[2000] KECA 33 (KLR)

REPUBLIC OF KENYA IN THE COURT OF APPEAL OF KENYA AT NAIROBI Civil Appeal 135 of 1999

KARSAM LALJI PATEL.................................................................APPELLANT

AND

PETER KIMANI KAIRU Practicing

as KIMANI KAIRU & COMPANY ADVOCATES....................RESPONDENT

(Appeal from a Ruling and Order of the High Court ofKenya at Nairobi (Hon. Justice Mbogholi) dated 9thMarch, 1999

in

H.C.C.C. NO. 2452 OF 1998(O.S)

JUDGEMENT OF THE COURT

KARSAM LALJI PATEL,the appellant, took out an OriginatingSummons in the superior court under Order Lll rules7 and 10 (2)ofthe Civil Procedure Rules (the Rules)to enforce a professionalundertaking given to his Advocates by Mr. Peter Kimani Kairu,anAdvocate of the High Court of Kenya practicing as Kimani KairuandCompany Advocates,in a letter dated 26th August, 1998. Theappellant was represented by the firm of Rayani Rach & SevanyAdvocates.

By an agreement for sale dated 9th April, 1998 made between Gateway-Insurance Company Limited (the Vendor)and Karsam Lalji Patel (thePurchaser)the Vendor agreed to sell to the Purchaser the propertyknown as Plot L.R. No.330/1077 Nairobi (the suit land)for Shs.6,250,000/-. The sale was with vacant possession and completiondate was 31st May, 1998. A deposit of Shs 625,000/-, being 10% ofthe purchase price, was paid by the Purchaser to the Vendor'sAdvocates, Kimani Kairu and Company Advocates (the Advocates).

Along the way difficulties arose, as a result of which theVendor was unable to give vacant possession in breach of conditionNo. 5 which provided that the suit land was sold with vacantpossession. Apparently there was some encroachment upon the suitland by a third party and the Vendor was unable to clear this. On26th August, 1998, long after the date fixed for completion hadpassed, the Purchaser's Advocates wrote to the Advocates in thefollowing terms-

"Dear Sirs

SALE OF L.R. NO. 330/1077

NAIROBI-GATEWAY INSURANCE COMPANY

LIMITED TO KARSAM LALJI PATEL

We refer to your two letters dated17th August, 1998 and in particular theone referring to retention of Shs.750,000/- as well as your letterdated 20th August, 1998.

We have instructions to state thatour client is agreeable to complete thetransaction on the following terms andconditions:-

1. Our client will pay to you throughus a sum of Shs. 4, 875, 000/- whichis the balance of purchase pricepayable to you under agreementdated 9th April, 1998 between yourclient and ours less Shs.750,000/-.

2. Upon receipt of confirmationhereunder requested from you wewill immediately attend to stampingand registration of the Conveyance.

3. The sum of Shs.750,000/- retainedby us shall only be payable onvacant possession of the whole ofthe property (with allencroachments removed)being handedover to our client.

4. The purchase price held by youshall be subject to yourprofessional undertaking to us torelease the same to your clientonly upon receipt by you fromus confirmation that (a) theConveyance in favour of our clienthas been registered at the LandOffice and (b) our client hasbeen handed the vacant possessionof the whole of the property (withall encroachments removed).(emphasis added)

5. If vacant possession of the whole of the property (with allencroachments removed)is not givento our client within the next75 days, our client would beentitled to pursue legal remediesfor specific performance and ordamages for breach of the agreementby your client as well as theright to retain the said sum ofShs.750,000/- which your clientwill forfeit.

Please confirm your agreement tothe aforesaid (including yourprofessional undertaking as set outabove) immediately so that we can attendto stamping and registration of theConveyance in favour of our client. Itis on this basis our cheque forShs.4, 875,000/- is enclosed herewith.In case you are unable to confirm the terms of this letter within next seven days the enclosed cheque is to be returned to us.

Yours faithfully, RAYANI, RACH & SEVANY

JIMMY RAYANI"

That is the letter which contained the professionalundertaking the purchaser sought to enforce. On 1st September, 1998 the Advocates replied to the Purchaser's Advocates as follows-

"Dear Sirs

SALE OF L.R. NO. 330/1077NAIROBI: GATEWAY INSURANCECOMPANY LIMITED TO KARSAMLALJI PATEL

We acknowledge receipt of yourletter dated 26th August, 1998 togetherwith the enclosed cheque. Our officialreceipt is attached herewith. Withregard to the contents of the saidletter, points 1 to 4 are acceptable tous and are hereby confirmed. However, with regard to point number 5, thecontents thereof are not acceptable. Weshall discuss this matter further withour client and shall revert to youshortly.

Yours faithfully, Kimani Kairu & Co."

Point No.5which the Advocates said categorically was unacceptable related to the removal of the encroachments on the land and one would have thought that there would be no argument about this as it had been made a condition of the sale. In the last paragraph of the letter of 26th August, 1998 the Purchaser's Advocates made it clear that the cheque for Shs. 4,875,000/- was forwarded on condition that the Advocates complied with all the 5 conditions and they made clear in the last sentence that-

In spite of the fact that the Vendor was unable to give the Purchaser vacant to possession the Advocates did not return either the cheque or proceeds thereof to the Purchaser's Advocates. So on 1st October, 1998, the latter wrote to the Advocates in the following terms-

"We refer to our letter of 26th August,1998 addressed to you and your responsethereto vide your letter of 1stSeptember, 1998. Our instructions arethat in view of your client's failure toaccept the conditions set out in ourletter of 26th August, 1998 and furtherconditions stated in our letter of 23rdSeptember, 1998, we are under instruc-tions to demand that all proceeds paidto you be forthwith released to us.

Yours faithfullyRAYANI RACH & SEVANY"

In the final letter dated 7th October, 1998 addressed to the Purchaser's Advocates, the Advocates delivered what amounted to a coup de grace,saying-

"There has been no fundamental breach ofthe agreement for sale by our client.Accordingly your client is not entitledto rescind the contract. Your clientshould now take possession of the aboveproperty. After all, the part of thesaid property that has been encroachedby the neighbor’s wall is a very smallpart of the entrance to the driveway."

The application was supported by an affidavit sworn by the Purchaser and the relief sought was to pay back to the Purchaser the sum of Shs.4,875,000/- together with interest at bank rates.The replying affidavit dated 19th November, 1998 was sworn by Mr. Peter Kimani Kairu of the Advocates in which he deponed inter alia-

“(8) Based on what I state in paragraph 7above the plaintiffs Advocates retainedShs.750,000/- from the balance of thepurchase price and forwardedKshs. 4,875,000/- to me in terms of theletter dated 26th August, 1998.

(9) I undertook not to release the purchaseprice to my client, the Vendor, untilthe issue of encroachment was resolved.I continue to hold the said amount interms of the undertaking.

(10) The above undertaking was given to theplaintiff's Advocate and the plaintiffnot being privy to the undertaking, cannot purport to enforce the samein his favour.

(12) In an effort to resolve the issue ofencroachment, the Vendor institutedproceedings against the encroachingparty to compel him to remove the encroachment,and this fact is withintheplaintiff's knowledge."

The application was heard by Mbogholi J.He held that the Advocates were not in breach of the undertaking and dismissed the application with costs. It is against that decision that the Purchaser now appeals to this Court.

Although the memorandum of appeal sets out. 8 groundsof appeal, Mr. Nagpal,for the Purchaser, argued them all together.

The learned Judge referred to a number of English decisions concerning the jurisdiction of the court in an application for enforcement of a professional undertaking. He noted that it is a summary jurisdiction over Advocates which should be exercised only in a clear case. That it is an inherent jurisdiction which the court has over Advocates who are officers of the court. And that it is a jurisdiction which is exercised, not for the purpose of enforcing legal rights, but for the purpose of enforcing honourable conduct on the part of the court's own officers.

The learned Judge directed himself correctly that the court must be satisfied that there has been a breach of an undertaking given by an Advocate acting professionally. All these principles which are a correct rehearsal of the law on the point can be gleaned from the cases of Geoffrey Silver & Drake vThomas Anthony Baines[1971] 1 All ER 473 and John Fox v Bannister, King & Rigboys[1987]3 WLR 480. Having stated the principles the learned Judge then referred to paragraph 9of Mr. Kimani'saffidavit and continued-

"With respect, I see no breach of theundertaking given by the defendant. Even if Iwere to find there is a breach thereof theeffect of an order there under would be tocompel the defendant to release the money tohis client and not to the plaintiff as soughtin the application before me. In that regardI am inclined to agree with the submissionthat by this application the plaintiff istrying to enforce his rights and interestunder the agreement."

Purchaser. This money was paid by the Purchaser to his Advocates with instructions to pass it on to the Advocates on the conditions stated in the letter of 26th August, 1998. It was a payment made by an agent on behalf of a disclosed principal, and at the end ofthe day, it does not matter whether the suit for its recovery wasbrought by the Purchaser or his Advocates.

Be that as it may, there would be nothing illegal if theenforcement of the undertaking achieved the unintended result ofenforcing the Purchaser's legal rights under the agreement forsale. The undertaking did not cover the full purchase price. Itwas limited to Shs.4, 875,000/- being the amount sent with theletter of 26th August, 1998. As the Advocates did not acceptpayment under the terms stipulated in that letter they were obligedto return the cheque or its proceeds either immediately or ondemand. Having failed to do so they were clearly in breach of theundertaking and the learned Judge was clearly wrong to deny thePurchaser the orders he sought on the Originating Summons.

For the reasons we have given, this appeal succeeds and isallowed. The ruling and order of Mbogholi Jdated 9th March, 1999are set aside and substituted by an order directing the Advocatesto honour their professional undertaking by paying to the Purchaserthe sum of Shs.4,875,000/- together with interest at 12% p.a. from1st September, 1998 within 14 daysfrom today. The Purchaser willalso have his costs in the superior court and of this appeal.

Dated and delivered at Nairobi this 7th day of April, 2000.

R. O. KWACH

JUDGE OF APPEAL

P. K. TUNOI

JUDGE OF APPEAL

E. O'KUBASU

JUDGE OF APPEAL

I certify that this is atrue copy of the original.

DEPUTY REGISTRAR