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ELCPartially AllowedNot stated in the judgment (HCCC, Nairobi)

Precast Portal Structure Limited v Riccardo Lizier,Pietro Langui,Ivrea Group & Catholic Archdiocese, Nairobi (? 1327 of 2007) (Environment and Land) [2015] KEELC 503 (KLR)

High Court of Kenya
22 April 2015
8,343 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~33 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded a company Kshs 30 million because land it was promised was sold to a church, but could not return the land itself.

What this practically means

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Executive summary

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The Plaintiff, Precast Portal Structures Ltd, sued the 1st, 2nd, 3rd and 4th Defendants over LR No. 15314/10, claiming that soft loans of about Kshs 600,000/- advanced to the 1st and 2nd Defendants were agreed consideration for a 0.57 hectare plot to be excised from LR 9953/1, evidenced by an undated 1991 underlease. It sought a declaration of ownership, cancellation of the 4th Defendant's title, specific performance, injunctions and damages, alleging the transfer of the suit property to the 4th Defendant was fraudulent. The 1st to 3rd Defendants admitted the loan but claimed it was repaid; the 4th Defendant pleaded innocent purchaser for value without notice. The court found the underlease existed and the Defendants' correspondence (notably the letter of 20th March 2004) uncontrovertedly acknowledged the Plaintiff's legitimate claim, and that the Defendants, having failed to prove repayment, breached the underlease. However, no fraud was pleaded or proved against the 4th Defendant, whose title was protected under section 80(2) of the Land Registration Act. Specific performance was refused because the contract's subject matter was uncertain and enforcement would cause the 4th Defendant, which had built a church and residence, severe hardship. Judgment was entered against the 1st and 2nd Defendants jointly and severally for general damages of Kshs 30,000,000/- and special damages of Kshs 811,014.75, each with interest at court rates, plus costs of the suit. The claims against the 3rd and 4th Defendants were dismissed.

Questions the Court framed

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

  1. 1.Whether the Plaintiff has any entitlement to LR Number 15314/10
  2. 2.Whether the 4th Defendant is an innocent purchaser for value of LR Number 15314/10
  3. 3.Whether the Plaintiff is entitled to the reliefs sought

Key legal issues

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01

Whether the Plaintiff had entitlement to LR 15314/10 under the underlease

Holding

The Plaintiff established on a balance of probabilities a legitimate claim/contractual entitlement to the suit property, based on the executed underlease and uncontroverted correspondence acknowledging its claim

Reasoning

The underlease of 1991 was admitted and produced; the Defendants admitted the loan but adduced no evidence of repayment, which was a fact within their knowledge. Letters from the Defendants in 1995-96 and the letter of 20th March 2004 expressly acknowledged the Plaintiff's legitimate claim. Effluxion of the head lease could not be pleaded because the lease was renewed and the transfer to the 4th Defendant post-dated the Plaintiff's unheeded demands.

p. 10
02

Whether the 4th Defendant was an innocent purchaser for value without notice

Holding

Yes - no fraud was pleaded or proved against the 4th Defendant, whose title was indefeasible under section 80(2) of the Land Registration Act

Reasoning

Save for an assertion that it had notice, the Plaintiff neither pleaded nor proved fraud by the 4th Defendant. Fraud must be specifically proved, and a registered proprietor for value is protected absent knowledge of or contribution to the fraud or mistake. PW1's own evidence did not attribute blame to the 4th Defendant.

03

Whether specific performance and the main declaratory orders could issue

Holding

No - specific performance was inappropriate because the subject matter was uncertain and the property belonged to a third party who would suffer hardship; the consequential declarations, cancellation of title and injunction could not issue

Reasoning

Specific performance is an equitable, discretionary remedy and requires certain and precise terms capable of exact performance. The underlease described the plot inconsistently (0.57 vs 0.75 hectares) and by reference to a plan, and the land was no longer in the Defendants' names. Since the 4th Defendant held good title, ownership declarations, cancellation and injunction failed.

p. 12
04

What damages were recoverable and against whom

Holding

General damages of Kshs 30,000,000/- (guided by the unchallenged valuation) and special damages of Kshs 811,014.75 strictly proved by receipts, payable by the 1st and 2nd Defendants only

Reasoning

Damages for breach of contract are limited to losses foreseeable at the time of contracting; the reasonable expectation of title and possession flowed naturally from the underlease, justifying damages sufficient to acquire an equivalent parcel. Special damages for rent were pleaded and strictly proved by 86 receipts. Liability rested solely on the contracting parties, the 1st and 2nd Defendants.

p. 13

Legal principles established

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  • Where a fact is especially within the knowledge of a party, that party bears the burden of proving or disproving it (section 112, Evidence Act)
  • A registered proprietor's title cannot be rectified under section 80(2) of the Land Registration Act unless the proprietor had knowledge of, or contributed to, the fraud, mistake or omission
  • Specific performance is discretionary and will be refused where there is an adequate alternative remedy, where it would cause severe hardship, or where the contract's terms are not certain enough for exact performance
  • Special damages must be both pleaded and strictly proved
  • A contract breaker is liable only for damage which he ought to have foreseen as likely to result naturally from the breach (Hadley v Baxendale rule)

Court orders

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  1. 1.The 1st and 2nd Defendant shall jointly and severally pay the Plaintiff general damages for breach of contract of Kshs 30,000,000/= with interest at court rates from the date of judgment until full payment
  2. 2.The 1st and 2nd Defendants shall jointly and severally pay the Plaintiff special damages of Kshs 811,014/75 with interest at court rates from the date of judgment until full payment
  3. 3.The 1st and 2nd Defendants shall jointly and severally meet the costs of the suit

The bench

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

majority

Wrote the judgment

Jurisdiction invoked
Original civil jurisdiction of the High Court over a land dispute (pleadings and reliefs; no specific constitutional provision invoked)

Relief refused

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Declaration that the Plaintiff is sole legal and beneficial owner of LR 15314/10; cancellation of title IR 93733; injunction over LR 15314/10; specific performance/compelled transfer

Specific performance refused as the property is registered in the 4th Defendant's name, the contract's subject matter was uncertain, and the 4th Defendant (no fraud proved against it) had built a church and residence

p. 12

First set of alternative prayers: compelled transfer of LR 15314/5 and payment of the difference in value between the two plots

No evidence of the 1st and 2nd Defendants' ownership of LR 15314/5 and no valuation evidence of the two parcels

p. 12

General damages of Kshs 100,000,000/- as pleaded in submissions

Court assessed damages at Kshs 30,000,000/- based on the unchallenged valuation of Kshs 25,000,000/- as at 9th November 2009

p. 13

Claim against the 3rd and 4th Defendants

No fraud proved against the 4th Defendant; liability attributable only to the 1st and 2nd Defendants with whom the Plaintiff contracted

Costs

The 1st and 2nd Defendants shall jointly and severally meet the costs of this suit

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.

In my view, the Plaintiff has on a balance of probabilities established its claim to LR 15314/10.
p. 10Plaintiff's contractual entitlement
save for stating that it notified the 4th Defendant of its legal and beneficial interest in the suit property before the transfer, the Plaintiff did not plead or prove any fraud on the part of the 4th Defendant.
Fraud and indefeasibility of the 4th Defendant's title
It is therefore the finding of this Court that the remedies available to the Plaintiff are the alternative remedies sought of general and special damages arising from the breach of the underlease entered into.
p. 13Remedies for breach of the underlease
The 1st and 2nd Defendant herein shall jointly and severally pay the Plaintiff general damages for breach of contract of a sum of Kshs 30,000,000/= with interest at court rates with effect from the date of this judgment until the date of full payment.
p. 14Final orders - general damages
The 1st and 2nd Defendants herein shall jointly and severally pay the Plaintiff special damages of a sum of Kshs 811,014/75 with interest at court rates with effect from the date of this judgment until the date of full payment.
p. 14Final orders - special damages
The 1st and 2nd Defendants shall jointly and severally meet the costs of this suit.
p. 14Final orders - costs

Issues in the judgment

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minor

The judgment describes the underlease plot measurement inconsistently, reciting 'nought decimal five seven of an hectare (0.75 hectares)' where 0.57 was intended

minor

The case number of the suit is not stated anywhere in the judgment

minor

Typographical error in the 20th March 2004 letter reference: judgment elsewhere dates the letter 20th March 2004 but cites 'a letter dated 20th March 2003 from the 3rd Defendant' in submissions

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, "Precast Portal Structure Limited v Riccardo Lizier,Pietro Langui,Ivrea Group & Catholic Archdiocese, Nairobi (? 1327 of 2007)  (Environment and Land) [2015] KEELC 503 (KLR)", Case Analysis (2015). Not stated in the judgment (HCCC, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2015/503/eng@2015-04-22

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