Bank of Africa Kenya Ltd suffered a blow after the Environment and Land Court (ELC) ordered it to refund KES 45 million paid to it as the purchase price for a parcel of land in Mombasa.
The ELC in Mombasa directed the bank to refund the money to Ms Hellen Nyaga and Mr Peter Nyaga together with interest at 14 per cent per annum with effect from February 15, 2022, until payment in full.
It also issued a declaration that the bank materially breached its warranties and contractual obligations thereby entitling the plaintiffs (Ms Hellen and Mr Peter) to be freed of its obligations.
In its decision, the ELC ruled that the plaintiffs had proved on a balance of probabilities that the defendant (bank) was in breach of the sale agreement by repudiating the agreement by advertising the property for public auction and failing to submit all the completion documents.
It also ruled that the plaintiffs had proved on a balance of probabilities that the bank was in breach of the sale agreement 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,” ruled the ELC.
The ELC also noted that the bank did not fulfil its obligations under clause 8 of the agreement.
It noted that a perusal of the defendant’s (bank’s) advocates letter dated forwarding completion documents reveals that only seven documents were forwarded as opposed to the nine 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,” noted the ELC.
The ELC said it agreed with the plaintiffs’ position that the bank’s conduct, of advertisement of the property for public auction despite the existence of the sale by private treaty, was a breach or repudiation of the sale agreement.
“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,” said the ELC.
The ELC also dismissed a counterclaim, which had been filed by Bank of Africa Kenya Ltd, in its entirety.
The plaintiffs told the court that vide a sale agreement dated February 1, 2022, the defendant sold to them the property pursuant to its statutory power of sale under a charge for KES 45 million.
According to the plaintiffs, the defendant induced them to enter into the agreement through fraudulent misrepresentation that it had the capacity to sell, transfer and hand vacant possession of the property.
They argued that in breach of the agreement, the defendant failed to deliver all the completion documents and supply copies of receipts for payment of rates for the year 2022.
The plaintiffs further claimed 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.
In its defence, the bank disputed the jurisdiction of the court to entertain the case.
The bank argued that it had the capacity to sell and transfer the property under its statutory power of sale and that there was no court order prohibiting registration of the transfer.
It also claimed that it was the plaintiffs who delayed in lodging the transfer for registration upon receipt of the completion documents.
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