https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/11509

**REPUBLIC OF KENYA** **IN THE HIGH COURT OF KENYA AT KIAMBU** **CIVIL APPEAL NO. E010 OF 2024** **MURUNGA INVESTMENTS LIMITED APPELLANT** **-VERSUS-** **EVA WANGUI OSHUMBA 1ST RESPONDENT** **COLLINS NDEGWA NJERI 2ND RESPONDENT** **(BOTH T/A METROSTAT MEDICAL SOLUTIONS)** **BEN THE AGENT CONSULTANCY LIMITED 3RD RESPONDENT** **JUDGEMENT** ***(Being an appeal from the judgement and decree of the Learned Magistrate Hon Nellanne Nganga, Resident Magistrate in the Chief Magistrate’s Court at Kiambu Civil Case No.366 of 2019 delivered on 6th November 2024)*** **Introduction and Background** 1. This is a first appeal arising from the judgment of the trial court delivered on 26th November 2024, in which the court entered judgment in favour of the 1st and 2nd Respondents against the Appellant for Kshs.1,128,272/- together with interest from the date of filing suit until payment in full. The Appellant was further ordered to bear the costs of the suit, including the costs of the 3rd Respondent. 2. The dispute arose from a proposed tenancy of premises situated at Ciata City Mall, Kiambu Road, owned by the Appellant. The 1st and 2nd Respondents were directors of Metrostat Medical Solutions, the intended tenant of the premises. The 1st and 2nd Respondents were directors of Metrostat Medical Solutions, the entity intended to occupy the premises. Their case before the trial court was that, acting upon the representations made in the course of the proposed tenancy, they paid monies towards the tenancy and incurred expenditure in preparing the premises for occupation, only for the transaction to fail after the Appellant allegedly sought to vary the agreed terms and subsequently denied them access to the premises. **The Respondents' Case Before the Trial Court** 1. The 1st and 2nd Respondents' case was that they were introduced to the premises through the 3rd Respondent, who was acting as the Appellant's letting agent. 2. A letter of offer was subsequently prepared in respect of the intended tenancy. The evidence showed that the document was executed on behalf of the Appellant by its directors and bore the Appellant's company seal. DW1, a director of the Appellant, admitted that the signature attributed to him on the letter of offer was his and that the company seal appearing thereon belonged to the Appellant. 3. Pursuant to the proposed transaction, a sum of Kshs.840,235 was paid to the 3rd Respondent and a receipt was issued describing the payment as being in respect of advance rent and agency-related charges. 4. The documentary evidence further included correspondence from the Appellant's advocates relating to the proposed tenancy. By a letter dated 14th March 2019, the advocates forwarded the letter of offer to the prospective tenant, describing it as having been duly signed by the landlord, and requested a further deposit to facilitate preparation of the formal lease. 5. The evidence further showed that legal fees were paid to the advocates and that a draft lease was subsequently prepared, although the same was never executed. 6. Architectural plans were also prepared in connection with the proposed fit-out of the premises. The architectural firm involved was associated with Susan Njeri Kibue, who was shown by the Appellant's corporate documents to be one of its directors. 7. The 1st and 2nd Respondents maintained that they incurred substantial expenditure in reliance upon the proposed tenancy but were ultimately prevented from proceeding with occupation of the premises. **The Appellant's Case Before the Trial Court** 1. The Appellant admitted that the 3rd Respondent was its agent but maintained that the agency was strictly limited to sourcing and introducing prospective tenants. According to DW1, the 3rd Respondent had no authority to collect rent, deposits or other monies on behalf of the Appellant. 2. DW1 denied that the Appellant ever received the Kshs. 840,235 paid to the 3rd Respondent. He further disputed letters produced in evidence which represented the 3rd Respondent as being authorised to collect rent and monies from other tenants of Ciata City Mall, maintaining that the signatures appearing thereon were forged. 3. DW1 nevertheless admitted that the letter of offer relating to the proposed tenancy bore his signature and the Appellant's company seal. He further acknowledged that the advocates who prepared the draft lease were the Appellant's advocates. 4. He suggested that the 3rd Respondent may have instructed those advocates without his authority. He, however, also acknowledged that the advocates would ordinarily not act without instructions and confirmed that no proceedings had been instituted against them concerning the preparation of the lease. 5. DW1 further testified that the 3rd Respondent was involved in a separate criminal case relating to alleged stealing by agent. The evidence, however, was that the criminal proceedings had not been concluded. **The 3rd Respondent's Case** 1. The 3rd Respondent maintained that it acted as the Appellant's duly appointed agent and that its mandate included dealing with prospective tenants and receiving payments in connection with tenancies at the mall. 2. It testified that tenants whom it procured ordinarily made payments through it and that the only tenants from whom it did not receive rent were those whose tenancies predated its agency arrangement with the Appellant. 3. The 3rd Respondent further stated that the usual practice was to introduce prospective tenants to the landlord through correspondence copied to the relevant directors and advocates. 4. Its position was that the transaction involving the 1st and 2nd Respondents was undertaken with the Appellant's knowledge and authority. **Judgment of the Trial Court** 1. Upon considering the evidence, the trial court found that an agency relationship existed between the Appellant and the 3rd Respondent and that the scope of the agency extended to the collection of rent and related monies. 2. The trial court relied, inter alia, on letters addressed to other tenants at Ciata City Mall which represented the 3rd Respondent as being authorised to collect rent and monies on behalf of the Appellant. 3. Although DW1 alleged that the signatures on those letters were forged, the trial court found that the allegation had not been substantiated by evidence. 4. The trial court further considered the Appellant's participation in the transaction, including the execution of the letter of offer, the involvement of its advocates in preparing the draft lease and the subsequent steps taken towards the fit-out of the premises. 5. The court found that the letter of offer created binding obligations notwithstanding that the contemplated formal lease was never executed. 6. On the monetary claim, the court found that the 1st and 2nd Respondents had proved Kshs. 840,235 paid in connection with the proposed tenancy, Kshs. 40,000 in legal fees, Kshs. 116,000 in architectural fees and Kshs. 132,027 in expenditure supported by receipts. 7. The court declined to award a further Kshs. 87,194 because the amount was supported only by an invoice without corresponding evidence of payment. It consequently awarded special damages of Kshs. 1,128,272. 8. The claim for general damages for breach of contract was declined. 9. Judgment was accordingly entered against the Appellant for Kshs. 1,128,272 together with interest and costs. The Appellant was further ordered to bear the costs incurred by the 3rd Respondent. **The Appeal** 1. Aggrieved by that decision, the Appellant lodged the present appeal through its Memorandum of Appeal dated 16th December 2024. 2. The grounds of appeal principally challenge the trial court's findings that the 3rd Respondent had authority to receive rent and deposits on behalf of the Appellant; that the Appellant was liable notwithstanding the absence of proof that the monies were remitted to it; that the 1st and 2nd Respondents proved their case on a balance of probabilities; and that the Appellant should solely bear the costs of the proceedings. 3. The Appellant consequently sought the setting aside of the trial court's judgment or, in the alternative, the substitution thereof with judgment against the 3rd Respondent alone. **Submissions by Parties** 1. The Appellant submitted that the 3rd Respondent had been engaged strictly as a letting agent and was never authorised to collect rent or deposits. 2. It argued that there was no evidence that the Kshs. 840,235 received by the 3rd Respondent was ever transmitted to the Appellant. Relying on sections 107 and 109 of the Evidence Act, the Appellant contended that the 3rd Respondent bore the burden of proving remittance and failed to discharge it. 3. It consequently submitted that the 3rd Respondent was acting on a frolic of its own and ought to have been held solely liable. 4. The 1st and 2nd Respondents opposed the appeal. They submitted that the Appellant admitted appointing the 3rd Respondent as its agent and that the surrounding circumstances demonstrated that the 3rd Respondent had been clothed with ostensible authority to receive payments. 5. They relied upon the Appellant's conduct, the letters concerning rent collection, the executed letter of offer, the involvement of the Appellant's advocates and the subsequent steps towards occupation and fit-out. 6. Their position was that any failure by the 3rd Respondent to account to the Appellant was an internal matter between principal and agent which could not prejudice innocent third parties who had acted in reliance upon the authority with which the agent had been clothed. 7. The 3rd Respondent similarly opposed the appeal and submitted that it acted for a disclosed principal. It maintained that the evidence demonstrated the Appellant's knowledge and participation in the transaction and that the trial court correctly imposed liability upon the Appellant. **Analysis and Determination** **Duty of the First Appellate Court** 1. This being a first appeal, this Court is under a duty to reconsider and re-evaluate the evidence presented before the trial court and arrive at its own independent conclusions, while bearing in mind that it neither saw nor heard the witnesses testify. 2. The applicable principle was stated in ***Selle & Another v Associated Motor Boat Co. Ltd & Others* [1968] EA 123,** where the court held that a first appeal proceeds by way of a retrial and that the appellate court must reconsider the evidence, evaluate it itself and draw its own conclusions, while making due allowance for the fact that it did not have the advantage of seeing and hearing the witnesses. 3. Guided by that principle, I have independently reconsidered the pleadings, the oral and documentary evidence presented before the trial court, the judgment appealed against, the grounds of appeal and the respective submissions of the parties. 4. In my view, the issues arising for determination may conveniently be condensed as follows: 5. ***Whether the 3rd Respondent had actual, implied or ostensible authority to receive the disputed payment on behalf of the Appellant;*** 6. ***Whether the alleged failure by the 3rd Respondent to remit the monies received to the Appellant absolved the Appellant from liability;*** 7. ***Whether the letter of offer created enforceable obligations between the parties;*** 8. ***Whether the 1st and 2nd Respondents proved their claim against the Appellant on a balance of probabilities;*** 9. ***Whether the 3rd Respondent ought to have been held solely liable; and*** 10. ***Whether there is a basis for interfering with the trial court's order on costs.*** **Whether the 3rd Respondent had authority to receive payment** 1. There is no dispute that an agency relationship existed between the Appellant and the 3rd Respondent. Indeed, DW1 expressly acknowledged that the 3rd Respondent had been engaged by the Appellant as a letting agent in respect of Ciata City Mall. The dispute concerns the extent of that authority. 2. The Appellant maintains that the 3rd Respondent's mandate was strictly limited to sourcing and introducing prospective tenants and did not extend to the receipt of rent, deposits or other monies on behalf of the Appellant. 3. The question before this Court, however, cannot be resolved solely by reference to the existence or absence of express authority. An agent's authority may be actual, whether express or implied, or ostensible where the principal, through its words or conduct, represents to a third party that the agent possesses authority to act on its behalf. 4. **In *Kenya Pipeline Company Limited v Glencore Energy (UK) Limited* [2015] eKLR,** the Court of Appeal considered the principles governing ostensible or apparent authority. The essential principle is that where the principal, through words or conduct, creates an appearance that another person possesses authority to act on its behalf, the principal may be bound as against a third party who reasonably acts upon that representation. 5. Similarly, **in *George Oloo Aringo v Anthony Omondi Kadede & 4 Others* [2020] eKLR,** the Court recognised that an agency relationship may arise from apparent authority or from the conduct of the parties and that where a person conducts himself in a manner that reasonably leads others to believe that another is acting as his agent, he may be precluded from subsequently denying that authority. 6. The critical inquiry in the present appeal is therefore not confined to whatever private limitations may have existed between the Appellant and the 3rd Respondent. The Court must equally examine what authority the Appellant, by its own words and conduct, represented to persons dealing with the 3rd Respondent that the latter possessed. 7. The documentary evidence before the trial court included letters addressed to Nairobi Java House and Yana Tyres Center in relation to their tenancies at Ciata City Mall. The letters expressly described the 3rd Respondent as the sole leasing agent for Ciata City Mall and stated that it was authorised to collect all rent and monies on behalf of the Appellant. The letters proceeded to provide the 3rd Respondent's banking details into which such payments were to be made. 8. The Appellant contends that the trial magistrate erred by relying on those letters because they concerned transactions involving other tenants and were therefore extraneous to the dispute before the court. 9. I do not agree. 10. The trial court did not rely upon the letters for the proposition that the contractual arrangements between the Appellant and those other tenants automatically governed the proposed tenancy involving metrostat medical solutions. Rather, the documents were relevant circumstantial evidence concerning the manner in which the Appellant had held out the same 3rd Respondent in its dealings with tenants and prospective tenants at the same premises. 11. The documents were therefore relevant to the disputed scope of the 3rd Respondent's agency. DW1 sought to disown the documents by alleging that the signatures appearing thereon were forged. 12. Sections 107 and 109 of the Evidence Act place the burden of proving a disputed fact upon the party asserting its existence. In ***Jennifer Nyambura Kamau v Humphrey Mbaka Nandi* [2013] eKLR,** the Court of Appeal reiterated that the evidential burden rests upon the party asserting a particular fact and that, where expert evidence is necessary to establish that assertion, it is incumbent upon that party to place such evidence before the court. 13. In the present case, DW1 did not merely deny knowledge of the letters. He positively asserted that the signatures appearing thereon were forged. That was a positive assertion of fact requiring an evidential foundation. 14. While expert evidence is not invariably the only means by which an allegation of forgery may be established, the Appellant placed no handwriting evidence, comparative documentary evidence or other cogent material before the trial court capable of substantiating the allegation. The documents further bore what purported to be the Appellant's company seal, a matter which was not satisfactorily explained by DW1. 15. In those circumstances, the trial magistrate cannot be faulted for declining to accept the allegation of forgery merely upon DW1's assertion. 16. In any event, the question of the 3rd Respondent's authority does not depend exclusively upon those letters. The evidence relating specifically to the transaction involving metrostat medical solutions presents an even more compelling course of dealing. 17. The 3rd Respondent introduced the proposed tenant and facilitated the tenancy negotiations. The disputed sum of Kshs. 840,235 was thereafter paid and receipted as being in respect of advance rent and agency-related charges. 18. A letter of offer was subsequently executed in respect of the proposed tenancy. DW1 expressly admitted that his signature appearing thereon was genuine and that the company seal affixed to the document belonged to the Appellant. The letter of offer was also executed by another director of the Appellant. 19. The Appellant's own advocates thereafter became involved in progressing the transaction. By their correspondence dated 14th March 2019, the advocates forwarded the letter of offer to the intended tenant, expressly describing it as having been duly signed by the landlord. The advocates further requested payment to facilitate preparation of the formal lease. 20. The evidence also established that legal fees were paid in connection with the proposed tenancy and that the Appellant's advocates subsequently prepared a draft lease. 21. DW1 sought to suggest that the 3rd Respondent may have instructed the advocates without the Appellant's authority. That suggestion is difficult to reconcile with his own evidence that the advocates concerned were the Appellant's advocates and that they would ordinarily not act without instructions. 22. There was equally no evidence that the Appellant repudiated the advocates' involvement when the transaction was progressing or took any action against them for allegedly acting without authority. 23. The proposed tenancy further progressed towards the fit-out of the premises. Architectural plans were prepared and fees incurred in that regard. The evidence connected the architectural firm involved in those works to Susan Njeri Kibue, who was shown by the Appellant's corporate documents to be one of its directors. 24. DW1 himself acknowledged that substantial fit-out or construction activities could not ordinarily have taken place at the premises without his knowledge. 25. The Court must evaluate those circumstances cumulatively rather than isolate each individual act. 26. The 3rd Respondent was admittedly appointed by the Appellant to source tenants for Ciata City Mall. It introduced the intended tenant and facilitated the transaction. The Appellant's directors thereafter executed and sealed the letter of offer. The Appellant's advocates progressed the transaction towards a formal lease. Steps were thereafter undertaken towards preparing the premises for occupation. 27. The 3rd Respondent's apparent authority therefore did not arise merely from its own representation that it was authorised to act for the Appellant. It arose materially from the Appellant's own conduct. 28. Applying the principles **in *Kenya Pipeline Company Limited v Glencore Energy (UK) Limited* and *George Oloo Aringo v Anthony Omondi Kadede & 4 Others*,** I am satisfied that the Appellant clothed the 3rd Respondent with ostensible authority upon which the 1st and 2nd Respondents reasonably relied in progressing the proposed tenancy. 29. Any private limitation which the Appellant may have imposed upon the 3rd Respondent's authority, but which was not communicated to the 1st and 2nd Respondents, could not defeat the reasonable appearance of authority created by the Appellant's own words and conduct. 30. I therefore find no error in the trial court's conclusion that the 3rd Respondent possessed authority sufficient to bind the Appellant in the transaction giving rise to the suit. **Whether the absence of proof of remittance absolved the Appellant** 1. The Appellant's principal argument is that the 3rd Respondent produced no documentary evidence demonstrating that the Kshs. 840,235 received from the intended tenant was subsequently transmitted to the Appellant. 2. The Appellant consequently argues that the 3rd Respondent must be held solely liable for that payment. 3. In my view, that argument conflates two distinct legal relationships. 4. The first is the relationship between the principal and the third party dealing with an agent. The second is the internal relationship between the principal and the agent, including the agent's obligation to account for monies received in the course of the agency. 5. As between the Appellant and the 1st and 2nd Respondents, the material question is whether the payment was made to a person whom the Appellant had actually or ostensibly authorised to receive it. 6. Having found that the 3rd Respondent was clothed with ostensible authority in the transaction, the subsequent question whether it accounted for the monies to the Appellant does not defeat the rights of innocent third parties who acted upon that authority. 7. A principal who has placed an agent in a position which reasonably represents to third parties that the agent possesses authority to receive payments cannot ordinarily shift to those third parties the risk of the agent's subsequent failure to account. 8. The Appellant's reliance upon the absence of evidence of actual remittance therefore does not absolve it from liability to the 1st and 2nd Respondents. 9. Equally, I would not infer, merely from the Appellant's failure to lodge a cross-claim against the 3rd Respondent, that the disputed money was necessarily remitted to the Appellant. Such an inference is unnecessary for the determination of this appeal. 10. Whether the Appellant has or had an independent cause of action against the 3rd Respondent arising from its obligation to account is a distinct matter. It does not determine the rights of the 1st and 2nd Respondents, who dealt with an agent whom the Appellant had clothed with apparent authority. 11. The Appellant's argument founded upon non-remittance therefore fails. **Whether the letter of offer created enforceable obligations** 1. Although the principal grounds of appeal relate to the question of agency, the binding effect of the letter of offer forms an integral part of the transaction giving rise to the dispute. 2. The Appellant's position was that no formal lease was ultimately executed and that the proposed tenancy therefore never crystallised into an enforceable relationship. 3. Whether a letter of offer constitutes a binding agreement depends upon its terms, the intention objectively manifested by the parties and the surrounding circumstances. 4. The fact that the parties contemplate the subsequent preparation of a more formal instrument does not invariably mean that no contractual obligations can arise before execution of that subsequent document. The decisive question is whether the parties intended to be immediately bound by the terms already agreed or intended that no legal relations should arise until execution of the contemplated formal agreement. 5. In the present case, the letter of offer was not an informal proposal generated solely by the 3rd Respondent. It was executed on behalf of the Appellant by its directors and bore the Appellant's company seal. DW1 expressly acknowledged both his signature and the Appellant's seal thereon. 6. The document was thereafter transmitted by the Appellant's own advocates as a letter of offer duly signed by the landlord. The advocates received fees in connection with the transaction and proceeded to prepare the contemplated draft lease. 7. The parties' subsequent conduct is equally instructive. Payments were made in furtherance of the proposed tenancy; architectural plans were prepared; and steps were undertaken towards fitting out the premises. 8. The transaction had therefore progressed beyond mere preliminary negotiations. 9. Kenyan courts have recognised that an accepted letter of offer may constitute the contractual foundation of the parties' relationship where the essential terms have been agreed and the parties have acted upon those terms. The absence of a subsequently contemplated formal instrument does not invariably extinguish obligations which have already arisen from an accepted offer. 10. I am therefore satisfied that the trial magistrate did not err in finding that, in the particular circumstances of this case, the letter of offer created obligations upon which the parties had acted and which the Appellant could not subsequently disregard merely because the contemplated formal lease remained unsigned. **Whether the 1st and 2nd Respondents proved their claim** 1. The trial court found that the 1st and 2nd Respondents had proved expenditure comprising Kshs. 840,235 paid in connection with the proposed tenancy, Kshs. 40,000 in legal fees, Kshs. 116,000 in architectural fees and Kshs. 132,027 supported by receipts for materials. 2. Significantly, the trial magistrate did not award every amount claimed. The court declined to award a further Kshs. 87,194 because the amount was supported merely by an invoice without corresponding evidence of payment. 3. The trial court thereby subjected the claim to the settled requirement that special damages must not only be specifically pleaded but must also be strictly proved. 4. Having independently reconsidered the documentary evidence, I find no basis for concluding that the award of Kshs. 1,128,272 was unsupported by the evidence. 5. The Appellant has not demonstrated with specificity which of the sums allowed by the trial court was unsupported by proof of payment. Its appeal is substantially directed at the question of who should bear responsibility for the loss rather than whether the expenditure was actually incurred. 6. The trial court further declined to award general damages for breach of contract. 7. In ***Kenya Tourist Development Corporation v Sundowner Lodge Limited* [2018] eKLR,** the Court of Appeal reaffirmed the general principle that general damages are ordinarily not recoverable for breach of contract and that compensation must correspond to the loss established in accordance with the applicable principles governing contractual damages. 8. The trial magistrate therefore correctly distinguished the quantifiable expenditure proved by the Respondents from the claim for general damages. The court scrutinised the documentary proof supporting the individual items and rejected expenditure which was not supported by sufficient evidence of actual payment. 9. I am accordingly satisfied that the 1st and 2nd Respondents proved their claim against the Appellant on a balance of probabilities. **Whether the 3rd Respondent ought to have been held solely liable** 1. The Appellant's alternative position is that judgment ought to have been entered against the 3rd Respondent alone. 2. The 3rd Respondent, on the other hand, relies upon the general principle that an agent acting for a disclosed principal does not ordinarily incur personal liability upon the principal's contract. 3. In ***Mabachi & Another v Nurtun Bates Ltd* [2013] eKLR**, the Court of Appeal affirmed the general common-law principle that where an agent contracts on behalf of a disclosed principal, the contract is ordinarily that of the principal and the agent is not personally liable upon it. 4. That principle is not absolute. An agent may incur personal liability where, among other circumstances, the agent contracts personally, acts outside the scope of authority, expressly assumes personal responsibility or commits an independent actionable wrong. 5. The Appellant's case for imposing sole liability upon the 3rd Respondent was principally founded upon the contention that the 3rd Respondent had no authority to receive the disputed payment and failed to prove that the money was subsequently remitted to the Appellant. 6. Having found that the Appellant's own conduct clothed the 3rd Respondent with ostensible authority in its dealings with the 1st and 2nd Respondents, the factual foundation upon which the Appellant seeks to transfer the entire liability to the 3rd Respondent falls away. 7. The fact that the 3rd Respondent physically received the payment does not, without more, make it solely liable where the payment was received in the course of an agency which, as against the 1st and 2nd Respondents, was represented by the Appellant as encompassing the transaction in question. 8. I therefore find no basis for interfering with the trial court's decision declining to impose sole liability upon the 3rd Respondent. **Costs** 1. The Appellant finally challenges the trial court's decision requiring it to bear the costs of the proceedings. 2. Section 27 of the Civil Procedure Act vests the court with discretion in relation to costs, subject to the general principle that costs follow the event unless the court, for good reason, orders otherwise. 3. In ***Mbogo & Another v Shah* [1968] EA 93,** the court set out the well-established principles governing appellate interference with the exercise of judicial discretion. An appellate court will not ordinarily interfere unless satisfied that the court below misdirected itself, acted upon a wrong principle, considered matters it ought not to have considered, failed to consider relevant matters, or arrived at a decision which is plainly wrong. 4. The Appellant has not demonstrated any such error in the present case. 5. The trial court found the Appellant liable for the proved loss and declined to impose liability upon the 3rd Respondent. In those circumstances, the order requiring the Appellant to bear the costs of the proceedings cannot be said to have been based upon a wrong principle. 6. I therefore find no basis for interfering with the trial court's exercise of discretion on costs. **Disposition** 1. Having independently reconsidered and evaluated the entire evidence, the grounds of appeal, the submissions of the parties and the applicable law, I find that the appeal is devoid of merit. 2. The Appellant admittedly appointed the 3rd Respondent as its agent in relation to the letting of premises at Ciata City Mall. Although the Appellant maintained that the agency was strictly limited to sourcing tenants, the totality of the documentary and oral evidence established that the Appellant, through its own words and conduct, clothed the 3rd Respondent with ostensible authority upon which the 1st and 2nd Respondents reasonably relied. 3. The authority did not arise merely from representations made by the 3rd Respondent. The Appellant's directors executed and sealed the letter of offer arising from the transaction facilitated by the 3rd Respondent; the Appellant's advocates progressed the transaction towards a formal lease; and further steps were undertaken towards preparing the premises for occupation. 4. The Appellant cannot, in those circumstances, rely upon an undisclosed internal limitation of its agent's authority to defeat the rights of third parties who reasonably acted upon the appearance of authority which the Appellant itself created. 5. Further, the alleged failure by the 3rd Respondent to remit the monies received to the Appellant, even if established, does not defeat the claim of the 1st and 2nd Respondents. Any obligation by the 3rd Respondent to account for monies received in the course of the agency is a matter arising within the principal-agent relationship and cannot retrospectively invalidate a payment made in good faith to an agent acting within ostensible authority. 6. The trial magistrate therefore arrived at the correct conclusion in holding the Appellant liable for the loss proved by the 1st and 2nd Respondents. 7. Consequently, the appeal fails. **Final Orders** 1. Accordingly, I make the following orders: 2. The appeal is hereby dismissed. 3. The judgment and decree of the trial court delivered on 26th November 2024 awarding the 1st and 2nd Respondents **Kshs.1,128,272**/- together with interests thereon from the date of filing suit until payment in full is hereby upheld. 4. The order of the trial court on costs is hereby upheld. 5. The Appellant shall bear the costs of this appeal. It is so ordered. **DELIVERED, DATED AND SIGNED AT ON 24th DAY OF JULY, 2026. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM.** **MARTHA MUTUKU** **JUDGE** In the presence of: - Mr Murage h/b for Mr Maina for the Appellant. Miss Wangari for the 1st and 2nd Respondents. Court Assistant – Mr. Zadock.