[2024] KEHC 16370 (KLR)

Kinoro v Kinyajui t/a Mohamed Kinyanjui Advocates (Civil Case E064 of 2024) [2024] KEHC 16370 (KLR) (Civ) (19 December 2024) (Ruling)

Neutral citation: [2024] KEHC 16370 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Case E064 of 2024

TW Ouya, J

December 19, 2024

Between

Charles Mwangi Kinoro

Plaintiff

and

Lydia Wambui Kinyajui t/a Mohamed Kinyanjui Advocates

Respondent

Ruling

Background 1. This matter was initiated by way of originating summons under 37 Rule (1) and Section 47 (1) of the Advocates Act, Cap 16 of the Laws of Kenya and all other enabling provisions of the Law under Certificate of urgency dated 26th March 2024 by Charles Mwangi Kinoro the plaintiff herein against Lydia Wambui Kinyanjui t/a Mohamed Kinyanjui Advocates, the Defendant herein.

2. The plaintiff’s claim against the defendant is for Kshs. 5,800,000 being the balance of the purchase price for APARTMENT NUMBER F104 AT GREEN ZONE ERECTED ON LR NO. 28428/51 KIAMBU. The plaintiff filed an originating summons dated 26th March 2024 supported by an affidavit sworn on 26th March 2024 and later, a supplementary affidavit sworn on 22nd July 2024 both by the Plaintiff. He is seeking for determination of the following issues:i.Whether the Defendant has breached her fiduciary duty by withholding client funds unconsciously, unreasonably and unlawfully.ii.Whether this Honourable Court should order the Defendant to release the plaintiff the sum of ksh. 5,800,000. being the balance of the purchase price for Apartment Number F104 at Green Zone on L.R. No. 28428/51-Kiambu.iii.Whether this Honourable Court should issue a finding that the Defendant breached her fiduciary duty to the plaintiff.iv.Whether this Honourable court should make an order for the Defendant to refunds the sum of Ksh 100,000. 000 paid as legal fees.v.Whether the plaintiff is entitled to damages for breach of Fiduciary duty by the defendant.vi.Who should bear the costs of the summons.

3. The Defendant filed a Notice of Preliminary Objection dated 21st May 2024 challenging the court’s jurisdiction and the competency of this of this suit relying on a replying affidavit sworn on 24th March,2024 by Kimani Kinyanjui.

4. The court directed that the matter be disposed of by way of written submissions. At the time of determination of this matter, only the plaintiff had complied with the filing of submissions.

5. The Plaintiff submits that on or about March 2023, the plaintiff instructed Lydia Wambui Kinyanjui, the Defendant herein, an advocate of the High Court of Kenya (Admission number P.105/2128/91) trading as Mohamed Kinyanjui Advocates, to represent him in the purchase of property known as Apartment Number F104 at Green Zone Erected at L.R.No. 28428/51 Kiambu. The Defendant accepted the instructions thereby creating an advocate-client relationship and subsequently acted for the Plaintiff during the execution of the Agreement of Sale dated 5th May 2023. The plaintiff paid the deposit of the purchase price of Ksh. 500,000. 00 as well as the requisite legal fees of Ksh. 100,000. 00. The Ksh. 500,000 was remitted by the Defendant to Krishna Estates, the Vendor as deposit for the purchase.

6. Whereas clause 2(b) of the Agreement for Sale provided that the balance of the purchase price shall be paid directly to the Vendor in cleared funds, the defendant advised the plaintiff to pay the balance of the purchase price of Ksh. 5,800,000 into the defendant’s law firm’s client account for onward transfer to the vendor. Pursuant to the defendant’s advice, the plaintiff paid the sum into the defendant’s law firm’s client account on 30th May 2023.

7. The above-mentioned amount being the balance of the purchase price, was to be paid to the vendor within 90 days from the date of execution of the Agreement for sale, that was 3rd August 2023. The Defendant defaulted in remitting the balance of the purchase price to the vendor’s advocates despite demand and unsuccessful effort by the plaintiff. The plaintiff engaged the law firm on record Messrs. J. Salim Advocates LLP on or about January 2024 to intervene in the issue and to take up conduct of the matter. Despite numerous demands from J. Salim Advocates LLP acting for the plaintiff, the defendant has failed to release the balance of the purchase price.

8. The Plaintiff holds that the defendant is in breach of fiduciary duty and has placed him (the plaintiff) in a precarious position considering that the vendor has since issued the plaintiff with a 21 days Completion Notice dated 20th February 2024 which had expired as at the timing of filing this application. That the vendors are entitled to rescind the Agreement for Sale leaving the plaintiff at a risk of forfeiting the deposit sum of Ksh.500,000. 00 in the event the Vendor rescinds the Agreement for sale adding that part of the purchase price was financed through a bank loan facility.

9. The defendant filed a preliminary objection dated 21st May 2024 and a replying affidavit opposing the application. The preliminary objection is that this court lacks jurisdiction to hear and determine this issue as the same offends Art.162 (2) b of the Constitution of Kenya and the Environment and Land court Act No 19 of 2011 ELCA) which confers jurisdiction of the environment and Land court. He also raises the issues that under Order 52 Rule 4, this matter touches on relationship between advocates and clients and that orders prescribed therein have been fulfilled by deposit of Ksh. 4,300,000 into the plaintiffs’ account and

10. In her replying affidavit, the Defendant holds that she has fulfilled the remedies provided under order 52 Rule 4 of the Civil Procedure Act pursuant to the Advocates Act on the orders that the court may make where a relationship of advocates and clients exists by virtue of having paid to the plaintiff Ksh.4,300,000. She has attached a copy receipt of the said amount as evidence of payment to Krisna Investments, the plaintiff’s vendor. It is her position that this suit has been overtaken by events.

11. She terms the suit as frivolous, scandalous, vexatious and an abuse of the process of the court and that this suit has been overtaken by events. She terms the suit as frivolous, scandalous, vexatious and an abuse of the process of the court and that this suit has been overtaken by events. She terms the suit as frivolous, scandalous, vexatious and an abuse of the process of the court and urges the court to dismiss it with costs.

12. This court has considered in totality the parties’ pleadings and evidence adduced by way of affidavit together with the submissions by the plaintiff.

13. The court will first deal with the issue of jurisdiction which has been raised in the preliminary objection by the defendant.The Supreme Court in Independent Electoral & Boundaries Commission v Jane Cheperenger & 2 Others [2015] eKLR made the following observation as relates to Preliminary Objections:“The true preliminary objection serves two purposes of merit: firstly, it serves as a shield for the originator of the objection— against profligate deployment of time and other resources. And secondly, it serves the public cause, of sparing scarce judicial time, so it may be committed only to deserving cases of dispute settlement. It is distinctly improper for a party to resort to the preliminary objection as a sword, for winning a case otherwise destined to be resolved judicially, and on the merits.”

14. The jurisdiction of the High court is enshrined in Article 165 of the constitution while the that of the ELC is at Article 162. Angote J. in Thomas Mutuku Kasue vs Housing Finance Company Ltd (HFC) & Another [2021] eKLR the court held:” The Court of Appeal, whose decision is binding on this court, has held that where the predominant issue in a suit involves mortgages, charges, collection of dues and rents, it is the High Court, and not the Environment and Land Court, that has jurisdiction to deal with the dispute. That being so, and the predominant issue in this matter being the issuance of the statutory notices by the charge, it is my finding that this court does not have jurisdiction to hear and determine this suit.”

15. The substratum of the instant suit relates to failure of an advocate to remit clients money to a third party, a vendor in this case for the purposes of the purchase of property on the one hand and touches Advocate-Client relationship on the other hand. The property in issue is a house Apartment Number F104 at Green Zone Erected at L.R.No. 28428/51 which the Plaintiff /Applicant was in the process of purchasing while the Defendant was acting on his behalf. The predominant issue therefore was breach of fiduciary duty by the Defendant as an advocate by failing to remit purchase funds to a vendor on behalf of his client, funds paid by his clients’ account. Having said so, I find that this court, based on the reliefs sought, has jurisdiction to proceed further to consider the claim as raised in the plaint and, in the same breath deal with the pending application.

16. This court having pronounced itself on jurisdiction will now delve into the other issues for determination. Whether the Defendant owed the Plaintiff fiduciary duty and whether that duty was breached. The claimant has narrated in his pleadings clearly how he deposited money in the tune of Kshs. 5,800,000 in two installments for the purposes of purchase of a house whose particulars are stated above. That the amount was meant for onward transmission Krishna Estates who was the vendor for completion of payment for the property. That the completion date was within 90 days which expired and the defendant still withheld the money. As at the time of filing this suit to wit 26th March 2024, the amount was still outstanding. The plaintiff has also stated that he got financing from a bank which continued to earn interest and that he had intended to rent out the apartment to help him in offsetting the loan but this did not happen due to the defendant’s delay.

17. The court has gained sight of Agreement for Sale dated 5th May 2023, signed by the plaintiff and witnessed by their advocates including the Defendant having acted for the plaintiff. The court has also gained sight of receipts for Ksh. 5,800,000 and Ksh. 600,000 by the Defendant law firm on the one hand and Ksh. 500,000 by Krishna Estates (the Vendor) on the other. Indeed, there was established an advocate-client relationship between the parties and the Defendant owed the Plaintiff fiduciary duty which she failed to honor by failing to remit the purchase funds to the Vendor within the 90 days period as per the Agreement for sale. This is evidenced by the Completion Notice to the plaintiff by the vendor’s advocate dated 20th February 2024 marked CMK9.

18. The court has also taken note of the correspondences between the plaintiff and the Defendant on the one hand and the Defendant’s advocates (J Salim Advocates) and the Defendant. In the correspondence, the Defendant cited delay in obtaining search from the lands registry as the reason for her failure in executing the plaintiff’s instructions to remit funds to the vendor. J Salim advocates obtained search and communicated with the Defendant on 14th February 2024 but she still did not comply and a demand latter dated 6th March 2024 was addressed to her by the plaintiff copied to his advocates and advocates for the Vendor.

19. The Defendant first misadvised the client to pay the funds in her clients’ account contrary to the terms of the sale agreement and then failed to remit the same to the vendor within the prescribed period as per the agreement which she prepared. The delay was inordinate and prompted the plaintiff to enlist the services of another advocate to wit Messrs. J. Salim Advocates LLP obviously at a cost. The Defendant remitted the Ksh.4,300,000 on 22nd May 2024 long after the prescribed period as per the sale agreement, three months after the search document was obtained by J Salim LLP and also one month after the suit was filed still leaving an outstanding balance of Ksh. 1,500,000. Other than breaching her fiduciary duty, her conduct amounts to professional misconduct which she has also alluded to in her pleadings.

20. The third issue for determination is whether the reliefs sought are merited. The Plaintiff seeks for orders:a.A declaration that the Defendant/advocate breached her fiduciary duty owed to the Plaintiff/client;b.The Defendant to refund the legal fees paid by the Plaintiff;c.Award of compensatory and punitive damages to the Plaintiff for the financial losses suffered;d.Costs of the suit and interest be awarded to the Plaintiff

21. This court has duly determined that there was fiduciary duty owed to the plaintiff by the Defendant by virtue of Client/ Advocate relationship. The plaintiff has demonstrated that he paid the Defend ant kshs.100,000 in legal fees and he demands a refund of the same for the breach. However, he has failed to show the breakdown of the legal fee or the manner in which the legal fee was costed.

22. The court has noted that the Ksh. 100,000 was paid prior to the drafting of the agreement for sale. It is the Plaintiff’s evidence that the Defendant did prepare the agreement for sale upon payment of kshs.100,000 and that the breach happened afterwards. The claim for refund of legal fees fails because some legal work was done by the defendant and the work’s worth has not been quantified.

23. On the prayer for compensatory and punitive damages, the plaintiff has neither demonstrated the financial losses suffered nor pleaded any quantum for damages. It is settled law that parties are bound by their own pleadings. The court itself is as well bound by the pleadings of the parties as they are themselves. It is not part of the duty of the court to enter upon any inquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by the pleadings. This court cannot therefore award damages that are not pleaded.

24. The Plaintiff’s prayer for costs of the suit and interest cannot succeed because none of the prayers in the suit have succeeded. This is based on the principle that costs follow the event.

25. The court has taken notice of the fact that the Defendant has remitted to the vendor Ksh. 43,000,000 being part of the sum in dispute. This means that there is still an outstanding balance being that the amount in issue was Ksh. 5,800,000. The court therefore deems it fit to order that any outstanding balances be remitted to the plaintiff within 30 days from the date hereof.Determination

26. Based on the above findings, the court therefore determines that:a.A declaration is hereby made that the Defendant as an advocate, was in breach of her fiduciary and professional duty to the Plaintiff as her client.b.The prayer for refund of legal fees failsc.The prayer for award of compensatory and punitive damages failsd.The prayer for costs and interest on the suit fails.e.The defendant to refund any outstanding balance of the monies in dispute to the plaintiff within 30 days from the date of this Ruling.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 19th DAY OF DECEMBER, 2024ROA 14 days.HON. T. W. OUYAJUDGEFOR Plaintiff: ………Applicant plaintiff Jean NjorogeFOR Respondent: No appearanceMartin: Court Assistant