https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1258
The appeal failed because the respondent had adequately shown authority to sue, the addendum was not proved to be a valid binding corporate act, section 45 of the Advocates Act did not bar inquiry into whether the appellant lawfully handled and accounted for client monies, and the appellant did not satisfactorily...
Source-derived case information.
- Citation
- [2026] KECA 1258 (KLR)
- Parties
- Appellant: Evans Ezekiel Wafula Simiyu; Respondent: Wanyororo Farmers Limited
- Court
- Court of Appeal
- Jurisdiction
- Kenya
- Case Number
- Civil Appeal E016 of 2023
- Procedural Posture
- Civil Appeal / Appeal From High Court Judgment in an Originating Summons / Converted Plaint
- Outcome
- Appeal dismissed with costs to the respondent
- Judges
- ["DK Musinga", "M Ngugi", "GV Odunga"]
- Legal Topics
- Authority of Corporate Litigants, Order 4 Rule 1(4) Verifying Affidavit, Advocate Client Remuneration Agreement, Section 45 Advocates Act, Rendering of Accounts by Advocate, Fiduciary Duty of Advocate, Discharge Vouchers, Doctrine of Indoor Management / Turquand Rule, Pleadings and Unpleaded Issues, Burden of Proof
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Evans Ezekiel Wafula Simiyu
Appellant
Wanyororo Farmers Limited
Respondent
Procedural Posture
Civil Appeal / Appeal From High Court Judgment in an Originating Summons / Converted Plaint
Legal Issues
- 1 Whether the respondent properly authorized institution of the suit and the supporting affidavit
- 2 Whether the High Court lacked jurisdiction to interrogate the addendum under section 45 of the Advocates Act
- 3 Whether the appellant was denied an opportunity to render accounts before judgment
Ratio Decidendi
The appeal failed because the respondent had adequately shown authority to sue, the addendum was not proved to be a valid binding corporate act, section 45 of the Advocates Act did not bar inquiry into whether the appellant lawfully handled and accounted for client monies, and the appellant did not satisfactorily explain the disbursement of the admitted Kshs. 97,096,042.15 received on the respondent's behalf. The discharge vouchers and Turquand rule could not override the appellant's fiduciary obligation to account.
Court Disposition
Appeal dismissed with costs to the respondent
Orders
- The judgment and decree of the High Court were left undisturbed
- The appellant must bear the costs of the appeal
Full Case Text
Judgment text and source record
1 paragraphs
Simiyu v Wanyororo Farmers Ltd (Civil Appeal E016 of 2023) [2026] KECA 1258 (KLR) (3 July 2026) (Judgment) Neutral citation: [2026] KECA 1258 (KLR) Republic of Kenya In the Court of Appeal at Nairobi Civil Appeal E016 of 2023 DK Musinga, M Ngugi & GV Odunga, JJA July 3, 2026 Between Evans Ezekiel Wafula Simiyu Appellant and Wanyororo Farmers Limited Respondent (Being an appeal from the Judgment and Decree of the High Court at Nakuru (R. Ngetich, J.) (as she then was) dated 30th April 2020 in High Court Civil Suit No. 2 of 2017 (OS)) Judgment 1.Before this Court is an appeal from the judgment of the High Court at Nakuru (Ngetich, J.) (as she then was) delivered on 30th April 2020 by which the learned judge held that the appellant had failed to account for Kshs. 84,196,042.15 received on behalf of the respondent and entered judgment against him for that sum together with interest and costs. 2.The dispute culminating in the appeal stemmed from an Originating Summons dated 7th February 2017 filed by the respondent in High Court Civil Suit No. 2 of 2017 (O.S.). Through the Originating Summons, the respondent sought orders compelling Evans Ezekiel Wafula Simiyu (the appellant), Bernard Chege and Edgar D. Washika Ochima T/A E. Wafula & Associates Advocates to render a cash account of monies received on its behalf from the Attorney General on 1st December 2014 and 14th August 2015; to pay over the sums received together with interest; and in default to show cause why disciplinary action should not be taken against them under section 56 of the Advocates Act for being guilty of professional misconduct. 3.The dispute had its genesis in Nakuru HCCC No. 821 of 1993 in which the respondent sued the Attorney General and others, arising from the destruction of the company’s property by the Provincial Administration. To pursue the claim, the company instructed E. Wafula & Associates Advocates through a letter of engagement dated 23rd October 2012. Subsequently, on 28th October 2013, a consent judgment was entered in favour of the respondent for Kshs. 39,196,042.15 together with costs and interest from 30th September 1999, and the matter was marked as settled. Thereafter, a Certificate of Order against the Government was issued and payment was processed through the Attorney General’s office. The advocates eventually received a sum of Kshs. 39,196,042.15 on 24th December 2014 and a further sum of Kshs. 57,900,000/- on 7th September 2015, bringing the total sum received on behalf of the company to Kshs. 97,096,042.15. The respondent’s complaint was that despite receipt of these funds, the advocates neither rendered accounts nor remitted the monies to the company. 4.The appellant opposed the Originating Summons through a replying affidavit sworn on 3rd April 2017. He acknowledged acting for the respondent in Nakuru HCCC No. 821 of 1993 and receiving the decretal sums from the Attorney General on the respondent's behalf. He maintained that the monies were lawfully dealt with pursuant to instructions from the respondent's officials, denied liability for the sums claimed, and further contended that the suit had not been properly authorized by the respondent company. He also averred that Bernard Chege, the 2nd defendant, and Edgar D. Washika Ochima t/a E. Wafula & Associates Advocates, the 3rd defendant, had been wrongly joined to the proceedings as they neither received nor dealt with the settlement funds and had no involvement in the matters complained of. 5.Wilson Nyonji Kimani, a director and treasurer of the respondent, also filed a replying affidavit supporting the appellant’s position. He averred that the appellant had been duly instructed by the respondent’s officials to pursue Nakuru HCCC No. 821 of 1993 and that the decretal sums subsequently paid by the Attorney General were received and disbursed with the knowledge of the respondent’s directors. He maintained that the appellant had faithfully dealt with the monies in accordance with the directors’ instructions and that any complaint regarding the accounts was misconceived. He further contended that the resolutions relied upon by the respondent to institute suit were procured through an improperly convened meeting that excluded other directors, and that none of the directors had previously challenged the manner in which the funds had been distributed. Finally, he asserted that he had not been furnished with any documents requiring disclosure and urged that the application be dismissed. 6.At the hearing, the company called Geoffrey Mutahi Ndegwa, a director of the respondent company, as PW1. He testified that the company had instructed the appellant to act on its behalf in Nakuru HCCC No. 821 of 1993 and subsequently discovered that approximately Kshs. 97 million had been paid by the Government in settlement of the claim. He maintained that no meeting of the directors had ever authorized the appellant to distribute the funds in the manner alleged and denied any knowledge of instructions permitting the appellant to retain interest or costs beyond the agreed legal fees. He further testified that the addendum dated 8th October 2013 had been executed without the authority of the company and contended that Joseph Waweru Gatere who purportedly signed for the respondent was neither a director nor a person authorized to bind the company, and that no special resolution had been passed approving the arrangement. He also stated that the payments allegedly made to Joseph Gatere, James Karega Kaguru, Wilson Nyonji Kimani, Joseph Waweru Gatere and Eliud Ndungu Thuo had not been sanctioned by the company. According to him, despite repeated demands, the appellant had failed to render any account of the monies received on the company’s behalf. 7.During cross-examination, PW1 stated that he had served as a director of the respondent since 1993 and had participated in the resolution appointing the appellant as the company’s advocate. Although he acknowledged having seen the addendum through documents obtained during investigations, he maintained that it was not a valid company document. He reiterated that Joseph Gatere was not a director and that no company resolution had authorized the payments in question. He further testified that he only became aware of the payment of the decretal sums through investigations conducted in 2015 and denied knowledge of the minutes dated 29th March 2016, maintaining that he had neither attended the meeting nor recognized the minutes. On re- examination, he reiterated that he had never attended the alleged meeting of 29th March 2016, was unaware of any communication from the appellant following the consent, and knew of no resolution authorizing the appellant to distribute the funds as alleged. 8.The respondent’s second witness, Eliud Ndungu Thuo, the company secretary and a director, testified as PW2. He confirmed that the respondent had instructed the appellant to pursue compensation from the Government, and stated that the company only learnt that payment had been made after making inquiries at the Attorney General’s office. He testified that no board meeting had ever authorized the appellant to distribute the funds to individual directors and maintained that Joseph Waweru Gatere was merely a shareholder but not a director of the respondent. He further stated that the payments allegedly made to Gatere and other individuals had not been sanctioned by the company. PW2 acknowledged having received Kshs. 1.5 million from the appellant, but maintained that the payment was not made on behalf of the company. He testified that he and others had asked the appellant for the money while awaiting payment from the Government, and that it was to be refunded. He further testified that the company accepted the appellant’s legal fees of Kshs. 13 million and sought only the balance of the monies received from the Government. 9.On cross-examination, PW2 acknowledged that the company had never formally provided the appellant with a bank account into which the settlement funds were to be paid. He confirmed that the respondent had at one point been managed by Government- appointed administrators before management reverted to elected directors. He admitted receipt of Kshs. 1.5 million personally, but maintained that it was a loan. He further acknowledged that the minutes dated 29th March 2016 bore genuine signatures, but asserted that they had been prepared at the appellant’s office after police investigations had commenced and were intended to justify payments that had already been made. On re-examination, he reiterated that Joseph Gatere lacked authority to execute documents on behalf of the respondent, that the respondent did not recognize the addendum, and that the money he received was a personal loan which he was prepared to refund. He also maintained that the appellant never informed the company when payment was received from the Government, and reiterated that the minutes of 29th March 2016 had been prepared at the appellant’s office while investigations were ongoing. 10.The defence called Wilson Nyonji Kimani, the respondent’s treasurer and one of its directors, as DW1. He testified that the appellant had been properly instructed to act for the company and maintained that the addendum reflected the arrangement agreed upon regarding the settlement proceeds. He stated that the addendum bore his signature and that of Joseph Gatere, whom he regarded as authorized to participate in the affairs of the company. He further testified that he had authority from the chairman and secretary to execute the document. He acknowledged receiving Kshs. 2 million after the conclusion of the suit and confirmed that other directors, as well as Joseph Gatere, also received payments. He denied having received notice of the board meeting held on 13th January 2017 at which resolutions adverse to the appellant were passed. 11.During cross-examination, DW1 confirmed that the appellant received Kshs. 97,096,042.15 on behalf of the company. He admitted that the company had not given written instructions authorizing the appellant to make payments directly to individual directors and other persons totaling to Kshs. 13 million. DW1 also testified that he did not know who the appellant paid the balance of Kshs. 84 million. He also admitted that Joseph Gatere was neither an elected director nor a registered shareholder and that he was representing one Margaret Wambui who was deceased, that the addendum did not bear the company seal, and that no meeting had expressly authorized him to execute the addendum. He also acknowledged that criminal proceedings had been instituted against both himself and the appellant and agreed that the company’s members were entitled to know what had become of the settlement monies. On re-examination, he maintained that the directors who signed the original letter of instruction had all received payments from the appellant, reiterated his support for the manner in which the funds were disbursed, and maintained that the appellant did not owe the respondent any money. 12.In the impugned judgment, the learned judge identified three central issues for determination: whether the addendum dated 8th October 2013 had been properly authorized by the company; whether the company had authorized payment of Kshs. 13 million to various directors; and whether any money remained due from the advocate to the company. 13.The court found that although the original letter of engagement dated 23rd October 2012 was undisputed, the addendum dated 8th October 2013 had not been shown to have been properly authorized by the company. The court observed that Wilson Nyonji Kimani admitted being the only director who signed it, that Joseph Gatere was not a director, that no meeting had elected him as one, and that the addendum lacked the company seal. The court therefore concluded that the addendum was not a valid company document and could not bind the company. 14.The court further held that there was no valid resolution or corporate authority authorizing payment of Kshs. 13 million to individual directors and associates. The learned judge held that even if some directors had personally incurred expenses in pursuing the litigation, reimbursement could only lawfully occur after approval by the company through its proper organs.Consequently, the payments made to the directors were found to have been irregular and unauthorized. 15.On the question whether money remained due, the court observed that it was undisputed that the Government had paid approximately Kshs. 97 million through the appellant and that the appellant was entitled to legal fees of Kshs. 13 million. The court found, however, that apart from the payments totaling Kshs. 13 million made to various individuals, there was no evidence explaining how the balance of Kshs. 84,196,042.15 had been dealt with or demonstrating that it had been remitted to the respondent. The appellant had therefore failed to account for the funds received on behalf of his client. The court consequently entered judgment in favour of the respondent and ordered the appellant to pay Kshs. 84,196,042.15 together with interest at court rates from the date of filing suit and costs of the suit. 16.Being aggrieved and dissatisfied with the judgment of the trial court, the appellant preferred this appeal. In the Memorandum of Appeal dated 21st December 2022, the appellant contends that the learned judge erred in law and in fact by entertaining and determining a suit that was allegedly fatally defective, having been supported by an affidavit sworn by Geoffrey Mutahi Ndegwa, whom the appellant maintained was neither authorized nor competent to act on behalf of the respondent company as required under Order 4 rule 1(4) of the Civil Procedure Rules; entering judgment against the appellant for Kshs. 84,196,042.15 without first affording him an opportunity to render accounts as sought in the Originating Summons and notwithstanding the existence of remuneration agreements dated 23rd October 2012 and 8th October 2013; determining the validity and efficacy of the agreement dated 8th October 2013 in the absence of assessors as provided for under section 45(2) of the Advocates Act; entering judgment for Kshs. 84,196,042.15 without considering the substance and effect of the agreement as to fees dated 8th October 2013; granting reliefs that had not been specifically prayed for; disregarding acknowledgements of payment and discharge vouchers allegedly executed by the respondent's agents; failing to apply the rule in Royal British Bank v Turquand (1856) 6 E&B 327 which was pleaded and was wholly applicable to the case; and failing to determine whether there existed a valid resolution authorizing the institution and maintenance of the suit. 17.Consequently, the appellant seeks orders that the appeal be allowed; that the judgment and decree of the High Court delivered on 30th April 2020 be set aside and substituted with an order dismissing the Originating Summons dated 7th February 2017 with costs; or, in the alternative, that the judgment be set aside and substituted with an order directing the appellant to render accounts to the respondent in accordance with the advocates' remuneration agreements dated 23rd October 2012 and 8th October 2013; and that the costs of this appeal be awarded to the appellant. 18.At the hearing of this appeal, learned counsel, Mr. Bwire, was present for the appellant while the respondent was represented by learned counsel, Mr. Waiganjo, who appeared alongside learned counsel, Ms. Wangari. Both counsel made brief oral highlights of their respective client’s written submissions. 19.Highlighting the appellant's written submissions dated 17th May 2024, Mr. Bwire submitted that the appeal raised four broad issues, namely, whether the Originating Summons was competently instituted; whether the High Court had jurisdiction to interfere with the advocate-client remuneration agreements; whether the learned judge erred in entering judgment for Kshs. 84,196,042.15 without first requiring the appellant to render accounts; and whether the court failed to accord due effect to the discharge vouchers, the acknowledgments and the rule in Royal British Bank v Turquand (1856) 6 E & B 327. 20.On the first issue, counsel submitted that the respondent, being a corporate entity, could only act through resolutions passed by its directors and was therefore required to authorize the institution of proceedings in accordance with Order 4 rule 1(4) of the Civil Procedure Rules. Relying on Spire Bank Limited v Land Registrar & 2 Others [2019] eKLR, counsel contended that a valid company resolution must authorize not only the institution of proceedings but also identify the person or persons mandated to conduct the litigation on behalf of the company. According to counsel, the resolution dated 13th January 2017 merely instructed Waiganjo & Co. Advocates to pursue recovery of the decretal sum and did not authorize the filing of the Originating Summons or the swearing of affidavits in support thereof. 21.Counsel further submitted that Geoffrey Mutahi Ndegwa, who swore the supporting affidavit to the Originating Summons, had not been shown to be a director or authorized representative of the respondent. It was contended that the CR12 on record referred to one Geoffrey Mutaru Ndegwa and not Geoffrey Mutahi Ndegwa, and that no evidence had been tendered to establish that the two names referred to the same person. Counsel therefore maintained that Geoffrey Mutahi Ndegwa was a stranger to the company and lacked authority to institute proceedings on its behalf. 22.Building on that argument, counsel submitted that the defect went beyond a mere procedural irregularity and struck at the very jurisdiction of the court. Reliance was placed on Benjamin Leonard Macfoy v United Africa Company Limited [1961] 3 All ER 1169, where it was held that a proceeding founded upon a nullity is incurably defective, and that one cannot place something on nothing and expect it to stand. Counsel maintained that because the Originating Summons had allegedly been instituted without proper corporate authority, the proceedings before the High Court were void ab initio and incapable of conferring jurisdiction upon the court. Counsel further cited Adero & Another v Ulinzi Sacco Society Limited [2002] 1 KLR 577 for the proposition that jurisdiction cannot be derived from defective pleadings, and that proceedings commenced without authority are a nullity from inception. 23.Counsel submitted that the learned judge erred in treating the requirement for a company resolution as a procedural technicality curable under Article 159 (2)(d) of the Constitution. Reliance was placed on Spire Bank Limited v Land Registrar & 2 Others (supra), Law Society of Kenya v Centre for Human Rights and Democracy & 12 Others, Petition No. 14 of 2013; Raila Odinga v IEBC & Others [2013] eKLR; and Jaldesa Tuke Dabelo v IEBC & Another [2015] eKLR, for the proposition that Article 159 is not a panacea for all procedural shortfalls, and that mandatory procedural requirements prescribed by law cannot be disregarded under the guise of substantive justice. Counsel maintained that the failure to comply with Order 4 rule 1(4) of the Civil Procedure Rules rendered the suit incompetent and deprived the High Court of jurisdiction to entertain it. 24.Turning to the advocate-client remuneration agreements, counsel submitted that it was common ground that the respondent retained the appellant to prosecute Nakuru HCCC No. 821 of 1993, and that the parties entered into a retainer agreement dated 23rd October 2012 under which the appellant was entitled to legal fees of Kshs. 13 million in addition to the fees received by the respondent on Party and Party basis in the suit. Counsel further submitted that on 8th October 2013 the parties executed an addendum wherein the respondent was to be entitled to the principal sum that would be received from the proceedings, whereas interest and costs of the matter were agreed to be paid to the appellant as fees. According to counsel, both agreements were advocate-client remuneration agreements falling within section 45(1) of the Advocates Act and remained binding upon the parties, unless and until set aside through the statutory procedure prescribed under section 45(2) of the Act. 25.Counsel contended that the respondent never filed any application challenging, varying or setting aside either the Retainer Agreement dated 23rd October 2012, or the Addendum dated 8th October 2013 in accordance with section 45(2) of the Advocates Act. Counsel submitted that section 45(1) permits an advocate and client to enter into a binding agreement fixing the advocate's remuneration, while section 45(2) provides the exclusive procedure through which such an agreement may be challenged on grounds that it is harsh, unconscionable, unfair or unreasonable. Counsel further submitted that, by virtue of section 45(2A), any application seeking to set aside or vary such an agreement must be made within one year of the agreement or, where a fee note has been issued, within three months of receipt thereof. According to counsel, the respondent never invoked that procedure within the prescribed period and was therefore statute-barred from challenging the agreements. Consequently, it was submitted, the High Court lacked jurisdiction to inquire into the validity, efficacy or enforceability of the agreements in the absence of a formal application brought under section 45(2), and that in any event, section 45(2) expressly provides that such applications be heard before a judge sitting with two assessors, advocates of not less than 5 years standing, appointed by the Registrar after consultation with the Chairman of the Society. Counsel maintained that by interrogating the validity of the addendum in proceedings commenced by Originating Summons for accounts, the learned judge effectively assumed a jurisdiction that had not been invoked by the pleadings and rendered findings on matters that were not properly before the court for determination. 26.Counsel further submitted that where a remuneration agreement exists under section 45 of the Advocates Act, disputes relating to fees and payments made pursuant thereto are governed exclusively by that provision and not by section 47 of the Act. He contended that the respondent could not circumvent the statutory framework by seeking to invalidate the agreements indirectly through proceedings for accounts. Counsel maintained that the validity of the retainer agreements was never pleaded as an issue for determination, and that the learned judge therefore acted without jurisdiction in purporting to determine their validity. 27.On the issue of accounts, counsel submitted that the Originating Summons specifically sought delivery of a cash account of the monies received by the appellant and payment only upon default in rendering such account. He submitted that the learned judge nevertheless proceeded to enter judgment against the appellant for Kshs. 84,196,042.15 without first directing him to account for the funds. According to counsel, the court thereby granted a remedy that had not been sought, and denied the appellant an opportunity to render accounts. Reliance was placed on Independent Electoral and Boundaries Commission & Another v Stephen Mutinda Mule & 3 Others [2014] eKLR for the principle that courts are bound by the pleadings of the parties and may not grant reliefs outside the issues presented for determination. 28.Counsel also relied on Order 52 rule 4(1)(a) of the Civil Procedure Rules, Article 47(1) of the Constitution, and section 4 of the Fair Administrative Action Act, contending that the appellant was entitled to procedural fairness before adverse orders could be made against him. Counsel cited General Medical Council v Spackman [1943] 2 All ER 337 and Attorney-General v Ryan [1980] AC 718, for the argument that a decision reached in breach of the rules of natural justice is unlawful, null and void. Counsel therefore submitted that the judgment was arrived at in violation of the appellant's right to a fair hearing and could not stand. 29.In response to questions from the Court, counsel clarified that the appellant's complaint was not that he had been denied an opportunity to participate in the proceedings, but rather that he had been denied the specific opportunity sought in the Originating Summons to render an account before judgment was entered against him. Counsel maintained that evidence concerning the addendum and the discharge vouchers had been adduced through Wilson Nyonji Kimani and formed part of the evidentiary record before the High Court. He reiterated that if the trial court was not persuaded by the appellant's reliance on the retainer agreements and discharge vouchers, it ought first to have granted the prayer requiring the appellant to account before proceeding to determine liability. 30.As regards the acknowledgements of payment and discharge vouchers, counsel faulted the learned judge for failing to accord them due legal effect. Counsel submitted that following the settlement of Nakuru HCCC No. 821 of 1993, the appellant acted on instructions received from Eliud Ndungu Thuo, James Karega Kaguru, Wilson Nyonji Kimani and Joseph Waweru Gatere, whom he regarded as the respondent's representatives, regarding the mode of disbursement of the decretal sums. According to counsel, upon receipt of the funds, those individuals executed acknowledgements and discharge vouchers confirming receipt of the monies in full and final settlement and expressly discharging the appellant from any further claims or liabilities arising from the settlement proceeds. 31.In support of the legal effect of discharge vouchers, counsel relied on Trinity Prime Investment Limited v Lion of Kenya Insurance Company Limited [2015] eKLR, where this Court held that a discharge voucher constitutes a complete contract. Reliance was also placed on Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] eKLR, Margaret Njeri Muiruri v Bank of Baroda (Kenya) Limited [2014] eKLR and National Bank of Kenya Limited v Pipeplastic Samkolit (K) Limited & Another [2001] eKLR for the proposition that courts must enforce contracts voluntarily entered into by parties and should not rewrite contractual bargains. Counsel therefore submitted that the High Court erred in failing to give effect to the discharge vouchers and acknowledgements executed by the respondent's representatives. 32.On the rule in Royal British Bank v Turquand (supra), counsel submitted that throughout the retainer, the execution of the addendum and the subsequent disbursement of the decretal sums, the appellant dealt with persons who consistently held themselves out as directors and authorized representatives of the respondent company. Relying on the doctrine of indoor management established in Turquand's case, counsel contended that a person dealing with a company is entitled to assume that its internal procedures and corporate approvals have been duly complied with and is not required to investigate whether every internal requirement has in fact been satisfied. Counsel further invoked Salmon v Salmon & Co Ltd [1897] AC 22 and Post Bank Credit Limited (In Liquidation) v Nyamangu Holdings Limited [2015] eKLR on the separate legal personality of a company and the manner in which companies transact through their directors, officers and agents. It was therefore submitted that the appellant was entitled to rely on the apparent authority of the persons who instructed him, executed the retainer agreement and addendum, and subsequently received the settlement monies on behalf of the respondent. Counsel maintained that the respondent could not, after benefiting from those transactions, seek to impeach them by relying on alleged internal irregularities that were neither known nor apparent to the appellant. 33.Counsel emphasized that the very persons who had instructed the appellant, executed the remuneration agreements and participated in the disbursement of the settlement proceeds had subsequently sought to repudiate those transactions after benefiting from them. He submitted that both Eliud Ndungu Thuo and Wilson Nyonji Kimani acknowledged receiving substantial sums from the appellant, and confirmed material aspects of the arrangements relating to the settlement funds. According to counsel, the respondent could not approbate and reprobate by accepting the benefits flowing from the agreements and disbursements, while at the same time challenging their validity and enforceability. 34.In conclusion, counsel urged this Court to find that the learned judge misapprehended both the evidence and the applicable principles of company law, failed to apply the rule in Turquand's case, improperly assumed jurisdiction to interrogate agreements governed by section 45 of the Advocates Act, and consequently rendered a judgment that was illegal, a nullity, and void ab initio. He accordingly prayed that the appeal be allowed with costs, and that the judgment of the High Court be set aside in its entirety. 35.On his part, Mr. Waiganjo, highlighting the respondent's written submissions dated 25th June 2024, urged this Court to uphold the judgment of the High Court and dismiss the appeal with costs. Counsel submitted that the appellant had been retained by the respondent to prosecute Nakuru HCCC No. 821 of 1993 against the Attorney General and others, and that his legal fees had been agreed at Kshs. 13 million. According to counsel, the appellant successfully prosecuted the claim and received a total sum of Kshs. 97,096,042.15 on behalf of the respondent, but failed to remit the funds or properly account for them. 36.Counsel submitted that after learning that the decretal sums had been paid to the appellant, the respondent demanded release of the funds through a demand letter dated 18th January 2017. When the appellant failed to respond, the respondent instituted the Originating Summons dated 7th February 2017 seeking, inter alia, an account of the monies received from the Attorney General and payment of the sums found due. Counsel pointed out that following directions given on 11th May 2017, the Originating Summons was converted into a plaint and the matter proceeded by way of viva voce evidence. He further noted that Bernard Chege and Edgar Washika Ochima were subsequently removed from the proceedings, leaving the appellant as the sole defendant. 37.On this Court’s duty as a first appellate court, counsel relied on Gitobu Imanyara & 2 Others v Attorney-General [2016] eKLR, where this Court reiterated the principles in Selle & Another v Associated Motor Boat Co. Ltd [1968] EA 123 and Williamson Diamonds Ltd v Brown [1970] EA 1, namely, that a first appellate court is obliged to reconsider and re-evaluate the evidence and draw its own conclusions while bearing in mind that it neither saw nor heard the witnesses testify. 38.Turning to the first ground of appeal, to wit, the appellant's contention that the suit was instituted without the requisite authority of the respondent, counsel submitted that the complaint was devoid of merit and had not been properly raised before the trial court. He contended that the appellant's case before the High Court was not that there was no authority to institute the suit, but rather that the meeting from which the respondent's resolutions emanated had not been properly convened. Counsel maintained that the appellant neither pleaded lack of authority to sue nor challenged the institution of the proceedings in his replying affidavits. Further, he did not adduce any evidence before the trial court to support the contention now advanced on appeal. According to counsel, the issue was therefore being raised for the first time at the appellate stage and could not properly form a basis for impeaching the judgment of the High Court. 39.In support of that submission, counsel relied on Republic v Tribunal of Inquiry to Investigate the Conduct of Tom Mbaluto & Others Ex Parte Tom Mbaluto [2018] eKLR, where this Court held that, save in exceptional circumstances, parties are generally confined, on appeal, to issues that were raised and determined before the trial court, and that appellate courts should not determine issues that were neither pleaded nor canvassed before the court of first instance. Counsel therefore submitted that the appellant could not be permitted to challenge the competence of the suit on grounds that had not formed part of his case before the High Court. 40.Counsel further submitted that, in any event, the respondent's resolutions expressly authorized the institution of proceedings against the appellant and the recovery of the monies received by him. Referring to the minutes of the meeting held on 13th January 2017, counsel contended that the respondent resolved both to compel the appellant to return the sum of Kshs. 97,096,042.15 and to institute legal proceedings against him for depositing the company's money into his own account instead of the company's account. Counsel therefore maintained that the respondent had properly authorized both the recovery process and the institution of the suit. 41.Counsel similarly rejected the appellant's contention that Geoffrey Mutahi Ndegwa lacked authority to swear the supporting affidavit. He submitted that the issue had not been pleaded by the appellant before the High Court, and that both replying affidavits filed by the appellant failed to challenge Geoffrey Mutahi Ndegwa's capacity to act on behalf of the respondent. Counsel pointed out that Geoffrey Mutahi Ndegwa expressly deponed that he was a director and secretary of the respondent and that no challenge was mounted to that assertion at the pleading stage. According to counsel, had the issue been properly raised, the respondent would have produced additional documentation evidencing the authority granted to him. 42.Counsel further submitted that the evidence before the trial court fully supported Geoffrey Mutahi Ndegwa's authority. He pointed out that Geoffrey Mutahi Ndegwa testified that the reference in the CR12 to "Mutaru Ndegwa" was merely a spelling error, and that PW2, Eliud Ndungu Thuo, confirmed that Geoffrey Mutahi Ndegwa was a director of the respondent company. Counsel also relied on the testimony of DW1, Wilson Nyonji Kimani, who did not dispute that Geoffrey Mutahi Ndegwa was a director of the respondent with authority to swear the supporting affidavit. Further, that Wilson Nyonji Kimani acknowledged the meeting held on 13th January 2017 and confirmed that Geoffrey Mutahi Ndegwa was among the directors reflected in the minutes. Counsel therefore maintained that there was no factual foundation for the appellant's assertion that Geoffrey Mutahi Ndegwa was a stranger to the proceedings or that he lacked authority to institute the suit. 43.Turning to the advocate-client agreements, counsel submitted that the respondent did not dispute the Retainer Agreement dated 23rd October 2012 under which the appellant was entitled to legal fees of Kshs. 13 million. What the respondent disputed was the alleged Addendum dated 8th October 2013 by which the appellant claimed entitlement to retain the interest and costs arising from the suit. Counsel contended that the respondent's witnesses consistently denied the existence of any resolution or agreement authorizing the appellant to retain those sums and maintained that no valid authority had ever been given for such an arrangement. 44.Counsel further submitted that the burden of proving the existence and validity of the alleged addendum rested squarely upon the appellant. Relying on section 107 of the Evidence Act, counsel submitted that a party who asserts the existence of a fact must prove it. According to counsel, because the appellant sought to rely on the addendum to justify retention of the interest and costs, it was incumbent upon him to produce and prove the document. Counsel maintained that having failed to place sufficient evidence before the trial court to establish the validity of the addendum, the appellant could not fault the trial court for rejecting it. 45.Counsel also rejected the appellant's argument founded on section 45 of the Advocates Act. He submitted that the respondent did not seek to vary, set aside or challenge the agreed legal fees of Kshs. 13 million. Rather, the respondent's case was that the appellant had received Kshs. 97,096,042.15 on its behalf and had failed to account for or remit the balance after deducting the agreed fees. According to counsel, the dispute before the High Court was therefore one of accounting and recovery of the respondent's funds and not a challenge to an advocate-client remuneration agreement. It was consequently misleading, in counsel's view, for the appellant to suggest that the respondent was required to invoke section 45 of the Advocates Act in circumstances where the agreed fees were never disputed. 46.On the merits of the dispute, counsel submitted that the evidence overwhelmingly demonstrated that the appellant received Kshs. 97,096,042.15 on behalf of the respondent and failed to remit the balance due. He pointed to the testimony of Wilson Nyonji Kimani, the appellant's own witness, who acknowledged that the appellant had received the settlement funds on behalf of the respondent and had not paid the monies to the company. Counsel asserted that while the appellant sought to justify certain payments made to directors, no evidence was produced showing that the respondent had authorized the disbursements or that the company had instructed the appellant to distribute the monies in the manner alleged. 47.Counsel further submitted that the appellant failed to render a proper account of the settlement funds despite having every opportunity to do so during the proceedings. He contended that the suit proceeded by way of oral evidence, and that the appellant was afforded ample opportunity to testify and produce documents, yet he neither testified personally nor furnished a satisfactory account regarding disbursement of the funds. According to counsel, the appellant could not therefore complain that he had been denied an opportunity to account when that opportunity was available throughout the proceedings before the trial court. 48.Finally, counsel invoked Article 159 of the Constitution and submitted that the appellant's challenge rested largely on procedural objections rather than the substantive merits of the dispute. Counsel maintained that the evidence established that the appellant received the respondent's funds, failed to remit them and failed to satisfactorily account for them. He therefore urged this Court to find that no basis had been laid for disturbing the judgment of the High Court and to dismiss the appeal with costs. 49.As this is a first appeal, it is our duty to analyze and re-assess the evidence on record and reach our own conclusions in the matter. We have considered the record, the submissions of counsel, and the judgment of the trial court. In our view, this appeal turns on the following five issues: whether the respondent authorized the institution of the suit; whether the learned judge lacked jurisdiction to interrogate the validity and effect of the addendum dated 8th October 2013 by virtue of section 45 of the Advocates Act; whether the learned judge erred in entering judgment against the appellant without first directing him to render accounts; whether the appellant satisfactorily accounted for the monies admittedly received on behalf of the respondent; and whether the learned judge erred in rejecting the appellant's reliance on the discharge vouchers and the rule in Royal British Bank v Turquand (1856) 6 E & B 327. 50.As regards the first issue, the appellant's complaint is anchored on Order 4, rule 1(4) of the Civil Procedure Rules. Order 4 deals with the institution of suits by plaint and sets out the particulars and accompanying documents required for a competent pleading. One of those requirements, where the plaintiff is a corporation, concerns the authority of the person swearing the verifying affidavit. Rule 1(4) provides as follows:“Where the plaintiff is a corporation, the verifying affidavit shall be sworn by an officer of the company duly authorized under the seal of the company to do so.” 51.The appellant's complaint under this ground was twofold. First, that the respondent failed to demonstrate that it had authorized the institution of the proceedings. Secondly, that Geoffrey Mutahi Ndegwa was not shown to be a director or authorized officer of the respondent and therefore lacked capacity to swear the supporting affidavit and prosecute the suit on the company's behalf. 52.Before addressing those complaints, we must observe that neither of the two issues formed part of the appellant's pleaded case before the trial court. We have carefully perused the replying affidavit sworn by the appellant on 3rd April 2017 as well as that sworn by Wilson Nyonji Kimani in opposition to the Originating Summons and agree with the respondent's submission that neither affidavit challenged the competence of the suit on the ground that it lacked corporate authorization, nor did either deponent aver that Geoffrey Mutahi Ndegwa lacked authority to institute the proceedings or swear the supporting affidavit on behalf of the respondent. Although the issue subsequently emerged during the course of the proceedings and was addressed in submissions, it was not a pleaded issue upon which the parties joined issue before the High Court. The learned judge neither framed those matters as issues for determination nor rendered any findings thereon. 53.It is trite law that parties are bound by their pleadings and that issues for determination ordinarily arise from those pleadings. In Independent Electoral and Boundaries Commission & Another v Stephen Mutinda Mule & 3 Others (supra), this Court reiterated that:“The parties are bound by their pleadings and the court itself is bound by the issues arising from the pleadings." 54.Likewise, in Galaxy Paints Company Ltd v Falcon Guards Ltd [2000] eKLR, this Court stated as follows:“It is trite law, and the provisions of O. XIV of the Civil Procedure Rules, are clear that the issues for determination in a suit generally flow from the pleadings, and unless pleadings are amended in accordance with the provisions of the Civil Procedure Rules, the trial court, by dint of the provisions of O. XX rule 4 of the aforesaid rules, may only pronounce judgment on the issues arising from the pleadings or such issues as the parties have framed for the court’s determination.In Gandy v Caspair [1956] EACA 139 it was held that unless the pleadings are amended parties must be confined to their pleadings. Otherwise, to decide against a party on matters which do not come within the issues arising from the dispute as pleaded clearly amounts to an error on the face of the record.” 55.The rationale is self-evident. Litigation must proceed upon clearly defined issues so that each party knows the case it is required to meet. 56.Ordinarily, our finding that the issues of corporate authorization and Geoffrey Mutahi Ndegwa's capacity were not pleaded would have been dispositive of the appellant's complaint under this ground. However, given that the matters were canvassed in the evidence, featured in the parties' submissions before the High Court, and have been fully argued before us, we consider it appropriate, for completeness, to examine them on their merits. 57.On the first limb, namely whether the respondent authorized the institution of the proceedings, the record reflects that the respondent relied upon resolutions said to have been passed at a meeting held on 13th January 2017. At the hearing before the High Court, Geoffrey Mutahi Ndegwa and Eliud Ndungu Thuo testified that the respondent had resolved to pursue recovery of the monies received by the appellant and to institute proceedings for that purpose. Wilson Nyonji Kimani, who testified on behalf of the appellant, challenged the propriety of the meeting and maintained that he had not been notified thereof. The dispute that emerged from the evidence was therefore not whether a meeting had been held, but whether the resolutions passed thereat were binding upon the company. 58.It is evident from the impugned judgment that the learned judge did not make a specific finding on the question whether the respondent had authorized the institution of the suit. This notwithstanding, and upon our own evaluation of the record, we are not persuaded that the evidence established that the proceedings were instituted without the respondent's authority. Geoffrey Mutahi Ndegwa, who testified as PW1 and in his capacity as director and secretary of the respondent, stated that the respondent resolved to pursue recovery of the monies received by the appellant and to institute proceedings for that purpose. His evidence was corroborated by Eliud Ndungu Thuo (PW2), the respondent's secretary and director, who likewise testified that the company had authorized the proceedings. On the other hand, Wilson Nyonji Kimani, who testified as DW1 and in his capacity as the respondent's treasurer and one of its directors, challenged the propriety of the meeting held on 13th January 2017 and maintained that he had not been notified thereof. 59.However, and significantly, he did not deny that the meeting took place or that resolutions were passed thereat. There was no evidence, in our view, demonstrating that the proceedings were commenced in defiance of the respondent's wishes or without any corporate backing. On the contrary, the respondent consistently adopted and prosecuted the proceedings through its officials and advocates throughout the trial. Viewed in its totality, the evidentiary record falls short of establishing that the proceedings were instituted without the authority of the respondent. 60.Turning to the second limb, Geoffrey Mutahi Ndegwa (PW1) testified that he was a director and secretary of the respondent company. His evidence was corroborated by PW2, Eliud Ndungu Thuo. The appellant relied on the fact that the CR12 referred to one "Mutaru Ndegwa" rather than Geoffrey Mutahi Ndegwa. PW1 explained that the discrepancy arose from an error in the company records and maintained that the reference was to him. That explanation was not displaced by any contrary evidence. In the absence of evidence demonstrating that Geoffrey Mutahi Ndegwa was a stranger to the respondent company or lacked authority to act on its behalf, we find no basis for interfering with the proceedings on that account. 61.In the end, notwithstanding the omission by the learned judge to expressly determine the issue in the impugned judgment, we are satisfied that the appellant's challenge founded upon Order 4, rule 1(4) of the Civil Procedure Rules is without merit. 62.Turning to the appellant's argument that the learned judge lacked jurisdiction to interrogate the validity and effect of the addendum dated 8th October 2013, the crux of the appellant’s argument is that the addendum constituted an advocate-client remuneration agreement and could only be challenged through the procedure prescribed under section 45(2) of the Advocates Act. 63.Section 45(1) of the Advocates Act expressly permits an advocate and client, before, during or after the conduct of contentious business, to enter into a written agreement fixing the advocate's remuneration, instruction fees or fees for appearing in court. Once reduced into writing and signed by the client or a duly authorised agent, such an agreement is valid and binding upon the parties. However, the Act has provided a limited statutory safeguard under section 45(2) which allows a client to move the court by chamber summons for the agreement to be set aside or varied upon proof that it is harsh and unconscionable, exorbitant or unreasonable. The court may uphold the agreement, vary it, set it aside altogether, or direct that the costs be taxed. Importantly, section 45(2A) imposes strict timelines within which such a challenge may be mounted, namely, one year of the making of the agreement or within three months of a written demand for payment by the advocate, whichever is later. Consequently, unless and until an advocate-client remuneration agreement is successfully impugned in accordance with section 45(2) and within the timelines stipulated under section 45(2A), it remains valid, binding and enforceable as between the parties. 64.Having considered the appellant's contention, we are unable to agree that the dispute before the High Court fell within the ambit of section 45(2) of the Advocates Act. The respondent did not challenge the Retainer Agreement dated 23rd October 2012 or the appellant's entitlement to the agreed fee of Kshs. 13 million. Rather, the controversy concerned the appellant's handling of Kshs. 97,096,042.15 received on the respondent's behalf. and the propriety of the deductions and disbursements made from those funds. 65.The respondent's case was therefore not that the agreement was harsh, unconscionable or unreasonable within the meaning of section 45(2). Rather, its case was that the appellant had failed to account for monies received on its behalf. In those circumstances, the learned judge was not exercising the jurisdiction contemplated under section 45(2) of the Advocates Act. She was determining whether the appellant had established a lawful basis for retaining or disbursing the respondent's funds. 66.In our view, the learned judge was entitled to examine the addendum and determine its evidentiary value. To hold otherwise would mean that any document labelled as an advocate-client agreement would be insulated from judicial scrutiny, even where it is relied upon to justify the unauthorised disbursement of client funds. 67.In any event, even if section 45 were applicable, we would still be unable to fault the learned judge's approach. Geoffrey Mutahi Ndegwa testified that the addendum had never been authorized by the respondent, and that no company resolution sanctioned its execution. Eliud Ndungu Thuo similarly denied that Joseph Waweru Gatere possessed authority to execute documents or otherwise bind the respondent company. On his part, Wilson Nyonji Kimani acknowledged during cross-examination that the addendum neither bore the company seal nor emanated from any resolution of the company. In light of that evidence, the learned judge was entitled to conclude that the addendum had not been proved as a valid corporate act binding upon the respondent. That conclusion did not, in our view, amount to setting aside a remuneration agreement under section 45(2). On the contrary, it was a finding, based on the evidence, that the appellant had failed to establish the factual foundation upon which he sought to rely on the document. 68.Turning to the appellant's complaint that he was denied the opportunity to render accounts before judgment was entered against him, reliance was placed on Order 52 rule 4 of the Civil Procedure Rules and on the terms of the Originating Summons, whose principal prayer sought an order requiring the appellant to account for monies received on behalf of the respondent. 69.While the Originating Summons sought an order requiring the appellant to render accounts, the parties subsequently consented to the Originating Summons being treated as a plaint and the matter proceeding by way of viva voce evidence. The High Court consequently heard the testimony of Geoffrey Mutahi Ndegwa and Eliud Ndungu Thuo on behalf of the respondent, and that of Wilson Nyonji Kimani on behalf of the appellant, received documentary evidence relating to the settlement monies and the alleged disbursements, and ultimately determined the dispute on its merits. In those circumstances, the issue before the court evolved beyond the mere making of an order for accounts and became whether the appellant had satisfactorily accounted for the monies admittedly received on behalf of the respondent. 70.The record demonstrates that the appellant fully participated in the proceedings through counsel, cross-examined the respondent's witnesses, called Wilson Nyonji Kimani as a witness, and relied on the addendum, acknowledgements and discharge vouchers in support of his position. Indeed, during the hearing of this appeal, counsel for the appellant clarified, in response to questions from the Bench, that the complaint was not that the appellant had been denied participation in the proceedings, but rather that he had been denied the specific opportunity contemplated in the Originating Summons to render an account before judgment was entered against him. 71.We do not accept the appellant's contention on this issue. We are of the view that by the time the matter was heard through viva voce evidence, the central question for determination was whether the appellant had satisfactorily accounted for the monies admittedly received on behalf of the respondent. That issue was comprehensively litigated through the testimony of the witnesses and the documentary evidence produced, and was ultimately determined by the learned judge on the basis of the evidentiary record before her. The manner in which the proceedings were conducted by the parties before the trial judge mirrored what this Court alluded to in its decision in Mithamo & another v Mithamo [2024] KECA 1864 in which it expressed itself as follows:“While it is desirable that where necessary the pleadings should be amended to bring in all the issues, Odd Jobs vs Mubia [1970] EA 476, remains good law, that in limited circumstances where an unpleaded issue is crucial to the matters in issue, the court may determine a suit on the unpleaded issue, provided both parties have clearly addressed the unpleaded issue in their evidence or submissions, and left the matter for the determination of the court.” 72.Accordingly, nothing turns on this issue. 73.This leads us to what we consider the central issue in the appeal, namely, whether the appellant satisfactorily accounted for the sum of Kshs. 97,096,042.15 admittedly received on behalf of the respondent. 74.It is common ground that the appellant received Kshs. 97,096,042.15 from the Attorney General pursuant to the settlement of Nakuru HCCC No. 821 of 1993. It is equally common ground that he was entitled to retain Kshs. 13 million as agreed legal fees. 75.The respondent's witnesses consistently maintained that no authority had been given to the appellant to distribute the monies to individual directors or other persons, and that he never rendered a proper account. Their evidence remained substantially intact notwithstanding cross-examination. 76.The appellant sought to justify the disposition of the funds through the addendum, acknowledgements and discharge vouchers. However, Wilson Nyonji Kimani conceded during cross- examination that there were no written instructions authorizing payment of the monies to individual directors, and further admitted that he did not know what became of a substantial portion of the funds. 77.Sections 107 and 109 of the Evidence Act places the burden of proof upon the person asserting a fact and upon the person possessing peculiar knowledge of a matter. The appellant admittedly received Kshs. 97,096,042.15 on behalf of the respondent. While his entitlement to retain Kshs. 13 million as agreed legal fees was not disputed, he also asserted that portions of the funds were disbursed to various directors and other persons pursuant to instructions received from the respondent's officials. The burden nevertheless remained upon him to demonstrate, through a satisfactory account, how the entirety of the balance of the funds was applied. In our view, the evidence adduced fell short of discharging that burden. 78.An advocate who receives money on behalf of a client assumes fiduciary obligations of the highest order. As this Court observed in King Woolen Mills Ltd & Another v Kaplan & Stratton Advocates [1993] eKLR, the relationship between advocate and client is one founded on trust and confidence. Those obligations are reinforced by the Advocates (Accounts) Rules. Rule 9 strictly regulates the circumstances under which money may be withdrawn from a client account, while rule 13 requires every advocate to keep proper books of account showing every receipt of client money, every payment or application of such money, the balance held for each client, and the costs charged to that client. Client funds received by an advocate remain the property of the client and the advocate bears a continuing duty to account for their receipt, retention and application. In the present case, while the appellant's entitlement to Kshs. 13 million as agreed legal fees was not disputed, the evidence fell short of satisfactorily explaining the disbursement of the balance of the funds admittedly received on behalf of the respondent. That failure was fatal to his defence. 79.We now turn to the appellant's reliance on the acknowledgements, discharge vouchers and the rule in Royal British Bank v Turquand. The appellant's position was that the vouchers constituted complete contracts, confirmed that the beneficiaries had received the monies due to them, and effectively discharged him from any further liability. 80.There can be no dispute that discharge vouchers may, in appropriate circumstances, constitute binding contracts. As this Court observed in Trinity Prime Investment Limited v Lion of Kenya Insurance Company Limited (supra), a discharge voucher freely executed by parties may amount to a complete contract capable of compromising future claims arising from the same transaction. 81.The difficulty confronting the appellant, however, is that the vouchers were relied upon not merely as acknowledgements of payment, but as justification for the disbursement of monies belonging to the respondent. The evidentiary question before the trial court was therefore whether the payments reflected in those vouchers had been authorized by the respondent, and whether they constituted a proper application of the funds received by the appellant on the respondent's behalf. On the evidence presented, the learned judge was not satisfied that the respondent, acting through its authorized organs, had sanctioned those payments. 82.The appellant sought to reinforce his position by invoking the rule in Royal British Bank v Turquand (supra). In that case, a company resisted liability on a bond executed by two of its directors, contending that the borrowing had not been authorized by a resolution of the general meeting as required by its deed of settlement. The English Court of Exchequer Chamber rejected that defence, holding that an outsider dealing with a company is entitled to assume that acts which are within the company's powers have been properly authorized in accordance with its internal procedures. The Court stated:“...a person, on reading the deed of settlement, would find, ... not a prohibition against borrowing, but a permission to borrow on certain conditions, and, learning that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done; and therefore, the company was liable whether or not a resolution had been passed.” 83.In East African Safari Air Limited vs. Anthony Ambaka Kegode & another [2011] eKLR, this Court had occasion to consider the Turquand rule as propounded in Royal British Bank vs. Turquand (supra). The Court stated as follows about the rule and its applicability:“While persons dealing with a company are assumed to have read the public documents of the company and to have ascertained that the proposed transaction is not inconsistent therewith, they are not required to do more; they need not inquire into the regularity of the internal proceedings – what Lord Hatherley called “the indoor management” and may assume that all is being done regularly. This rule, which is based on the general presumption of law, is eminently practical, for business could not be carried on if a person dealing with the apparent agents of a company was compelled to call for evidence that all internal regulations had been duly observed. Thus, where the articles give power to borrow with sanction of an ordinary resolution of the general meeting, a lender who relies on this power need not inquire whether such sanction has in fact been obtained. He may assume that it has, and if he is acting bona fide, he will, even though the sanction has not been obtained, stand in as good position as if it had been obtained.” (emphasis added).Gower’s Principles of Modern Company Law has summarized the rule in Turquand’s case as follows: -“This rule was manifestly based on business convenience, for business could not be carried out if everybody who had dealings with a company had meticulously to examine its internal machinery in order to ensure that the officers with whom he dealt with had actual authority. Not only is it convenient, it is also just. The lot of creditors of a limited liability ____ company is not a particularly happy one; it would be__ ____ unhappier still__ if__ the__ company__ could__ escape__ liability__ ____ by denying__ the__ authority__ of__ the__ officers__ to__ act__ on__ its__ ____ behalf.” (emphasis added). 84.The doctrine of indoor management serves an important commercial purpose by protecting persons who deal with a company in good faith from being prejudiced by undisclosed defects or irregularities in the company's internal procedures. In an appropriate case, therefore, a party dealing with company officials may be entitled to assume that those officials possess the requisite authority to bind the company. The difficulty with the appellant's reliance on the doctrine, however, is that the respondent's claim was not founded solely on the absence of authority. Rather, it was a claim for an account of monies admittedly received by the appellant on the respondent's behalf. Consequently, even if the appellant was entitled to assume that the persons who instructed him and executed the discharge vouchers possessed the necessary authority, that assumption could not, without more, relieve him of his fiduciary and professional obligation to account for the funds entrusted to him. The critical question remained whether the appellant had satisfactorily explained the retention, application and disbursement of the monies received on behalf of the respondent. For the reasons already given, we are satisfied that he did not. 85.Having independently re-evaluated the evidence on record, we are satisfied that the learned judge correctly concluded that the respondent had established its claim on a balance of probabilities and that the appellant failed to render a satisfactory account of the monies received on the respondent's behalf. 86.In the end, and for all the foregoing reasons, we find no basis for interfering with the judgment of the High Court. Accordingly, this appeal is not merited and is hereby dismissed in its entirety with costs to the respondent. DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JULY 2026.D. K. MUSINGA…………………………JUDGE OF APPEALMUMBI NGUGI…………………………JUDGE OF APPEALG. V. ODUNGA…………………………JUDGE OF APPEALI certify that this is a true copy of the original.Signed DEPUTY REGISTRAR.