, in writing, and the vendor there sought retransfer of property already conveyed. Here the parties reduced the agreement into writing, a completion date was fixed, and the vendor accepted the balance. Accordingly the authority could not support denying interest.

p. 3

Legal principles established

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  • Where the parties' agreement incorporates Law Society Conditions of Sale clause 5, the vendor is lawfully entitled to remain in possession (and receive rent) until the whole of the purchase money is paid, and such possession cannot defeat his claim to interest on a delayed balance.
  • Where completion is delayed for any reason other than the vendor's default, the purchaser is liable to pay interest on the balance of the purchase money from the completion date until payment in full under clause 8(3) of the Law Society Conditions of Sale.
  • Where parties' correspondence demonstrates a common understanding that interest was payable on a delayed purchase price, it is inequitable for a defaulting purchaser who had use of the money to resist interest on the ground that the vendor was in possession and received rent.

Court orders

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  1. 1.Appeal allowed
  2. 2.Judgment of the High Court dated 9th June 2008 set aside
  3. 3.Judgment substituted for the appellant for interest on Kshs.2,850,000 at the rate of 20% p.a. from 30th May 1990 to 22nd March 2004
  4. 4.Appellant granted costs of the appeal and of the High Court

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
Mohamed Abdulahi Warsame
M. WarsameJA
Currently serving
majority
majority
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 178 of 2008
Jurisdiction invoked
First appellate jurisdiction under the Constitution and the Appellate Jurisdiction Act (not expressly stated in the judgment; appeal as of right from a High Court decree)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

It would be inequitable for him to have delayed with the vendor's money and now claim that he cannot pay interest because the vendor was in possession and received rent.
p. 4Equity and interest on delayed purchase price
Pursuant to this clause, it cannot be gainsaid that the vendor herein was in possession of the suit property lawfully as he could not give up possession until the purchase money was paid in full.
p. 3Vendor's lawful possession under Law Society Conditions of Sale, clause 5
In the result, we think the learned Judge was in error when he declined to award the interest the vendor sought. This appeal must therefore succeed.
p. 5First appellate court's conclusion on the trial judge's error
We substitute therefor judgment for the appellant for interest on Kshs.2,850,000\= at the rate of 20% p.a. from 30 th May, 1990 to 22nd March, 2004.
p. 5Final orders - substituted judgment
The appellant shall have the costs of this appeal and also of the High Court.
p. 5Costs order

Issues in the judgment

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minor

The purchaser's advocates' response letter is described in the judgment as erroneously dated 4th April 1993 but actually written on 4th May 1993.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Lydia Wanjiku Wanyee suing as the administrator of the estate of the Late George Wanyee v George Nyanja [2015] KECA 124 (KLR)", Case Analysis (2015). Civil Appeal No. 178 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/124/eng@2015-12-18

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.