[2023] KEHC 24587 (KLR)

Nderitu v Sichangi & Partners Advocates (Civil Appeal 295 of 2018) [2023] KEHC 24587 (KLR) (Civ) (3 November 2023) (Judgment)

Neutral citation: [2023] KEHC 24587 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 295 of 2018

AN Ongeri, J

November 3, 2023

Between

Joseph Nderitu

Appellant

and

Sichangi & Partners Advocates

Respondent

(Being an appeal from the decision of the Auctioneers Licensing Board at Nairobi by Hon. Kandet (Board Secretary) delivered on 29/9/017 in DC no. 68 of 2015)

Judgment

1. The Secretary of the Auctioneers Licensing Board wrote a letter communicating the decision of the board in the following terms;“Notice of the Decision of the BoardWhereas the above mentioned Disciplinary Cause came up for hearing before the Board on 19th September 2017 and whereas both the Auctioneer and the Complainant were represented; Now Therefore Take Notice that the board found as hereunder:1. The auctioneer herein was instructed by the Law firm of Sichangi Partners Advocates to execute warrants of attachment in CMCC No. 6194 of 2014 for ksh.8,332,172. 352. The auctioneer proclaimed on 10th July 2015. The judgment debtor however made part-payment of kshs.950,000/= via cheque in favour of Sichangi and Partners and cash payment of ksh.1,000,000/= (one million) as evidenced by receipt no. 351 dated 19th August 2015. This was pursuant to an agreement entered into with the auctioneer herein.3. The auctioneer/respondent herein failed to disclose receipt of Kshs. 1 million he received in cash to the firm of Sichangi & Partners Advocates.In light of the findings hereinabove, the complaint succeeds. The Board ordered the following;a.The respondent to refund the sum of ksh.1,000,000/= (one million) he received from the judgment debtor, to the firm of Sichangi & Partners Advocates within 30 days. The auctioneer is at liberty to tax his Bill of costs.b.The auctioneer was fined ksh.100,000/= and ordered to pay costs of kshs.50,000/=. The above is payable within 30 days.c.The auctioneer was strongly reprimanded and directed to always adhere to the Auctioneers Act/Rules.d.The matter was stood over for mention on the 23rd November 2017 at 9. 00am at the Milimani Law Courts Board Room 1st Floor Room No. 143 to confirm compliance.Take notice that the Board will proceed with the matter your absence notwithstanding and may take any action it deems appropriate even to your detriment.”

2. The appellant is aggrieved with the said decision and has filed this appeal on the following grounds;That the Auctioneer Licensing Board erred in law and fact by:a.Ordering the Appellant to pay kshs. 100,000 to the Board and another Kshs. 50,000 to the Complainant/Respondent yet the Appellant was only paid Kshs. 950,000 by cheque to the account of CFC Bank Limited;b.Deciding that the Appellant was paid Kshs. 1,000,000 by the Judgement debtor while no such money was received by the Appellant except Kshs. 500,000;c.Failing to appreciate that the Appellant was only paid Kshs. 500,000 being auctioneer’s fees, transport and labour on the attachment day and other incidental costs which the Respondent had directed the Appellant to recover directly from the Judgement debtor;d.Failing to consider that a post-dated cheque of Kshs. 950,000 was paid as part of the decretal sum which was not denied by the Respondents;e.Failing to appreciate that the Kshs. 500,000 was paid based on the Appellant’s and Respondent’s mutual agreement as part of the Auctioneer’s fees and cost recoverable from the Judgement debtor;f.Being biased and ordering the Appellant to pay a sum of Kshs. 1,000,000 to the Respondent;g.Failing to appreciate that the case was not proved on a balance of probabilities beyond reasonable doubt;h.Failing to appreciate that the receipt dated 19th August 2015 was on a without prejudice basis to enable the 2nd Defendant borrow to make payment on the debt, and later issued a disclaimer dated 19th August 2015, that the Judgment debtor had not paid the sum of Kshs. 1,000,000;i.Failing to appreciate that the Appellant was entitled to recover their fees of Kshs. 500,000 from the judgement debtor;j.Finding that the Appellant and the Respondent had agreed that the Appellant would recover their costs directly from the judgment debtor in CMCC No. 6194 of 2014 Milimani Law Courts;k.Failing to appreciate that the sum received in cash had been utilized when attachment proceeded and costs of the attachment utilized on various dates.

3. The Appellant prays that the decision made on 19th September 2017 by K. L. Kandet, Board Secretary of the Auctioneers Licensing Board be set aside and the Appeal be allowed, the Court do find that the Appellant was only paid Kshs. 500,000 and not Kshs. 1,000,000 by the Judgement debtor which covered their costs and that the cost of the Appeal be in the Cause.

The Submissions 4. The Appellant submitted that upon proclamation, the expected Auctioneers fees was Kshs. 680,000 and a decree of Kshs. 8,200. After proclamation, a cheque of Kshs. 950,000 was delivered to the respondent as part settlement of the decree and auctioneer’s fees of Kshs. 500,000 was also paid. A receipt for Kshs. 1,000,000 was then issued to the Judgement debtor, on a “without prejudice” basis to assist him to secure a debt from his co-directors, without actual receipt of those funds. Hence the decision to have the Appellant refund Kshs. 1,000,000 plus a fine of Kshs. 150,000 was unjust.

5. The Appellants also submitted that once the decision of the Auctioneers Board is set aside, then they would be able to tax their bill against the Judgment Debtor after proclamation and recovery of part of the judgement proceeds.

6. The respondent submitted that they instructed the Appellants to execute warrants of attachment to recover a decretal sum of Kshs. 8,332,172. 35. The Appellant proceeded to proclaim the properties of the Judgement debtor who in turn made two separate payments of Kshs. 950,000 by cheque and Kshs. 1,000,000 in cash to the Appellant who issued a receipt. The complaint before the Board had been occasioned by the failure of the Appellant to remit the Kshs. 1,000,000 paid to them, to the respondents.

7. The respondent submitted that having acknowledged Kshs. 1,000,000 from the judgement debtor and even proceeding to issue a receipt on the same, the Appellant was estopped from claiming that the amount was never paid.

8. The Appellant had not disputed issuing the receipt and the explanation that the receipt was issued on a without prejudice basis to enable the judgement debtor to source funds was rejected by the Auctioneers Board.

9. The respondent further argued that the Appellant not being in a suit with the judgement debtor, had no basis for issuing a receipt on “without prejudice” basis. No sworn evidence was provided by the judgement debtor that he had not paid the ksh.1,000,000 to the Appellant.

10. The Respondent relied on the decision in the matter of Gospel Assembly Church of Music &anorv Munene Ngotho (2005) eKLR where the Court held:“. . . the receipt, identifies the Respondent, amount of money received and the purpose. . . none of this is controverted. What more proof did the lower court require in favour of the Respondent? None in my view. The respondent was required to establish his case simply on a balance of probability. . . . the receipt is evidence of a transaction that took place, a transaction that has not been disputed under oath.”

11. The respondent did not dispute that the Appellant was entitled to fees for proclamation of the Judgement Debtor’s property, but contended that the fees was dependent on recovery of the decretal sum. The Respondent referred to Rule 7 and 55 of the Auctioneer Rules (1997) which provide as follows:7. Payment of auctioneer’s chargesA debtor shall pay the charges of the auctioneer unless—(a)that debtor cannot be found; or(b)he has no goods upon which execution can be levied; or(c)the sale proceeds are insufficient to cover the charges, in which cases the creditor shall pay the charges or the deficiency thereof.55. Fees and disbursements payable to an auctioneer(1)Except as may be provided by any other written law or by contract the fees set out in the Fourth Schedule payable to the auctioneer for the attachment, repossession and sale of movable and immovable property under court warrants or letters of instructions shall be charged in accordance with these Rules.(2)Where a dispute arises as to the amount of fees payable to an auctioneer—(a)in proceedings before the High Court; or(b)where the value of the property attached or repossessed would bring any proceedings in connection with it within the monetary jurisdiction of the High Court, a registrar, as defined in the Civil Procedure Rules (Cap. 21, Sub. Leg.), may on the application of any party to the dispute assess the fee payable.(3)In any other case where a dispute arises as to the amount of fees payable to an auctioneer a magistrate or the Board may, on the application of any party to the dispute, assess the fees payable.(4)An appeal from a decision of a registrar or a magistrate or the Board under subrules (2) and (3) shall be to a judge in chambers.(5)The memorandum of appeal, by way of chamber summons setting out the grounds of the appeal, shall be filed within 7 days of the decision of the registrar or magistrate.

12. In application of Rule 7 and 55 of the Auctioneer Rules (1997), the Respondent quoted the decision in the matter of Co-operative Bank of Kenya Ltd v Jeofrik N. Muinde t/a Kimu Auctioneers (2019) eKLR where the Court held that:“my reading of the rule is that his first point of call should have been the debtor and once the exceptions under Rule 7 were established could he pursue the Appellant for payment . . . he did not bring himself under any of those exceptions. It is not enough to say that he incurred expenses and was therefore entitled to his fees. Neither can his argument be that the debtor or the appellant entered an agreement with him to settle the costs held. The Law is clear and it ought to be followed.”

13. The respondent further submitted that in fact, the appellant had already admitted receiving cash from the judgement debtor, which he had not disclosed to the Respondent which he misappropriated against the Auctioneer Rules and the punishment meted on him was within the provisions of the Law. They thus urged the Court to dismiss the Appeal with costs to the Respondent.

14. The issues for determination in this appeal are as follows;i.Whether the Auctioneer should refund the firm of Sichangi & Partners Advocates kshs.1,000,000 as directed by the Auctioneers Licensing Board.ii.Whether the impugned decision should be set aside.iii.Who pays the costs of this appeal?

15. On the issue as to whether the Auctioneer should refund kshs.1,000,000 as directed by the Auctioneers Licensing Board, the Appellant’s submissions were that the judgment debtor(JD) did not pay the said amount but the same was issued “on a without prejudice” basis to enable the JD to borrow money from his co-directors.

16. It was established that the Auctioneer issued a proclamation notice on 10/7/2015.

17. I find that the Board ignored written agreement by the JD which was attached to the receipt which stated that the JD gave the Appellant Kshs. 500,000 in cash and a postdated cheque of Kshs.950,000 and further that he asked the Appellant to give him a receipt of Kenya shillings One million to enable him secure a loan from his co-directors.

18. Further that he issued a receipt No. 351 dated 19/8/2015 for the purpose of securing a loan.

19. Upon considering the appeal herein, I find that it was necessary for the Board acting in its quasi-judicial capacity to enjoin the JD as an Interested party whose presence would have enabled the Board to completely adjudicate the case before it.

20. Order 1 rule 10(2) of the said Rules provides that:“The court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all questions involved in the suit, be added.”

21. In the case of Departed Asians Property Custodian Board v Jaffer Brothers Ltd [1999] 1 EA 55 it was held as follows:“A clear distinction is called for between joining a party who ought to have been joined as a defendant and one whose presence before the Court is necessary in order to enable the court effectually and completely adjudicate upon and settle all questions involve in the suit. A party may be joined in a suit, not because there is a cause of action against it, but because that party’s presence is necessary in order to enable the court effectually and completely adjudicate upon and settle all the questions involve in the cause or matter…For a person to be joined on the ground that his presence in the suit is necessary for effectual and complete settlement of all questions in the suit one of two things has to be shown. Either it has to be shown that the orders, which the plaintiff seeks in the suit, would legally affect the interests of that person, and that it is desirable, for avoidance of multiplicity of suits, to have such a person joined so that he is bound by the decision of the Court in that suit. Alternatively, a person qualifies, (on an application of a Defendant) to be joined as a co-defendant, where it is shown that the defendant cannot effectually set a defence he desires to set up unless that person is joined in it, or unless the order to be made is to bind that person.”

22. I also rely on the case of Civicon Limited v Kivuwatt Limited and 2 Others [2015] eKLR the court observed as follows:“Again the power given under the Rules is discretionary which discretion must be exercised judicially. The objective of these Rules is to bring on record all the persons who are parties to the dispute relating to the subject matter, so that the dispute may be determined in their presence at the time without any protraction, inconvenience and to avoid multiplicity of proceedings. Thus, any party reasonably affected by the pending litigation is a necessary and proper party, and should be enjoined…”

23. I find that the issue as to whether the receipt was issued upon payment of Kshs.1,000,000 (One million) or for purposes of deceiving the JD’s co-directors to give him a loan was not determined with finality since the JD was not enjoined as a party to the proceedings.

24. The Respondent did not prove that the JD received the said funds in view of the written agreement that the receipt was issued for the purpose of enabling the JD borrow money.

25. The agreement stated that the Appellant only received Kshs. 500,000 in cash.

26. I find that the Appellant is not bound to refund the Kshs. One million to the firm of Sichangi & Partners Advocates. The Board ought to have made the JD a necessary party to the case.

27. However, the Appellant should remit the Kshs. 500,000 to the Respondent since it was paid in the process of execution.

28. On the issue as to whether the decision of the Board should be set aside, I find that the Board acted within its mandate to order the Appellant to pay a fine of Kshs. 100,000 and costs of Kshs. 50,000 in view of the complaint.

29. The Appellant choose to have the JD pay him his fee of 500,000 instead of executing the warrants first.

30. Section 24 (4) and (5) of the Auctioneer’s Act provide for orders that may be made by the Board as follows:(4)After hearing the complaint and the licensed auctioneer to whom the complaint relates, if he wishes to be heard, and considering the evidence adduced, the Board may order that the complaint be dismissed or if it is of the opinion that a case of misconduct on the part of the auctioneer has been made out, the Board may order—(a)that the licensed auctioneer be admonished; or(b)that the auctioneer’s licence be suspended for such period, not exceeding six months as the Board thinks fit; or(c)that the auctioneers licence be revoked; or(d)that such condition or conditions as it deems appropriate be attached to the auctioneer’s licence; or(e)that the licensed auctioneer pay a fine not exceeding one hundred thousand shillings; or(f)that the licensed auctioneer pay compensation not exceeding one hundred thousand shillings to the person damnified by his misconduct; or(g)that the auctioneer be disqualified from holding an auctioneer’s licence for such period as the Board thinks fit; or(h)such combination of the above orders as the Board thinks fit.(5)The Board may make such order as to the payment by any party of any costs or witness’ expenses and as to the expenses of the Board or the members thereof in connection with the hearing of any complaint as it may think fit.

31. I find that the Board was right in ordering the Auctioneer to pay a fine of 100,000 and also costs of the complaint of kshs.50,000 which was well within its mandate as provided for by the Auctioneer’s Act.

32. However, there is no evidence that the Appellant received Kshs. 1,000,000 from the JD and the order directing him to remit the said sum to the Respondent is set aside.

33. The Appellant is directed to remit the Kshs. 500,000 which he received in cash to the Respondent.

34. I find that this appeal partially succeeds and I direct that each party bears its own costs of this appeal.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 3RD DAY OF NOVEMBER, 2023. A. N. ONGERI.....................................JUDGEIn the presence of:……………………………. for the Appellant……………………………. for the Respondent