Hellen Wanjiru Nyaga & another v Bank of Africa Kenya Limited

under Section 157 of the Land Act, 2012 and cannot therefore be registered. c) A declaration that the defendant materially breached its warranties and contractual obligations in the Agreement thereby rendering the Agreement null and void and entitling the plaintiffs to damages for breach of contract. d) Judgment be entered for the plaintiffs against the defendant in the sum of Kshs.45,000,000.00 together with interest from 15.2.2022 up to the date of payment at 14% per annum compounded monthly. e) Punitive and aggravated damages at 20% of the purchase price together with interest thereon from the date of Judgment until payment in full. f) Damages for breach of contract g) Costs of and incidental to this suit. 2. The plaintiffs pleaded that vide a sale agreement dated 01.02.2022 the defendant sold to them Title No. Mombasa/XVII/586 (the suit property) pursuant to its statutory power of sale under a charge for a sum of Kshs 45,000,000/=. 3. The plaintiffs pleaded that the defendant had induced them to enter into the said agreement through fraudulent misrepresentation that it had that the capacity to sell, transfer and MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 2

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hand vacant possession of the suit property. It was pleaded that in breach of the said agreement, the defendant had, inter alia, failed to deliver all the completion documents and supply copies of receipts for payment of rates for the year 2022. It was the plaintiffs’ case that the defendant had also failed to provide a valid transfer document duly executed and attested in accordance with section 45 of the Land Registration Act and capable of registration. 4. The plaintiffs pleaded that the transfer provided by the defendant falsely indicated that the sale was through a public auction whereas no such auction had taken place. It was the plaintiffs’ case that the said transfer was false and fraudulent. 5. The plaintiffs pleaded that after execution of the sale agreement dated 01/02/2022 and long after receipt of the purchase price from the plaintiffs the defendant advertised the suit property for public auction on 19.04.2022. The plaintiffs considered such action to be a breach or repudiation of the sale agreement. 6. It was also the plaintiffs’ case that in breach of the terms of the agreement under clause 16 the defendant had failed to disclose the existence of various suits, orders and restrictions affecting the performance of the sale agreement. The plaintiffs referred to various civil suits over the suit property to which the Defendant MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 3

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was party and a restriction against the suit property registered at the instance of the Assets Recovery Agency (ARA). 7. The defendant filed a defence and counterclaim dated 15.07.2025. By its defence the defendant disputed the jurisdiction of the court to entertain the suit. It pleaded that it had the capacity to sell and transfer the suit property under its statutory power of sale; that there was no court order prohibiting registration of the transfer; and that it was the plaintiffs who delayed in lodging the transfer for registration upon receipt of the completion documents. 8. The defendant pleaded that some of the suits (about 5) referred to by the plaintiffs were concluded and that two of the cited suits concerned different parcels of land. However, the defendant conceded that the restriction by ARA could impede the registration of the transfer. 9. By its counterclaim, the defendant joined the Chief Land Registrar and the Assets Recovery Agency as the 3 rd and 4th defendants respectively. The defendant denied having breached any of the terms and warranties in the sale agreement of 01.02.2022. It was pleaded that the restriction by ARA was placed after making of the sale agreement and that it was not a foreseeable event. It was further pleaded that it was an event beyond the control of the MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 4

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defendant and that it took all reasonable steps including litigation to have the restriction lifted. 10. The defendant pleaded that it was not at fault at all with respect to performance of the sale agreement and that the fault was on the part of the 3rd defendant for requesting for the entry of the restriction and the 4th defendant for refusing to lift the same. As a result, the defendant sought the following reliefs by its counterclaim: a) A mandatory injunction be and is hereby issued against the 3rd defendant to reconstruct the Deed file in respect of the Land Parcel known as Mombasa Block/XVII/586. b) A mandatory injunction be and is hereby issued against the 3rd defendant to vacate, remove and/or deregister the restriction placed on the Land Parcel known as Mombasa Block/XVII/586. c) An order of specific performance against the 1 st and 2nd defendants to complete the sale and transfer of the suit property. d) In default of prayer (c) above, the Deputy Registrar of the Environment & Land Court to execute any conveyancing documents to effect the transfer of the property to the 1st and 2nd defendants. MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 5

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e) A mandatory injunction be and is hereby issued against the 3rd defendant to register Mombasa Block/XVII/586 in the joint names of the 1st and 2nd defendants. f) An order of permanent injunction be and is hereby issued prohibiting and/or restraining the defendants from placing and/ registering any further inhibitions, cautions, and/ or restrictions in any manner that violates the provisions of Land Registration Act, 2012 on the suit property. g) Costs of the suit and counterclaim. 11. The Plaintiffs filed a reply to defence and defence to counterclaim dated 07.02.2026. By their defence the plaintiffs joined issue with the defendant on its defence and reiterated the contents of their plaint. The plaintiffs reiterated that the defendant had failed to comply with its obligations under the sale agreement and that it had failed to provide evidence of payment of Capital Gains Tax and the statutory notices issued to the chargor of the suit property. It was pleaded that there was a subsisting injunction in Mombasa ELC No.E049 of 2023 restraining the Defendant from disposing of the suit property. 12. By their defence to counterclaim, the plaintiffs denied the contents of the counterclaim. It was pleaded that the defendant had not complied with its obligation to provide copies of the relevant MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 6

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statutory notices and the obligation to hand vacant possession. They pleaded that the suit property was still encumbered hence the transfer cannot be registered even if the parcel file was found. 13. The plaintiffs further pleaded that the appropriate remedy in the circumstances was a refund of the purchase price together with interest thereof at 14% per annum and not specific performance as sought by the defendant. 14. There is no evidence on record of the 3rd and 4th defendants having entered appearance or filed defences to the action. They did not also attend court or tender any evidence at the trial hereof. 15. At the trial hereof, the 1 st plaintiff testified on behalf of both plaintiffs as the sole witness. She adopted the contents of her witness statement and further statement as her evidence in chief and produced the documents in the Plaintiffs’ trial bundle as exhibits. The defendant also called one witness, Idan Kasenge to testify on its behalf. He also adopted the contents of his witness statement and produced the 19 documents in the defendant’s trial bundle as exhibits. MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 7

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16. The court has perused the pleadings, documents and evidence on record. The court is of the view that the following are the main issues for determination herein: a) Whether the plaintiffs have proved their claim against the defendant. b) Whether the defendant has proved its counterclaim against the defendants by counterclaim. c) Whether the plaintiffs are entitled to the reliefs sought. d) Whether the defendant is entitled to the reliefs sought in the counterclaim. e) Who shall bear costs of the suit and counterclaim. 17. The court has considered the material and submissions on record on the 1st issue. Whereas the plaintiffs submitted that the defendant had failed to observe the warranties and other terms of sale contained in the agreement, the defendant submitted otherwise. The plaintiffs also considered the defendant’s subsequent action of advertising the suit property on 19.04.2022 for public auction to be a breach or repudiation of the sale agreement. The plaintiffs also contended that the defendant had failed in its obligation to supply all the completion documents as per clause 8 of the agreement. MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 8

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18. Clause 8 of the agreement on the release of completion documents stipulated as follows; “On or before the completion date and upon receipt by the Vendor of the entire purchase price in the terms of Clause 3 above, the Vendor’s Advocates, shall on or before the completion date procure and hand over to the purchasers’ advocates the following completion documents: a) The original title deed in respect of the property. b) Duly executed but undated Transfer by chargee (in triplicate) with respect to the Property in favour of the Purchasers. c) Land rates payment receipts for the year 2022. d) Certified copies of the Vendors Certificate of Incorporation and KRA Pin Certificate. e) Certified copy of the Vendors Directors/ Attorneys KRA Pin Certificate and ID Cards. f) Three (3) coloured passport photos of each of the Vendors Directors/ Attorneys who will execute the transfer. g) Land Control Board consent to transfer. h) Copies of all statutory notices issued to chargors/ borrowers by the Vendor including but not limited to Notices issued under Section 90 and 96 of the Land Act No. 6 of 2012. MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 9

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i) A copy of the valuation report the Vendor relied on in determining the purchase price. The documents listed from clause (a) to (i) (both inclusive) are hereinafter referred to as the “Completion Documents”. 19. A perusal of the defendant’s advocates letter dated forwarding completion documents reveals that only 7 documents were forwarded as opposed to the 9 listed in clause 8. The defendant submitted that consent to transfer was not required since the suit property fell within a township but nothing was said about the receipts for payment of rates for the year 2022. The court finds that the defendant did not fulfil its obligations under clause 8 of the agreement. 20. The court has also considered the question of the defendant’s advertisement of the suit property on 19.04.2022 for public auction despite the existence of the sale by private treaty on 01.02.2022. The defendant contended that the advertisement was merely a precautionary measure in case the sale by private treaty was successfully challenged in legal proceedings. The court takes the view that this is the clearest indication that the Defendant did not consider itself bound by the sale by private treaty and had no qualms in seeking to have a second bite at the cherry. The court agrees with the plaintiffs’ position that the MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 10

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Defendant’s said conduct was a breach or repudiation of the sale agreement dated 01.02.2022. 21. The court has considered the warranties by the Defendant in the agreement. Clause 16 of the agreement stipulated as follows: “The vendor warrants to the purchasers that: 16.1 It has a good and marketable title to the property, free and clear of all encumbrances save for its existing right as chargee under the charges and that it is the beneficial owner of the property and entitled to exercise its statutory power of sale pursuant to Section 98(1)(d) of the Land Act No. 6 of 2012 and has the benefit of all rights and easements necessary for its full use enjoyment. 16.2 The ownership of the property is not subject to ay challenge whatsoever from the Government of Kenya, any local authority or any third party whatsoever. 16.3 There is no law or decree or similar enactment being on them so far as they are aware which would conflict with or prevent them from entering into or performing and observing the terms of this Agreement MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 11

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16.4 It is not engaged in nor to the best of its knowledge threatened by any litigation, arbitration or administration proceedings relating to this property. 16.5 There is no adverse claim on the property, dispute regarding ownership, boundary, easement, rights of way or any other such matters. 16.6 It has not given any rights of way, easement or any overriding interest and has no intention of so doing. 16.7 It has to the best of its knowledge disclosed to the purchaser all material information relating to the property. 16.8 It has not received any notice form government or county authority or from owners of adjoining properties which remain to be compiled with and has disclosed all such notices received to the purchasers. 16.9 It will immediately disclose in writing to the purchaser any event or circumstance which may arise or become known to them after the date of this agreement and prior to completion which is inconsistent with any of the warranties or which had it occurred or before the date of this Agreement would have constituted a breach of MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 12

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the warranties or which is material to be known by a purchaser for value of the property. 22. The court does not agree with the plaintiffs that the defendant as a chargee did not have a good and marketable title at the material time. The material on record shows that there were no encumbrances as at 01.02.2022 when the agreement was made. It would appear that all prior suits had been concluded with no orders made against the defendant. The proceedings in which an interim injunction was granted were filed long after the agreement of the parties. The same applies to the order of stay granted by the Court of Appeal and the restriction entered at the instance of ARA. 23. The defendant can only be faulted for defaulting on clause 16.7 whereby it was required to disclose all material information relating to the suit property. In particular, the defendants failed to make a full disclosure of legal proceedings concerning the property even though the were concluded at the material time. The court also takes the view that the defendant was also obligated under clause 16.9 to communicate the supervening events which made it impossible for the transfer to be registered. The court is satisfied that the defendant had full knowledge of the suits which were filed after the making of the sale agreement MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 13

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since it instructed the firm of WAMAE & ALLEN Advocates to represent them in those proceedings. That is the same firm which represented the defendant in the instant suit. 24. The court is thus of the opinion that the plaintiffs have proved on a balance of probabilities that the defendant was in breach of the sale agreement by; inter alia, repudiating the agreement by advertising the suit property for public auction; failing to submit all the completion documents; and by defaulting on its obligations to make a full disclosure of all material facts both before and post execution of the agreement. In the premises, the court is satisfied that the plaintiffs have proved their claim against the Defendant. 25. The court has considered the material and submissions on record on the 2nd issue. The court has already found that the defendant was in breach and repudiation of the sale agreement dated 01.02.2022. Such breach would entitle the plaintiffs to be discharged from the agreement. It would, therefore follow that the court cannot possibly grant a mandatory injunction to compel the 1st and 2nd defendants by counterclaim complete the sale. An order to restrain the 2nd and 3rd defendants from ever encumbering the property in future would be purely speculative. MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 14

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None of those defendants has threatened to do so in future without any lawful justification or excuse. 26. It is quite strange that the defendant is seeking an order of specific performance of the sale agreement against the Plaintiffs. The material on record shows that the plaintiffs paid the full purchase price way back in 2022 and they do not owe the defendant anything. The material on record shows that the said transaction cannot lawfully be completed in view of the pendency of the interim Court Order issued by the Environment and Land Court in ELC No.51 of 2022 and the stay granted by the Court of Appeal. The court is thus far from satisfied that the defendant has proved its counterclaim to the required standard. 27. The court has already found and held that the plaintiffs have proved their claim against the defendant to the required standard. The court takes the view that the plaintiffs are entitled to some but not all the reliefs sought in the suit. The court is inclined to grant prayers (c) and (d) of the plaint in the manner specified hereafter. 28. The court is, however, not inclined to award the plaintiffs punitive or aggravated damages. The court agrees with the defendant’s submission that no legal basis was demonstrated for such an MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 15

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award. The court is not inclined to award general damages for breach of contract either. The court takes the view that whatever additional loss the plaintiffs may have suffered should have been sufficiently quantified and claimed as special damages. 29. On the remedies which may be available to the defendant, the court has already found that the defendant had failed to prove its counterclaim against any of the defendants. It would, therefore, follow that the defendant is not entitled to the reliefs sought in the counterclaim, or anyone of them. 30. Although costs of a suit or proceeding are at the discretion of the court, the general rule is that costs shall follow the event in accordance with the proviso to section 27 of the Civil Procedure Act. The court finds no good reason why the successful parties should not be awarded costs of the action. The Plaintiffs shall thus be awarded costs of both the suit and the counterclaim. 31. The upshot of the foregoing is that the court finds and holds that the plaintiffs have proved their suit against the defendant to the required standard. However, the court finds and holds that the defendant has failed to prove its counterclaim to the required standard. As a consequence, the court makes the following orders for disposal of both the suit and the counter claim: MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 16

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a) Judgment be and is hereby entered for the plaintiffs in the following terms only; (i) A declaration is hereby made that the Defendant warranties materially and breached contractual its obligations thereby entitling the plaintiffs to be freed of its obligations. (ii) An order for the defendant to refund the Plaintiffs the purchase price in the sum of Kshs 45,000,000/= together with interest at 14% per annum with effect from 15.02.2022 until payment in full. (iii) The plaintiff is hereby awarded costs of the suit. b) The defendant’s counterclaim is hereby dismissed in its entirely with costs to the plaintiffs only. It is so decided. DATED, SIGNED AND DELIVERED VIRTUALLY ON THIS 24 TH DAY OF SEPTEMBER 2026 Y. M. ANGIMA JUDGE In the presence of: MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 17

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Ms. Muyaa for the Plaintiffs No appearance for the Defendant Court Assistant: Hinga MOMBASA ELC CASE NO. E044 OF 2023 (JUDGMENT) Page 18

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