D. Njogu & Company Advocates v Harit A. Sheth t/a Harit Sheth Advocates, Afrison Export Import Limited & Huelands Limited [2017] KEHC 10027 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MILIMANI

COMMERCIAL AND ADMIRALTY DIVISION

CIVIL CASE NO. 646 OF 2015 (0. S)

IN THE MATTER OF PROFESSIONAL UNDERTAKING

BETWEEN

D. NJOGU & COMPANY ADVOCATES....................................PLAINITFF

VERSUS

HARIT A. SHETH T/A HARIT SHETH ADVOCATES...........DEFENDANT

AFRISON EXPORT IMPORT LIMITED...........1ST INTERESTED PARTY

HUELANDS LIMITED.......................................2ND INTERESTED PARTY

RULING

1. This matter was substantially compromised by the written Consent dated 24th October, 2016 which reads as follows:-

“By Consent:

1. The Defendant and Interested Party have agreed to pay the Plaintiff a sum of Kenya Shillings One Hundred and Seventy One Million Nine Hundred Thousand (Kshs.171,900,000) within seven days after receiving payment for L.R. No.7879/24 from the Government of Kenya Shillings Seven Hundred and Fifty Million (Kshs. 750,000,000) and being authorized to release the same to the interested parties and the Plaintiff hereby agrees that out of the said sum of Shs.171,900,000/- the firm of Harit Sheth Advocates is hereby authorized to retain the sum of Kenya Shillings Twelve Million Five Hundred (Shs.12,500,000).

2. The balance of Kenya Shillings Eighty Million (Kshs.80,000,000) in regard to L. R. No.13472/3 (Original No.13472/1/2) shall be paid from the proceeds of sale of the school land of approximately 13. 5. acres being part of L.R. No. 7879/25 upon which the Plaintiff shall give the interested parties the said title and discharge of charge.

3. The parties agree that they shall file the submissions in Court on the issue of Interest claimed and await the Court’s decision on the same.

4. The parties have agreed that the orders against L.R. No.7879/24 be vacated forthwith and orders against L.R No.7879/25 remain in force until the payment of Kenya Shillings Eighty Million (Kshs.80,000,000) and the resolution of interest”.

2. The Court must now determine the issue of the Interest claimed and has given regard to the submissions made by both sides.  As would be expected the resolution of the Claim turns on the construction of the two Letters of Undertaking given by Harit Sheth Advocates to D. Njogu & Company Advocates.

3. On 9th April, 2013, Harit Sheth Advocates gave an undertaking in the following terms:-

“ATT: Mr. David Njongu

Dear Sir

RE: NAIROBI HIGH COURT CIVIL COMMERCIAL CASE NO.617 OF 2012- AFRISON EXPORT AND IMPORT LIMITED & ANOTHER VS. ATTORNEY GENERAL AND OTHERS.

Reference to the captioned whereby a settlement has been reached at Khs.24000,000,000/= with our clients.

Your clients Continental Credit Finance Limited have a Mortgage over land Reference No.7879/4 in the name of Afrison Export and import Limited and Huelands Limited.

The parties have agreed that Kshs.100,000,000/= (Kenya Shillings One hundred Million) is payable to your client in full discharge of our client’s obligations.  A further sum of Kshs.50,000,000/= (Kenya Shillings Fifty Million) would be paid in respect of advocates fees. We are advised that you hold the Deed Plan for L.R 7879/24 being the portion sold to the Government.

To facilitate smooth completion we require your clients to execute a Re-conveyance of Mortgage over L.R 7878/24 and release the same to us together with original Deed Plan.

In consideration of your releasing the same to us we undertake to pay to yourselves Kshs.100,000,000/= (Kenya Shillings One hundred million) from the sale proceeds of L.R No.7879/25 being the portion being retained by our client.  We further undertake to pay to you the sum of Kshs.50,000,000’= (Kenya Shillings Fifty Million only) in respect of advocates fees.

This undertaking shall become effective only upon receipt of the Re-conveyance of Mortgage duly executed by your client over L.R. 7879/24 together with the Deed plan.  Payment of the two sums shall become payable within 12 months of the issuance of the new Certificate of Title for L.R No.7879/25 whichever is the later”.

4. Harit Sheth Advocates insist that they were not in breach of that undertaking as, by the time these proceedings were commenced, the Certificate of Title to LR. No. 7879/25 had not been issued.

5. Looking at the undertaking of 9th April, 2013, the timing for the payment of Kshs.150,000,000/= would be in the ultimate paragraph therein which reads:-

“To facilitate smooth completion we require your clients to execute a Re-conveyance of Mortgage over L.R 7878/24 and release the same to us together with original Deed Plan.

In consideration of your releasing the same to us we undertake to pay to yourselves Kshs.100,000,000/= (Kenya Shillings One hundred million) from the sale proceeds of L.R No.7879/25 being the portion being retained by our client.  We further undertake to pay to you the sum of Kshs.50,000,000’= (Kenya Shillings Fifty Million only) in respect of advocates fees”.

6. Payment of the sums in the undertaking would be 12 months of the issuance of the new Certificate of title for LR. No.7879/25.  When forwarding the documents on 01. 10. 2013 D. Njogu & Co. Advocates forwarded, in respect to LR. No.7879/25, a partial re-conveyance. In that letter D. Njogu & Co. Advocates says that the Client of Harit Sheth holds the original title plan for LR. NO.7879/25.  From the Letter of Undertaking of 9th April, 2013 no obligation was placed on D. Njogu & Co. Advocates to obtain the issuance of the Certificate of Title for LR.7879/25. It would have to be the responsibility of the firm of Harit Sheth Advocates.  However no timeline was imposed by the parties.

7. Clearly, as the payment of the sums was pegged on the issuance of Title to LR.No.7879/25, no obligation accrued until the issuance thereof.  There is no evidence that the said title had issued by the time the Originating Motion was filed.  I would have to agree with Counsel for both the Defendant and Interested parties that the all important event upon which the undertaking was to be enforced had not happened.

8. The second undertaking was that of 16th September 2013 which reads:-

16th September 2013

“ATT: Mr. David Njogu

Dear Sirs

RE: LAND REFERENCE NUMBER 13472/3 (ORIGINAL NUMBER 13472/1/2).

We act for Afrison Import Limited and Huelands Limited who are the registered owners of Land Reference Number 7879/25.

We understand that you have agreed to release the title for land Reference Number 13472/3 (Original Number 13472/1/2), which is registered in the name of Chakama Ranching Limited and has been used to secure amounts advanced to Citangila Limited, upon receipt of Kenya Shillings Eighty Million (Khs.80,000,000/=).

We undertake to pay Continental Credit Finance Limited (in liquidation) Kenya Shillings Eighty Million (Kshs.80,000,000/=) from the sale proceeds of Land Reference Number 7879/25 in full settlement for Land Reference Number 13472/3 (Original Number 13472/1/2).

We further undertake to pay a further Kenya Shillings Twenty Nine Million Four Hundred Thousand (Kshs.29,400,000/-) being the interest element of your fees in respect of Land Reference Number 7879/24 from the sale proceeds of land Reference Number 7879/25.

Please let us have your undertaking to let us have the title document with respect to Land Reference Number 13472/3 (Original Number 13472/1/2) together with the Discharge upon receipt of the Kenya Shillings Eighty Million (Kshs.80,000,000/=)

As agreed, you will release the Original title deeds and re-conveyance for land Reference Number 7879/25. We undertake to pay Kenya Shillings Eighty Million (Kshs.80,000,000/=) and Kenya Shillings Twenty Nine Million Four Hundred Thousand (Kshs.29,400,000/=) stipulated above within one (1) year of receipt of the Certificate of Title duly registered in our client’s name for Land Reference NO.7879/25 freed and discharged of all encumbrances.

Kindly confirm the above is agreeable within seven (7) days of the date hereof in default of which this offer will lapse”.

Again this undertaking was pegged on receipt of the certificate of Title by Harit Sheth Advocates.

9. The overwhelming evidence is that the Certificate of Title to LR 7879/25 had not been issued by the time of presentation of this suit.

10. This Court therefore takes the view that on the basis of the wording of the two Undertakings, the filing of this suit was premature and there can be legitimate reason why Interest on an undertaking that had not been breached should be paid. The Court makes no order on interest.

Dated, Signed and Delivered in Court at Nairobi this 11th day of October, 2017.

F. TUIYOTT

JUDGE

PRESENT;

Sawia for Defendant

Kwanga h/b Anzala for Interested party

Alex - Court Clerk