Q6-2015-Civil Litigation

Q6-2015-Civ-Lit

Developers Enabling Bank as chargee had, in exercise of its statutory power of sale, sold by public auction, charged property. The purchaser was Lady Khasoa. The conditions of sale included one requiring the highest bidder to pay immediately a deposit of twenty five per cent (25%) of the sale price, and he balance to be paid within 30 days from the date of the sale. Khasoa made a down payment of the 25% of the purchase price and was issued with a certificate of sale. She was left with a balance of Kshs.2,400,000 to be paid within 30 days from the date of the auction sale. Six days later, Khasoa wrote to Developers Enabling Bank asking it to supply her with title documents, discharge of charge, a duly executed transfer and rates and rents clearance certificates in respect of the parcel of land and improvements erected on it. She also stated in the letter that she required 60 days to enable her organize the necessary finance. Developers Enabling Bank responded by saying among other things, that it could not release the documents and was expecting to receive the balance of the purchase price within the stipulated 30 days. Subsequent discussions led to some mutual extension of the period for the payment of the balance. But it did not work. Developers Enabling Bank refunded to Khasoa the 25% deposit sums paid at the auction sale. While acknowledging the refund, Khasoa brought suit against the Bank for breach of contract. Developers Enabling Bank entered appearance and filed a defence to the suit, the basis of which was that the plaintiff Khasoa's counter-offer varying the conditions of the auction which was unacceptable to the defendant Bank. By a notice of motion filed in the Court, Khasoa applied for summary judgement against Developers Enabling Bank in the sum of Kshs.15,000,000 prayed for in the plaint as special damages for loss of bargain. She took the position that she was not in breach of the 30 days period within which it was required to pay the balance of the auction purchase price when the bank refunded to her the deposit of the purchase price, and the 30 days period had not expired. This being her take, Khasoa was of the view that the Bank was in breach of the contract of sale. The bank took the position that instead of paying the balance of the purchase price within the stipulated 30 days in the conditions of sale, Khasoa counter-offered and sought a 60 days period within which to pay the balance of the purchase price, and the counter-offer was unacceptable, and the Bank was not therefore in breach of the contract as alleged. On this ground, the Bank opposed the application for summary judgement and asked for leave to defend.

You are attached to Lady Justice Showy as her research assistant. She instructs you to carry out research for her and write out an opinion, applying relevant principles whether summary judgement is available on the above facts.

Set out your reasoned opinion, showing the applicable principles and applying them and advise the learned judge accordingly to assist her in writing her ruling on the application which she has heard before her.

Summary Judgement

Summary judgement is provided for under Order 36 of the Civil Procedure Rules.  Summary procedure is a legal term which means that a court makes a determination (a judgment) without a full trial. A court can decide on the merits of the whole case or on specific parts[1]. Summary judgement is applicable to two scenarios; where the plaintiff is seeking relief for a liquidated amount of damages or for the recovery of land. The basis of summary judgement is that the defendant does not have a defense to make.  It must be made after appearance has been entered but before defense has been filed.

Summary judgement is applicable to this scenario as the contract that was made was for land. It has since failed and as such it is a suit for the recovery of land. Further the claim is for a definite amount. The Plaintiff claims KSH 15,000,000/= from the defendant for the loss of bargain. Whether this amount has merit is for the court to decide. However it is calculable and therefore liquidated.

Ruling

Summary judgement is applicable to this procedure however is it the correct course to take given the facts?

Summary judgement is applicable where ones cause of action or defense is baseless. Where the defendant demonstrates that there is a triable issue then courts must grant leave to defend the suit and avoid the application for summary judgement.

The plaintiff claims that the defendant breached the contract by returning the 25% deposit before the 30 day limit. The defendant allege that the 60 day extension period that the plaintiff requested for was a waiver of the contract which was unacceptable and therefore feel that they were entitled to repudiate the contract.

The facts allege that there was an attempted mutual extension but it did not work. I find that this raises questions of law and fact. Which are whether the mutual extension was a waiver of the contract that entitled the defendant to repudiate?
As such the application for summary judgement is dismissed with costs to the Plaintiff. The defendant is hereby granted leave to defend suit.

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[1] S. Ouma, Commentary of the Civil Procedure Act (2^nd edn, Law Africa, 2010) 414