[2020] KESDT 37 (KLR)

REPUBLIC OF KENYA

THE JUDICIARY

OFFICE OF THE SPORTS DISPUTE TRIBUNAL

AT NAIROBI

SDT CASE NO. 15 OF 2020

ERICK KINUTHIA MAINA....................PLAINTIFF/APPLICANT

VERSUS

KCB FOOTBALL CLUB.......................................1ST DEFENDANT

STEPHEN OTHORO..........................................2ND DEEFENDANT

AZU OGOLA........................................................3RD DEFENDANT

BRAMWEL SIMIYU..........................................4TH DEFENDANT

ELIAKIM KIDINGA.........................................5TH DEFENDANT

DECISION

(Notice of Motion Application dated 8th October 2020)

Hearing: 4th November, 2020

Panel: Mrs. Elynah Sifuna-Shiveka - Chairperson;

Ms. Mary Nyokabi Kimani – Member

Mr. Allan Mola Owinyi - Member

Appearances:C.M.O Advocates for the Plaintiff/Applicant

TripleOKLaw Advocates for the 1st, 3rd and 5th Defendants

Kieti Advocates for the 2nd and 5th Defendants

The Plaintiff has approached this Tribunal through an application by way of Notice of Motion dated 8th October 2020 (‘the Application’) and filed on 8th October 2020. The Plaintiff requests the Honorable Tribunal to grant the following Orders:

1. That the Application be certified urgent and be heard ex partein the first instance;

2. That service of the Application be dispensed within the 1st instance;

3. That the 1st Defendant be immediately and urgently compelled to issue release letter for the Applicant for breach of the contract pending inter parties hearing and determination of the case to enable the Applicant secure a new club since the 2020/2021 transfer window is closing on the 2nd of November 2020;

4. That a declaration be made that the subject contract is valid and enforceable;

5. That a declaration be made that the 1st Defendant breached the valid contract;

6. That a declaration be made that the 2nd to the 5th Defendant signed the contract on behalf of the 1st Defendant;

7. That all defendants be held liable for breach of contract;

8. That the 1st Defendant be compelled to pay Kshs 250,000 to the Applicant being the legal and valid transfer signing fee;

9. That the 1st Defendant be compelled to pay Kshs 720,000 to the Applicant as being unpaid salary;

10. That damages for breach of contract and interest plus costs of the suit be borne by the defendants.

11. Make necessary orders; and on other grounds contained in the application as supported by the Affidavit of ERICK KINUTHIA MAINA, adduced at the hearing held on the 4th November 2020.

12. The 1st, 3rd and 4th Defendants opposed the Application dated 8th October 2020 on the grounds that it lacked merit. They averred that the Plaintiff was not entitled to any of the reliefs sought as against the 1st, 3rd and 4th Defendants as the Applicant had no valid Player’s Contract with the 1st Defendant as provided for under the clause 6. 2.7. 6 of the FKF Rules and Regulations. They further averred that a Release Letter/Clearance Certificate can only be issued to a Player by the Club for which he is registered and that at no point was the Applicant a registered player for the 1st Defendant.

13. 1st, 3rd and 4th Defendants further averred that since there was no valid contract, the same was incapable of breach as breach can only occur where there is valid and binding contract.

14. The 1st, 3rd and 4th Defendants also averred that since the 2nd and 5th Defendants were not the 1st Defendant’s authorized club officials they had no authority to sign a valid contract that would bind the 1st Defendant.

15. The 2nd and 5th Defendant opposed the Application dated 8th October 2020 on various grounds including the fact that they dealt with him and Nairobi Stima as representatives of Protégé FC and not of the 1st Defendant as initially claimed.

16. The 2nd and 5th Defendant also averred that contrary to rule 6. 5.4 of the FKF Rules and Regulations, there was no written transfer agreement between the 1st Defendant and Nairobi Stima and that consequently the Applicant could not then complete a valid contract with the 1st Defendant.

17. That despite Protégé F.C. having paid Kshs 265,000 to Nairobi Stimaon 6th February 2020, the latter was yet to issue a release letter to enable the Applicant conclude a contract with Protégé FC.

18. In conclusion, it was the 2nd and 5th Defendant’s averment that should the Honourable Tribunal find the disputed contract valid, any liability for breach of contract cannot be imposed on the 2nd and 5th Defendant as they were not a party in their personal capacity of the disputed contract. They relied on the established contractual principle that it is only the parties to a contract that can be held liable for its breach.

Analysis and Determination

19. Having looked at the parties’ pleadings, this panel is of the view that the causes raises the following issues for determination:

i.Whether the disputed contract is valid and enforceable

ii.Whether the 2nd and the 5th defendants are the agents of the 1st defendant

iii.Which club has the ownership rights to the Plaintiff/Applicant

iv.Who is liable to the plaintiff for damages

v.Whether the 1st defendant is liable to pay the plaintiff/applicant the sum of Ksh. 250,000 as transfer fee.

vi.Whether the 2nd and 5th defendants are personally liable for damages for alleged breach of contract

i.Whether the disputed contract is valid

20. To be able to determine the validity of the contract in question, we shall check the circumstances that presided the signing. In his supporting affidavit, the plaintiff/applicant stated in paragraph 3 that he was approached by the 2nd defendant who introduced himself as the agent of the 1st defendant and offered him a contract at the club. In paragraph 7 he states that he was offered a contract where 1st defendant was party to the contract that was signed on 2nd September 2019.

21. The 1st,3rd and 4th defendants in their submission paragraph 17 denies having any form of a contract with the plaintiff/applicant and that the alleged contract was not signed in accordance with clause 6. 2.7. 6 of FKF Rules and Regulations which requires the contract be signed by the player and the club official with authority to sign the contract.

22. The Law of Contract recognizes mistake and misrepresentation as one of the vitiating factors of the contract. Both must be shown to have influenced a party’s decision to conclude a contract. Misrepresentation by omission gives rise to a reasonable mistake when a party has remained silent where in law he ought to have spoken out to correct the other person’s misunderstanding.

23. The 2nd and 5th defendant commits in our opinion a unilateral mistake which occurs during formation of a contract, where one of the parties in this case the Plaintiff is mistaken as to which party he is entering into contract with, whether Protégé FC or KCB and the other party that is 2nd and 5th defendant is aware of the mistake because they have fraudently induced the mistake by promising the plaintiff/applicant a contract with the 1st defendant.

24. Although the 2nd and 5th defendants had a contract with the 1st defendant, they misrepresented facts to the plaintiff/applicant by having him believe the 1st defendant was contracting him. They presented the plaintiff/applicant with a contract which the 2nd and 5th defendants signed for the 3rd and 4th defendants. This is further proved in the plaintiff’s supporting affidavit paragraph 18, the applicant questioned why he was practicing with Protégé FC a feeder team while he belonged to the 1st defendant’s team, a fact he was made to believe by the 2nd and 5th defendants. It is the plaintiff’s submission that after questioning, he was transferred to the 1st defendant’s field where he practiced for 2 weeks.

25. The mistake and misrepresentation of the 2nd and the 5th defendants renders the contract voidable.

ii. Whether the 2nd and the 5th defendants are agents of the 1st defendant.

26. Agency is a legal relationship between 2 parties. An agent is employed to represent another in dealing with third parties. Cap 23 Laws of Kenya govern the agency law in Kenya. In Timmins (Town) v Brewers’ Warehouse Co. Ltdit was stated

“the outstanding feature of an agent ‘s employment in a legal sense is that he is employed primarily to bring about business relations between the principal and third persons, and this characteristic is perhaps the most distinctive mark of the agent as contrasted with others not agents who act in representative capacities”

In Agency Law, the relationship between the 3rd party and the agent ends the moment the Principal and the 3rd party relate.

27. The 1st defendant has a contract dated 29th January 2020 with Protégé FC where the 2nd and 5th defendant work. Protégé FC has the responsibility to scout, identify, train and develop talent as stipulated in the contract paragraph 3 from which the 1st defendant selects 2 players each year.

28. The relationship between the parties creates agency where the 2nd and 5th defendants working for Protégé FC scout for players to train with the intention of transferring them to the 1st defendant. This is a business relation with an end goal of transferring players to the 1st defendant as showcased in the case of Timmins (Town) vs. Brewers House Company Limited.

29. Agency relationship can be created in law through various ways, among them Agency by Estoppel that means a person by his words or conduct has made a 3rd party believe that the person he is contracting is an agent of the first mentioned person and therefore the first mentioned person is estopped from denying the fact that the person with whom the 3rd party contracted is an agent. In this case, the 1st defendant is estopped by the law from denying that the 2nd and 5th defendants are their agents due to the fact that their conduct and word implied they worked as agents of the 1st defendant.

iii. Who has the ownership rights of the Plaintiff/applicant?

30. The relationship between the 2nd and 5th defendant in relation to the 1st defendant is that of an agent and a principal relying on formation of agency by estoppel.

31. The requirements for agency by estoppel must be clearly present for agency to be created. The plaintiff has proven to the honourable tribunal that the first requirement which is, there must be a representation is present. There must be a statement or conduct on the part of the principal herein the 1st defendant which amounts to representation which the agent has authority to act. The presence of a contract that authorizes the 2nd and 5th defendants to scout and train players for the end goal of having them transferred to the 1st defendant fits the bill.

32. Another requirement is that there must be a reliance on the representation. The plaintiff/applicant has shown the fact that he relied on the representation and information presented to him by the 2nd and 5th defendant. They informed him of their intention to give him a contract as agents of the 1st defendant as is stated in the plaintiff’s supporting affidavit and further went on to have him sign the contract on 2nd September 2019. Every move the plaintiff took after, relied on the representation of the 2nd and 5th defendant.

33. Agency by estoppel further requires be an alteration of the party’s position resulting from such reliance. The Plaintiff/applicant terminated his contract with stima that was effective till 2021 to enter into one with the 1st defendant. This is a clear alteration of his position.

34. The representation must be the proximate cause leading the third party into the mistake. As presented, the plaintiff relied entirely on the representation of the 2nd and 5th defendant into signing a contract with the 1st defendant. The applicant signed the contract without having a letter of consent from the club as required by clause 6. 5.5 of the FKF Rules and Regulations, we are persuaded to think believing he is dealing with the agents of the 1st defendants, he did not pursue the procedural aspect required hence making mistakes.

35. All the requirements of agency by estoppel having been met, the 1st defendant is estopped from denying the 2nd and 5th defendants were not their agents hence their activities are binding the 1st defendant.

36. It is therefore safe to say the 1st defendant and their agents have ownership rights of the plaintiff/applicant. The plaintiff/applicant has stated at some point for two weeks he even practiced with the 1st defendant’s team members, this implies acceptance of him as a team member.

iv. Who is liable for damages?

37. Having established that the 1st defendant together with his agents 2nd and 5th have ownership rights of the plaintiff, they are hereby held liable for damages.

v.Whether the 2nd and 5th defendants are personally liable for damages for alleged breach of contract

38. The Plaintiff in his application by way of Notice of Motion dated 8th October 2020 has sought orders that all defendants be held liable for breach of Contract. Learned Counsel for the plaintiff avers that the plaintiff’s contractual rights have been violated and has sought remedies from this Tribunal.

39. Opposing the application, Kieti Advocates, the 2nd and 5th defendant’s Advocates, submitted that in the event that the disputed contract was upheld the 2nd and 5th defendants could not be held liable for breach of contract in their personal capacity as neither of them was a party to the disputed contract.

40. The 2nd and 5th defendants at paragraph 9 of the 2nd Defendant’s Replying Affidavit have admitted to signing the “KCB Football club player’s contract”. The 2nd and 5th defendants, and not Protégé F.C, entered into a contract with the plaintiff allegedly on behalf of the 1st defendant.

41. At paragraph 4 of the 2nd defendant’s replying affidavit the 2nd and 5th defendants admit that neither of them is an agent of the 1st Defendant.

42. The 2nd and 5th defendants are club officials of Protégé FC and thus could in no capacity whatsoever sign the agreement on behalf of the 1st defendant.

43. In their submissions, Advocates for the 2nd and 5th defendants, submitted that the 2nd and 5th defendants dealt with the Plaintiff in their capacity as representatives of Protégé FC and not as agents of the 1st defendant as initially alleged. They also averred that though prima facie the contract relied on by the plaintiff appears to establish a contractual relationship between the plaintiff and the 1st defendant events before and after it’s signing reveal that it was a misnomer and that it was Protégé FC and not the 1st defendant that had an intention to sign up the plaintiff.

44. Contrary to the Court of Appeal’s finding in Kenya Tea Development Agency Limited v Victory Tea Brokers Limited & 2 others [2019] eKLR,where it was held that the Directors of a company could not be sued in their own personal capacity under the principle of separate legal personality, in the instant case, the 2nd and 5th defendant fraudulently entered into a contract with the plaintiff on behalf of the 1st defendant and should therefore be held personally liable for breach of contract. The act by the 2nd and 5th defendant to enter into a contract on behalf of the 1st defendant was fraudulent and they should bear personal responsibility in the transaction which had given rise to the losses occasioned by the plaintiff; Their fraudulent misrepresentations and inducement led to the plaintiff’s signing of the contract and consequently should be held personally liable for any breach of contract.

ORDERS

45. Having established that the 2nd and the 5th defendants acted in their capacity as the agents of the 1st defendant, and signed the contract on behalf of the 1st defendant on 2nd day of September 2019, the contract is hereby declared valid on the basis of the agency by estoppel created between the 1st defendant and the 2nd and 5th .

46. Though the FKF Rules and Regulations clause 6. 2.7 requires the contract be signed by the player and the club officials on all pages, the contract presented by the plaintiff/applicant has clearly been signed on all pages by the plaintiff and although the 2nd and 5th defendants now herein referred to as the agents of the 1st defendants failed to sign on all pages knowing fully the FKF Rules and Regulations require them to sign. In the interest of justice, it shall be very unfair to invalidate the contract based on the mistake of the agent and therefore the contract’s validity is upheld.

47. Paragraph 21 of the plaintiff’s application , the plaintiff states he has suffered damages due to the breach of the contract , which paragraph 3. 4 of the contract states:

“The club will be obligated to pay the player a monthly salary of KES. 30,000 in words, THIRTY THOUSAND KENYA SHILLINGS during the period the player’s contract will be in force.”

48. A claim for damages by the plaintiff/ applicant for breach of contract is entitled. In the Anson’s Law of Contract, 28th Edition at pg. 589 and 590 the law is entitled to be that:

Every breach of contract entitles the injured party to damages for the loss he or she has suffered. Damages for breach of a contract are designed to compensate for the damage, loss or injury the claimant has suffered through that breach.”

The plaintiff/applicant has shown the court though the contract entitles him a monthly pay of Kshs. 30,000. 00 he has not been receiving the same save for the money the mother has been receiving.

49. Article 12 of FIFA Regulations on the Status and Transfer of Players requires clubs to comply with their financial obligation as per the terms stipulated in the contract, this is a standard requirement and therefore the 1st defendant is in breach of their obligation as per the FIFA Regulations.

50. Article 17 of FIFA Regulations (Regulations on the Status and Transfer of Players) requires the party in breach to pay compensation to the injured party. compensation for the breach is calculated with due consideration to the law of the country concerned.

51. In the application, paragraph 24, the plaintiff prays to be given a Release Letter to enable him get another club, the 1st defendant is hereby ordered to provide the letter.

52. Although the contract the plaintiff signed with the 1st defendant has not expired, he is entitled to terminate it and given a release letter. Article 14 of FIFA Regulations (Regulations on the Status and Transfer of Players) states that an effective contract may be terminated by either party without consequences of payment of compensation or imposition of sporting sanctions where there is a ‘just cause’. In this case, we are of the opinion that the defendants’ failure to pay the plaintiff is a just cause and the plaintiff therefore allowed to terminate the contract and issued with a release letter.

53. Save for the 3rd and the 4th defendants all the defendants are hereby liable for breach of contract.

54. The 2nd and 5th defendant are liable in their personal capacity individually since the acted as agents of the 1st defendant and Protégé FC and fraudulently lured the plaintiff/applicant.

CONCLUSION

55. The Tribunal shall therefore proceed to entertain the claim as against the 1st, 2nd and 5th Defendants.

56. The defendants shall pay for lost income, damages and the cost of the suit and interest.

Dated and delivered at Nairobi this __16th__day of ___November____, 2020.

Signed by:

1. Mrs.Elynah Sifuna- Shiveka, _______________________

Chairperson

2. Ms. Mary Nyokabi Kimani, ________________________

Member

3. Mr. Allan Mola Owinyi ________________________

Member