[2014] KEHC 8528 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NYERI

IN THE ENVIRONMENT AND LAND COURT

CIVIL CASE NO.184B OF 1995

MICHAEL MURAGE NJUNGE …............PLAINTIFF

VERSUS

JOSEPH GATHANWA NJUNGE.........DEFENDANT

J U D G M E N T

The plaintiff filed in this court a plaint dated the 16th October a plaint, seeking enforcement of terms agreement dated 27th January 1994 between himself and his brother, the defendant over parcel of land known as L.R Nyeri/Municipality/Block 11/61(property). This property is a commercial building located within Nyeri municipality, measuring 0. 05 Ha which the parties here in are joint proprietors having been bequeathed of the same by their aged mother Julia Wagacii Njunge where in they are registered as joint owners.

The plaintiff contends that the defendant is in express breach of the terms of the agreement. The terms he adds, required the defendant to manage the property and collect rents, paying the plaintiff a monthly sum of Kshs 25,000/= from the month of February 1994 to June 1994, and there after to pay a monthly sum of Kshs 15,000/= from July 1994 to January 1995 which he states that the defendant has neglected to do.

The plaintiff prays for judgment against the defendant for the

Appointment of a receiver manager over the suit property.

Suit property be valued and sold and the proceeds be apportioned equally between the parties herein.

Costs of this suit and interest at the court rates.

The suit having been filed under certificate of urgency accompanied by a chamber summons application for injunctive orders, the defendant, filed a replying affidavit stating that he had carried out repairs as authorized in the agreement which took away monies the plaintiff was entitled for the months of January 1994 after the municipality health officials closed the property on sanitary concerns. He adds that since their mother had given them the suit property on condition that they maintain her from the proceeds therefrom, they agreed to review the earlier agreement for each to be remitting Kshs 5,000/= to their mother which the defendant says he had been doing, slashing 5,000/= off the plaintiffs share and remitting the remainder of Kshs 10,000/-. This was done in the month of February 1995 before the defendant's advocate. This position is supported by the parties mother in her affidavit.

The mother of the parties here in applied enjoined as a co-defendant to the suit to protect her own interest in the suit on 14th October 1996.

She was enjoined. This was after her sons had entered into a consent to sell off the suit property and share the proceeds equally, she filed a caution to prevent that action stating that she was residing in the property and was the source of her livelihood. She added that her husband at his death left a loan of Kshs 1,500 000/= on the property which the defendant cleared. The plaintiff in 2010 filed an application seeking to enforce the consent of sale which had earlier been entered to, where the suit property was valued at 5. 5 million, which application was dismissed on 23 sept, 2011 after the court found that the orders had expired.

The matter came for hearing when the plaintiff reiterated his case as pleaded. He lamented all through the defendant does not share the proceeds of the property from the rents collected while he has pressing needs as a retired civil servant. The defendant on the other hand stated that he has other 3 brothers and in addition to their aged mother. The names of the other brothers are John Gachara Njunge, David Kibera Njunge and Francis Macharia Njunge. He stated that the suit property had at one point been sold out by auction, but he bought it single handedly without the help of the plaintiff.

The parties filed their written submissions. The defendant submits that having rescued the property when it had been auctioned and the fact that none of his brothers contributed a cent to repay the loans he took, he be allowed to be a sole proprietor. He stated that there is no law that allows bequeathing a property that has a loan. He adds that he has nothing to account for to the plaintiff as the proceeds of the property were going towards the repayment of loans taken in salvaging the suit property. He states that he cleared the debts before 1992 but the property was registered in the both names because he was being threatened. It appears the mother died in the process of litigation from the defendant's submissions hence she is out of the picture.

The plaintiff also filed his submissions. He pointed to the fact that the defendant did not file any defence although he was allowed to proceed with oral testimony so he termed the matter as an undefended one. He stated that he has tried severally to engage an estate agent which the defendant has vehemently resisted. The matter has lasted in the court close to 20 years now, and since the date of the agreement the defendant has not been remitting the lawful share of the plaintiff. The defendant testified that the income from the suit property over the years was 152,000/=. The plaintiff argues that if the estate agent had estimated a monthly income of Kshs 118,000 per month the amounts that have accumulated so far are close to 12 million.

He further submits that the defendant has not provided before the court any accounts for the court to view. He therefore submits that the defendant has breached the terms of joint ownership by failing to give him the share of the proceeds of the suit property hence prayed the court to order the property to be placed under management of a manager and accounts be stated or be placed for sale and the proceeds be shared equally between the two, with option being granted to the defendant to purchase the plaintiffs share of half value failure to which it be sold to a third party as was ordered in 2 different court orders which the defendant never obeyed.

I have considered the pleadings, proceedings and rival arguments from both the parties herein. The following issues are picked out for determination.

Failure to file a defence testifying in court orally.

Whose property is the suit property.

Whether the plaintiff is entitled to the share of the proceeds of the rents from the property.

Whether there is creation of trust over the suit property.

The plaintiff has pointed on to the fact that the defendant has not filed any defence. I have looked at the pleadings and I have not seen any. However I note that the judge in the ruling delivered on the 19th June 2003, noted “The application has been made after appearance has been entered and defence filed” So whether defence was filed, the record show that it was filed, and that is solved.

The analogy in the matter is that the suit property has been bequeathed by their mother when she was aged to whom it had been left behind by her husband. The defendant and the mother have argued that the suit property was under a loan at the time of bequeathing it unto the parties when it was registered as a joint ownership property in favour of the parties herein. I have looked at the the evidence tendered and I have not seen any document indicating the loan allegedly left behind as required by the law. So the issue of the alleged loan is far fetched by the defendant.

The plaintiff has strongly testified that the defendant has not availed any accounts of the proceeds of the property since 1994 when it was placed under his management by agreement. I have looked at the court order issued by the court on 19th June 2003 which required the defendant to render statement of account which he has never obeyed. The mother of the parties stated in her affidavit that she intended that the parties herein manage the suit property and maintain her from the proceeds. The defendant has also indicated that their mother was a diabetic person who needed care.

The intention of the mother of the parties was thus to transfer the property to the parties here in during her life time due to her health. The defendant has argued that due to his great role played in the management of the property, it should belong to himself alone. There appears to have been no intention that the suit should belong to the defendant alone. I have looked at the title deed wherein the parries are registered as joint owners. No proof of intimidation was proved by the defendant after he alleged that he was threatened if the property was to be registered in his name alone as alleged. I have also looked at the agreement dated 27th January 1994 in clause 1 and 2 which recognize the parties here in as joint owners with equal shares and rights. I have looked at that agreement and I have not seen any provision regarding the property to have any loan repayments clauses either. The defendant did not prove that he had paid any loan on the suit property documentary. I find the defendants allegation are thus unfounded and mere denials.

The defendant was thus entrusted with the care of the property by the plaintiff. As a trustee there is the duty giving the other parties thereto, complete and accurate information about the trust property and transactions, including trust records and accounts (Schmidt v Rosewood Trust Ltd (Isle of Man) [2003] UKPC 26 (27 March 2003).See also the case of Novoship (UK) Limited & Ors v Nikitin & Ors [2014] EWCA Civ 908 (04 July 2014),If it is in the category allowed by the law.

In Australian case of Randall v Lubrano (unreported 31st October 1975) cited by Kirby P in Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, 416: As approved in the case of Schmidt v Rosewood Trust Ltd (Isle of Man) [2003] UKPC 26 (27 March 2003)it was held,

"…...No matter how wide the trustee's discretion in the administration and application of a discretionary trust fund and even if in all or some respects the discretions are expressed in the deed as equivalent to those of an absolute owner of the trust fund, the trustee is still a trustee."

Thus the duty of trust placed upon the defendant as per the agreement remained valid, despite other duties that had been placed on the defendant by the agreement to be the administrator, he still held the share of the property on his behalf and of the plaintiff hence he was a trustee of the plaintiff's share.

In the case ofNovoship (Supra)approved the principle set in the case of Barnes v Addy (1874) LR 9 Ch App 244 at 251

"Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility.”

It was upon the defendant to carry out the duties of a trustee that he was bestowed upon diligently and avail information. In Novoship (Supra) where the trustee being a company tried to deny the beneficiary right to information, the court declined that argument stating that the beneficiary was entitled to information to the extent of his own benefit/interest in the trust. Therefore there is need for this court to consider the effect of the non disclosure on the part of the defendant which is stated to have lasted for close to 20 years now.

The other issue is the issue of the other siblings of the parties herein. As I have already stated above, there was a trust relationship created between the parties here in by the agreement. However, the other angle of trust to the siblings of the parties herein is worthy considering. The question lingering in my mind is whether this property, having been bequeathed to the parties by their mother was excluded from being part of the family ancestral property. Bequeathing of properties is held as same as giving them away as gifts. Whether it forms part of ancestral property of the family depends on the circumstances under which it was given out. First there is no instrument upon which the parties were bequeathed. They just stated that they were registered as the owners by their mother. The kind of gift this passing of property was will be very essential in arriving to a proper conclusion.

Of great value is intention of their mother when she decided to bequeath them. She remained with an interest in the suit property as she stated in the affidavit she had filed. She personally objected to the property being sold and shared amongst her two sons, when the court issued those orders. She was sick with a terminal illness, diabetes and it was deponed that she passed on the property to the parties when she could not manage it any longer. The questions to be answered linger in interpretation of her motive in dealing with the suit property.

The other siblings of the parties herein never showed any interest in the suit property, whereas the suit lasted many years in court. This being a gift to the parties, I'm delving in the area of gifts to Analyze the circumstances. There are gifts made in contemplation of death of a giver (Donatio mortis causa). This kind of gifts was discussed in the case of Cain vs. Moon (1896) 2 Q. B. 283. Conditions upon which interest vests in a beneficiary in this kind of transmission of interest were set in this case as

The gift must be made by the donor in the contemplation of death

The gift must be conditional on the donor’s death

The subject matter of the gift must be delivered to the donee

The property must be capable of forming the subject-matter of a donatio mortis causa. The burden of proving that all four conditions have been met lies with the donee.

We have already seen that the property was registered in the names of the parties by their mother when she was terminally ill, and that she had objected to it being disposed away during her lifetime. The defendant has been in management and control where the proceeds there from he said used to support their mother. Her interest in the property was for her own maintenance and support, and she has now passed on, and may of these conditions are met, since her only objection to the property's disposal was her maintenance during her lifetime. Whether there was any contrary intention for the property to form apart of the estate of the deceased would have been properly articulated by the other siblings who have not made any effort to be party in the suit property despite the length of the Matter. In absence of their expressed interest, I cannot find there to have been an intention fort the property to form part of ancestral property of the family.

In the Indian case of C. N. Arunachala Mudaliar vs C. A. Muruganatha Mudaliar And another 1953 AIR 495, 1954 SCR 243, It was held that the intention of the giver should be clear as to the kind of property the gift is intended to form in life of the receiver, so that where a father in his will had gifted his sons with properties directing there be right for their sons to inherit had made the gift absolute upon them so that it was out of the larger family's ancestral property for the rest. Since it was was an oral gift to the parties herein, and was vested to them during the life time of their mother, I deem there has been transmission of the interest to the parties here in as absolute joint owners.

The plaintiff has made 2 main prayers in respect of the suit property. However in light of the conduct of the defendant for the last 20 years, I find the defendant has been ab unfaithful trustee and agent of the plaintiff. There has been breach of the duty to account and share profit so even if a manager is appointed as prayed the same problems will continue. So I find I favour of the plaintiff that, since the defendant said there are no profits accrued from the suit property, it will be futile to appoint a receiver manager.

I hereby order the property be valued, and sold and a share of half be granted to each party, the defendant being granted first priority to purchase the plaintiffs half share failure to which it be sold to 3rd party. On the costs, the defendant having been at breach, it would have been expedient to pay costs of the suit to the plaintiff and interest in court rates. However this being a family dispute I order each party to bear own costs.

Dated, signed and delivered on 28th day of November 2014.

A. OMBWAYO

JUDGE