[2017] KEHC 10017 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL AND TAX DIVISION

CIVIL SUIT NO. 643 OF 2015

PETER KIVOLONZI…….…….……..……..PLAINTIFF

-VERSUS -

ALICE WANJIKU KARIUKI...………1ST DEFENDANT

HASS CONSULT LTD………….….2ND DEFENDANT

RULING NO.2

1. The 2nd Defendant, HASS CONSULT LIMITED, has asked the Court to dismiss the case against it, as it is scandalous, frivolous, vexatious and/or otherwise an abuse of the court process.

2. The basis for the application is that there is no privity of contract between the applicant and the plaintiff.

3. Secondly, the applicant was the agent of a disclosed principal, who has been sued as the 1st defendant, ALICE WANJIKU KARIUKI.

4. It is common ground that the basis of the plaintiff’s suit herein is the alleged breach of contract. At paragraph 13 of the plaint, it was asserted that the defendants were in breach of contract.

5. As a result, the plaintiff sought a refund of the sum of Kshs. 48,390,000/- which he had paid to the defendants as a deposit for the purchase of 10 apartments. The said apartments were within a project known as SERENITA APARTMENTS.

6. The plaintiff also asserted that he was entitled to Damages for breach of contract.

7. It therefore follows that for the plaintiff to be able to sustain the claim against the 2nd defendant, he would first have to demonstrate that there was a contract between him and the said 2nd defendant.

8. Obviously, if there was no contract between these 2 parties, it would not be possible for the 2nd defendant to breach it.

9. And it would also follow that if there was no contract between these 2 parties, the plaintiff could not sustain a claim for Damages arising from an alleged breach of contract.

10. The plaintiff has submitted that the applicant is a person against whom common questions of law and fact would arise if separate suits were brought by the plaintiff against the two defendants. Consequently, the plaintiff is of the view that the 2nd defendant should be retained as a party to the suit, in order to enable the court deal with the issues in question, completely and effectually.

11. The reasons why the plaintiff holds that view are, first, that it is the applicant who placed the initial advertisement in the local media, concerning the sale of the apartments which were the subject matter of the suit.

12. Secondly, the applicant is said to have played an integral role in the sale of the apartments, as meetings for the purchase of the apartments were held at the applicant’s offices.

13. The plaintiff said that it was the applicant’s reputation and business acumen which was a key motivating factor, that compelled the plaintiff to invest in the project.

14. The plaintiff added that the applicant drew a commission from the money which the plaintiff paid through the applicant, towards the purchase of the apartments. In the circumstances, the plaintiff believes that the applicant will need to show that it deserved to draw the commission it had earned.

15. In my considered opinion, the pleadings do not give rise to any issue in which the 2nd defendant has to justify that it was entitled to receive commissions out of the money which the plaintiff had paid.

16. The Sale Agreements in issue, were executed as between the plaintiff and the 1st defendant. Therefore, there is no privity of contract between the plaintiff and the 2nd defendant. I so find because as the plaintiff has acknowledged;

“…privity of contract refers to the relationship between the parties to a contract, allowing them to sue each other, but preventing a third party from doing so?.

17. The plaintiff submitted that the contract between the 2 defendants was as a result of the contract between the plaintiff and the 1st defendant.

18. First, that is a recognition that the plaintiff had a separate contract with the 1st defendant, which was not the same contract as the one which the plaintiff had with the 2nd defendant. It is further confirmation, if any was needed, that there is no privity of contract between the plaintiff and the 2nd defendant.

19. The plaintiff submitted that it had denied the contention that the 2nd defendant was an agent of the 1st defendant.

20. That submission is wholly inconsistent with the express pleadings drawn by the plaintiff.

21. At paragraph 4 of the plaint it is stated that;

“At all material times the 2nd Defendant was the Agent of the 1st Defendant?.

22. Thereafter, at paragraph 5 of the plaint, it is stated thus;

“At all material times relevant to this suit, the plaintiff was a purchaser of 10 off-plan Apartments in the Project known as “Serenita Apartments? to be erected on Ngong Road Opposite China Centre and belonging to the 1st Defendant, while the 2nd Defendant was the agent of the 1st Defendant?.

23. From those 2 paragraphs of the plaint, it is evident that the plaintiff knew the 1st defendant to be the “owner? of the project, whilst the 2nd defendant was an agent of the said 1st defendant.

24. It is well settled that when a person is the agent of a disclosed principal, he ought not to be sued in respect to acts or omissions that he was involved in, in that capacity of an agent.

25. Of course, there are exceptions to that general rule, however the plaintiff has not sought to demonstrate that the 2nd defendant herein fell within the exceptions to the rule.

26. As the claim is founded in contract, and as the 2nd defendant was not a party to the said contract, the dispute between the plaintiff and the 1st defendant can be completely and comprehensively determined without the involvement of the 2nd defendant.

27. I note that, at paragraph 11 of the plaint, it was stated that;

“The plaintiff subsequently sought his refunds of the Deposit from the Defendants, whereupon the 1st Defendant committed to pay back the total Deposit of Kshs. 48,390,000/- plus additional 10% thereon within 30 days ending 18th July 2015?.

28. The plaintiff has already received a commitment from the 1st defendant, that she will pay back the TOTAL DEPOSIT of Kshs. 48,390,000/-.

29. As that is the full principal sum being claimed in the plaint, and because the 1st defendant had given to the plaintiff, a commitment to repay the full amount, I find that the said commitment must be deemed to constitute an acknowledgement by the 1st defendant, that she received the whole amount which the plaintiff was claiming.

30. I also note that in her Defence, the 1st defendant said that;

“The plaintiff can only seek refund and/or enforcement of the monies, once the properties have been resold to other persons?.

31. In effect, the 1st defendant has not denied receipt of the money which the plaintiff had paid either directly to her, or through the 2nd defendant. The only things which the 1st defendant is complaining about are;

a. That the suit was brought to court prematurely, as there is an arbitration clause in the contract; and

b. That the plaintiff’s refund would only become due after the re-sale of the 10 apartments which the plaintiff had originally contracted to purchase.

32. Those are matters which can be discovered from the terms of the contract between the plaintiff and the 1st defendant. They do not require the 2nd defendant to be enjoined to the suit, before the said matters can be determined by the court.

33. In the result, I find that there is no privity of contract between the plaintiff and the 2nd defendant.

34. I also find that the 2nd defendant was not a necessary party to the determination of the dispute between the plaintiff and the 1st defendant.

35. Thirdly, the plaint does not disclose any cause of action against the 2nd defendant.

36. The said defendant would be highly prejudiced if it was compelled to remain as a party to this suit, when no cause of action has been disclosed against it in the plaint.

37. Accordingly, there is merit in the application dated 24th October 2016, and I therefore order that the plaintiff’s suit against the 2nd defendant be dismissed forthwith. If the suit were allowed to continue subsisting, that would constitute an abuse of the process of the court.

38. Finally, the costs of the application and of the suit are to be paid by the plaintiff to the 2nd defendant.

DATED, SIGNED and DELIVERED at NAIROBI this 12th day of October 2017.

FRED A. OCHIENG

JUDGE

Ruling read in open court in the presence of

Miss Gitau for Mrs. Onsare for the Plaintiff

No appearance for the 1st Defendant

Miss Bulut for Kyengo for the 2nd Defendant

Collins Odhiambo – Court clerk.