John Mwaura Thuo v Dickson Ngugi; Creswell, Mann & Dod Advocates & Mohammed & Kinyanjui Advocates (Interested parties) [2021] KEELC 1716 (KLR)

REPUBLIC OF KENYA

IN THE ENVIRONMENT AND LAND COURT OF KENYA

AT NAKURU

ELC NO. 187 OF 2017

IN THE MATTER OF LAND REFERENCE NUMBER 519/533

IN THE MATTR OF A PROFESSIONAL UNDERTAKING BETWEEN ADVOCATES

JOHN  MWAURA  THUO......................................................................PLAINITFF

VERSUS

DICKSON  NGUGI .............................................................................DEFENDANT

AND

CRESWELL, MANN& DOD ADVOCATES..............1ST INTERESTED PARTY

MOHAMMED & KINYANJUIADVOCATES........2ND INTERESTED PARTY

J U D G M E N T

1. The plaintiff commenced the present suit by way of an originating summons dated 17th February 2017. The plaintiff sought the determination of the following questions by the court.

1. Whether  the plaintiffs is entitled  to a declaration  that he is the legal and equitable  owner  of property  land Reference  No.519/353 situated  in Njoro within  the Nakuru District being premises registered in the Registry  of Titles  at Nairobi  as Number  IR 40423/1 which  said piece of land and boundaries  thereof  is delineated and described on land survey  plan number 124991 deposited  in  the  Survey  Records at Nairobi;

2. Whether  the plaintiff  is entitled  to the delivery  of all completion documents held in the firm of Mohammed &  Kinyanjui  Advocates  regarding property  Land Reference No.519/353.

3. Whether the firm of Mohamed & Kinyanjui  advocates  is entitled  to be released from their  professional undertaking  contained  in the letter from  the firm  of Cresswell, Mann & Dod  Advocates  dated 8th  October 2012.

2. The  originating  summons was supported on the annexed  affidavit  sworn  by the plaintiff, John  Mwaura Thuo, on 1st  February  2017. The plaintiff  averred that on 31st  August  2007 he entered into a sale agreement for purchase  of  portion of 20 acres  out of L.R  519/353 for the consideration  of Kshs,7,000,000/=  and further  on 29th October  2008 he entered into another agreement with the defendant to purchase  the remainder  of  30 acres  of LR  519/353 at the consideration of  Ksh.12,000,000/= as the subdivision  for the initial  20 areas  had not been effected.

3. That on the 16th March 2012 the plaintiff, and the defendant agreed to modify the terms of the previous two agreements and entered into a fresh agreement for the sale of the entire 50 acres of LR  No.519/353 for the agreed consideration of Kshs.35,000,000/=  which  sum was to be paid  as follows :-

(a)  Twenty Million Kenyan shillings (Ksh.20,000,000/=) on or before  the execution of the Agreement which amount was duly paid.

(b) 10 million Kenyan shillings ( Ksh.10,000,000/=)  to be financed by Barclays  Bank of Kenya Ltd with Land Reference No.519/353 as security.

(c)  Balance of Five Million Kenyan Shillings (Kshs5,000,000/=) to be paid in Ten (10) equal monthly installments of five hundred thousand shillings (Ksh.500,000/=). Annexed hereto and marked “JMT3” is the agreement of sale).

4. Under clause 4 of the sale agreement the completion date for the transaction was expressed to be 30th June 2012 while under clause 6 of the agreement it was acknowledged that the purchaser (plaintiff) was already in possession of the property. As per the agreement of sale both the plaintiff and the defendant were represented in the sale transaction by the firm of Cresswell, Mann and Dod Advocates while the firm of Mohammed and Kinyanjui acted for Barclays Bank in the financing transaction.

5. The plaintiff averred that Barclays Bank agreed to advance him the sum of Ksh.10,000,000/= towards the purchase  and in that regard instructed  its advocates M/s Mohammed  & Kinyanjui  to take a charge in its favour over L.R No.519/353 to enable  the bank to disburse  the loan proceeds.  The bank’s lawyer vide the letter dated 29th June, 2012 (JMT4”) requested for the necessary documents against their professional undertaking to pay Kshs10,000,000/= by RTGS within 14 days of the registration of the Transfer in favour  of the purchaser and  charge in favour of the bank. On 8th October 2012 the firm of Creswell, Mann &  Dod  Advocates  released  the following documents  to facilitate  the creation of the security  and set out the terms  of the professional undertaking  upon which  the documents  were released : ( “JMT3a”):-

1. Original provisional certificate of Title of LR No. 519/353 dated 10th March 2003 INO Dickson Ngugi Ngugi.

2. Transfer duly executed by the vendor and the purchaser.

3. Original land Control Board consent to the transfer.

4. Original rates   clearance certificate valid upto 31st  December  2012.

6. On 10th October 2012 the firm of Mohammed & Kinyanjui Advocates acknowledged receipt of the documents. However the advocate vide a letter dated 14th January 2013 addressed to M/s Cresswell Mann & Dod Advocates (“JMF-6”) indicated they had experienced difficulties in obtaining the consent to charge since the vendor (defendant) had lodged an objection to the sale. M/s Cresswell Mann & Dod Advocates  vide  their letter of  17th  January  2013 ( JMT7)  responded  stating they were unaware  of the vendors objection to the sale  and stated  that they  learnt of the complaint from the letter written  to the purchaser  by the firm of Ndeda & Associates  Advocates  dated 17th October  2012 which  had been  copied  to them. (“ JMT-9”) .

7. The plaintiff asserted that as it became not possible to complete the financing arrangement without the consent to charge he sourced the balance of the purchase price from other sources and paid to the vendor. On that account his advocates M/s  Wandabwa Advocates  wrote the letter  dated 18th January,2016 to Mohammed & Kinyanjui  advocates  ( JMT10) requesting  that they release to them  the completion  documents that had been released to them on their  professional undertaking for purposes of creating and registering  a charge on behalf  of Barclays  Bank.

8. The  firm  of M/s  Mohammed  & Kinyanjui  Advocates  responded  to M/s  Wandabwa Advocates  letter vide their letter  of 12th February, 2016 ( “ JMT-11”)  stating  that the  documents  had been released  to them  on a professional undertaking  they had  issued  to M/s  Cresswell, Mann & Dod  and hence they could  only release  the documents to the said firm  unless  the firm released and discharged  them from  the professional undertaking and authorized them to release  the documents. The said  advocates  intimated that the firm  of Cresswell, Mann  & Dod  had declined return  of the documents to them stating  that they no longer acted  for the vendor  in the matter.

9. The two  law firms were enjoined  in the suit  as interested  parties on account of the roles they  played  in the sale transaction. The 1st  and  2nd  interested  parties entered appearance and filed their responses. The 1st interested party  in the replying  affidavit  sworn by N.K  Githua  dated  19th June 2017  admitted  they acted  for both the plaintiff  and the defendant  in the sale and purchase  of LR No.519 /353, He affirmed that his firm forwarded the completion  documents  relating  to the sale to the 2nd interested  party who were the advocates  for Barclays Bank who were financing the purchase price to the extent of Kshs.10,000,000/=. He stated that the documents were acknowledged receipt of by the 2nd interested party vide the  letter dated 10th August  2012. He however stated the defendant caused the firm  of M/s Ndenda  &  Associates Advocates  to write  the letter dated 18th October  2012 which among  other  things stated  the defendant  had been made  to sign  some documents in the 1st  interested  party’s  office. The 1st interested party thus stated that since the defendant  had appointed  another firms to represent  him they  could not deal  with the matter  any further  by accepting the  documents back and/or  by discharging  the  firm  of M/s  Mohammed Kinyanjui from  their  professional  undertaking.

10. The 2nd interested party in the replying affidavit sworn by Nicholas Karanja advocate dated 12th July 2017 reiterated that they received and accepted the documents on the terms of the professional undertaking they had given to the firm of Cresswell,  Mann & Dod  advocates. The 2nd interested party stated they could only release the documents to the said firm against the said firm releasing  them from  their  professional undertaking  unless  a court order  directed otherwise.

10. The defendant did not appear and did not file any response. The  record does not  show whether   he  had been served  with the  originating  summons  until  17th  February 2021  when one Onyango  Henry  Obonyo  served him with Notice  of Motion  dated 20th  January  2021  that sought  directions to be given  on the  originating  summons. The affidavit of service filed on 18th February 2021  indicated that apart  from the application  for directions  he was served  with the other  documents  including the originating summons . The same process stated  he on 12th  June 2021  served the defendant  with a Notice  for delivery of judgment  scheduled on 15th  July 2021.

12. It is against the foregoing background that the instant originating summons was instituted by the plaintiff.  On 23rd February 2021 the court gave directions that the originating summons be disposed off on the basis of affidavit evidence and the documents filed and submissions. The plaintiff was directed to file and serve his submissions on the defendant and the interested parties. The record does not  show the plaintiff’s  submissions  were served  on the other parties. I have reviewed the pleadings including the supporting documents and the submissions  filed  on behalf  of the plaintiff  and the following  are the issues  that arise for determination:-

(i)   Whether the plaintiff paid the full purchase price  for the suit  property?

(ii)   Whether the plaintiff has demonstrated that he is the equitable owner of LR No.519 /353 to warrant the court to declare that he is legal  owner of the property?

(iii)  Whether the 2nd interested party  should be released from their  professional undertaking  contained in the letter  dated 8th  October  2012 and the documents released to the plaintiff  and/or  to his order  to facilitate  completion  of the transaction.

13. There is no dispute that the plaintiff and the defendant entered into a series of agreements for sale relating to LR No.519/353 owned by the defendant, culminating in the agreement for sale dated 6th March  2012. The issue however that arises is whether the terms of that agreement were honoured by the plaintiff. Under clause 3 of the agreement for sale Kshs.20 million was paid and acknowledged upon execution; Kshs10 million was to be financed to the plaintiff by Barclays Bank; and the balance of Kshs.5 million was to be paid in instalment of Kshs.500,000/=  for  10 months. The plaintiff to acquire an equitable right to be entitled to be declared as the legal owner of the suit property has to show and demonstrate that he fulfilled the terms of the agreement including the payment of the full purchase price. Although the plaintiff has averred he paid the full purchase price, he has not demonstrated when and how he paid the balance of the purchase price of Kshs.15 million. It is clear the financing of Kshs.10 million by Barclays  Bank  did not come through. Under paragraph 18 of the supporting affidavit the plaintiff deposes thus:-

18.   When it became manifestly clear that it was impossible to register the charge owing to lack of consent from the defendant, I sourced for funds and paid the full shillings Ten million only (Ksh10,000,000/=) to the defendant thereby paying the full purchase price and discharging all my obligations under the agreement.

14. How was this amount paid and was there an acknowledgment by the defendant?  And still while at the payment of the balance of the purchase price, when and how was the balance of Kshs.5,000,000/=  paid  and was there  an acknowledgment? Without satisfactory answers to these queries, I find myself unable to hold and find that the defendant was paid the full purchase price  for the suit  property . If the plaintiff  paid  the full  purchase  price considering that consent  to transfer  had been obtained and the plaintiff  had been  granted possession, there would be no doubt  that  an equitable trust  would have arisen in his favour and  the court would  have had no hesitation in finding  that  he would  have become  entitled  to be declared  as the equitable  owner  of the property  and therefore  entitled to a  declaration that he was the legal  owner and  entitled  to be registered  and issued title. The maxim that he who seeks equity must come to court with clean hands must apply in the circumstances of this  matter. The plaintiff must demonstrate and show he paid the full purchase price.

15. The plaintiff   in the  present matter  is basically  seeking specific  performance  of the sale agreement dated 16th  March  2012 . A party who seeks specific  performance  of a contract  must be able  to prove  and demonstrate  that they  on their part  performed  all  the obligations  placed upon  them under the contract and  are therefore  entitled to have the contract  specifically performed.

16. Having considered the circumstances of this matter in its totality, I am of the view that owing to the issues that required to be proved, an originating summons was not necessarily the best route to approach the court. The matter was not simply one for enforcement of a professional undertaking and/or discharge thereof.

17. The matter entailed consideration whether or not the terms of the sale agreement of 16th March 2012 were fully complied with by the plaintiff. There was no admission by the defendant that the terms of the agreement were satisfied. Infact there was correspondence that indicated he was blaming the plaintiff for breach. These are issues that I think could only be ventilated in a formal suit commenced by way  of plaint. To preserve the parties position I will order the present originating summons struck out and grant leave to the parties to commence a fresh action within the next six months from the date of this judgment. In such subsequent suit any plea of resjudicata on account of the present action and/or limitation of action is waived to enable and to facilitate the pursuit of substantive justice by the parties.

18. As I have not made any determination respecting the question of release of the documents held by the 2nd interested party on a professional undertaking, and or the discharge of the professional undertaking, the position will remain as it was before the present suit was filed pending further action by the plaintiff and/or the defendant.

19. Each party will bear their own cost of the suit.

JUDGMENT DATED SIGNED AND DELIVERED AT NAKURU VIRTUALLY THIS 30TH DAY OF SEPTEMBER 2021.

J M MUTUNGI

JUDGE