A land buyer who fought for a Kilifi property for 16 years has lost both the
parcel and more than Sh4 million after the Court of Appeal ruled that a land
sale agreement lapses automatically if not completed within the stipulated 90
days, and courts cannot revive it once time has expired.
In a judgment delivered on Friday, a three-judge bench comprising Justices Agnes
Murgor, Kibaya Imaana Laibuta and Ngenye-Macharia dismissed an appeal by
Magretville Asami Macho and Grigorios Smaragdis.
The court noted that the two had conceded that they were in receipt of the
consent from Bahari Land Control Board as at January 12, 2010, adding
that after missing the 90-day payment window, nothing could be done to cancel
the enforcement.
“On this basis they were under a duty to pay the balance of the
purchase price within 90 days thereof. Nothing was presented before the
trial court to explain what
hindered the appellants from complying,” the court said.
“The failure to pay the balance of the purchase price within time
rendered the agreement of no force and effect, and as a consequence, the
agreement lapsed ipso facto.”
The appellants had sought specific performance to compel transfer of land
parcel in Kilifi based on a 2009 sale agreement with the original owner, Musa
Mwera Athuman.
The appellants had paid Sh572,000 as part of the agreed Sh900,000 purchase
price and later argued they were willing to pay the balance of Sh328,000.
They insisted the seller, Athuman, frustrated the deal by failing to timely
supply completion documents and later transferring the land to third parties
while there was an active court inhibition.
But the appellate court upheld the finding of the Environment and Land Court
that the agreement had already “lapsed ipso facto” when the buyers
failed to pay the balance within 90 days after the vendor obtained Land Control
Board consent on January 12, 2010.
Under clause 5 of the agreement, the balance was due within 90 days of that
compliance.
“The failure to pay the balance of the purchase price within time rendered
the agreement of no force and effect, and as a consequence, the agreement
lapsed,” the Court of Appeal held.
“A property which was being offered for Sh900,000 in 2009 cannot be of the
same value 16 years later.”
The core of the judgment centred on time being of the essence. The Court
found that by the time the buyers issued a completion notice on January 7,
2014, five years after execution, the agreement was already legally defunct.
Athuman’s lawyer submitted that the completion date had been October 10,
2009, and argued that any notice issued thereafter was “of no legal
consequence.”
He said the agreement, which incorporated the Law Society of Kenya
Conditions of Sale, could not be revived after the lapse.
The Court agreed.
It noted that “the appellants did not demonstrate that they made any effort
to complete payment of the balance of the purchase price timeously” despite
receiving LCB consent in early 2010.
It added that courts cannot enforce a contract that has expired by effluxion
of time.
The Court reiterated that specific performance is an equitable remedy
reserved for situations where damages would be inadequate and where a party
seeking it has fulfilled their own obligations.
“In this case, the appellants were not entitled to an order of specific
performance considering that they breached the essential terms of the Agreement,”
the Court held.
It added that the land had since changed hands and that “there would be
nothing capable of being transferred.”
The appellate bench upheld the order that the 1st respondent refund the Sh572,000
already paid, with interest from July 10, 2009.
It however set aside the Sh4 million general damages earlier awarded by the
trial court, finding that general damages are not recoverable in contract
disputes.
“There would be absolutely no basis upon which the learned Judge would go
ahead to award… general damages,” the Court said, terming the earlier award
erroneous.
Instead, the Court awarded the buyers nominal damages of Sh100,000 to
acknowledge infringement of their legal rights without proof of actual
financial loss.
Ultimately, the appeal was dismissed, with the judges directing each party
to bear their own costs, citing the “background and nature of the dispute.”
The ruling underscores a firm judicial position: once the contractual 90-day completion period lapses without full payment, a land sale agreement collapses automatically, and courts will not resurrect it.
