[2006] KEHC 903 (KLR)

REPUBLIC OF KENYA IN THE HIGH COURT OF KENYA AT NAIROBI (MILIMANI COMMERCIAL COURTS) Civil Case 68 of 2004

FRED MWANGO AND ANOTHER……………..........................................……..PLAINTIFFS

VERSUS

MUNYAE MULINGE AND ANOTHER……......................................……1ST DEFENDANTS

MARGARET MUNYAE……………………...................................………2ND DEFENDANTS

MWAKA MUSAU……………....................................…………………….3RD DEFENDANTS

R U L I N G

By a Chamber Summons dated 16th March 2006, the 3rd defendant seeks the striking out or dismissal of the suit herein. The applicant also asks that the plaintiff be ordered to grant vacant possession of the suit property.

Furthermore, the applicants want the plaintiffs to deliver the certificate of title of the suit property, L.R. No. 209/10497/531R.52097, Jokim Estate Nairobi, to the 1st and 2nd defendants. And it is also the wish of the applicant that the caveat lodged by the plaintiffs against the title to the suit property be removed forthwith.

It is the applicant’s contention that the plaintiffs are illegally in possession of the suit property, as they have no claim against the defendants, following the remittance of the purchase price, by May 2005.

As far as the applicant is concerned, the date of May 2005 was significant because it fell at a time before the 3rd defendant (who is the applicant herein) had been served with the Originating Summons.

If I understand the applicant correctly, its position is that it did perform its obligations before he had become a party to these proceedings Therefore, the applicant holds the view that the proceedings had been overtaken by events, as the proceedings were seeking to compel him to make payment, yet payment had been made already.

The court records show that these proceedings were commenced by way of an Originating Summons dated 18th December 2003. The said Originating Summons was filed on 3rd February 2004.

As at that date, there were only two defendants. The 3rd defendant was not a party to the proceedings then.

In an affidavit sworn by the 2nd plaintiff, to support the Originating Summons, the deponent stated that the title to the suit property had already been transferred to the 1st and 2nd defendants, as at 2nd October 2002. However, the plaintiffs had not yet received the balance of the purchase price, amounting to KShs. 2,025,000/=.

Due to that default on the part of the 1st and 2nd defendants, the plaintiffs took possession of the title documents, as security.

On 8th October 2004, the plaintiffs filed an application for directions, pursuant to the provisions of Order 36 rules 8A and 9 of the Civil Procedure rules. As the 1st and 2nd defendants did not oppose the application, the court directed that the said defendants should file their replying affidavits within 21 days, following which the case would be heard on the basis of affidavit evidence. However, all the parties were granted liberty to appear at the trial, and to take such part as the trial court would deem fit.

In compliance with the directions, the 1st defendant filed a Replying Affidavit on 11th November 2004. The said affidavit was said to have been filed on behalf of both the 1st defendant as well as the 2nd defendant.

Shortly thereafter, on 1st December 2004, the 1st and 2nd defendants filed an application, seeking to have the 3rd defendant enjoined to the suit, as a co-defendant.

When the application came up for hearing, the plaintiffs did not oppose it. Therefore the court ordered that the 3rd defendant be enjoined to the suit as a co-defendant of the 1st and 2nd defendants. The court also granted directions that the Originating Summons be amended so as to accommodate the addition of the 3rd defendant as a party to the proceedings. Those orders were made on 24th February 2005.

It is now the 3rd defendant’s position that he has never been served with an Amended Originating Summons. Therefore, he believes that the Originating Summons ought to be struck out not only because of non-service but also because it had been overtaken by events.

A perusal of the court records reveals that on 10th May 2005, the 3rd defendant filed a Replying Affidavit. In the said affidavit he deponed that he was competent to make the affidavit as he had been joined “as a respondent/defendant in this proceedings.”

The Replying affidavit was sworn on 8th April 2005, and in it, the 3rd defendant readily admits that whilst he had received a total of KShs. 3,353,000/=, he had only remitted to the plaintiffs a sum of KShs. 2,531,535/45. He explained that he was still withholding the sum of KShs. 821,465/55.

According to the 3rd defendant’s replying affidavit, the plaintiffs were not entitled to the balance of the purchase price until and unless they handed over the suit property in vacant possession, and also provided an account for the rents collected as from the date of sale.

Notwithstanding that stated position, the 3rd defendant subsequently remitted to the plaintiffs the balance of the purchase price. The said remittance was made in or about May 2005.

Following the payment of the balance of the purchase price, has the suit been overtaken by events, as submitted by the 3rd defendant?

First, although the 3rd defendant blames the plaintiffs for the failure to amend the Originating Summons, I hold the view that the 3rd defendant found fault with the wrong party.

At no time did the plaintiffs indicate that they had any claim against the 3rd defendant. If anything, it was the 1st and 2nd defendants who expressed the view that there was need to enjoin the 3rd defendant;

“as a co-defendant in this case to enable this court to determine effectively and completely adjudicate upon and settle all questions involved in this suit.”

Therefore, if any amendments were to be effected to the Originating Summons, the parties who should have ensured that the needful was done, were the 1st and 2nd defendants. The plaintiffs cannot be faulted for the omission on the part of the 1st and 2nd defendants.

The 3rd defendant has submitted that at all material times he was the agent of the plaintiffs in the contract for the sale of the suit property. He therefore holds the view that the plaintiffs do not have any sustainable claim against the 1st and 2nd defendants, who did pay the full purchase price timeously.

The other twodefendants also state that the 3rd defendant was the agent of the plaintiffs.

However, the plaintiffs insist that the 3rd defendant was an agent of the 1st and 2nd defendant, for the purposes of receiving the purchase price and remitting it to the plaintiffs.

To my mind the question as to whose agent the 3rd defendant was, is critical in this matter. It is at the very core of determining, (as the 3rd defendant had asserted in his replying affidavit), if the plaintiffs should not only hand over the suit property but also provide accounts for the rents which they have received.

An interesting issue which the 3rd defendant is likely to have to grapple with is why, if he was not the agent of the 1st and 2nd defendants, he was insisting that the plaintiffs should provide an account of the rents they had received. One wonders, on whose behalf the 3rd defendant was calling the plaintiffs to an account.

To my mind, the 3rd defendant is a very essential party to these proceedings. He has accepted the fact that the 1st and 2nd defendants remitted the purchase price timeously. According to the affidavit of John M. Mativo, which was sworn on 1st December 2004, the 3rd defendant was paid KShs. 3,033,000/= on 30th May 2002.

The 10% deposit had already been paid on 29th April 2002.

If those facts be accurate, I hold the considered view that the 3rd defendant will be accountable to either the plaintiffs or to the 1st and 2nd defendants for withholding part of the money until May 2005.

As I see it, the 3rd defendant’s delay in remitting payment to the plaintiffs is the cause for the decision by the plaintiffs withholding the title documents, as well as possession to the suit property. Whether or not, the plaintiffs had a legal entitlement to do so, will need to be determined at the trial.

In the event that the trial court were to conclude that the 3rd defendant was the agent of the plaintiffs, for the purposes of receiving the balance of the purchased price, it is possible that the plaintiffs may be held accountable to the 1st and 2nd defendants for the rents which the plaintiffs have continued to receive. But, at the same time, there was a possibility that the 3rd defendant may be held accountable to the plaintiffs for interest accruing on the balance of the purchase price, from the date the 3rd defendant received it, until the date he paid it over to the plaintiffs.

On the other hand, if the 3rd defendant was found to have been the agent for the 1st and 2nd defendants, he could possibly be accountable, but only to the said 1st and 2nd defendants for the loss which they suffered due to the delay in forwarding payment to the plaintiffs.

In a nutshell, I find that the suit herein does not appear so hopeless that it plainly and obviously discloses no reasonable cause of action.

Indeed, the 1st and 2nd defendants had fully appreciated the serious issues emanating from the proceedings herein, from as early as 6th December 2004, when they filed their version of the “Agreed Issues.”The said issues were as follows:

“1. Whether Mr. E. Mwaka Musau T/a Mwaka Musau Consultants was an agent of the plaintiff.

2. Whether the defendants fully performed their part of the contract by paying the purchase price to the said agent within the contract period.

3. If the said agent misappropriated the said funds, whose fault is it?

4. What is the legal relationship between the plaintiffs and the aforesaid agents?

5. Whether or Not the said agent received the entire purchase price and if so, what is the legal implication?

6. Can payment to an agent, be said to have been received by the principal?

7. What was the scope of the agent’s powers?

8. Was the said power (if any) revoked?

9. What is the legal effect of actions of an agent who holds himself to be duly acting for his principal and in reliance of his express or implied conduct, a party performs his part of the agreement.

10. Whether the reliefs sought in this suit can be justifiably granted without resultant injustice on the part of the defendant.

11. What is the defendant’s remedy in the circumstances.

12. Who should bear the costs of the suit?”

To my mind, only a few of those issues have been addressed, after the 3rd defendant was enjoined to the suit. For instance, he has readily acknowledged receipt of the balance of the purchase price.

The next question that he will need to answer is when exactly he received the funds, and to whom he was answerable thereafter.

For all those reasons, I hold that the application dated 16th March 2006 is without merit, as the suit raises serious questions which ought to proceed to trial.

Accordingly, the application is hereby dismissed, with costs to the plaintiffs.

Finally, I direct that the suit be set down for hearing on a priority basis. However, I also grant liberty to the 3rd defendant to apply, in the event that he finds the directions which were given on 6th December 2004, inadequate.

Dated and Delivered at Nairobi, this 25th day of October 2006.

FRED A. OCHIENG

JUDGE