[2022] KEHC 16682 (KLR)

Mukuha v Waweru Munyi Jackson t/a Waweru Munyi & Co Advocates (Civil Case E951 of 2021) [2022] KEHC 16682 (KLR) (Commercial & Admiralty) (7 December 2022) (Ruling)

Neutral citation: [2022] KEHC 16682 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Admiralty

Civil Case E951 of 2021

DO Chepkwony, J

December 7, 2022

Between

Grace Wamboi Mukuha

Plaintiff

and

Waweru Munyi Jackson t/a Waweru Munyi & Co Advocates

Respondent

Ruling

1. The plaintiff’s claim against the defendant as enumerated in her plaint dated November 2, 2021 mainly seeks for refund of Kshs 10,220,000/=, general damages, interests and costs of the suit. The prayers in the plaint are couched in the following terms;a.A declaration that the defendant has breached and/or violated a fiduciary duty owed to the plaintiff.b.Refund of the sum of Kshs 10,220,000/= which was paid out to the defendant on the basis of a land sale transaction in respect of Laikipia/salama Pesi Blcok1/53 (OMC).c.General damages for professional negligence.d.Exemplary damages for breach of fiduciary duty and failing to carryout professional instructions in line with the request of the plaintiff.e.Interest on (b) above at court rate wef July 26, 2019. f.Costs of the suit be borne by the defendant.g.Such other and/or further reliefs as the court may deem fit, just and expedient.

2. The factual background of this matter is that on or about july 26, 2019, the defendant introduced the plaintiff to a vendor namely Mrs Wanja Laiboni who was the registered proprietor of a parcel of land known as Laikipia/salama Pesi Block 1/53 (OMC) measuring approximately 17. 7 Ha. Following the introduction of the said vendor, the plaintiff developed an interest in the purchase and acquisition of a portion of the parcel of land measuring 30 acres.

3. The plaintiff mandated and/or authorized the defendant to prepare a sale agreement and which was drafted on July 26, 2019 and the same was ready for execution by the parties.

4. Pursuant to the impression created by the defendant that the vendor had lawfully and legally executed the sale agreement, the plaintiff proceeded to execute the sale agreement under the instance of and/or prompt by the defendant.

5. Upon entry onto the suit property, and in an attempt to commence construction,the plaintiff was confronted by the vendor’s caretaker and stopped. The plaintiff reached out to the vendor in a bid to confirm that she had duly signed the sale agreement dated July 26, 2019 and had received the purchase price over the suit property.

6. It is upon reaching out to the vendor, that the plaintiff established that the defendant had denied execution of the sale agreement dated July 26, 2019, receipt and acknowledgement of the sum of Kshs 5,700,000/= as stakeholders sum, receipt of any other monies including the balance of the purchase price and then authorized the defendant to act for her in the subject sale agreement.

7. Upon lodgment of a complaint with the director of criminal investigations, it transpired that the signature of the vendor, namely wanja laiboni on the sale agreement dated July 26, 2019 had been forged.

8. While the defendant knew that the sale agreement dated July 26, 2019 had been executed by the vendor despite the fact that no monies had been paid to the vendor, the defendant failed to release and/or refund the entire purchase price which had been paid out on the belief that the same would be transmitted to the vendor for purposes of the purchase price of the suit property.

9. As a result, the defendant illegally, unlawfully and in breach of fiduciary duties owed to the plaintiff, retained the entire Kshs 10,220,000/=. The plaintiff claim against the defendant is for provision of accounts for the entire monies paid out to and retained by the defendant on account of the purchase of the suit property known as Laikipia/salama Pesi Block1/53 (OMC) and a refund of the entire sum of Kshs 10,220,000/=.

10. The defendant did not enter appearance and a request for plaintiff was endorsed. The matter was then listed down for formal proof hearing on September 20, 2022.

Evidence 11. The plaintiff’s case stands on the evidence of Grace Wamboi Mukuha, the plaintiff. She adopted her witness statement dated September 2, 2021 and produced the plaintiff’s list of documents dated September 2, 2021. Over and above of her evidence as recorded in her witness statement, further evidence was mainly seeking a refund of the money with interest. She stated that she took the money as a loan from the bank and has been repaying the loan without the land. She also asked for damages

Submissions 12. The Plaintiff filed her submissions which are dated 17th October, 2022 as per court’s directions issued on 20th September, 2022.

Analysis and Determination 13. I have carefully considered the plaintiff’s plaint, the written submissions alongside the cited authorities. the issues arising for determination are;-a.Whether there was a breach of fiduciary duty by the defendant.b.Whether the plaintiff is entitled to a refund of Kshs 10,220,000/=.c.Whether the plaintiff deserves to be granted general damages and exemplary damages for breach of contract.

Whether There Was A Breach Of Fiduciary Duty By The Defendant 14. It is important to first define what amounts to fiduciary duty. According to Black’s Law Dictionary, 11th edition, a fiduciary duty is defined as:“A duty of utmost good faith, trust, confidence and candor owed by a fiduciary (such as an agent or a trustee) to the beneficiary (such as the agent’s principal or the beneficiaries of the trust;… a duty to act with the highest degree of honesty and loyalty towards another person and in the best interest of the other person…Also termed as duty of loyalty, duty of fidelity; duty of faithful service; duty to avoid conflict of interest.”

15. It is my view that a fiduciary duty is as in the instant case where the defendant was entrusted with the plaintiff’s money and transactions as instructed, and that such instructions should be executed to the letter without breaching any of them. It is expected that in carrying out those instructions, the defendant executes them with utmost confidence, honesty and in the best interest of the client. It is a duty that requires the highest degree of accountability.

16. The plaintiff in this matter executed the sale agreement and the defendant indicated that the vendor had executed the same only to realize later that the vendor did not execute the sale agreement and in fact, the purchase price which had been paid by the plaintiff was never received by the vendor.

17. Based on the evidence presented by the plaintiff, i am of the humble view that the defendant breached his fiduciary duty as an advocate representing the plaintiff in this matter.

Whether the Plaintiff is entitled to a refund of Kshs 10,220,000/= 18. The plaintiff paid the purchase price in respect of the subject matter through the defendant for onward transmission to the vendor. The record clearly shows two acknowledgment notes dated July 19, 2019 and August 21, 2019 respectively evidencing that the defendant received a total sum of Kshs 10,220,000/= from the plaintiff.

19. This matter not having been contested by the defendant who failed to enter appearance despite having been served with the pleadings, the same proceeded for hearing by way of formal proof.

20. Section 107(1) of the Evidence Act, cap 80 Laws of Kenya provides that;“Whoever desires any court to give plaintiff as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”further, section 108 thereof, provides as follows;“The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.”The evidential burden is provided for under section 109 of the Evidence Act which provides that;“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

21. Therefore, in this case the plaintiff having adduced evidence that has not been rebutted and upon a careful consideration of the same by this court, the conclusion is that the plaintiff has discharged the burden of proof as required under sections 107 and 108, both of the Evidence Act.

22. It then follows that the plaintiff deserves the prayers sought in her plaint dated November 2, 2021 as the same are uncontested.Whether the plaintiff general damages and exemplary damages for breach of contract

23. On the question of general damages, I wish to rely on the case of Kenya Women Microfinance Ltd vs Martha Wangari Kamau(2021) eKLR, where the court held that;“The law is that general damages are not awardable for breach of contract or breach of contractual obligations. A contract for performance of specific duties or obligations, if breached, would lead to compensation for the specific loss suffered as a result of the breach, but not general damages.”

24. On the question of exemplary damages which are basically punitive in nature for the alleged breach, the principles were set out in the case of Godfrey Julius Ndumba Mbogori & Another vs Nairobi City County (2018) eKLR as follows:“The appellants claimed for exemplary and punitive damages. Exemplary damages are essentially different from ordinary damages. The object of damages in the usual sense of the term is to compensate. The object of exemplary damages is to punish and deter. We are guided by the case of Rookes v Barnard (1964) AC 1129 where Lord Devlin set out the categories of case in which exemplary damages may be awarded which are:i.in cases of oppressive, arbitrary or unconstitutional action by the servants of the government,ii.cases in which the defendant’s conduct has been calculated to make a profit for himself which may well exceed the compensation payable to the plaintiff; andiii.where exemplary damages are expressly authorized by statute.”

25. It is worth-noting that having acquired a loan facility to fund the purchase of the parcel of land, the plaintiff had a high legitimate expectation that she would own land but shock on her, the ambition never materialized at all due to the defendant’s fault.

26. The plaintiff has asked this court to make an award of Kshs 5,000,000/= each on general damages and exemplary damages. The plaintiff having proved her case on a balance of probability that the defendant was in breach of the fiduciary duty and for faulting the terms of the sale agreement dated July 26, 2019 for failure to remit the purchase price to the vendor.

27. Accordingly, this honourable court enters judgement in favour of the plaintiff as against the defendant in the following terms:-a.A declaration be and is hereby issued that the defendant breached and/or violated fiduciary duty owed to the plaintiff.b.The defendant be and is hereby ordered to refund the sum of kshs 10,220,000/= to the plaintiff.c.The plaintiff is granted exemplary damages is assessed at Kshs 2,000,000/=.d.The plaintiff shall also have costs and interest of this suit.

Orders accordingly

RULING DELIVERED VIRTUALLY, DATED AND SIGNED AT NAIROBI THIS 7TH DAY OF DECEMBE, 2022. D. O. CHEPKWONYJUDGEIn the presence of:Mr. Ocholla holding brief for Mr. Kamunge for the PlainitffNo appearance for and by the DefendantCourt Assistant - Sakina