[2017] KEHC 10054 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 579 OF 2015

DANIEL OCHIENG OGOLA

T/A OGOLA OKELLO & CO. ADVOCATES…….………….............PLAINTIFF

- VERSUS -

GEORGE MUGOYE MBEYA

T/A MUGOYE & ASSOCIATES ADVOCATES........DEFENDANT/APPLICANT

MAURICE OMONDI OGOLA………………….............INTENDED 3RD PARTY

RULING NO.2

1. The plaintiff, DANIEL OCHIENG OGOLA Trading As OGOLA OKELLO & Co. ADVOCATES instituted proceedings for the enforcement of the professional undertaking which had been given by GEORGE MUGOYE MBEYA Trading As MUGOYO & ASSOCIATES ADVOCATES.

2. The professional undertaking was in respect of a sum of Kenya Shillings Eighteen Million (18,000,000/-), which the respondent was to pay to the applicant within 14 days of the registration of the Assignment of Lease and the Charge.

3. It is common ground that the Assignment of Lease and the Charge were duly registered on 11th November 2013. Therefore, it follows that the respondent ought to have remitted payment of Kshs. 18,000,000/- to the plaintiff, within 14 days from the 11th of November 2013.

4. The defendant remitted payment to the plaintiff, but it was not in respect of the whole amount of Kshs. 18,000,000/-.

5. At this point it is vital to put everything within perspective.

6. First, the defendant was the advocate for MAURICE OMONDI OGOLA, who was intending to purchase Apartment No. 2 on L.R. No. 2/258, NAIROBI.

7. The agreed Purchase price was Kshs. 19,000,000/-, out of which the Consolidated Bank financed the sum of Kshs. 17,146,416/-.

8. Before the bank provided the sums it was financing, the purchaser had deposited Kshs. 1,000,000/- towards the purchase price.

9. In effect, the amount deposited by the purchaser, if added to the amount which the bank was financing would add up to Kshs. 18,146,416/-. At that stage, the outstanding difference would be Kshs. 853, 584/-.

10. However, when the defendant first gave his professional undertaking, it was not for either Kshs. 853,584/- or Kshs. 17,146,416/-. It was for Kshs. 16,200,000/-.

11. As the purchase price was for Kshs. 19,000,000/-, there would be an outstanding difference between the purchase price and the sum for which the defendant gave his first professional undertaking.

12. Thereafter, the defendant gave the professional undertaking which is the subject matter of this suit; and that undertaking was for Kshs. 18,000,000/-.

13. However, the defendant only remitted payment of Kshs. 16,200,000/-, to the plaintiff.

14. The defendant blames his failure to remit the balance upon the alleged failure by the purchaser to put him in funds.

15. First, I note that the defendant had written to the Consolidated Bank calling for the sum of Kshs. 17,146,416/-. It is not then clear why the defendant only remitted to the plaintiff, the sum of Kshs. 16,200,000/-.

16. If the bank handed over to the defendant the sum of Kshs. 17,146,416/-, and if the defendant forwarded that whole amount to the plaintiff, the outstanding balance could have been Kshs. 853,584/-.

17. The defendant has blamed the purchaser for failing to pay the sum of Kshs. 853,584/-.

18. In the defendant’s view, he had discharged his obligation, by ensuring that the transaction in respect to which he had been instructed, was duly completed.

19. It is true that the Assignment of Lease and the Charge have been duly registered. Therefore, as between the defendant and his own client, he may well have discharged his professional duty.

20. However, the professional undertaking is not one which was between the defendant and his client. The professional undertaking is as between the plaintiff and the defendant.

21. The defendant has not demonstrated to this court how he discharged his obligation under the professional undertaking, pursuant to which he was required to pay to the plaintiff Kshs. 18,000,000/-.

22. Whilst the plaintiff may have been aware that it was the purchaser who was to provide the finances in respect to the purchase price, the plaintiff took the precaution of obtaining a professional undertaking from the defendant as an “insurance” that the full sum would be remitted to the vendor.

23. I must emphasize that when an advocate gives his professional undertaking, the same is not conditional upon compliance by his client.

24. If the advocate did not wish to assume personal responsibility for the sums in respect to which he was giving a professional undertaking, then he must not give the said undertaking.

25. Once an advocate has given his professional undertaking, he is deemed to have given his word, that he would honour the undertaking, unconditionally.

26. If an advocate were to offer an undertaking which was conditional upon receipt of payment from his client or from any other source, that would not constitute a proper professional undertaking.

27. In this case the defendant gave a professional undertaking which was irrevocable. It was an undertaking that the defendant would pay to the plaintiff the sum of Kshs. 18,000,000/- within 14 days of the registration of the Assignment of Lease and the Charge.

28. Clause (vi) of the letter of undertaking states as follows;

“That by accepting, retaining or utilizing the Title Documents that shall be sent by you to us, we shall be deemed not only to have accepted and confirmed the foregoing undertaking, terms and conditions as set forth hereinabove but also to have acknowledged and confirmed that we are solely liable and responsible for full compliance with the said undertaking, terms and conditions and that we shall indemnify you fully and keep you fully indemnified in all respects on account of any breach on our part of the said undertaking and/or terms and conditions aforesaid”.

29. Nothing could be more explicit than that pronouncement, that the defendant would be “solely liable and responsible for full compliance with the said undertaking….”

30. Accordingly, I find the defendant liable to the plaintiff for the terms of the professional undertaking.

31. The defendant is thus liable to pay the sum of Kshs. 1,800,000/- with interest from 26th November 2013.

32. However, the defendant is not entitled to the interest at 6% above the base lending rate of Barclays Bank Limited. That rate of interest was payable under the Agreement of Sale, which is the contract between the Vendor and the Purchaser.

33. The contract of sale was not part of the professional undertaking. The defendant cannot be held accountable for the failure by his client to comply with the terms and conditions of the Agreement for Sale.

34. The converse is equally true; that the purchaser cannot be held liable under the professional undertaking, because he was not party to it.

35. If the plaintiff wished to enforce the contract between his client and the purchaser, he would have to bring a suit in the name of the vendor, and the purchaser would be the defendant.

36. I find and hold that the plaintiff is entitled to interest calculated at Court rates, from 26th November 2013.

37. Finally, I order the defendant to pay to the plaintiff, the costs of the suit.

DATED, SIGNED and DELIVERED at NAIROBI this 14th day of November2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

Sasaka for Ochieng for the Plaintiff

Mrs. Khayesi for the Defendant/Applicant

No appearance for the Intended 3rd Party

Collins Odhiambo – Court clerk.