Hussein Ladha v Haresh Soni Soni a.k.a AS-Haresh Vrajlal Damodarda [2017] KEHC 724 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT MOMBASA

CIVIL SUIT NO. 26 OF 2014

HUSSEIN LADHA........................................................PLAINTIFF

VERSUS

HARESH SONI a.k.a

AS-HARESH VRAJLAL DAMODARDA..............DEFENDANT

R U L I N G

1.  By a Chamber Summons dated 9th April 2014 but filed in court onthe 1stJuly 2016, the defendant seeks Orders that the plaintiffs suit against it be struck out with costs on the basis that the same is scandalous, frivolous and vexations on the grounds that the plaintiff was not a registered estate agent to be entitled to commission on sale of land and that it would be against public policy and an action to perpetuate an illegality to enforce the agreement sued on.

2. That application is supported by the Affidavit in support sworn byDefendant whose thrust is that the plaintiff suit is grounded on the allegation that the plaintiff seeks the recovery of commission for having introduced the defendant as a prospective buyer to one Raffia Bags (Kenya) Ltd for the purchase of a parcel of land known as LR Number 548, Section V mainland North.  To the defendant the claim can only be made by a person registered as an Estate Agent under the law and that the plaintiff was never such an estate agent hence his suit is grounded on an illegal agreement and one against public policy.

3. The plaintiff opposed the application by an Affidavit In Reply swornbefore MAURICE MKAN, Commissioner for Oaths on the 5thSeptember 2016.  In that affidavit the plaintiff fault the application for itself being frivolous, vexatious, an afterthought and for merely reiterating the statement of defence which fact would be best addressed at trial and by evidence.  On a more substantive note, the plaintiff denies ever acting or holding out self as an estate agent and that he is not claiming commission based on Estate Agent Act.  The plaintiff then embarks on a detailed explanation that the payment claimed was not commission but rather his facilitation fees to ensure that the other directors of the proprietor consented to the sale; that the money was initially paid to him but refunded to await the outcome of a suit between the parties to the sale agreement and to him the defendant is stopped from denying his entitlement to the payment.

4.  I have had a chance to read the papers filed as well as the two setsof submissions by the respective parties.  The only question that this court needs to determine is whether or not the plaintiff suit is for recovery of commission for the part played by him in the sale of the parcel of land known as Plot No. 548 Section V, MN.  If it be established that the claim is for what the law deems commission then, the next question would be whether or not such contract founding such a claim is enforceable.

Submissions by the parties

5. The defendant has framed his submissions into two segment; factsand the law.  To the defendant the facts as pleaded by the parties and in particular the plaintiff is that the plaintiff acted as an agent for the vender in introducing the parties for the sale of that parcel of land known as Plot No. 548/V/MN at Kshs.35,000,000/= on an agreement that he would be paid a sum of USD 253,800/=.

6.  To the defendant, the plaintiff is making the claim to recovercommission for his facilitation toward sale of land is in other words to say he was acting as an estate agent.  To him those facts when applied to the law under sections 4 and 18 of Estate Agents Act, Cap 533 Laws of Kenya leave no doubt that what is claimed is a commission.

7.  The defendant therefore relied on the maxims Exturbi Causa NonOratur actionandEx dolo malo non Oritur actio”and various decisions by which the court have held that a contract contrary to a statute is agent public policy and the court has no power to enforce or just lend its aid to enforcement[1].  In a nutshet, the defendant contend that since the agreement sought to be enforced by the suit is to accord to the plaintiff financial remuneration on account of facilitating a sale of land when he was not a licensed Estate Agent under the Act, the contract was an illegal one and thus against public policy and the suit cannot stand but must be struck out on that account.

8.  In answer to the Defendant’s submission the plaintiff took the firstattack on the application to strike out by stating that it was itself an abuse of the process of court for being brought late in the day, that the plaintiff is stopped from denying the validity of the contract having paid the sum and only sought a refund due to delay in concluding the sale and having obtained a benefit out of the service by the plaintiff.

9.  On the merits, the plaintiff contended that the suit is not claimingcommission for sale of land as an estate agent but rather for facilitating the transaction.  To ground his position the plaintiff cited to court the decision inTitus Muiruri Doge vs Kenya Canner Ltdon estoppel[2],Co-operative Merchant Bulk Ltd vs George FredrickWekesa[3]andYaya Towers Ltd vs Trade Bank Limited[4]on when a court would strike out a pleading.  On the authorities cited by the defendant, including the Estate Agents Act, the plaintiff submitted that the same are grounded upon misappreciation of the plaintiff suit and that the defendant have failed to demonstrate that the contract was invalid, void or fraudulent.  To the plaintiff, the defendant is only using legal craft to avoid a crystalized obligation owed to the plaintiff.

Analysis and determination

10. Parties are always bound by their pleadings being the only way toensure that each is assured of the right to a fair hearing bereft of ambush.  In this matter, I understand the Defendants position to be that, as pleaded, the plaintiff is seeking to recover sums that can only be called commissions for facilitating sale of land when he is not a registered estate agent.  In answer to that position the plaintiff says it is not suing as an estate agent.

11. Paragraphs 3 & 5 of the Replying Affidavit captures the plaintiffstand when it says:-

“At no point in time was I acting as an Estate Agent or holdingmyself out to be an estate agent, and, am not claiming commission based on the Estate Agent’s Act.

The payment of US$ 253,800 was for facilitating the sale, dealing with the proposed purchasers of Raffia Holdings Limited and Raffia Bags (Kenya) Limited and informing all parties concerned, including the Board of the holding company of the proposed sale and, getting their consent on the same”.

12. Those paragraphs in the affidavit cannot be read and understood inisolation and away for the plaint and if there be an equivocation between the two document it is the plaint to prevail being the basis of the suit to which the plaintiff is bound and not allowed to depart unless by an amendment properly effected.

13. The relevant parts of the plaint for the purposes of this ruling areparagraphs 3 & 4.  Both say in sum that the payment of the sumsued upon in this suit was for the plaintiff having acted as an agentin the introduction of the parties and facilitation of the sale of theparcel of land.

14.  That payment as put by the plaintiff was not part of the purchaseprice.  It was something over and above and not related to the purchase price and definitely not payable to the vendor but to an intermediary who facilitated the transaction between the two contracting parties.  To determine the dispute one has to find out what such payment would be called in common parlance.

15. According to the author of Black’s Law Dictionary, ‘a salescommission is extra account of money that is paid to a sales person on the amount of sale that have been made on top of the salary’.I understand this to mean some remuneration to a person for facilitating a sale.  And according to Oxford Law Dictionary,‘a commission is a sum typically, a set percentage of the value involved, paid, to an agent in a commercial transaction’.  Both definition describe a commission as a reward for one who has facilitated enabled or worked towards a successful sale.

16. Sale of land in Kenya has been regulated by parliament when itenacted the Estates Agent Act.  That Act defines the practice of an Estate Agent to involve and include:-

“The doing, in connection with the selling, mortgaging,charging, renting or management of immovable property or of any house, shop or other building forming part thereof of any of the following Acts:

a) Bringing together, or taking steps to bring together prospective vendor, lessor or lender and a prospective purchaser, lessee or borrower; or

b) negotiating the terms of the sale, mortage, charge or letting as an intermediary between or on behalf of either of the principle”

17. Put in the context of what the plaintiff says he did in relation to thetransaction leading to this claim, it is beyond peradventures that the plaintiff facilitated the introduction and negotiations between the parties that led to the sale.  He, for that reason, engaged in the practice of an estate agent.  It is not in dispute that he was never a licensed estate agent and therefore in so doing he affronted the provisions of the Act at Section 18 of the Act.

18. Being so prohibited by the statute this court is itself, being a courtand creature of the law, prohibited from enforcing a contract that is contrary to the provisions of a statute.  A contract founded upon breach, violation or circumvention of a statutory provision cannot be enforced by the court.  Indeed in this matter, the plaintiff seeks to be rewarded for having engaged in the practice of an Estate Agent when he was not registered under the law.  To enforce such a contract would not only beat the very purpose of the law but the entire purpose of a judicial system which is to act as a bastion for the observance of the law.  To enforce the agreement sued upon would be to throw out the entire architecture and purposes put in place by parliament in its constitutional legislative mandate regarding the prohibition placed against unregistered persons from engage in the practice of Estate Agents.  This is a clear case for the court to say the cause of action aroseexturpi causaand this court has no otherwise but to declare that it has no ability or authority to assist the plaintiff benefit from his actions in violation of a positive provision of the Kenya Law.

19. Having said so, the next question is whether the defendant hasconducted himself in a manner that invites the doctrine estoppel to operate against him from denying the entitlement of the plaintiff to the sum.  I understand the doctrine of estoppel to be an equitable doctrine and subject to the law.  It is also subject to the known maxims of equity establishing the relationship between equity and the law to avoid conflict.  One of such maxims is that equity follows the law and cannot be employed to defect the law.

20. In this matter the letter of the law is clear that no unregisteredperson is free to engage in the practice of estate agents.  To that extent it matter not that parties have agreed expressly to defect the law or in ignorance of it.  It is enough that it is brought to the attention of the court that the agreement is contrary to the statute.  At that moment a court of law must remind itself that equity follows the law and cannot be employed to defeat a statutory enactment[5]

21. It follows that the claim cannot be entertained and the only fate thathas always awaited it and which must not be unleashed is that it be struck out with costs to the defendant.

Dated and delivered at Mombasa this 4th day of December 2017.

P.J.O. OTIENO

JUDGE

[1] Barclays Bank of Kenya Ltd vs Patriotic Guards Ltd [201] eKL; Festus Ogada vs Itans Mollin [2009] eKLR and Mapis Investment (K) Ltd vs Kenya Railways Co-operation [2006] eKLR

[2][1988] eKLR

[3] Caca No. 54 of 1999 (Unreported)

[4]Caca No. 35 of 200 (Unreported)

[5] Aristocrats Conceate Company Ltd vs Mavoko Municipal Council [2009] eKLR