[2022] KEHC 3075 (KLR)

Ahmed Adan T/A Wetangula, Adan & Company Advocates v Oyatsi & 2 others (Civil Case 400 of 2018) [2022] KEHC 3075 (KLR) (Commercial and Tax) (17 June 2022) (Judgment)

Neutral citation: [2022] KEHC 3075 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case 400 of 2018

A Mshila, J

June 17, 2022

Between

Ahmed Adan T/A Wetangula, Adan & Company Advocates

Plaintiff

and

Desterio Andadi Oyatsi

1st Defendant

Kenneth Hamish Wooler Keith

2nd Defendant

Elisabeth Klem (Sued Jointly as Executors of the Will And Administrators Of The Estate of the Late Hon. Kipyator Nicholas Kiprono Biwott

3rd Defendant

Judgment

Introduction 1. The Plaintiff filed a Plaint dated 5th November 2018 against the Defendants who are jointly sued in their capacities as executors of the will and administrators of the estate of the late Hon. Kipyator Nicholas Kiprono Biwott.

2. The Plaintiff’s claim is for Kshs.71, 000, 000 being money payable by the Defendants to the Plaintiff for money lent by the Plaintiff to the late Hon. Biwott.

3. It was the Plaintiff’s averment that between 9th October 2014 and 13th May 2015, the Plaintiff lent the late Hon. Biwott a total of Kshs.71, 000, 000 remitted by transfer from the Plaintiff’s account number xxxxxxxxxx operated at Barclays Bank of Kenya Limited to Hon. Biwott’s account number xxxxxxxxxx operated with the same bank.

4. At the time of his death, Hon. Biwott had not repaid the said sum of Kshs.71, 000, 000. The Defendants herein petitioned for the grant of probate of the deceased’s written will in Succession Cause No. HC 1506 of 2016 and notified creditors of the estate of the deceased to send particulars of their claims.

5. On 23rd October 2018, the Defendants acting through Desterio Andadi Oyatsi rejected the Plaintiff’s claim; it was the plaintiffs contention that the defendants falsely claimed that the amount claimed by the Plaintiff was the consideration of properties sold by Hon. Biwott to the Plaintiff.

6. The Plaintiff further claims interest on the said sum of Kshs.71, 000, 000 at commercial rates from 16th March 2018 when the claim was submitted to the Defendants until payment in full or judgment.

7. The Plaintiff prayed for judgment against the Defendants in the following terms;a.Sum of Kshs.71, 000, 000 together with interest at commercial rates from 16th March 2018 until payment in full.b.The Defendants be ordered to pay the Plaintiff’s costs of this suit together with interest thereon at court rates from the date of filing of suit until payment in full.c.Any such other or further relief as the Court may deem appropriate.

8. The Defendants in reply stated that in terms of the Advocates Act, the only lawful relationship that could exist and/or existed between the Plaintiff and the deceased was that of Advocate and Client. They denied the Plaintiff’s claim of Kshs.71, 000, 000 or any sum at all as pleaded in the Plaint.

9. In terms of the Advocates Act, all financial dealings between the Plaintiff could only be transacted through the Clients’ account maintained by the Plaintiff. The statute permits the Plaintiff to maintain two lawful accounts, being the Clients’ account and the office account.

10. It was the Defendants’ assertion that in relation to handling of financial matters or transactions in the Clients’ accounts, these are regulated by the provisions of the Advocates (Accounts) Rules made under the provisions of the Advocates Act.

11. The Plaintiff did pay and could only have paid money to the deceased as “Client’s money” being money that the Plaintiff received or held on behalf of the deceased. There was no application made by the deceased for the alleged loan as alleged or at all.

12. The Defendants stated that the Plaintiff is not the legal beneficiary or owner of the Client’s money lying with the Plaintiff and could not lawfully or legally use “client’s money” for the purpose of carrying on the trade or business of a money lender as pleaded in the Plaint or at all.

13. Further, they stated that there was no lawful consideration for the claim made to sustain a valid cause of action against the estate and/or the Defendants.

Plaintiff’s Case 14. The Plaintiff submitted that its claim was supported by the sworn testimony of Ahmed Adan as contained in his Witness Statement dated 5th November, 2018 where Adan referred to and produced eighteen funds transfer slips together with a bank statement from his account evidencing the transfer of a total of Kshs. 71,000,000. 00 to the account of the late Honourable Kipyator Nicholas.

15. In the Witness Statement sworn by Desterio Andadi Oyatsi on 23rd August, 2021 the Defendants claim that the Kshs. 71,000,000. 00 transferred from the Plaintiff's account to that of the late Honourable Nicholas Kipyator Biwott was "sale proceeds" or "deposit of purchase price". The Defendants abandoned their initial position taken in the Statement of Defence that the Kshs. 71,000,000. 00 was "client's money".

16. Money lent is a cause of action known in common law. Upon proof of payment by the Plaintiff, the onus shifts to the Defendant to demonstrate that the money received was not a loan to be repaid on demand. A reproduction of the relevant sections of the Evidence Act Cap 80 of the Laws of Kenya is necessary to underscore the Defendants' burden to demonstrate that the Kshs. 71,000,000. 00 received by late Honourable Nicholas Kipyator Biwott was "sale proceeds" or "deposit of purchase price" and not a loan. (See: Sections 107, 108, 109 & 110)

17. The Defendants have not tendered any defence upon which to sustain their contradictory positions as contained in their Statement of Defence and the testimony of Desterio Andadi Oyatsi.

18. The principle in law that a mere denial does not amount to a sufficient defence is well settled. In Magunga General Stores v Pepco DistributorLtd, EA (1986-89) 334 this principle was stated thus;“First of all, a mere denial is not a sufficient defence in this type of cases. There must be some reason why the Defendant does not owe the money. Either there was no contract or it was carried out and failed. It could also be that payment had been made and could be proved. It is not sufficient therefore simply to deny liability without some reason given.”

19. It was the Plaintiff’s further submission that the Defendants’ averment at paragraph 12 of the Statement of Defence that the only relationship which could possibly exist between the Plaintiff and the late Honourable Kipyator Nicholas Biwott is with regard to "client's money" is neither a sincere nor a genuine defence. The Defendants' lack of a bona fide defence is further demonstrated by the contradictory positions taken in the Statement of Defence and the testimony of Desterio Andadi Oyatsi.

20. The Plaintiff relied on the case of Margaret Njeri Mbugua v Kirk Mweya Nyaga [2016] eKLR a decision by the Court of Appeal in which the principle that in a claim for a liquidated sum or debt, a mere denial is not sufficient was reiterated.

21. The plea at paragraph 13 of the Defendants' Statement of Defence that there was no application made by the deceased for the loan does not also raise any bona fide triable issue since it is settled law that there is no requirement for a loan agreement to be in writing. This was affirmed in Abdulkadir Shariff Abdirahim & another v Awo Shariff Mohammed T/A A.S. Mohammed Investments [2014] eKLR.

22. The Defendants' entire Statement of Defence is also, evasive. The Defendants ought to have given a forthright defence to the Plaintiff's liquidated claim, which they have not.

23. It was the Plaintiff’s case that he has demonstrated on a balance of probabilities that he lent Kshs. 71,000,000. 00 to late Kipyator Nicholas Biwott.

Defendants’ Case 24. The Defendants submitted that in sequence, the burden of proof lies upon the Plaintiff as a claimant first to prove his or its case or claim before the burden of proof shifts to the Defendant to prove his or its defence. A Defendant cannot therefore be called upon to defend a claim that does not exist or is unsustainable in law.

25. Further, that the law concerning the burden of proof in Court cases as enacted in Sections 107 to 110 of the Evidence Act equally to all the parties to a suit and in this case the Plaintiff and the Defendants. It was the Defendants’ position that the Plaintiff was silent as to whether it has complied with this mandatory legal requirement in the present case and proved its claim as required by law.

26. In addition, the Plaintiff does not explain either in its evidence or submissions how the money transferred by the firm of Advocates to the Deceased as 'sale proceeds' or 'purchase of property' becomes or became a loan.

27. The Defendants submitted that the above facts easily prove false the Plaintiff's claim that the said sum of Kshs. 71 million transferred to the Deceased from its clients' account were proceeds of a loan as alleged or at all.

28. If as alleged by the Plaintiff, the said funds were loan proceeds or disbursements, the Defendants argued that the said alleged loan is unlawful, null and void and irrecoverable by the Plaintiff.

29. The law, as enacted under the Advocates Act, outlaws Advocates from trading with clients' money including using clients' funds or money for money lending business. For the above reasons, the Defendants submitted that the Plaintiff's case should be dismissed with costs.

Issues For Determination 30. The Court has considered the Plaint, the Defence, the evidence tendered and the submissions by the parties and has framed the following issues for determination;a.Whether the Plaintiff advanced a loan of Kshs.71, 000, 000 to the late Hon. Kipyator Nicholas Kiprono Biwott?b.Whether judgment should be entered against the Defendants in the sum of Kshs.71, 000, 000 together with interest at commercial rates from 16th March 2018 until payment in full?

Analysis Whether the Plaintiff advanced a loan of Kshs.71, 000, 000 to the late Hon. Kipyator Nicholas Kiprono Biwott? 31. It was the Plaintiff’s case between 9th October 2014 and 13th May 2015, the Plaintiff lent the late Hon. Biwott a total of Kshs.71, 000, 000 remitted by transfer from the Plaintiff’s account number xxxxxxxxxx operated at Barclays Bank of Kenya Limited to Hon. Biwott’s account number xxxxxxxxxx operated with the same bank.

32. On the other hand, the Defendants contended that the only lawful relationship that could exist and/or existed between the Plaintiff and the deceased was that of Advocate and Client. They denied the Plaintiff’s claim of Kshs.71, 000, 000 or any sum at all as pleaded in the Plaint.

33. It is not in dispute that the funds claimed from the Estate in the sum of Kshs.71 million were transferred or paid to the Deceased by way of bank transfers and that the bank transfers or instalments were eighteen (18) in number. Also, the Plaintiff is a firm of Advocates and the transfers were made out of its clients' account.

34. The main issue in contention is whether there was a loan advanced to the Deceased by the Plaintiff. It is noteworthy that the Plaintiff herein has not produced any evidentiary document proving that the said loan ever existed.

35. In civil cases, the onus is on the Plaintiff or any other claimant to prove the position he or she postulates on a balance of probabilities. This position is anchored in law in The Evidence Act, Cap. 80 which provides the law on matters of proof and evidence thus:107. Burden of proof(1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.

108. Incidence of burdenThe burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.

109. Proof of particular factThe burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.

36. The Plaintiff argued that upon proof of payment by the Plaintiff, the onus shifts to the Defendant to demonstrate that the money received was not a loan to be repaid on demand. The Court finds no situation that has shifted the burden of proof to any of the Defendants. In the Court’s view, the burden of proof as to the facts of the case lies on the Plaintiff who wishes to have judgment entered in its favour. The onus of proving that the loan was advanced to the deceased was upon the Plaintiff.

37. The Court takes cognizance of oral agreements provided for under Section 3(1) Law of Contract Act which does not make all contracts void and unenforceable if they are not reduced into writing. Oral agreements supported by credible evidence can be and are enforceable.

38. In the instant suit, the Plaintiff has provided the below mentioned transfers which transfers do not support its case that indeed the money advanced was a loan to the deceased. A closer look at the transfers indicate the user narrative as follows;DATE AMOUNT USER NARRATIVE

13/05/2015 2,000,000 Sales proceeds

05/05/2015 2,000,000 Sales proceeds

28/04/2015 3,000,000 Sales proceeds

16/04/2015 2,000,000 Sales proceeds

30/03/2015 2,000,000 ……………..

20/03/2015 2,000,000 Sales proceeds

13/03/2015 2,000,000 Purchase of property

05/03/2015 2,000,000 ……………..

16/01/2015 1,000,000 Sales proceeds

09/01/2015 4,000,000 ………………

07/01/2015 4,000,000 Sales proceeds

16/12/2014 5,000,000 Deposit of purchase price

11/12/2014 5,000,000 …………….

20/11/2014 10,000,000 Sales proceeds

05/11/2014 10,000,000 Deposit of purchase price

31/10/2014 5,000,000 ………………

16/10/2014 5,000,000 Sales proceeds

09/10/2014 5,000,000 Sales proceeds

TOTALS 71,000,000

39. From the above table extracted from the documentary evidence presented before this court, the reasons for the transfer of the funds from the Plaintiff’s bank account to the deceased was either “sales proceed” or “deposit of purchase price”. None of the said narratives indicate that the transfers were effected as a loan to the deceased.

40. Further, in light of the provisions of the Evidence Act above, it is the Plaintiff who produced the transfers mentioned herein and the said transfers indicate the user narratives as outlined. The onus was on the Plaintiff to prove or disprove the user narrative.

41. The Halsbury’s Laws of England, 4th Edition, Volume 17, at paras 13 and 14: describes it thus:a.“The legal burden is the burden of proof which remains constant throughout a trial; it is the burden of establishing the facts and contentions which will support a party’s case. If at the conclusion of the trial he has failed to establish these to the appropriate standard, he will lose. The legal burden of proof normally rests upon the party desiring the court to take action; thus a claimant must satisfy the court or tribunal that the conditions which entitle him to an award have been satisfied. In respect of a particular allegation, the burden lies upon the party for whom substantiation of that particular allegation is an essential of his case. There may therefore be separate burdens in a case with separate issues.”b.[16] The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence?”

42. Moreover, the Plaintiff in its witness statement by Ahmed Adan in paragraphs 5 & 6 stated that the claim against the Defendants was for money that he lent the deceased between 9th October 2014 and 13th May 2015 giving an indication that he personally lent the money to the deceased. The above mentioned bank account from which the transactions were carried out was operated and maintained in the name of Wetangula Adan Makhoha & Co. and this disproves Adan’s witness statement.

43. In Mourine Mukonyo v Embu Water and Sanitation Company [2020] eKLR the court stated;“It is thus trite that in civil cases, a party who wishes the court to give a judgment or to declare any legal right dependent on a particular fact or sets of facts, that party has a legal obligation to provide evidence that will best facilitate the proof of the existence of those facts. The party must present to the court all the evidence reasonably available on a litigated factual issue.”

44. This court is satisfied that the Plaintiff has failed to prove to the Court that it advanced a loan of Kshs.71, 000, 000 to the late Hon. Kipyator Nicholas Kiprono Biwott.Whether judgment should be entered against the Defendants in the sum of Kshs.71, 000, 000 together with interest at commercial rates from 16th March 2018 until payment in full?

45. For the foregoing reasons this Court finds that the Plaintiff failed to prove its case to the required standard that is on a balance of probabilities. It therefore follows that judgment cannot be entered against the Defendants in the sum of Kshs.71, 000, 000 together with interest at commercial rates from 16th March 2018 until payment in full as prayed for in the Plaint.

Findings And Determination 46. In the light of the foregoing this court makes the following findings and determinations;i.This Court finds that the Plaintiff failed to prove its case to the required threshold, that is on a balance of probabilities;ii.The suit is hereby dismissed with costs;iii.The Plaintiff shall bear the costs of the suit,

Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 17TH DAY OF JUNE, 2022. HON. A. MSHILAJUDGEIn the presence of;Mr. Nelson Havi for the plaintiffMiss Akelo holding brief for Oyatsi for the defendantLucy-------------------------Court Assistant