Gami Properties Limited v National Social Security Fund Board of Trustees & Chief Land Registrar [2021] KECA 673 (KLR)
The bottom line
#The Court of Appeal held NSSF breached a land sale agreement and made Kenya's Chief Land Registrar personally liable for removing a caution without notice.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the agreement for sale was vitiated by common mistake and whether the Judge erred in concluding that NSSF breached the agreement
- 2.Whether in assessing damages for loss of bargain, the value of the property is the value on the date of trial or date of judgment or the date of breach of the agreement
- 3.Whether the conclusion that the claim for feasibility studies and architectural fees was too remote is well founded
- 4.Whether the appellant had locus standi to complain about the removal of the caution, and whether the caution was lawfully removed
Key legal issues
#Whether the sale agreement was vitiated by common mistake
No. Both parties appreciated that the acreage required verification, and the agreement itself provided for a pro-rata reduction of price on any shortfall; there was no shared misapprehension of fact. The cross-appeal was dismissed.
NSSF's defences were inconsistent, pleading mutual mistake in its defence but asserting an 'as is' sale including the road encroachment in its cross-appeal. Clause 11 of the agreement expressly qualified the 'as is' purchase with a survey verification and pro-rata price reduction clause. A surveyor's evidence confirmed 13.07 acres and NSSF ignored letters seeking joint verification. Following Kiplangat Arap Biator and Moynes v Cooper, common mistake requires a misapprehension common to both parties, which was absent here.
Whether NSSF breached the sale agreement
Yes. NSSF entered the sale with the appellant during the currency of a lease granting Aviline Services Limited a first option to purchase, then sold to and transferred the property to third parties while the sale agreement subsisted.
The Court adopted the trial Judge's finding that the sale agreement was in subsistence when NSSF subdivided and transferred the property to third parties. The cross-appeal seeking to escape the finding of breach on grounds of mutual mistake failed, and was dismissed with costs to the appellant.
The date at which damages for loss of bargain in a land sale should be assessed
The trial Judge's assessment as at 2008 (when the deposit was refunded) involved no error of principle. Assessment at the date of judgment is a departure from the general rule, available only on case-specific facts where specific performance had real prospects and was diligently pursued.
Relying on Gicheru v Morton, Megarry & Wade, Halsbury's and Southern Shield Holdings, the Court held Wroth v Tyler and Malhotra v Choudhury were decided on their facts and involved equitable jurisdiction under Lord Cairns' Act. Here the appellant knew the property had been subdivided and transferred, sought to buy the subdivisions from the third party, and accepted the deposit refund, so only a plea of damages was realistically tenable and the restrictive approach was justified.
Remoteness of the feasibility and architectural fees claim
The claim was properly rejected as too remote under Hadley v Baxendale; no evidence showed the costs were communicated to or contemplated by the parties at the time of contracting.
The Court applied the Hadley v Baxendale rule that damages must arise naturally from the breach or be in the reasonable contemplation of both parties when contracting. Since the appellant never communicated its intention to conduct feasibility studies or the nature of its proposed development, the trial Judge committed no error of principle in excluding that head of damages.
Removal of the caution by the Chief Land Registrar
Although the appellant was not the registered cautioner (the directors lodged it in their names), the caution was removed irregularly and illegally without notice or a court order, and the 2nd respondent is jointly and severally liable with NSSF to satisfy the decree.
Section 133 of the repealed Registered Land Act allowed removal only by withdrawal, court order, or Registrar's order after notice to the cautioner. The 2nd respondent led no evidence explaining the circumstances of removal, ignored the appellant's advocates' letter seeking explanation, and the claim that the Registrar moved suo motu was speculative. The irregular removal facilitated the transfer to third parties, so the Registrar must share liability for the judgment.
Legal principles established
#- A land registrar who removes a caution otherwise than by withdrawal of the cautioner, order of the court, or after due notice to the cautioner under section 133 of the repealed Registered Land Act removes it irregularly and illegally and is liable for that removal.
- A contract for sale of land is not vitiated by common mistake where the agreement itself contemplated verification of acreage and made provision for a pro-rata reduction of the purchase price on any shortfall.
- Where a party has no reasonable prospect of specific performance and has accepted a refund of the deposit, damages for loss of bargain may properly be assessed by reference to the value of the property near the date of breach rather than the date of judgment; assessment at the date of judgment is discretionary and case-specific.
- An appellate court will not interfere with the assessment of damages absent an error of principle or an award so high or so small as to be an entirely erroneous estimate (Gicheru v Morton principle).
Court orders
#- 1.The cross-appeal by NSSF is dismissed with costs to the appellant
- 2.The judgment of the trial court is varied to the extent that the 2nd respondent (Chief Land Registrar) is jointly and severally liable to satisfy the decree of the trial court
- 3.The appellant is awarded half costs of the appeal and costs of the cross appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi, Commercial and Admiralty Division
- Nai. H.C.C. Suit No. 335 of 2007
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (Rule 29), as a right from the High Court
Relief refused
#Damages for loss of bargain based on the value of the property as at the date of judgment (Kshs.686,500,000)
The trial Judge did not err in principle; the appellant unrealistically pressed on for specific performance after accepting a refund of the deposit, so assessment of loss as at 2008 when the deposit was refunded was appropriate
Special damages of Kshs.18,870,226.81 for feasibility studies and architectural plans
Too remote; no evidence that the intention to incur such costs was communicated to or within the contemplation of the parties at the time of contract
Setting aside transfers on the basis that the appellant itself lodged the caution / locus to complain of its removal
The caution was lodged by the directors in their names claiming as purchasers under the appellant, but the appellant still benefited from the finding of irregular removal through joint liability
Costs
The appellant is awarded half costs of the appeal and costs of the cross appeal; the cross-appeal is dismissed with costs to the appellant.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The final orders are that the Judgment of the trial court is hereby varied to the extent that the 2nd respondent is jointly and severally liable to satisfy the decree of the trial court. The cross appeal fails and is hereby dismissed.
The appellant is awarded half costs of the appeal and costs of the cross appeal.
we are satisfied and hold that the caution was irregularly and illegally removed, and the 2nd respondent is liable for its removal
Based on the foregoing it cannot be said that the parties to the agreement for sale shared any misapprehension of fact.
we understand the learned Judge to have pronounced that each case must be decided on its own facts and circumstances and that in the circumstances of this case, it was not appropriate to take the value of the property beyond when the deposit was refunded.
Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties
Issues in the judgment
#The judgment contains an internal typographical inconsistency in the special damages figure claimed as loss of bargain: it is stated as Kshs.686,500,000.00 in most passages but as Kshs.685,500,000.00 in the respondent's submission passage.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Inc Supplies Limited v Kihara (Environment and Land Appeal E206 of 2024) [2025] KEELC 8562 (KLR)[2025] KEELC 8562 (KLR)9 Dec 2025applied
Cite this brief
#Cite this brief
Caselaw, "Gami Properties Limited v National Social Security Fund Board of Trustees & Chief Land Registrar [2021] KECA 673 (KLR)", Case Analysis (2021). Civil Appeal No. 460 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/673/eng@2021-04-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.