Joyce Wanjiku Madsen & Per Korgh Madsen v Daniel Kairu Kiaraho, Kimani Kairu t/a Kimani Kairu & Company Advocates, David Kamau Magwa & Housing Finance Company of Kenya Ltd [2014] KEHC 724 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

MILIMANI LAW COURTS

LAND AND ENVIRONMENTAL  DIVISION

ELC CIVIL SUIT NO. 1965 of  2007

JOYCE WANJIKU MADSEN...........................................................1ST PLAINTIFF

PER KORGH MADSEN..................................................................2ND PLAINTIFF

VERSUS

DR. DANIEL KAIRU KIARAHO....................................................1ST DEFENDANT

KIMANI KAIRU T/A KIMANI KAIRU & COMPANY ADVOCATES...2ND DEFENDANT

DAVID KAMAU MAGWA............................................................3RD DEFENDANT

HOUSING FINANCE COMPANY OF KENYA LTD.........................4TH DEFENDANT

JUDGMENT

Introduction  and background

The Plaintiffs filed suit against the Defendants by way of a Plaint dated 2nd August 2006 as amended on 13th March 2009.  The Plaintiffs claim is that by and through an agreement dated 28th March 2003, they purchased property known as LR No. 7583/174 from the 1st Defendant for the consideration of Kshs 8,200,000/-.  The 2nd Defendant who was a partner at the firm of Archer Wilcock and Kairu Advocates acted for both parties at the signing of the agreement and further, that he acknowledged receipt of the purchase price and stamp duty monies from the Plaintiff.

It is the Plaintiffs' case that despite complying with the terms of the agreement, the Defendants  neglected and /or refused to transfer the suit property and hand over the title to them. The Plaintiffs have pleaded particulars of breach of contract as well as particulars of breach of professional and fiduciary duty as against the 1st and 2nd Defendants respectively. The Plaintiffs further averred that during the pendency of this suit and despite existence of injunctive orders as well as orders requiring the maintenance of status quo, the 1st and 2nd Defendants sold and transferred the suit property to the 3rd Defendant who mortgaged the property to the 4th Defendant. The plaintiffs  by the amended plaint prays for Judgment against the Defendants in the followings  terms:-

a. The 1st and 2nd Defendants be ordered to specifically perform the agreement dated 28th March, 2003 and transfer property L.R. NO. 7583/174 to the plaintiffs free from any encumbrances.

b)  A declaration that the conveyance dated 13th July 2006 for property LR No. 7583/174 to the 3rd Defendant and registered on 17th  August 2006  in volume N74 folio 85/1 was obtained in breach of the law and court orders, fraudulently and is null and void ab initio and cancellation of the same.

c) A declaration  that the mortgage  dated 30th April 2008 for property LR No. 7583/174 to the 4th  Defendant and registered on 30th April 2008 in volume N74 folio 85/1 was obtained in breach of the law and court orders, fraudulently and is null and void ab initio and cancellation of the same.

d) Mesne profits of Kshs 70,000 per month with effect from 2nd December 2004 until delivery of vacant possession of the property to the Plaintiffs.

e. In the alternative, special damages of Kshs 11,409,850 together with special damages at commercial rates from 2nd December 2004 until payment in full against all the Defendants jointly and severally.

f. General damages for breach of professional and fiduciary duty against the 2nd Defendant.

g. General damages for fraud against all the Defendants jointly and severally.

h. Costs of the suit.

The 1st and 2nd Defendants filed a statement of defence dated 16th August 2006 which was amended on 30th April 2009. The 1st and 2nd Defendants admitted the existence of the sale agreement dated 28th March 2003 but averred that the Plaintiffs did not have the entire purchase price and further, that the Plaintiffs failed to complete the transaction without giving notice to the 1st Defendant that they had rescinded the sale agreement. The 2nd Defendant denied allegations of breach of his professional or fiduciary duty towards the Plaintiffs and further denied the allegations of fraud set out in the Plaint. The  1st and 2nd Defendants denied they were in breach of any court orders and put the Plaintiffs  to strict proof of their allegations.

The 3rd Defendant filed a statement of defence dated 4th May 2009 where save for admitting that he was the registered proprietor of LR No. 7583/174, he denied the plaintiffs averments made against him in the amended plaint.  In particular, the 3rd Defendant denied that the purchase of the suit property was in contravention of section 52 of the Transfer of Property Act  or any other law and further denied having been aware  of any court orders made on 10th August 2006 or 16th November 2006.  The 3rd Defendant contended that there were no inhibitions registered against the title at the time he purchased the suit property and further   pleaded that he was an innocent purchaser for value without notice of all prior dealings on the property.

The 4th  Defendant filed a statement of defence dated 20th July 2011 where it denied the Plaintiffs allegations  against it and in particular, denied the particulars of fraud pleaded against it and all the Defendants. Further, the 4th Defendant contended that she did not in any way interfere with the suit property and therefore, that the Plaintiffs are non suited as against the 4th Defendant and the suit against the 4th Defendant is misconceived and raises no cause of action or any reasonable cause of action.

The parties on 11th October 2011 filed a rather long list of agreed statement of contested issues dated 6th October 2011 which set out the following issues:-

1. Whether the monthly installments of Kshs.110,000. 00 paid to the 2nd Defendant by the Plaintiffs were part of the purchase price under the agreement for sale property L.R. NO. 7583/174 Nairobi dated 28th March, 2003.

2. Whether it was agreed that the plaintiffs would shoulder the interest on the 1st Defendant’s loan account with the 4th Defendant until the completion date.

3. Whether the plaintiffs paid the entire purchase price in terms of the agreement for sale of property L.R. NO.7583/174 Nairobi dated 28th March, 2003.

4. Whether the 2nd Defendant owed the plaintiffs professional and fiduciary duty in the sale of property L.R. NO.7583/174 Nairobi.

5. Who between the 1st Defendant and the Plaintiffs breached the agreement for sale of property L.R. NO. 7583/174 Nairobi dated 28th March, 2003.

6. Did the plaintiffs complete the sale in terms of the agreement for sale dated 28th March, 2003.

7. If the answer to the above is in the negative, were the plaintiffs offered a refund of the purchase price?

8. Further, if the answer to 6 above is in the negative, were the Plaintiffs ever given any notice (s) to complete the sale transaction by the 2nd Defendant on behalf of the 1st Defendant?.

9. Did the Plaintiffs ever issue a rescinding notice or a completion notice to the 1st Defendant in respect of the sale transaction?

10. Did the agreement for sale dated 28th March 2003 provide for a refund of the purchase price together with interest thereon if the plaintiffs were in default?

11. Whether the 2nd Defendant breached his professional and fiduciary duty to the plaintiffs in the sale of property L.R.NO.7583/174 Nairobi.

12. Whether the 2nd Defendant acted impartially towards the Plaintiffs.

13. Did the Plaintiffs ever raise the issue of the alleged impartiality on the part of the 2nd Defendant at all through or at any time of the subject sale?

14. If the answer to 13 above is in the affirmative, did the Plaintiff disengage the services of the 2nd Defendant at any time during the process of the subject transaction?

15. Whether the 1st and 2nd Defendants are in breach of the court orders dated 10th August, 2006 and 16th November, 2006 respectively.

16. Was the Order of 16th November 2006 set aside by consent?

17. Whether the 1st and 2nd Defendants sale and transfer of property L.R.NO.7583/174 Nairobi to the 3rd Defendant was undertaken in breach of the law and court orders, was fraudulent and is null and void ab initio.

18. Whether the 3rd Defendant is guilty of any act of fraud.

19. Whether the plaintiffs suit discloses a reasonable cause of action as against the 4th Defendant.

20. Whether the 3rd Defendant’s mortgage of property L.R. NO.7583/174 Nairobi to the 4th Defendant was undertaken in breach of the law and court order, was fraudulent and is null and void ab initio.

21. Whether the Plaintiffs are entitled to specific performance of the agreement for sale of property L.R.NO.7583/174 dated 28th March 2003.

22. If not, whether the Plaintiffs are entitled to special damages and general damages in terms of prayers d, e, f and g of the Amended Plaint dated 13th March, 2009.

23. Who is the liable for the cost of suit?

Thus the parties at the trial were to lead evidence to provide answers and/or responses to these identified issues.

The Plaintiffs case.

Hearing of the suit commenced on 2nd November 2011 when the 1st Plaintiff (PW1) testified on behalf of herself and the 2nd plaintiff.  The 1st plaintiff adopted her witness statement dated 17th May 2011 as her evidence and stated  that she and the 2nd Plaintiff purchased the suit property on 28th March 2003 from the 1st Defendant  for consolidation of  Kshs 8,200,000. 00. on the terms and conditions set out in the agreement for sale dated 28th March 2003.  The agreement for sale was included and filed with the plaintiffs bundle of documents dated 17th May 2011.  The 2nd Defendant acted for both the plaintiffs and the 1st Defendant in the sale transaction.  A caveat was registered on 12th May 2003 against the suit property to secure the plaintiffs purchasers interest pursuant to the agreement for sale.

The Plaintiffs contended that the entire purchase price, legal charges, stamp duty, registration charges as well as other disbursements required to complete the transaction was paid in full in accordance with the sale agreement and acknowledged by the  2nd Defendant  statement of account dated 1st December 2004  by the Defendant showing the plaintiffs had paid a total of  Kshs.8,719,850/- tendered in  evidence. Further, the 1st plaintiff  stated that upon completion of payment of the purchase price and related charges, the 2nd Defendant requested them to sign a notice of withdrawal of caveat to facilitate the registration of the plaintiff’s names.  The 1st plaintiff testified that the 2nd Defendant did not effect the transfer of the property to the plaintiffs as expected but rather by a letter dated 21st February 2005 wrote to the plaintiffs demanding further payment of unstated amount on account of the balance of the purchase price despite the Plaintiffs' full payment.

The 1st plaintiff testified that the 1st and 2nd Defendants refused to transfer the suit property to them despite repeated requests. The plaintiffs lawyers M/S Kittony Maina Karanja Advocates vide a letter dated 21st August 2006 made a formal demand that the 1st and 2nd Defendants transfer the suit property to the plaintiffs which was not acted upon.  The plaintiffs asserted that the 1st Defendant notwithstanding the pendency of this suit and an order for maintenance of status quo made on 10th August 2006.  The transfer to the 3rd Defendant was effected on 17th August 2006.

The plaintiffs aver that the 1st Defendant breached the agreement for sale by refusing to give them vacant possession, refusing to transfer and for selling and transferring the suit property to the 3rd Defendant. Further, the 1st plaintiff averred that the 2nd Defendant breached his professional and fiduciary duty to the Plaintiffs by procuring their execution of the notice of withdrawal of the caveat and also in acting for the 1st Defendant in the sale and transfer of the property to the 3rd Defendant.   The 1st Plaintiff contended that the Defendants are obliged to either specifically perform the agreement for sale and transfer the suit property to the Plaintiffs free from any encumbrances or to pay the liquidated demand of Kshs 11,409,850/- together with interest at commercial rates from 2nd December 2004 until payment in full.  The 1st Plaintiff  further testified that the property would have earned a rental income of  Kshs 70,000/- per month, and averred that they had been denied this income from 2nd December 2004 and according to her, the Defendants were obliged to pay the said sum together with interest at commercial rates from 2nd December 2004 until payment in full.  Consequently the plaintiffs urge the court to order specific performance of the sale agreement and in the alternative, payment of special damages together with general damages as pleaded in the amended plaint.

In  cross examination by Counsel for the 1st and 2nd Defendants, the 1st plaintiff stated  that the 1st Defendant had advertised the property for sale  in the Newspaper and they contacted him and expressed interest whereupon a meeting to discuss the matter was set at the 2nd Defendants office who the 1st Defendant stated was his lawyer.  The plaintiffs accepted to be represented in the sale transaction by the 2nd Defendant and thus the 2nd Defendant was advocate for both parties in the sale transaction.  The plaintiffs contend that at the time they executed the Agreement for sale on 28th March 2003 they were unaware that the suit property was mortgaged to the Housing finance Company of Kenya (HFCK).  The plaintiffs under purchase price within a period of 12 months from the date of signing the agreement with a sum of Kshs.110,000/- being paid monthly.

While contending that they were not supposed to pay money to HFCK, the 1st plaintiff  stated that they made no late payment and could therefore not be charged interest.  The 1st plaintiff stated the transaction was to last for 12 months since they did not have the entire purchase price and they required the period to arrange and raise the balance.  The 1st plaintiff  maintained that despite the agreement lasting one year, they were not supposed to pay any interest and she maintained that they paid Kshs 110,000/-  s provided under the agreement and even made an excess payment of Kshs.110,000/- had no knowledge of the interest charges.

The 1st Plaintiff informed the court that they engaged their own lawyer in 2006 after waiting for the 2nd Defendant to transfer the property after the 1st and the 2nd Defendant failed to transfer the property to them after they had fully paid for it.  The witness stated they felt the 2nd Defendant no longer was representing their interest in the transaction.  The witness denied they requested the 2nd Defendant to assist them to sell their car so that they could pay the interest charge.  The 1st plaintiff testified that they were not made aware that they were required to pay any interest charge until they had completed paying the purchase price and has made an overpayment by Kshs.110,000/- which the 1st and 2nd defendants wanted to appropriate as interest payable to HFCK.

In further testimony, the 1st Plaintiff reiterated that the 2nd Defendant did not inform them how much balance was due and that although they were uncomfortable being asked to more money, they did not ask the 2nd Defendant to rescind the sale. It was the evidence of the 1st plaintiff  that the 2nd Defendant should have advised them to issue a completion notice.  The plaintiffs withdrew and disengaged the services of the 2nd Defendant on 31st July 2006.  The 1st plaintiff stated that although they paid a total of Kshs 8. 7 million, they were demanding Kshs 11. 4 million with interest thereon. The 1st Plaintiff further  stated that  that they rejected an offer for refund of the purchase price and at any rate  they did not receive a rescission notice  from the 1st Defendant.

In cross examination by Counsel for the 3rd Defendant, the 1st plaintiff admitted that the caveat registered on 30th April 2003 was for lR No. 7583/120 which was different from the suit property. She contended that the caveat which had been lodged two months after the signing of the agreement was removed on 7th December 2003 after they had completed paying the purchase price.

The plaintiffs admitted there was no contractual relationship between them and the 3rd Defendant but contended that  the 3rd Defendant who entered into an agreement  of sale with the 1st Defendant on 2nd May 2006 should have known that there was another buyer. The 1st Plaintiff stated that the sum of Kshs 70,000/- claimed as loss of income was anticipated revenue that would have come to the plaintiffs had the property been transferred to them and rented out. The witness however admitted that since the property is vacant, it cannot fetch Kshs 70,000/- before being developed.

In further cross examination by Counsel for the 4th Defendant, the 1st Plaintiff stated that the plaintiffs only claim against the HFCK is that they entered into a mortgage with the 3rd Defendant. She admitted that the bank was not party to the sale agreement and could not tell whether a copy of the agreement between the plaintiffs and the 1st Defendant the plaintiffs and the 1st Defendant had been availed to the bank. The 1st plaintiff reiterated that they did not make any payments to HFCK since they had no agreement with the bank and further, that no payment for interest was made to the bank.

In re-examination, by Mr. Havi advocate the 1st plaintiff maintained that they had fully performed their part of the agreement.  The 1st plaintiff reiterated that the 1st Defendant did not grant the plaintiffs vacant possession after payment of Kshs.4,100,000/- as per the agreement and never gave them possession even after paying the full purchase price.  The 1st plaintiff while referring to the order of status quo made on 10th August 2006, stated  that the transfer was registered on 17th August, 2006 and further, that the 2nd Defendant who had acted for them also acted for the 3rd Defendant. Finally the 1st plaintiff stated  that they did not want money refund of the purchase price since they wanted to build a house in Karen and cannot get a similar property at the moment and thus sought specific performance of the agreement for sale.

The 1st Defendant’s case.

Defence hearing opened  on 28th May 2013 when the 1st Defendant (DW1) testified that he was in business running several pharmaceutical firms. He produced  bundles of documents dated 4th July 2011, 4th October 2011 and 20th November 2011as Defence Exhibits 1, 2 and 3 respectively. The witness entirely relied on his witness statement dated 22nd November 2011.  It is the 1st Defendant’s evidence that he advertised the suit property for sale in one of the daily newspapers in March 2003 after which the plaintiffs contacted him through phone and expressed interest whereupon  he invited the Plaintiffs to his house in Karen where they met and negotiated the sale.

The 1st Defendant stated that the plaintiffs and himself met at the 2nd Defendant’s office where they discussed the terms of the agreement.  The plaintiffs agreed to be represented by the 2nd Defendant in the transaction and on 28th March 2003 the 1st Defendant  and the plaintiffs entered into a sale agreement of the suit property at the consideration of Kshs.8,200,000/-.  The plaintiffs agreed to place a deposit and to pay the balance of the purchase price over a 12 months period.  The 1st Defendant testified that the basis for agreeing a 12 month’s payment period was because the plaintiffs stated they did not have the full purchase price and needed time to arrange the payment.  According to the 1st Defendant, the Plaintiffs agreed to pay Kshs.110,000/- per month to HFCK for 12 months which was not to be credited to the purchase price because the plaintiffs agreed to pay the interest payable to the HFCK on the mortgage the 1st defendant held with them on the property.  The witness testified the sum of Kshs.110,000/- paid to KFCK monthly was not to form part of the purchase price.

It is the averment of the1st Defendant that they went to the 2nd Defendant who agreed to represent them both in the transaction. The 1st Defendant stated that on 28th March 2003, they entered into  sale agreement with the Plaintiffs for the purchase of the suit property at Kshs 8,200,000/- and further, that the Plaintiffs were to pay the balance of the purchase price within 12 months in accordance with clause 4 of the agreement. The 1st Defendant contended  that he agreed to payment of the balance of the purchase price within 12 months because the Plaintiffs did not have the full purchase price and further, that the payment plan was subject to the plaintiffs agreement to pay interest on the mortgage at HFCK until payment of the full purchase price.  According to 1st Defendant, the Plaintiffs agreed to pay Kshs 110,000/- per month to HFCK for 12 months which was not to be deducted from the purchase price.

The 1st  Defendant stated that he was informed by the 2nd Defendant every time the Plaintiffs made payment of Kshs 110,000/- per month and further, that he was also informed when the plaintiffs made a payment of Kshs 2,509,000/- on 29th March 2004 and thereafter claimed to have completed payment of the purchase price and all monies due by them on the sale transaction. It is the averment of the 1st Defendant that he enquired from the 2nd Defendant why the Plaintiffs were not addressing the issue of interest as stipulated in the sale agreement after which a meeting was arranged at the 2nd Defendants office  with plaintiff on 21st May 2004 to discuss the issue. The 1st Defendant  referred to a letter dated 21st May 2004 written by the 2nd defendant to the plaintiffs where interest due to HFCK from the 1st Defendant was apportioned with the Plaintiffs such that the plaintiffs were to bear Kshs.1,000,000/- and the 1st Defendant Kshs.200,000/-.  The 1st Defendant testified that the plaintiffs did not make payment as agreed. DW1 made reference to a letter dated 16th August 2004 where the 2nd Defendant wrote to the Plaintiffs requesting for payment of the Kshs 1,000,000/-.

According to the 1st defendant, the Plaintiffs owed him further monies on account of interest and he contended that he did not intend to give the Plaintiffs 12 months in which to pay the balance of the purchase price and shoulder the interest on the facility at HFCK.  The 1st Defendant maintained that if the plaintiffs had the full  purchase price, he would have paid the amount owing to HFCK and discharged the property. It is the case of 1st Defendant  that the Plaintiffs failure to pay the interest as stipulated by the sale agreement reduced the purchase price due to him by Kshs 1,000,000/-as assessed and agreed upon by the parties.

The 1st Defendant testified that in September 2004, the 1st Plaintiff requested more time to pay the Kshs 1,000,000/- and informed the 1st Defendant that they were in the process of selling a car to raise the money. The 1st Defendant reiterated that he did not receive all the monies due to him under clause 4(b) (i) and (ii) of the agreement to enable him transfer the property to the Plaintiffs.  The 1st Defendant stated that the plaintiffs did not pay the Kshs.100,000/- as agreed and he therefore instructed the 2nd Defendant that he had rescinded the agreement and would offer the property for sale to other parties.  The 2nd Defendant wrote letters to the plaintiffs on 4th October 2005 and 8th October 2005 and a further letter of 29th November 2005 notifying the plaintiffs of the 1st Defendant’s  intentions.

According to the 1st Defendant at a meeting held on 1st December 2005 between the parties at the 2nd Defendant’s office, the Plaintiffs agreed to pay the monies due within one week.  The 1st Defendant referred to  produced a letter from the 2nd Defendant addressed to the plaintiffs dated 1st December 2005 communicating this agreement reached at the meeting.  As the plaintiffs did not pay the money as agreed the 1st Defendant caused a notice dated 22nd February 2006 to be issued to the plaintiffs requiring them to pay the balance of the purchase price  within 21 days or have their monies refunded upon sale of the property to another buyer.  The plaintiffs did not respond to the notice and 1st Defendant stated that he sourced another buyer for the property, the 3rd Defendant with whom he entered the sale agreement dated 2nd May 2006 which has been tendered in evidence. According to 1st Defendant,  the completion documents in relation to the sale agreement with the 3rd Defendant were  forwarded to the 3rd Defendant's lawyers on 24th July 2006 and that the transfer of the property in favour of the 3rd Defendant had been signed by the time the Plaintiffs filed this suit on 3rd  August 2006.

The 1st Defendant states contends that he over indulged the Plaintiffs by giving them more than 2 years  to pay the interest due him which they never did, and maintained that it is the Plaintiffs who failed to  comply with the terms of the sale agreement dated 28th March 2003 and were therefore in breach. The 1st Defendant  averred that he asked the 2nd Defendant to refund the purchase monies to the Plaintiffs and he exhibited a letter dated 8th September 2006 enquiring from the then Plaintiffs' advocates where the monies should be placed. The 1st Defendant  stated that the Plaintiffs refused to accept the refund through a letter dated 17th October 2006.  Lastly, 1st Defendant  contended that since the monies paid under the contract was Kshs 8,200,000/-, there was no basis for the Plaintiffs to seek payment of Kshs 11,400,000/-

In cross examination by Counsel for the Plaintiffs, the 1st Defendant agreed that the purchase price of the suit property  was Kshs 8,200,000/-  out of which the sum of Kshs 2,500,000/- was  paid as deposit while the balance of Kshs.5,700,000/-was payable under clause 4 (a) (b). The witness affirmed  that Kshs 2,000,000/- under clause 4(a) was paid on the due date leaving a balance of Kshs 3,700,000/-. According to the witness, the amount payable to HFCK for 12 months was Kshs 1,320,000/-. Which amount  was however not set out under clause 4(b)(ii) and/or provided under the agreement.

The 1st Defendant testified  that he gave the Plaintiffs vacant possession after they paid Kshs.4. 5 million under clause 4 of the agreement but stated that  averred that the 3rd Defendant whom he sold the property to after the Plaintiffs failed to complete the transaction was the one in possession presently. The 1st Defendant stated that the completion date as per the agreement was 31st March 2004 and that a total sum of  Kshs 8,719,850/- was paid towards the purchase price and disbursements and that the last payment of Kshs  2,509,850/- from the Plaintiffs was paid on 29th March 2004  before the close of the completion date. He however maintained that after the completion date only the interest payable to HFCK remained outstanding which the plaintiffs were required to pay.

While admitting that the amount payable to HFCK was not specified in the sale agreement, the 1st Defendant stated that he subsequently agreed with the plaintiffs that the amount of interest was about  Kshs 1. 2 million out which the plaintiffs were to pay to pay Kshs 1,000,000/- and the 1st Defendant Kshs 200,000/- According to the 1st Defendant the Plaintiffs under clause 4(i)(b) paid monthly payments on the due dates without delays. The 1st Defendant insisted that the amount of Kshs.110,000/ paid monthly to HFCK was on account of interest payable to HFCK on the 1st Defendant’s mortgage account and was not to be credited to the purchase price.  The 1st Defendant maintained that the plaintiffs failed to complete payment of the purchase price and for that reason he rescinded the sale agreement and sold the property to the 3rd Defendant.  The 1st Defendant conceded that at the time he resold the property he had not refunded the plaintiffs the moneys they had paid towards the purchase price.  He stated he resold the property to the 3rd Defendant at Kshs.11,000,000/-.

During cross examination by Counsel for the 3rd Defendant, DW1 stated that he had cancelled the agreement with the Plaintiffs at the time of entering the agreement with the 3rd Defendant. He contended that he did not collude with the 3rd Defendant to defraud the Plaintiffs and further, that the 3rd Defendant was an independent party who did not have anything to do with the Plaintiffs' agreement. The 1st Defendant maintained that the 3rd Defendant was an innocent purchaser for value who was unknown to him prior to the sale agreement between them.

In further cross examination by Counsel for the 4th Defendant, the 1st Defendant stated that  HFCK was not party to the agreement with the plaintiffs and that he sold the property on his own account. The 1st Defendant stated that HFCK was only paid what  it was supposed to be paid and no more and further, reiterated that the transfer of the property to the 3rd Defendant was not injuncted by any court order at the time it was effected.

In  re-examination, the 1st Defendant averred that as per clause 4(b)(i) of the sale agreement, the payment of Kshs 110,000/- was payable to HFCK for as long as the vendors account with HFCK was not paid  and further, contended that the Plaintiffs who were aware of his obligations to HFCK authorized remittances to the bank.  The 1st Defendant averred that he could not transfer the property to the plaintiffs as they had not completed payment by 31st October 2004. He stated that he was paid the purchase price on the 2nd transaction in July 2006.

The 2nd Defendant’s case

The 2nd Defendant Mr. Kimani testified that he was an advocate in the firm of Kimani Kairu & Company Advocates and had been in practice since 1978. His witness statement dated 3rd February 2012 was adopted as evidence. In his evidence, the 2nd Defendant stated that in mid March 2003, he was introduced to the Plaintiffs by the 1st Defendant and the parties requested him to render professional services in a sale and purchase transaction of the suit property that the 1st Defendant was selling at the price of Kshs 8,200,000/-.   The 2nd Defendant prepared the Agreement for sale which the parties executed on 28th March, 2003.

The 2nd Defendant stated  that payment was to be effected as set out in clause 4 of the agreement for sale and further, that the Plaintiffs paid a total of  Kshs 8,719, 850/-  as shown in the statement of account dated 1st December 2004  which sum included disbursements towards stamp duty and registration charges of the transfer. The 2nd Defendant testified that out of the sums he received in his office for the plaintiffs he paid a monthly installment of Kshs 110,000/- per month to HFCK on behalf of the Plaintiffs in compliance with clause 4(b)(i) of the agreement dated 28th March 2003.

The 2nd Defendant stated that on 28th March 2004, the Plaintiffs made a  payment of Kshs 2,509,000/-after which the 2nd Plaintiff contended that he had completed paying the balance of the purchase price. The 2nd Defendant made reference to letter dated 2nd December 2004 through which he had  informed the Plaintiffs of an extra installment of Kshs 110,000/- made, which would be paid towards interest which they were liable to pay on behalf of the 1st Defendant in terms of clause 4 of the sale agreement.  The 2nd Defendant testified  that he organized a meeting between the plaintiffs and the 1st  Defendant where they deliberated the issue of interest payable to the 1st Defendant on account of outstanding sums at HFCK. According to the 2nd Defendant the parties agreed the interest payable and  the sum was apportioned with the Plaintiffs bearing Kshs.1,000,000/- and the 1st Defendant bearing Kshs.200,000/- and a letter dated 21st May 2004 by the 2nd Defendant to the parties  to this effect was exhibited. The 2nd Defendant averred that the Plaintiffs did not pay the Kshs 1,000,000/- as agreed prompting the 2nd Defendant to write the letter dated 16th August 2004 of the plaintiff requesting for the payment.

It is the 2nd Defendant's case that the plaintiffs never paid the Kshs 1,000,000/- and further that throughout the transaction period, he never received any instructions from the Plaintiffs to rescind the agreement. According to the 2nd Defendant the Plaintiffs led him to believe that they were intent on paying the said sums as a result of which he sought indulgence from the 1st Defendant to enable them to pay. Further, the 2nd Defendant contended that he acted impartially towards the Plaintiffs throughout the transaction and never received a complaint from them on his services and he denied the allegations that he had breached his professional and fiduciary duties toward the Plaintiffs.

In further evidence, the 2nd Defendant stated that in May 2006, the  1st Defendant instructed him  to act for him in the sale of the suit property to the 3rd Defendant  after he had given the Plaintiffs express notice of his intention to sell the suit property to a third party.  The 1st Defendant also instructed the 2nd Defendant to refund the Plaintiffs the purchase price as soon as the sale to the 3rd Defendant was completed. The 2nd Defendant stated that  the suit property was properly transferred to the 3rd Defendant.  The 2nd Defendant testified that the completion documents were released to the 3rd Defendants and the 4th   Defendants  financiers advocates on 24th July 2006 before the  institution of this suit.  The 2nd Defendant maintained that the Defendants did not act fraudulently and were not in breach of any court orders as alleged by the Plaintiffs.

During cross examination by Counsel for the Plaintiffs, the 2nd Defendant stated that he had previously known the 1st Defendant for over 10 years. He reiterated that the property was being sold at Kshs 8,200,000/- and clause 3 and 10 of the agreement provided for possession and completion respectively. The 2nd Defendant  contended that transfer was to be  on payment of the full purchase price together with registration disbursements which included legal fees. He confirmed that the statement of account made on 1st December 2004 shows that Kshs 8,719, 850/- was received in deposits.  The  2nd Defendant  stated that the  last payment which was made on 29th March 2004 was made before the completion date and further, that as at 30th April 2003, more than 50% of the purchase price had been received as deposit. This witness stated that he was informed that the Plaintiffs were granted possession but could not tell whether they fenced the suit property.

The 2nd Defendant stated that he did not register the transfer in favour of the plaintiffs because interest had not been paid to the 1st Defendant, and averred that the amount of interest owing to HFCK was Kshs 1,200,000/- and was given by HFCK through the 1st Defendant.  The witness stated that the monthly amount payable to HFCK was Kshs 110,000/- which was paid on time since there were levies charged by HFCK for any late payment.  The 2nd Defendant conceded that inspite of the agreement between the parties there was no formal variation to the sale agreement executed by the parties.

The 2nd Defendant stated that he lodged a caveat on 12th May 2003 to protect the purchasers' interest.  The 2nd Defendant stated that the deed plan for the suit property under the Government Lands Act had not been registered and that the application for removal of caveat dated 7th December 2004  was to facilitate registration of the deed plan which was to be attached  to the conveyance to the Plaintiffs. The 2nd Defendant admitted that after the removal of the caveat, there was no other protection of the Plaintiffs interest on the register. He maintained that he notified the Plaintiffs that the 1st Defendant intended to sell the property to another person if they were not able to complete the transaction.

The 2nd Defendant stated  that although clause 12 of the agreement provided for payment of interest at 20% p.a for delay, DW2 contended that he did not demand the 20% interest since the parties had agreed to pay interest which was due to HFCK. He reiterated that the 1st Defendant requested him to act for him in the subsequent sale to the 3rd Defendant and to refund the monies paid by the Plaintiffs which they refused to accept. The 2nd Defendant asserted that he did not pay the Plaintiffs since these proceedings were commenced before they could effect payment and stated that after the suit, he did not tender the money in court.

In cross examination by Counsel for the 3rd Defendant, the 2nd Defendant stated that prior to the 2nd transaction, he did not know the 3rd Defendant who was introduced to him by the 1st Defendant. According to the witness, the 3rd Defendant was unaware of the transaction between the 1st Defendant and the Plaintiffs and further, that there was no collusion or fraud in selling the property to the 3rd Defendant. The 2nd Defendant maintained that he was not served with any court orders to restrain the transaction to the 3rd Defendant which was successfully completed.

In re-examination, 2nd Defendant maintained that clause 4 of the sale agreement permitted the charging of interest and that he communicated the apportionment of interest to the parties following a meeting held in his office.  The 2nd Defendant clarified that the caveat on LR No. 7583/120  was for the whole parcel of land before subdivision. He averred that he did not prepare a variation agreement following the mutual agreement of the parties and further, that the Plaintiffs never indicated that they would not pay the interest as agreed between the parties. The witness averred that although the letters dated 29th November 2005 and 22nd February 2006 were not in strict terms statutory completion notices, they communicated the 1st Defendant's intention in case the Plaintiffs failed to complete.

The  3rd Defendant’s case

The 3rd Defendant in his evidence stated that he lives in Lavington and was a pilot by profession with Kenya Airways. The 3rd Defendant’s witness statement dated 18th November 2011 and 3rd February 2013 as well as his bundle of documents were adopted as his evidence before the court.  The 3rd  Defendant stated that he entered into a sale agreement with the 1st Defendant on 2nd May 2006 for the purchase of the suit property at Kshs 11,000,000/-. The witness averred that prior to purchasing the property, he carried out a search in the lands registry where he established that the property was not encumbered in any way. It is the evidence of 3rd Defendant that he paid a deposit of Kshs 1,100,000/- which was 10% of the purchase price immediately after signing the sale agreement. He contended that thereafter, he borrowed Kshs 9,500,000/- from the 4th Defendant and mortgaged the suit property to enable him to pay the balance of the purchase price.

The 3rd Defendant stated that on 7th July 2006, he paid a further Kshs 400,000/- to complete the purchase price and the property was transferred to him. The witness averred that the Plaintiffs were strangers to him and that the 1st and 2nd Defendants became known to him during the purchase of the suit property. The 3rd Defendant stated  that the search he carried out revealed that a caveat that had been placed on 30th April 2003 had been withdrawn on 2nd February 2005, and the witness  averred that he would not have purchased the suit property if the caveat was still in place since even the 4th Defendant could not have extended a loan facility to him.

The witness stated that he was not aware of the present suit at the time of purchase and contended that he was a purchaser for value without any knowledge  or notice whatsoever of any preceding transactions between the Plaintiffs and the 1st and 2nd Defendants. The 3rd Defendant stated  that the registration of the conveyance dated 13th July 2006 was effected on 17th August 2006, and maintained that the conveyance was not in breach of any law and he denied having acted fraudulently as alleged by the Plaintiffs.  The witness avers that there would be no justification to declare the transfer of the suit property to him as void ab initio as sought by the Plaintiffs. He contended that the plaintiffs had no claim against him either for specific performance or for damages and he regarded the claim against him as misconceived and an abuse of the court process.

In  cross examination by Counsel for the Plaintiffs, the 3rd Defendant  stated that the caveat referred to in his statement was registered by the plaintiffs while the application for removal of caveat was drawn by the 2nd Defendant. He confirmed that the 2nd Defendant was the vendor's advocate in the sale agreement between him and the 1st Defendant. He reiterated that the search indicates that the conveyance from the 1st Defendant to him was registered on 17th August 2006 and further, that the property had not been transferred to him at the time the instant suit was lodged. Further, the 3rd Defendant agreed that the suit was before the registration of the mortgage between him and the 4th Defendant on 23rd August 2006.  The 3rd Defendant stated that he is in possession of the suit property, and that he did re-development of the same in 2010.

In cross examination by Counsel for the 1st and 2nd Defendants, the 3rd Defendant stated that at the time he conducted a search, the suit property was in the name of the 1st Defendant and not  the Plaintiffs. He reiterated  that the transfer to him was effected on 13th July 2006,and  stated that he had no notice of the suit at the time of transfer.

During re-examination, the 3rd Defendant clarified  that a letter dated 24th July 2006 from Kimani Kairu & Company advocates forwarded the completion documents to the 4th Defendants advocates to enable them complete the transaction. He also stated that as at 24th June 2006, he had done all that was required of him to enable the conveyance to  be competed in his favour and was not aware of any hindrance to the conveyance including a suit.  The 3rd Defendant stated that registration of the conveyance had already  been effected at the time a letter dated 23rd August 2006 from the Plaintiffs' advocate was notifying Kamotho Maiyo advocates of the status quo order issued in the instant suit. The 3rd Defendant was emphatic that since 2006, he had never been served with any order barring him from developing the property.

The 4th Defendant’s case

Patrick Mwangi Maina testified on behalf of  the 4th Defendant as DW4 and produced a bundle of documents dated 7th October 2011 and relied on his witness statement dated 21st January 2014.  He stated that he was the Assistant Manager for Legal Services with the 4th Defendant and  that the 1st Defendant who was a customer of the 4th Defendant since May 1991 when he approached the bank for a construction loan which was advanced to the tune of Kshs 1,200,000/-.The witness testified that the loan was secured by the 1st Defendant's title for LR No. 7583/67 where a charge was created over the parcel and was duly registered. He averred that a further charge was created over the same property for a further loan of Kshs 5,000,000/- advanced to the 1st Defendant in 1999.

DW4 stated  that the 1st Defendant continued to repay the loan until 2003 when he approached the 4th Defendant to be allowed to subdivide the charged property and sell a portion to redeem the loan amount. It is the 4th Defendant's case that the subdivision of the charged property was allowed and the suit property known as LR No. 7583/174 was released to the 1st Defendant to sell and redeem the loan amount. DW4 averred that a partial re-conveyance of mortgage and further mortgage was prepared and registered on 13th July 2006 and the suit property was re-conveyed and released to the 1st Defendant.

Dw4 stated that the 4th Defendant received a sale agreement dated 2nd May 2006 between the 1st and 3rd Defendants and  that the 3rd Defendant approached the 4th Defendant for a mortgage facility of Kshs 9,500,000/- for the purchase of the suit property.  The witness stated that a mortgage facility in favour of the 3rd Defendant was approved as per the letter of offer dated 12th June 2006 signed by the parties and  that a mortgage over the suit property was created in favour of the 4th Defendant which was duly registered on 17th August 2006. According to DW4, a search carried out by the bank revealed that a caveat that had been registered on 30th April 2003 by the Plaintiffs had been withdrawn on the 2nd February 2005 and therefore, that there was no encumbrance at the time the mortgage was perfected and further, that the 4th Defendant was not aware of the instant suit as he was not a party to it as at the time.

DW4 testified  that the 4th Defendant was a stranger to the agreement dated 28th March 2003 between the Plaintiffs and the 1st Defendant and averred that the 4th Defendant did not act fraudulently in mortgaging the suit property since the title was clean and there was no court order restraining the 4th Defendant from mortgaging the suit property.  Lastly, DW4 averred that the Plaintiffs have no cause of action against the 4th Defendant who was not party to the agreement between the Plaintiffs and the 1st Defendant and was not party to these  proceedings when any orders, if at all, were granted.

In cross examination by Counsel for the Plaintiffs, DW4 confirmed that the mortgage between the 3rd and 4th Defendants was registered on 17th August 2006 while the present suit was filed on 3rd August 2006.

Submissions by the parties.

Plaintiffs submissions

Parties were directed to file submissions and the Plaintiffs filed submissions dated 17th February 2014 where they reiterated the facts and evidence and argued that the monthly installments of Kshs 110,000/- they paid to the 2nd Defendant was part of the purchase price under the agreement for sale of the suit property dated 28th March 2003. The Plaintiffs submitted  that the 1st and 2nd Defendant's argument that the installments of Kshs 110,000/- were not to be deducted from the purchase price is not sustainable, Counsel for the Plaintiffs argued that the 1st Defendant's liability to HFCK was not the Plaintiffs concern at all otherwise it should have been expressly stated in the agreement. For this submission, the Plaintiffs relied on the case of the Government of the United States of America -vs- Joseph Muiruiri Githongo  (2000)eKLR  for the proposition that intentions kept away from a party and not reduced into the agreement cannot constitute a mutual mistake or a frustration of the agreement.

It is the Plaintiffs submission that under clause 4(b)(i) of the agreement, their liability for the 1st Defendant's loan account would have arisen only if there was delay in their remittance of the monthly installment forming part of the purchase price  within the agreed 12 months. The plaintiffs submit  that there was no blanket obligation as implied by the 1st and 2nd Defendants, the Plaintiffs argued that it was not agreed that they would shoulder the interest on the 1st Defendant's mortgage account until the completion date.  They submit there was no such agreement.

In further submission, it was contended that the Plaintiffs paid the entire purchase price for  the suit property as per the agreement dated 28th March 2003. It was contended that the  deposit on the purchase price in the sum of Kshs 2,500,000/- was paid before the execution of the agreement while  the payment of the balance of Kshs 5,700,000/- is not disputed.  The Plaintiffs  submit that a statement of account showing a sum of Kshs 8,719,850/- had been  received by the 1st and 2nd Defendants before the completion date had been exhibited and that the excess of Kshs 519,850. 00 over and above the purchase price of Kshs.8,200,000/- was to be apportioned towards legal fees, stamp duty on the conveyance and registration charges.

In respect to the relationship between the 2nd Defendant and the Plaintiffs, Counsel argued that the relationship between an advocate and a client was not contractual but fiduciary and required the 2nd Defendant to act in the best interests of the Plaintiffs. While arguing that the duty which is in the nature of a trust is founded upon common law and statute, Counsel relied on section 80 of the Advocates Act and contended that under clause 10(b) of the agreement, the 2nd Defendant was duty bound to register the transfer of the property in the plaintiffs names upon receipts of the amounts required for stamp duty, registration fees and the plaintiffs' share of the parties' legal charges.

It is the Plaintiffs' submission that the 2nd Defendant was required to serve a completion notice upon the 1st Defendant under Condition 4(7) (f) of the Law Society Conditions of Sale and was also required under Condition 8, to deposit the entire purchase price in an interest earning account for the benefit of the Plaintiffs, in the event of rescission of the agreement by the 1st Defendant. Counsel for the Plaintiffs contended that the 2nd Defendant was paid legal fees and retained by the Plaintiffs in the sale transaction and relied on the case of King Woolen Mills Ltd & anor -vs- Kaplan & Stratton Advocates (1990-1994)1EA 244CAK for the submission that a retainer established a fiduciary duty between an advocate and a client. Counsel contended that the 2nd Defendant owed the Plaintiffs a professional and fiduciary duty in the sale of the suit property and reliance was placed on the case of Kincluc Holdings Ltd -vs- Mint Holdings Ltd & anor(1998)eKLR for the proposition that a breach of that duty is actionable in damages.

In further submission, the Plaintiffs argued that the 1st Defendant was in breach of the sale agreement dated 28th March 2003 by refusing to give them vacant possession despite payment of 50% of the purchase price. In addition, it was contended that the 1st Defendant was in breach by refusing to execute the transfer in the Plaintiffs' favour despite their payment of the full purchase price, stamp duty, registration fees and their share of legal charges. Counsel also submitted that the reselling and transferring of the suit property to the 3rd Defendant constituted breach of the agreement with the plaintiffs and urged the court to so hold.

The plaintiffs while arguing that the caveat on the property was removed for the sole purpose of registering the conveyance in the Plaintiffs' favour,  contended that there would have been no basis for the 2nd Defendant to receive legal fees, stamp duty and registration charges if the conveyance was not registrable on account of nonpayment of part of the balance on the purchase price. Counsel for the plaintiffs submitted  that the 1st Defendant's claim for breach by the Plaintiffs was not supported by evidence since the Plaintiffs had demonstrated how the agreed purchase price of Kshs 8,200,000/- was paid in full before completion date.  The plaintiffs further contended it had not been demonstrated that the agreement was varied to require the plaintiffs to pay an additional sum of Kshs.1,000,000/-.

Counsel averred that there had been no termination of the agreement and reference was made to the case of Cassam -vs- Sachania (1982) eKLR. It is the Plaintiffs submission that the 1st Defendant's resale and conveyance of the property to the 3rd Defendant had contravened the law having been made pendente lite and the Plaintiffs relied on section 52 of the Indian Transfer of Property Act (repealed) as well as the cases of Mawji -vs- US International University & anor (1976-80)1KLR 229 and Clement Kuguru -vs- Kamau Njuguna & 2 others (2007) eKLR where the court finding was that a transfer to a third party before a dispute is determined is unlawful.

In respect to refund of the purchase price, it was argued that the same was not offered to the Plaintiffs since there was no evidence that the letter dated 29th November 2005 which did not forward a cheque of Kshs 8,719,850/- reached the Plaintiffs. It is the Plaintiffs' submission that subsequent letters from the 1st and 2nd Defendant's advocates offered to refund the purchase price subject to costs incurred which should not have been the case since they were not at fault. Counsel averred that the defence of tender under Order 7 Rule 2 of the Civil Procedure Rules was not available to the 1st and 2nd Defendants since the purchase price was not tendered into court.

While submitting that no rescission or completion notice was ever issued upon the Plaintiffs, Counsel reiterated that no part of the purchase price was outstanding to warrant service upon them of any notice to complete. Counsel submitted that the Plaintiffs did not issue a rescission notice   but issued two completion notices dated 31st July 2006 and 5th August 2008 to the 1st Defendant. It is the Plaintiffs submission that although the agreement for sale dated 28th March 2003 did not provide for a refund of the purchase price together with interest thereon, it provided for payment of penal interest at the rate of 20% p.a for late completion.

Further, it was contended that the agreement was subject to Condition 4(7)(d) of the Law Society Conditions for Sale 1989 Edition. Counsel maintained that the entire purchase price must be refunded for there to be a lawful rescission of a contract to sell land. For this submission, Counsel relied on the case of Nyamunyu -vs- Nyaga (1983) KLR 283 as well as the case of Ayub Ndung'u -vs- Marion Waithera Gicheru (2006) eKLR. It is the Plaintiffs' submission that having incorporated the Law Society Conditions of sale in the agreement, the Plaintiffs were entitled to a refund of the purchase price and interest thereon before rescission, even if they were in default.

The plaintiffs further submitted that the 2nd Defendant breached his professional and fiduciary duty to the Plaintiffs in the sale of the suit property transaction.   Counsel for the plaintiffs argued that the failure and/or refusal to procure the Plaintiffs' possession despite payment of  50% of the purchase price as well as the failure to register the transfer in the Plaintiffs name despite payment of the purchase price in full constituted breach. It was argued that the 2nd Defendant was also in breach for having acted in the resale and transfer of the property to the 3rd Defendant despite having received legal fees from the Plaintiffs. Further Counsel submitted that the 2nd Defendant abused the trust and confidence of the Plaintiffs in acting impartially to the benefit of the 1st Defendant while disregarding the Plaintiffs' rights. The Plaintiffs referred the court to the case of Mangi -vs- Munyi & anor(1991)KLR 432, King Woolen Mills Ltd & anor -vs- Kaplan & Stratton Advocatesas well as the case of Kincluc Holdings Ltd -vs- Mint Holdings Ltd & anor(1998)eKLR

As to whether there was breach of the court order dated 10th August 2006, Counsel submitted the same was made before the conveyance was registered on 17th August 2006. The Plaintiffs submitted that the 1st and 2nd Defendant who had notice of the order would have notified the advocate for the 3rd Defendant not to proceed with the registration even if the application for registration had been lodged before the order for status quo was made.

The court was referred to the case of Creative Homes Developers Ltd -vs- Koinange Investments & Development Ltd & 3 others CA No. 129 of 2009 for the submission that non service of a court order does not invalidate it but excuses actions done contrary and in ignorance of the order. Counsel argued that the sale and transfer of the suit property during the pendency of the suit contravened the provisions of section 52 of the repealed Indian Transfer of property Act. It is the Plaintiffs submission that the conveyance having been registered in the name of the 3rd Defendant during the pendency of the suit and the order of 10th August 2006 is proof of fraud and reliance was placed on the treatise Kerr on the Law of Fraud and Mistake, 7th Edn pg 163, section 53 of the repealed Indian Transfer of property Act as well as the decisions in Eliud Nyongesa Luseneka & others -vs- Nathan Wekesa Omocha(1994)eKLR and Tabitha Kamwangi -vs- John Gitongo Njeru & anor(2006)eKLR for the submission that fraud renders a contract voidable at the option of the injured party.

In respect to the orders for specific performance sought, it was submitted that the Plaintiffs who had fully performed  their obligations under the agreement for sale of the suit property were entitled to the same. Counsel for the Plaintiffs contended that the 3rd and 4th Defendant's interests which were unlawfully registered must pave way for the Plaintiffs' claim for specific performance. It is the Plaintiffs submission that cancellation of the conveyance and mortgage unlawfully registered would clear the way for the making of an order for specific performance.

While submitting that this was a case in which damages would not be an adequate remedy, Counsel contended that the market value had appreciated and the Plaintiffs had been out of the property and the entire purchase price for a period of  over 10 years.

In further submission, the Plaintiffs argued that they were entitled to special damages of Kshs 11,409,850/- . It was argued that the sum of Kshs 8,719,850/-  was the actual amount received by the 1st and 2nd Defendants and  further, that the Plaintiffs were entitled to interest thereon at 20% for the time of 10 years lost since 2nd December 2004. It is the Plaintiffs' submission that the principle together with interest amounts to Kshs 26, 159,550/- which should attract a further interest at 20% per annum from the date of judgement until payment in full.

Counsel averred that the Plaintiffs were entitled to mesne profits of Kshs 70,000. 00 per month from 2nd December 2004.  It was submitted for the Plaintiffs that a sum of Kshs 8,200,000/- which should attract interest at court rates from the date of judgement until payment in full should be awarded. In respect to a claim for loss of bargain, Counsel averred that a sum of Kshs 2,800,000/- which is the difference between the sale price to the Plaintiffs and to the 3rd Defendant was sought together with interest thereon from 2nd December 2004 at a contract rate of 20% per annum. Counsel relied on the case of Judy Wanjiru Wainaina -vs- Mathew Mbugua Maigwa (2005) eKLR and Kenya Hotel Properties Ltd -vs- Millesden Investments Ltd (2009) eKLR.

It is submitted for the Plaintiffs that the principle and interest under the claim for  loss of bargain should attract a further interest at 20% per annum from the date of judgement until payment in full. The court was referred to Chitty on Contracts, 27th edn Vol 1 at page 220 -226 as well as the case of Malhotra -vs- Choudhury (1979)1All ER 186 for the proposition that damages awarded in substitution for an order for specific performance of a contract for the sale of property are to be assessed by reference to the value of the property as at the date of the judgement and not at the date of breach of contract. Further reliance was placed on the case of Wilfred Kiura Mwangi -vs- Harrison Mwangi Gacheche & anor (2005) eKLR and Amina Abdul Kadir Hawa -vs- Rabinder Nath Anand & anor (2012) eKLR where an order for refund of purchase price and interest thereon was made.

In respect to general damages sought against the 2nd  Defendant for breach of fiduciary duty and the rest of the Defendants for fraud, it was submitted that these are to be assessed based on the value of the suit property, purchase money paid and the circumstances of the case. Counsel referred the court to the case of Thabiti Finance Company Ltd (in liquidation)& anor -vs- Abiero(2004)eKLR as  well as the case of Great Lakes Transport Company(U) Ltd -vs- Kenya Revenue Authority(2009)eKLR. Lastly, it was submitted that the Defendants should be ordered to pay costs of the suit jointly and severally since the suit should not have been necessary had the agreement been formally rescinded and the entire purchase price refunded to the Plaintiffs before resale and conveyance of the property to the 3rd Defendant.

Submissions by the 1st and 2nd Defendants

The 1st and 2nd Defendants filed submissions dated 17th April 2014 where they reiterated the facts of the case as set out in the pleadings and in the evidence.  Counsel for the 1st and 2nd Defendants submitted that in their interpretation, the Plaintiffs had taken a narrow interpretation of the agreement dated 28th March 2003.   Counsel for the 1st and 2nd Defendants submitted  that under clause 4(b) (i) of the agreement, the Plaintiffs expressly accepted the mandatory obligation to pay Kshs 110,000/- to HFCK on or before  1st May 2003 and thereafter, on or before the first month of every subsequent month. Counsel submitted that the obligation would not have been extinguished until the amount due from the 1st Defendant was paid in full to HFCK. It is the 1st and 2nd Defendant's submission that the Plaintiffs have not disowned that part of the agreement as having been included after the fact so as to plead fraud on their part and have also not pleaded misrepresentation or ignorance.

Counsel for the 1st and 2nd Defendants referred the court to the case of L'Estrange -vs- F. Grancob Ltd (1934)KB 394, Curtis -vs- Chemical Cleaning & Dyeing Co Ltd(1951)1KB 805  and  Kilifi Resorts Ltd -vs- Northern Lights Ltd ELC No. 3 of 2013 where the gist of the court findings was that in the absence of fraud or misrepresentation,  a party signing a contractual document is  bound by the terms. It was argued that the Plaintiffs had neither pleaded fraud nor misrepresentation as far as the terms of the agreement for sale dated 28th March 2003 are concerned. The court was also referred to the case of Rufate -vs- Union Manufacturing Company(1918)LR 1KB 592 for the proposition that courts ought not imply terms which parties have not expressed.

Counsel argued that  the whole contract must be considered and relied on the treatise Chitty on Contracts 25th Edition paragraph 777 as well as the case of Liverpool City Council -vs- Irwin & anor(1976)2All ER 39. It was submitted for the 1st and 2nd Defendants that the Plaintiffs acknowledge the agreement for sale in its entirety and that they did not plead that clause 4(b)(i) and (ii) of the agreement was not understood by them; was not explained to them or had another meaning other than the one the 1st and 2nd Defendants were giving to it. It was contended that the 1st Plaintiff acknowledged the existence of the obligation to pay HFCK as provided in the agreement.

It is the submission of the 1st and 2nd Defendants that having admitted that they paid Kshs 110,000/- to the 2nd Defendant, it was not contested that the payments were made in compliance with clause 4(b)(i) of the sale agreement and that the 2nd Defendant received and paid those monies to HFCK on behalf of the Plaintiffs in compliance with the Plaintiffs' obligations as set out in the said clause. Counsel for the 1st and 2nd Defendants argued that clause 4(b)(i) of the agreement did not provide  that the payments were being made to HFCK on behalf of the 1st Defendant  and therefore, that the Plaintiffs' allegations that those payments were made to HFCK  by the 2nd Defendant on behalf of the 1st Defendant were not supported by any evidence.

The 1st and 2nd Defendants submitted  that the agreement placed the obligation of paying interest and other charges on the Plaintiffs and  Counsel averred that it was dishonest for the Plaintiffs to claim that they were not required to pay interest or other charges whereas the same was expressly stipulated in the agreement. The 1st and 2nd Defendants referred the court  to clause 4(b)(ii)  of the agreement and  submitted that the amount of Kshs 110,000/- did not constitute part of the purchase price since the 1st Defendant expected further payments from the Plaintiffs at the end of the 12 months, Counsel urged that if no additional payments were expected from the Plaintiffs, clause 4(b)(ii)   of the agreement would have been unnecessary and superfluous in the agreement for sale.

In further submission, Counsel for the 1st and 2nd Defendants averred that the purchasers were expected to pay Kshs 110,000/- to HFCK from 1st May 2003 for 12 months until they were in a position to pay the balance of the purchase price which was Kshs 3,700,000/- and therefore, that the Kshs 110,000/- paid to HFCK was not part of the purchase price. In respect to why the amount due to HFCK was not set out in the agreement, Counsel averred that interest rates on the loan were fluctuating and that the sum could only be determined at the end of the contractual 12 months period. It was submitted that at a meeting between the parties  the interest due was ascertained and apportioned accordingly and the Plaintiffs and the 1st Defendant were to bear Kshs 1,000,000/- and Kshs 200,000/- respectively. According to the 1st and 2nd Defendants, the Plaintiffs bone of contention, if at all, should have been on the amount of interest payable by them and not whether interest was payable by them at all.

It was submitted for the 1st and 2nd Defendants that the agreement for sale dated 28th March 2003 being a commercial agreement, regard should be placed on the intention of parties during construction of terms. Counsel referred to Chitty on Contracts, 25th Edition page 421 as well as the case of Tom Otieno Odongo -vs- Cabinet Secretary Ministry of Labour Services & anor HCCC No. 1174 of 2013for the proposition that courts are bound to uphold the intentions of parties when disputes arise. Counsel urged the court to look at the element of consideration and contended that the Kshs 110,000/- paid to HFCK was the consideration for the 1st Defendant's waiting for payment of the balance of the purchase price for 12 months. Reliance was placed on Chitty on contracts at page 440 for the proposition that additional consideration not stated in the deed which is not in contradiction to the instrument may be proved.

The 1st and 2nd Defendants urged the court to find that the 1st Defendant was owed more money by the Plaintiffs who never paid the entire purchase price and hold that there was no breach of contract on their part for failing to execute the transfer in the Plaintiffs' favour. In respect to alleged breach of professional and fiduciary duty on the part of the 2nd Defendant, it was submitted that the duty was owed to both the Plaintiffs and the 1st  Defendant and that in exercising the duty, the 2nd Defendant had to ensure that both parties had fulfilled their contractual obligations before he could effect a transfer in the Plaintiffs' favour. Counsel averred that the 2nd Defendant never proceeded to register the conveyance in the Plaintiffs' favour because they never paid interest due to the 1st Defendant.

It was submitted that the Plaintiffs took over two years to bring this action against the 1st and 2nd Defendants for breach which took place in 2004. Counsel averred that in the absence of any complaint by the Plaintiffs between March 2003 to July 2006 as to any misconduct on the part of the 2nd Defendant, there is a reasonable presumption that the Plaintiffs were happy with the 2nd Defendant's legal services during the period they engaged him. It was argued for the 1st and 2nd Defendants that the case of King Woolen Mills Ltd & anor -vs- Kaplan & Stratton Advocates (1990-1994)1EA 244CAKcited by the Plaintiffs is not applicable since there was no conflict of interest between the 1st and 3rd Defendants that would have precluded the 2nd Defendant from acting for the 1st Defendant. The Counsel contended that the Plaintiffs had not demonstrated how the 2nd Defendant acting for the 3rd Defendant in the 2nd sale presented any conflict of interest or how it prejudiced them.

It was also contended that section 80 of the Advocates Act vindicated the 2nd Defendant since the Plaintiffs never pleaded or tendered evidence to show that the 2nd Defendant failed to pay out the monies they gave him. Counsel argued that the Plaintiffs'  submission that the monies paid ought to have been placed in an interest earning account  in terms of Condition 8 of the Law Society Conditions for sale  did not apply to this case because parties had agreed how the purchase price was to be paid at clause 4 of the agreement and none of it was to be retained by the 2nd Defendant.

While submitting that that the 1st and 2nd Defendants were not in breach of the court order made on 10th August 2006, Counsel contended that by the time the Plaintiffs filed the suit, the 1st Defendant had effected transfer to the 3rd Defendant. It was submitted that the suit was filed on 3rd August 2006 and the 1st and 2nd Defendants were summoned to appear in the court on 10th August 2006, while transfer had been effected on 13th July 2006.

Counsel contended that when parties appeared in court on 10th August 2006, the 1st and 2nd Defendant's advocate advised the court that transfer of the property had been effected to a 3rd party who was responsible for the registration of the conveyance in his favour and further, that the order for status quo was issued by the court on its own motion and was not consented to by the 1st and 2nd Defendant's advocate. Counsel urged that the 1st and 2nd Defendants cannot be said to have contravened an order which was not in existence when the 1st Defendant executed the conveyance dated 13th July 2006 in the 3rd Defendant's favour. Further, it was argued that since the property was conveyed to the 3rd Defendant on 13th July 2006 before this  suit was filed, the property cannot be said to have been conveyed during the pendency of the suit. It was submitted that no evidence was tendered to prove that the 1st Defendant signed the conveyance dated 13th July 2006 with intent to defraud the Plaintiffs.  Reliance was placed on the case of David Mburu Kamau -vs- National Industrial Credit Bank (2010)eKLR for the proposition that allegations of fraud must be strictly proved and require proof that is more than on a mere balance of probabilities.

In regard to the Plaintiffs' claim for specific performance, it was submitted that the Plaintiffs never paid the entire balance of the purchase price. Counsel sought to distinguish the case of Elijah Kipkorir Barmalel & anor -vs- John Kiplagat Chemwono & 3 others (2010)eKLR  cited by the Plaintiffs by arguing that the claimant could only sell his property to 3rd parties after rescinding and bringing the sale agreement to an end. It was submitted that the 1st Defendant by a letter dated 22nd February 2006 informed the Plaintiffs   that if they did not pay the balance of the purchase price within 21 days, the sale agreement would be rescinded.

Counsel relied on the case of Gurdev Singh Birdi and Marinder Singh Ghatora & Abubakar Madhbuti CA No 165 of 1996 for the proposition that a court of equity would refuse to grant specific performance where the claimant was guilty of breach of the contract. Counsel maintained that it was the Plaintiffs who were in breach having failed to meet their obligations under the agreement for sale. It was submitted that other than the remedy for refund of the purchase price, the Plaintiffs were not entitled to any other remedy. The court was referred to the case of Firozali Noormohamed Lalji -vs- Elias Kapombe Toka & 3 others (1981) KLR 325 for the submission that it is not enough to write down particulars of damages while seeking damages, but that the particulars have to be proved.

Submissions by the 3rd Defendant

The 3rd Defendant filed submissions dated 22nd April 2014 where the  facts of the case as they related to the 3rd Defendant were reiterated. Counsel submitted that all documents for registration of conveyance and mortgage were executed on 13th July 2006 and forwarded to the 4th Defendant's advocates on 24th July 2006 for registration two weeks before this suit was filed. It was submitted that stamp duty was paid on 27th July 2006 and that the registration process was out of the hands of all Defendants and in the hands of the Registrar of Lands when the instant suit was filed.

It is the 3rd Defendant's submission that the 1st Plaintiff in cross examination stated that she was not aware of any acts of fraud by the 3rd Defendants. Counsel averred that the 1st Defendant having waited for two years before re-selling the property defeats the Plaintiffs allegations that the 3rd and 4th Defendant's actions of purchase and mortgage was fraudulent and purposed to defraud the Plaintiffs. While arguing that equity aids the vigilant and not those who sleep on their rights, Counsel averred that the Plaintiffs did not actively pursue to resolve their difference with the 1st Defendant in two years. Counsel relied on the case of Kent Liboso & another -vs- Cikkon Trust Co. Ltd & 2 others ELC No. 288 of 2011where the court held that no evidence of fraud was furnished against the 4th  Defendant in that case who was found to have been an innocent purchaser for value without notice.

While submitting that the caveat placed and removed on LR 7583/120 was placed on a different parcel from the one purchased by the 3rd Defendant, Counsel submitted that the caveat over LR 7583/120 did not disclose to strangers the Plaintiffs' interest on the suit property. It was submitted that a buyer is entitled to rely on the records at the land registries at face value and therefore, that no fraud can be implied on the part of  the 3rd Defendant's failure to investigate the reason for removal of caveat.

In respect to the court orders issued on 10th August 2006, the 3rd Defendant submitted that he was not party to this suit at the time the orders were given since he was enjoined in 2009. It was submitted that the process of purchase and registration was commenced before the said orders were given and without any reference to any suit. Counsel averred that the said orders  have never been served on the 3rd Defendant to date and submitted that a letter dated 23rd August 2006 purporting to notify the 3rd Defendant of the order was received after registration had been completed.

In further submission, Counsel for the 3rd Defendant stated that the order of 16th November 2006 had no effect since it was premised on the condition of the property having not been sold. It was stated that the property had actually been sold and registration completed on 17th August 2006. Counsel argued that the 3rd Defendant carried out a due diligence search to establish ownership of the property where he established that there was no encumbrance on the title.  It was contended that the 3rd Defendant entered into the sale transaction with the 1st Defendant way before this suit was filed  and therefore, that the 3rd Defendant was an innocent purchaser for value without notice. For this submission, Counsel relied on the  case of Kent Liboso & another -vs- Cikkon Trust Co. Ltd & 2 others ELC No. 288 of 2011.

On the Plaintiffs' prayer for specific performance, it was submitted that the 3rd Defendant has been in possession of the property since August 2006 when the conveyance and mortgage were registered, a period of close to 8 years. It was argued that the 3rd Defendant has substantially developed the suit property and has serviced and completed payment of a mortgage of Kshs 9. 5 m and therefore, that his rights should not be interfered with at this stage. Counsel contended that the Plaintiffs' and 1st Defendant's rights and obligations should be dealt with through other available options. Counsel relied on the case of Geoffrey Kinuthia -vs- Macro Ventures Developers Ltd HCCC No. 324 of 2012 for the proposition that the remedy of specific performance is discretionary and not available as of  right unlike damages.

Reliance was also placed on the case of Amritlal vs City Council of Nairobi (1982) KLR 75where the court held that the order for specific performance had no probability of success since it was impossible for the City Council to comply with the same. Counsel averred that since the property had already changed hands, an order for specific performance would put the 1st Defendant in a position in which he could not obey the order since a cancellation of the title would cause suffering to an innocent party. The case of Elijah Kipkorir Barmalel & anor -vs- John Kiplagat Chemwono & 3 others (2010)eKLRcited by the Plaintiffs was distinguished and Counsel submitted that Barmalel had sold the property without rescinding his prior contract which was not the case herein. Counsel maintained that the Plaintiffs' can be compensated by a monetary award since what they paid is specified and hence a liquidated amount.

Further, the 3rd Defendant argued that section 52 of the Indian Transfer of Property Act (repealed) should be read together with section 23 of the Registration of  Titles Act (repealed). Counsel referred the court to the cases of Kenya Tourist Development Corporation -vs- Kenya National Capital Corporation Ltd & anor HCCC No. 6776 of 1992, Fredrick Jones Kinyua & anor -vs- G. N. Braid HCCC No. 4819 of 1989 as well as the case of Edwin Wambua Regeru & anor -vs- Joseph Kariuki Kibaara & anor HCCC No. 274 of 2009 for the proposition that the application of section 52 of the Indian Transfer of Property Act (repealed) must be considered against the background facts of each case.

While submitting that the mere fact of purchase and mortgage cannot be condemned to be fraudulent, Counsel argued that the suit did not disclose a reasonable cause of action against the 3rd Defendant. It was submitted that the 3rd Defendant did not breach the law and did not act fraudulently since no proof was tendered. Counsel relied on the case of David Mburu Kamau -vs- National Industrial Credit Bank(2010)eKLR for the submission that allegations of fraud must be strictly proved on a standard not so heavy as to require proof beyond reasonable doubt but, something more than a balance of probabilities. It is the 3rd Defendant's submission that fraud had not been proved against him and therefore, that the claim for general damages against him was misguided. Lastly, the 3rd Defendant sought costs for the suit for having been wrongfully and unnecessarily joined in the suit.

Submissions by the 4th Defendant

The 4th Defendant in submissions dated 20th March 2014 reiterated the facts and the pleadings and argued that the Plaintiffs' suit as against it did not disclose a reasonable cause of action. Counsel relied case of Carton Manufacturers Ltd -vs- Prudential Printers Ltd (2013)eKLR and  George Stephen Muhoro -vs-Catherine Wanjiku & 5 others (2014)eKLR as well as the treatise The Law of Pleading under the Codes of Civil Procedure, 2nd Ed 1899 for the proposition that a cause of action constitutes an act on the part of the Defendant which gives the Plaintiff his cause of complaint.

While submitting that the 4th Defendant was not party to the agreement dated 28th March 2003 between the Plaintiffs and the 1st Defendant, Counsel stated that the 1st Plaintiff had confirmed that she did not make or authorize any payments to be made to the 4th Defendant on account of the said agreement. It was argued that from the statement of mortgage account from the period between 1st January 2003  and 31st March 2004, it cannot be established who paid the money since there was no receipt on record indicating payment to the 4th Defendant. Counsel submitted that there was no correspondence between the Plaintiffs or their advocates linking the 4th Defendant to the transaction and therefore, that the Plaintiffs' claim against the 4th Defendant who was not party to the contract cannot be sustained.

It was submitted for the 4th Defendant that  a search carried out on the suit property prior to the registration of the mortgage for a facility of Kshs 9. 5 million in favour of the 3rd Defendant revealed that the property was not encumbered. Counsel averred that the standard of proof for fraud was more than a mere balance of probabilities and the court was referred to the case of David Mburu Kamau -vs- National Industrial Credit Bank (2010)eKLR. It is the 4th Defendant's submission that no fraud was disclosed on its part having satisfied itself that there was no encumbrance at the time of perfecting the mortgage over the suit property.

While arguing that the 4th Defendant was not a party to the suit and was never served with any court orders issued by the court restraining any dealings with the suit property on 18th December 2006, Counsel submitted that the 4th Defendant not being a party to the suit was under no obligation to obey orders which were never brought to its attention. Further, it was submitted that the orders had been overtaken by events and were not effective as they were hinged on the property having not been sold as at 16th November 2006. It was submitted that the 4th Defendant cannot be said to have disregarded court orders which were issued over 6 months after the transaction.

In further submission, Counsel for the 4th Defendant argued that the court cannot award damages arising from a contractual dispute and reliance was placed on the case of Securicor Courier (K) Ltd -vs- Benson David Onyango & anor (2008)eKLR, Henry Njenga -vs- Shell Chemicals Company of East Africa and Wally Trading Company Ltd -vs- Isiolo County Council(2005)eKLR  where the gist of the court finding was that general damages for breach of contract are generally not awardable.

In respect to the claim for mesne profits, Counsel reiterated that no evidence on record demonstrates the 4th Defendant's illegal involvement in the suit property since no fraud  was disclosed against the 4th Defendant in mortgaging the suit property. Further, it was submitted that mesne profits are categorized as special damages which must be specifically pleaded and proved. It is the 4th Defendant's submission that the Plaintiffs failed to prove to the required standards the 4th Defendant's liability to pay them mesne profits.  Counsel referred the court to the case of Danson Muniu Njeru -vs- William Kiptarus Korir & 6 others(2014)eKLR. Lastly, it was submitted that the 4th Defendant was an unnecessary party to this suit since the application of the law to the facts do not support the plaintiffs action against the 4th Defendant and therefore,  that the Plaintiff should bear the costs.

Consideration and determination of the issues

I have reviewed the pleadings the evidence and the submissions by the parties and I have considered the set of agreed issues submitted by the parties for determination.  The issues for determination revolve on the interpretation of  the Agreement for sale dated 28th March 2003 between the plaintiffs and the 1st Defendant with the main issue being  who as between the plaintiffs and the 1st Defendant was in breach of the said agreement if at all there was breach.  The question whether or not the subsequent sale and transfer of the suit property to the 3rd Defendant by the 1st Defendant was fraudulent stands to be determined.  The parties stated agreed issues referred to earlier are collapsable to fewer issues and I set out hereunder the issues that I have identified as requiring to be determined in this suit.

i. Whether the agreement for sale dated 28th March 2003 provided for the plaintiffs to pay interest on account of the1st Defendant to the Housing finance Company Ltd (HFCK) and whether the plaintiffs were in breach of any terms of said agreement.

ii. Whether the sale of the suit property to the 3rd Defendant by the 1st Defendant was fraudulent and whether the 1st and 2nd Defendants were in breach of any court order in processing the transfer in favour of the 3rd Defendant.

iii. Whether the 3rd and 4th Defendant acted fraudulently in causing the conveyance and mortgage to be registered in favour of the 3rd and 4th Defendants respectively and whether in doing so they acted in breach of any court order.

iv. Whether the 2nd Defendant acted in breach of his professional and fiduciary duty to the plaintiffs in the sale of property L.R. NO. 7583/174, Nairobi the suit property.

v. Whether the plaintiffs are entitled to the reliefs sought and who bears the costs of the suit.

vi. Whether or not the plaintiffs suit discloses a cause of action against the 3rd and 4th Defendants.

vii. Who bears the costs of the suit?

Issue NO. (i)

The Plaintiffs tendered evidence and submitted that they met their obligations under the sale agreement dated 28th March 2003 and were therefore not in breach of the agreement.  The Plaintiffs maintained  that the entire purchase price, legal charges, stamp duty, registration charges and  other disbursements required to be paid to complete the transaction were paid in full and acknowledged by the 2nd Defendant as per the statement of account dated 1st December 2004 for  Kshs 8,719,850/-  evidencing payments.

On their part, the 1st and 2nd Defendants contended that the full purchase price was not received. They contended that the Plaintiffs were to pay Kshs 110,000/- per month to HFCK for 12 months which was not to form part of the  purchase price which assertions were denied by the Plaintiffs. The interpretation of Clause 4 of the sale agreement dated 28th March 2003 which provides how the purchase price was to be paid is highly contested. Under Clause 4, of the Agreement for sale dated 28th March 2003  the purchase price of Kshs 8,200,000/- was to be paid in the following manner:-

a. Kshs 2,500,000 being deposit was payable before execution of the agreement.

b. Kshs 2,000,000/- was payable on or before 15th April 2003 (with authority to the parties lawyers to release the same to the vendor's financiers)

c. The balance  of the purchase price was payable within 12 months from the date of execution in the following  manner:-

i. On or before 1st May 2003 and thereafter on or before the first day on each subsequent month, the purchaser was to pay to the vendor's financiers (HFCK) an amount of Kshs 110,000/-  until the amount due from the vendor to HFCK was repaid in full (the purchasers were to be responsible for the payment to HFCK of any interest or other charges that may have been levied against the vendor for late payment of the monthly installments)

ii. The remaining balance of purchase price after the amount due to HFCK was paid in full was to be paid to the parties lawyers with authority for the said lawyers to release the same to the vendor.

Whereas the Plaintiffs interpreted the agreement to mean that the amount paid to HFCK comprised part of the purchase price, the 1st and 2nd Defendants maintained that the installments to HFCK were not to form part of the purchase price and that they were payable as consideration by the Plaintiffs for having been allowed by the 1st Defendant to pay the balance of the purchase price within 12 months. From my reading and understanding of the agreement, the Plaintiffs contention that the installments of Kshs 110,000/- paid for the  period of 12 months to HFCK were part of the purchase price of the suit property is well founded as clearly clause 4 spells out how the balance of the purchase price was to be paid and does not in my view provide for any other payments apart from the balance of the purchase price.

Indeed whether or not the plaintiffs can be adjudged to have breached and/or to have defaulted on the agreement for sale turns on the interpretation that is given to the said clause 4 of the agreement for sale that provided for the mode of payment of the purchase price.  Whereas Clause 4 of the agreement as drafted could have been made more explicit such that it left no room for misconstruction,  I am nonetheless of the view that applying the literal and plain interpretation of the clause and taking due regard of the context in which it was drafted, there is infact no ambiguity  that would  render the clause capable of two interpretations.  I set out hereunder the reasons and my basisfor holding that the agreement for sale made no provision for payment of interest by the plaintiffs to the HFCK on behalf of the 1st Defendant.

a. Clause 4(b) which provides that the balance of the purchase price was payable within 12 months from the date of execution of the agreement has two parts. Part (i) deals with payment of Kshs 110,000/- for 12 months to HFCK while part (ii) provides that the remaining balance of the purchase price after payments  of amounts due to HFCK was paid in full is what was to be accounted to the vendor by the parties Advocates.

b. What therefore was the remaining balance referred to in clause 4(b)(ii)? My understanding is that this was the balance of the total purchase price less the deposit of Kshs 2,500,000/- and Kshs 2,000,000/- paid as provided under clause 4(a) and (b) and further less the Kshs 110,000/- paid monthly for 12 months being a total of Kshs. 1,320,000/-). The balance that was to be due to the  vendor therefore provided the plaintiffs  paid the Kshs.110,000/- monthly on the due dates and provided there were no penalties for late payment  would have been Kshs.2,380,000/-.

c. Under clause 4(b) (i), the Plaintiffs were only liable for the payment to HFCK of any interest or other charges that may have been levied against the vendor for late payment of the monthly installments. Contrary to the 1st  Defendant's assertions, no interest was to be charged by HFCK on the Plaintiffs as long as they paid the installments as agreed and there was no evidence that the Plaintiffs were charged the interest for late payment.

d. Save for the interest or other charges that were to be levied by HFCK against the Plaintiffs for late payment of the agreed monthly installments, the agreement does not provide that the Plaintiffs were to pay any interst to HFCK

e. There was no variation to the sale agreement indicating that Plaintiffs were liable to pay Kshs 1,000,000/- over and above the  Kshs 8,200,000/- as interest due to HFCK as alleged by the 1st Defendant.  Letter dated 16th August 2004  in which the 2nd Defendant called for payment of  the Kshs 1,000,000/- from the Plaintiffs cannot constitute a variation to the agreement and neither can the letter dated 21st May 2004 from the parties Advocates alluding to the agreement on interest payable constitute a variation of the agreement.  It is my view that where there is a written agreement duly signed by the parties, such agreement can only be varied through a deed of variation duly executed by the parties to the agreement and oral evidence is inadmissible to prove the variation.

f. Parties are bound by the terms of the agreement they have signed and where the intention of the parties is clear from the agreement no further evidence is needed to prove or disapprove the agreement. My funding is that the agreement  between the plaintiffs and the 1st Defendant made no provision that the plaintiffs were to pay any interest to HFCK on account of the 1st Defendant unless they had delayed in remitting the installments they had committed to pay HFCK.

The Plaintiffs testified that they had paid the full purchase price before the completion date. This testimony was conceded to by the 1st Defendant and the 2nd Defendant who admitted  that as  31st March 2004 which was the completion date, the Plaintiffs had paid a total amount of Kshs 8,719,850/- which was over and above the purchase price of Kshs.8,200,000/-  and the only contention was that at the completion date, only the interest payable to HFCK remained outstanding. Payment of interest to HFCK would have constituted term of the agreement which would have needed to be expressly of provided and not left to be implied.

In the absence of evidence that the Plaintiffs were late in submitting the monthly installment of Kshs 110,000/- to HFCK and were therefore liable for payment of interest or other charges levied for late payment, the court finds that the Plaintiffs had paid the full purchase price before the completion date and were therefore not in breach of the sale agreement dated 28th March 2003 as alleged and pleaded by the 1st Defendant.

Issue No. (ii)

The plaintiffs have submitted that the sale of the suit property to the 3rd Defendant by the 1st Defendant was fraudulent and that the 1st Defendant and the 3rd Defendant acted in collusion to frustrate the plaintiffs sale transaction with the 1st Defendant.  The particulars of fraud attributed to the 1st, 2nd, 3rd and 4th Defendants by the plaintiffs as per the amended plaint are as follows:-

a. Selling and transferring the property to the 3rd Defendant whilst aware of the pendency of this suit.

b. Selling and transferring the property to the 3rd Defendant whilst aware of the order for status quo made on 10th August 2006 and an injunction issued on 16th November, 2006.

c. Mortgaging the property to the 4th Defendant whilst aware of the order for status quo made on 10th August, 2006 and an injunction issued on 16th November, 2006.

The Defendants have in unison submitted that the plaintiffs have not established and/or proved that the sale of the suit property to the 3rd Defendant was fraudulent and/or that there was any collusion between and amongst the Defendants in effecting the sale and transfer of the property to the 3rd Defendant.

The 1st Defendant has throughout in his testimony asserted that he opted to sell the suit property to the 3rd Defendant since the plaintiffs were unable and/or failed to complete the payment of the purchase price.  As per the evidence the contested balance of the purchase price consisted of the interest payable by the 1st Defendant to the HFCK on his mortgage which the 1st Defendant contended was under Clause 4(b)(i) of the Agreement for sale payable by the plaintiffs to the HFCK.  I have found and held that the plaintiffs were infact not liable under the Agreement for sale to pay any interest to the HFCK as alleged by the 1st Defendant.  The issue thus does  arise whether in circumstances the 1st Defendant’s act and decision to offer the suit property to the 3rd Defendant constituted a fraudulent act against the plaintiffs.

In my view a party would only be said to have acted fraudulently where it is shown such a party was fully aware of the true state of affairs (facts) and yet chose to act defiantly against the interest of the affected party to the prejudice of such affected party.  In the present case it does appear the 1st Defendant genuinely believed (albeit wrongly) that the plaintiffs should have been responsible for the payment of the interest due on his mortgage account to the HFCK.  There is evidence that the 1st Defendant and the plaintiffs held various consultations on the issue and the 1st Defendant through the 2nd Defendant who was the parties joint lawyer in the transaction made a demand for the interest from the plaintiffs.  The 1st Defendant indeed notified the plaintiffs of his intention to sell the suit property to a third  party if they failed to pay the sum of Kshs.1,000,000/- apportioned to them as being payable by them on account of interest.  In the circumstances of this matter I am  not persuaded or satisfied that the act of the 1st Defendant to offer and sell the suit property to the 3rd Defendant was fraudulent.  The 1st Defendant, I think honestly believed he was entitled to rescind the sale.

The sale of the suit property to the 3rd Defendant commenced on 2nd May 2006 when the 1st Defendant and the 3rd defendant entered into a sale agreement which was before the present suit was instituted.  The order for status quo ordered by the court on 10th August 2006 came a shade too late.  The 1st and 3rd Defendant had executed the conveyance of the suit property on 13th July 2006 and the completion documents had been released to financiers Advocates to process the registration of the transfer and mortgage at the Lands Office on 24th July 2006 and the process of registration was underway culminating with the registration of the transfer and mortgage.  The transfer in favour of the 3rd Defendant was registered on 17th August 2006.  The order of injunction issued on 16th November 2006 had thus been overtaken by events and was ineffectual.  In the premises I find the particulars of fraud as against the Defendants set out in the plaint have not been proved.

Where a party alleges fraud, the burden of proof rests with the party who makes the allegation to prove fraud.  Fraud is a serious allegation and borders on criminality and it is no wonder that  proof is required to be on a standard that is higher than in civil cases where proof is on a balance of probability.  In the case of R.G Patel –vs- Lalji Makanji (1957) EA  314 cited with approval by Maraga, J (as he then was) in the case of David Mburu Kamau –vs- National Industrial Credit Bank (2010) eKLR the Court of Appeal stated:-

“Allegations of fraud must be strictly proved: although the standard of proof may not be so heavy to require proof beyond reasonable doubt, something more than a mere balance of probabilities is required”.

On the question whether or not the 1st and 2nd Defendants were in breach of the court orders issued on 10th August 2006 and 16th November 2006 when they effected the transfer of the suit property to the 3rd Defendant.  I would answer in the negative.  The evidence that the 1st Defendant  executed the transfer in favour of the 3rd Defendant on 13th July 2006 and that all the completion documents were released to the 4th Defendants Advocates on 24th July 2006 for purposes of processing the registration of the transfer and mortgage was not contraverted.  At the time the court order of 10th August 2006 was issued the documents were out of the hands of the 1st and 2nd Defendants and they had no control over them.  The registration of the transfer and mortgage had by the time been commenced with the land office by 4th Defendant’s Advocates and not by the 1st Defendant’s Advocates.  The 4th Defendant was at the time not a party to the suit and the 3rd Defendant was unaware of the suit.

Issue NO.(iii)

Having held that the plaintiffs have not proved the allegations and particulars of fraud pleaded in the plaint it follows  that the 3rd and 4th Defendants could not have acted fraudulently in causing the conveyance and the mortgage to be registered in favour of the 3rd and 4th Defendants respectively.  No evidence was tendered to show that at the time the 3rd Defendant entered into the agreement with the 1st Defendant to purchase the suit property he was aware of the 1st Defendant’s agreement with the plaintiffs over the same property.  The 3rd Defendant testified that before he entered into the sale transaction with the 1st Defendant he carried out a search on the suit property which established the suit property was free and unencumbered.

In having the suit property transferred and mortgaged in favour of the 3rd and 4th Defendants respectively the 3rd and 4th Defendants could not have acted fraudulently and neither could they have acted in breach of any court order  as no court order had been brought to their attention as at the time the transactions were effected.  The court order of 10th August 2006 was not served on either the 3rd and 4th Defendant before the transfer was registered.  Indeed the 3rd and 4th Defendants were unaware of the pendency of the instant suit at the time the transactions were taking place.  The doctrine of Lis  pendence in my view having regard to all the circumstances would be inapplicable and therefore section 52 of the Indian Transfer Act (repealed) has no application.  Though the instant suit was filed on 3rd August 2006 as indicated earlier in this judgment, the transfer of the suit property to the 3rd Defendant had been executed on 13th July 2006 and the documents passed on to the 4th Defendants Advocates to undertake the registration of the transfer and the mortgage on the 24th July 2006.  The 3rd and 4th Defendants were unaware of the suit.  It is my finding and holding therefore that the 3rd and 4th Defendants did not act fraudulently in having the transfer and mortgage registered and neither were they in breach of the court orders of 10th August 2006 and 16th November 2006.

The plaintiffs have submitted that the registration of the 3rd Defendant as the owner of the suit property should be annulled on account of the same having been obtained fraudulently and through collusion with the 1st and 2nd Defendants.  The court has made a finding that there is no evidence of fraud and/or collusion that is been tendered and proved by the plaintiffs.  The 3rd Defendant in my view was an innocent purchaser for value without any notice of any interest the plaintiffs may have had in the suit property.  The 3rd Defendant exercised due diligence in carrying out a search on the suit property which revealed no encumbrance on the property.  the 4th Defendant equally searched the property for purposes advancing facilities to the 3rd Defendant and confirmed the property had no encumbrances to inhibit the mortgage transaction.  I do not suppose the 3rd Defendant and the 4th Defendant could in the circumstances have done anything more.  The 4th Defendant infact had previous dealings with the 3rd  Defendant as they had advanced him funds against the head title and all the 4th Defendant was required to do was to issue  a partial discharge and to advance to the 3rd Defendant a mortgage to finance the purchase of the portion they were discharging.  There is no evidence tendered to suggest the 4th Defendant was aware of the transaction between the 1st Defendant and the plaintiffs.

The 3rd Defendant therefore upon registration as the owner of the suit property acquired an indefeasible title in terms of sections 24 and 25 of the Land Registration Act NO.3 of 2012.  Section 24 of the Act provides thus:-

24. Subject to this Act-

a. The registration of a person as the proprietor of land shall vest in that person the absolute ownership of that land together with all rights and privileges belonging or appurtenant thereto and

b. The registration  of a person as the proprietor of a lease shall vest in that person the leasehold interest described in the lease, together with all implied and expressed rights and privileges belonging or appurtenant thereto and subject to all implied or expressed agreements, or expressed, agreements, liabilities or incidents o the lease.

25. (1)  The rights of a proprietor whether acquired on first registration or subsequently for valuable consideration or by an order of court, shall not be liable to be defeated except as provided in this Act and shall be held by the proprietor, together with all privileges and appertenancies belonging thereto, free from all other interests and claims whatsoever, but subject

(a)  to the leases charges and other encumbrances and to the conditions and restrictions, if any, shown in the register, and

(b)  to such liabilities, rights and interests as affect the same and are declared by section 28 not to require noting on the register unless the contrary is expressed in the register.

The 3rd Defendant as the registered owner of the suit property has an absolute title to the property which cannot be challenged except under the limited conditions set out under section 26 of Land Registration Act provides:-

25. (1)  The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence that the person named as proprietor of the land is the absolute and indefeasible owner, subject to the encumbrances, easements, restrictions and conditions contained or endorsed in the certificate and the title o that proprietor shall not be subject to challenge, except-

a. On the ground of fraud or misrepresentation to which the person is proved to be a party, or

b. Where the certificate of title has acquired illegally unprocedurally or through a corrupt scheme.

The court has held that the plaintiffs have not shown and/or adduced any evidence that the Defendant was fraudulently registered as owner of the suit property and that no fraud has been proved as against the 3rd Defendant.  The 3rd Defendant’s title cannot be challenged under any of the grounds under section  26(1) of the Land Registration Act.  The plaintiffs have sought an order for the rectification of the register and/or cancellation of the title  held by the 3rd Defendant and for their names to be substituted thereof after the deletion of the 3rd Defendants name from the land register.

The circumstances under which the court can make an order for rectification or cancellation of title are spelt out under section 80 of the Land Registration Act. Section 80(2) provides:-

The register shall not be rectified to affect the title of a proprietor who is in possession and had acquired the land, lease or charge for valuable consideration, unless the proprietor had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or caused such omission, fraud or mistake or substantially contributed to it by any act, neglect or default.

There is no evidence to prove that the 3rd Defendant who is in possession had knowledge of any omission, fraud or mistake in consequence of which the rectification is sought, or that the 3rd Defendant caused such omission, fraud or mistake or substantially contributed to it by any act, neglect or default and therefore, an order for rectification cannot issue.

The court of appeal in the case of Nairobi Permanent Markets Society & 11 others -vs- Salima Enterprises & 2 others [1997]eKLR held that in the absence of any allegations of fraud or misrepresentation perpetrated by the company in the acquisition of the suit land,  the company as the registered proprietor was the absolute and indefeasible owner. InBruce Joseph Bockle -vs- Coquero Limited [2014] eKLR the court held that even if the appellant had proved fraud and illegalities, the respondent’s title could not have been nullified since the respondent was not party to the fraud or illegalities that preceded its acquisition of the suit premises nor was there prove that the respondent had knowledge of the fraud, illegalities and misrepresentations.   I am of the view that the 3rd Defendant is in a similar situation and as such the title he holds cannot be impeached there having been no fraud in its registration and he having not been party to any fraud.

Issue NO.(IV)

The issue whether or not the 2nd Defendant acted in breach of his professional fiduciary duty to the plaintiffs in the sale of property L.R. NO.7583/174 Nairobi the suit property herein is one that poses considerable difficult to determine given that the 2nd Defendant acted as advocates for the  plaintiffs in the initial sale transaction as between the plaintiffs and the 1st Defendant and further acted as Advocates for the 1st and 3rd Defendants in a subsequent sale involving the same property eliminating in the present dispute.

The plaintiffs fault the 2nd Defendant for causing the withdrawal of the caveat placed on the head title which comprised the suit property and other lands which paved the way for the registration of the 3rd Defendant as owner of the suit property.

Further the plaintiffs blame the 2nd Defendant for failing to transfer the suit property to them inspite of paying the full purchase price, the legal, fees, stamp duty and the registration charges.  The plaintiffs additionally contend the 2nd Defendant failed to ensure they were granted possession once they paid 50% of the purchase price as provided in the sale agreement.  The plaintiffs aver the 2nd Defendant failed to advise them appropriately during the conduct of the transaction and was therefore in breach of their professional and fiduciary duty to the plaintiffs and are thus liable to the plaintiffs in damages.

On the evidence presented its clear that the plaintiffs voluntarily chose to be represented in the sale transaction by the 2nd Defendant when they knew and were aware that the 2nd Defendant was the 1st Defendant’s Advocate and was representing the 1st Defendant in the sale of his parcel of land that the plaintiffs agreed to purchase.  While it is not advisable to act for both the seller and the buyer in the same transaction there is no bar for the same Advocate to act for both the seller and the buyer in the same transaction where there is no apparent conflict of interest.  It is for the Advocate to determine whether there would be any potential conflict of interest and where there is none the advocate would be free to act for and represent both the buyer and the seller.

In the present case the2nd Defendant agreed to act for both parties the plaintiffs and the 1st Defendant meaning that he owed to each of the parties professional duty of care.  In regard to the plaintiffs he owed them a duty to ensure the property they were purchasing was transferred to them against their payment of the purchase price.  And in regard to the 1st Defendant he owed him a duty of care to ensure that the full purchase price for the property was paid before being transferred out.  The 2nd Defendant therefore owed the two parties separate duties of care to safeguard their respective interests.  As regards the plaintiffs no issue would arise whether or not the 2nd Defendant had been retained since it is  admitted in evidence that the plaintiffs had in addition to the stamp duty and registration charges deposited the requisite legal fees.

It is the 2nd Defendant’s position that he was unable to complete sale in favour of the plaintiffs because they failed to complete the payment of the purchase price.  The 2nd Defendant asserted that in fulfillment of his duty as advocate for both parties he did the best he could to get the parties to resolve the matter of payment of interest to HFCK that had arisen and states that even though the plaintiffs had agreed to pay a sum of Kshs.1,000,000/- on account of interest to finalise the transaction they failed to do so and he on the instructions of the 1st Defendant notified the plaintiffs that as they had failed to complete payment of the purchase price the 1st Defendant had opted to cancel the transaction and sell the property to any other interested party and would make a refund of the deposit they had paid as  soon as the purchase price in the second sale is paid.  The 2nd Defendant stated in evidence that he did everything he could to get the transaction to get completed a fact that he stated was borne out by the fact that it took about 2 years from the date of completion of the 1st transaction before the 1st Defendant opted to sell the suit property to the 3rd Defendant.

The 2nd Defendant defended his decision to act for the 3rd party in the subsequent transaction stating that there was no conflict of interest since the 1st transaction had been cancelled and the 1st Defendant had opted to refund to the plaintiffs the purchase moneys which they had paid which amount was to come from the second sale.  On that basis the 2nd Defendant proceeded to prepare and have the agreement between the 1st Defendant and the 3rd Defendant executed and the transaction completed by the registration of the transfer of the suit property in favour of the 3rd Defendant.  The 2nd Defendant stated that the plaintiffs rejected the offer for refund of the purchase monies they had paid and instead decided to institute legal proceedings in the form of the present action.  The 2nd Defendant asserted that the plaintiffs had not in the course of the 3 years that he represented and acted for them  lodged any complaint against him in regard to the manner he was serving them and he believed they were happy with his services.

I have evaluated the evidence by the 2nd Defendant and the filed written submissions in as far as they relate to his role and conduct as an advocate for the parties.  Whereas the plaintiffs may at the tail end of the transaction have perceived as though the 2nd Defendant was leaning more in favour of the 1st Defendant in his handling of the transaction I find no evidence that can support this.  As an Advocate acting for both parties in the transaction he had to balance the interest of both parties (which in itself is a delicate act) particularly where differences of opinion have arise.  From the evidence, the 2nd Defendant attempted to get the parties to agree and he even thought they had agreed when he authored the letter of 21st May 2004 apportioning the interest.  If the parties had reached some agreement which was in effect varying the principle agreement, the 2nd Defendant ought to perhaps have prepared a deed of variation  which however was not done.  It should nonetheless be remembered that the parties more or less differed on the interpretation of clause 4(b) of the agreement and thus a deed of variation may not have been in contemplation.

In my view therefore I find and hold that in the circumstances of this matter there was no conflict of interest that could have prevented the 2nd Defendant to act for both the 1st Defendant and the plaintiff and later for the 3rd Defendant.  Indeed on the question of rescission of the agreement between the plaintiffs and the 1st Defendant it would have been advantageous for the plaintiffs for the 2nd Defendant to act for the 3rd Defendant to facilitate the refund of all the monies that they had paid to the 1st defendant.   When the matter became litigious the 2nd Defendant did not elect to act for any of the parties in the litigation as he was at any rate a party to the litigation himself.  The gist of the case of King Wollen Mills Ltd & Another –vs- Kaplan & Stratton Advocates (1990-1994) 1 EA 244 (CAK) is to the effect that-

“An advocate who has acted for two common clients cannot later act for either party in litigation when a dispute arises between the common clients concerning the original transaction or the subject matter for which he acted for the clients as a common advocate”.

The rationale for that is easy to appreciate as such an advocate would be privy to all information some of which that could have been given or availed confidentially and to allow such an advocate to act for a party for whom he has previously acted in common with the other party in litigation would be to disadvantage the other party and should not be permitted.

The plaintiffs have contended that there was infact no rescission of the agreement since rescission entails the full refund of the purchase money being made.  The 2nd Defendant asserted that  the refund had to be made out of the sale proceeds in the second transaction but stated that the plaintiffs rejected the refund and soon thereafter filed the present case which meant the refund could not be made.  The 2nd  Defendant stated that the purchase monies paid by the plaintiffs in accordance with clause 4 of the sale agreement was disbursed to the 1st Defendant or as per his instructions and that the 2nd Defendant was not constituted a stakeholder and he could thereof not hold the same in an interest earning account.

In  the premises I do not find the 2nd Defendant was in breach of any professional and/or fiduciary duty or obligation so as to be liable to the plaintiffs for damages.

Issue NO. V

The issue whether or not the plaintiffs have a cause of action against the 3rd and 4th Defendant.  The suit by the plaintiffs  against the 3rd and 4th defendants could only be sustained if it was  only be sustainable if it was established through evidence that the  3rd Defendant and the  4th Defendant had knowledge of the sale transaction between the plaintiffs and the 1st Defendant and that they connived and/or colluded with the 1st Defendant to frustrate and/or defeat  sale agreement for sale between the plaintiff and the 1st Defendant dated 28th March 2003.  The plaintiffs did not know the 3rd Defendant and neither did they deal with the 4th directly at any stage.  The payments of Kshs.110,000/- that were being remitted monthly to the 4th Defendant (HFCK) were being paid by the 2nd Defendant on behalf of the 1st Defendant and the 4th Defendant had no knowledge who was making the payments.

I have earlier in this judgment held and found that the plaintiffs did not establish or prove the particulars of fraud pleaded against the 3rd and 4th Defendants and further that the registration of the transfer in favour of the 3rd defendant and the mortgage in favour of the 4th Defendant were not effected in breach of any court order as alleged by the plaintiffs.

The court has further held and found that the 3rd Defendant was an innocent buyer for value without notice and as the registered owner his title is absolute and indefeasible and as held by this court in the case of Kent Libiso & Ano. –vs- Cilkon Trust Co. Ltd & 2 others (2013) eKLR  the 3rd Defendant’s title is in terms of section 26(1) of the Land registration Act NO. 3 of 2012 in the absence of any fraud or misrepresentation and/or it being shown that the 3rd Defendant acquired the title illegality, unprocedurally or through a corrupt scheme he holds an absolute and indefeasible title.  The 4th Defendant advanced to the 3rd defendants funds to purchase the suit property in its normal and usual course of business and had no notice of any defeat  and/or challenge to the title.  The Land Register held at the Lands Office did not show the land had any encumbrances.

On the basis of the evidence  and material presented by the parties I am satisfied the plaintiffs suit does not disclose a reasonable cause of action as against the 3rd and 4th Defendant and I so hold.

(vi)  Reliefs available to the plaintiff

a.  Specific performance

From my analysis of the issues it must have become apparent by now that an order specific performance of the agreement dated 28th March 2003 would not be available to the plaintiffs.  Although the court has made a finding that the plaintiffs were indeed not in breach of the agreement and had paid the full purchase price for the suit property it is not lost to the court that the plaintiffs and the 1st Defendant engaged in consultations on whether or not the terms of the agreement for a period of over two (2) years from the date when the contract ought to have been completed.  Although the plaintiffs were taking the position that they had fully paid the purchase price they did not serve a completion notice on the 1st Defendant to complete the transaction neither is there any evidence that they instructed their joint lawyer to serve the requisite  notice under the appropriate provisions of the Law Society conditions of sale to which the agreement was subjected.  Instead the parties continued to engage in negotiations until in June 2006 when the plaintiffs disengaged the  services of the 2nd Defendant and obtained the services of another firm of lawyers.

In my view the plaintiffs took rather too long to seek to enforce their rights under the agreement for sale dated 28th March 2006 such that by the time they moved to seek the enforcement of the contract other third parties had acquired an interest in the suit property and at the time the court orders issued on 10th August 2006 and 16th November 2006 the said third party interests had crystalised.

Once the 1st Defendant transferred the suit property to the 3rd Defendant, it meant that the 1st Defendant could not specifically perform the contract/agreement with the plaintiffs since the suit property was no longer under his control.   The court cannot make an order for specific performance when it is clear it cannot be obeyed (see the case of Amritlal –vs- City Council of Nairobi KLR (E&L)1 at page 89) where the Court of Appeal held:-

“The Appellant’s prayer for specific performance had no probability of success.  It would be impossible for the City Council to comply with an order for specific performance since it would not be able to transfer the suit land to the apparent as the legal title was held by the Government.  The effect of an order of specific performance would put the respondent in a position in which it would not obey the order of the court”.

In the present case the same position obtains as the 3rd defendant is now the registered owner and an order for specific performance would be ineffectual unless the court had found the 3rd Defendant have been fraudulently registered owner in circumstances that would have led to the annulling and cancellation of the title.  That was not the case.  The order of specific performance is equitable and is given at the discretion of the court.  In determining whether or not to grant an order of specific performance the court will usually consider all the attendant circumstances of the case including whether or not the grant of the order is likely to affect or infringe on the rights of others.

In the case of Geoffrey Kinuthia Njoroge –vs- Macro Ventures Development Ltd (2013) e KLR Judge Gitumbi held that specific performance is not granted in every case that breach it is established.  The court in determining whether to grant specific performance will firstly consider whether  damages would be an adequate remedy and secondly whether hardship is likely to be visited on the Defendant.  Maraga, J (as he then was) in the case of Reliable Electrical Engineers (K) Ltd –vs- Mantrac Kenya Ltd (2006) eKLR observed as follows:-

“Even where damages are not adequate remedy specific performance may still be refused on the ground of undue influence or where it will cause severe hardship to the Defendant”.

In our instant case the 1st Defendant would not be in a position to honour an order for specific performance and I therefore decline to grant the same.

(b)Cancellation and rectification

Cancellation of registration of 3rd Defendant as owner of the suit property was urged  by the plaintiffs.   Under the discussion and consideration of issues (ii)  and (iii) above the court has held the 3rd Defendant was a bonafide purchaser for value and no fraud on his part was proved and therefore he was properly and regularly registered as owner of the suit property.  Thus cancellation of the registration and rectification of the register by the Land Registrar is not available to the Plaintiffs.

b. Mesne profits

The plaintiffs claimed for mesne of profits of Kshs.70,000/- per month for being denied the use of the suit property.  It is unclear how the plaintiffs settled on the figure of Kshs.70,000/-.  Although the plaintiffs claim they were not granted possession the evidence as per the record was that the property was vacant and the plaintiffs were to take possession upon payment of 50% of the purchase price.  It was not explained by any evidence why the plaintiffs did not take possession yet the property was vacant.  It was not suggested that the plaintiffs sought to take possession and were prevented.  Mesne profits is in the nature of special damage and the same has to be specifically pleaded and proved.  No evidence was led to prove the Mesne profit and I hold the same was not proved and I decline to grant the same.

c. Special damages

the Plaintiffs in the alternative to specific performance have claimed special damages of Kshs.11,409,850/- in the amended plaint being the sum of money paid to the 2nd Defendant being Kshs.8,719,850 by the plaintiffs and a further sum of Kshs.2,800,000/- on account of loss of bargain being the difference of the purchase price paid by the 3rd Defendant and that plaintiffs (Kshs.11,000,000/- less Kshs.8,200,000/-).  A claim for loss of bargain is in the nature of special damages and has to be specifically proved.  Loss of bargain as in case of general damages for breach in lieu of an order of specific performance is awardable at the time of Judgment and takes into account the value of the subject at the time  of Judgment and not at the time of the breach.  See Amina Abdul Kadir Hawa –vs- Rabinder Nath Anand & Another (2012) eKLR.  In the case Nambuye, J. (as she then was) set out the principles to take into account in assessing general damages in a case where specific performance is not granted and stated thus:-

“On general damages for breach, which this court has found payable as opposed to an order for specific performance, the principles guiding its award which this court has to bear in mind when making the assessment are:-

i. These are discretionary, meaning the court has to ensure that it exercises its discretion judiciously and with a reason.

ii. They are not meant to enrich a party but to compensate him/her for the injury suffered.

iii. These should not be inordinately too low or too high”.

On the issue of the refund of the sum Kshs.8,719,850/- there can be no contest since all the parties admit the plaintiff paid this sum.  The statement by the 2nd Defendant clearly illustrated the plaintiffs paid this amount to him for the account of the 1st Defendant.  I therefore find and hold that the plaintiffs are entitled to a refund of this amount and I make an order for its payment to the plaintiffs by the 1st Defendant together with interest at the rate of 20% p.a from the month of December 2004 until payment in full.  I am mindful that the parties in agreement provided for interest for any rate payments and I am of the view any party to the agreement making any refund should do so at the interest rate that the parties agreed to be payable by the defaulting party.

d. General damages

The plaintiffs did not get the property that they contracted to purchase although they complied with their obligations under the Agreement for sale.  The 1st Defendant is liable for the breach.  A refund of the money paid by the plaintiffs alone in my view  cannot get a similar or like property in the same neighbourhood for the amount of money they paid the 1st Defendant.  The 1st Defendant in a short 2 years after the sale to the plaintiffs managed to sell the same property to the 3rd Defendant at Kshs.11,000,000/- recording an appreciation of Kshs.2,800,000/-.  This means the same land today would be much more expensive.  The plaintiffs have suffered damages and are entitled to general damages.

In making an assessment of the quantum of general damages I take consideration of the principles set out by Nabuye J. in Amina Abdul Kadir Hawa case (supra) and take cognizance of the fact that land values in Karen area where the suit property is situate have appreciated considerably since 2004 and doing the best I can I award the plaintiffs general damages as against the 1st Defendant of Kshs.8,500,000/- together with interest at court rates from the date of this judgment.

e. General damages for breach of professional and fiduciary duty on the part of 2nd Defendant.

I under consideration of issue NO.(IV) above held that the 2nd Defendant was not liable for any breach and thus no general damages are awardable against him.

f. General damages for fraud against the 3rd & 4th Defendants.

I have held the plaintiffs have not established any reasonable cause of action against the 3rdand 4th Defendants and they are therefore not liable to the plaintiffs for damages.

g. Costs:

Ordinarily costs follow the event but the same are awarded at the discretion of the court.  The plaintiffs have partially succeeded in their claims as against the 1st Defendant but have not succeeded in their claims as against the 2nd, 3rd and 4th Defendants.  In ordinary situations  the plaintiffs would be entitled to recover costs from the 1st Defendant but they would also be executed to pay costs to the 2nd,3rd and 4th Defendants as the suits against them were dismissed.  The court however notes that the3rd and 4th Defendants got involved in the suit property the subject matter of the suit following differences  between the plaintiffs and the 1st Defendant and their involvement has been vindicated by the court.

The Court having regard to all the circumstances of this matter is of the view that the Order that commends itself in regard to costs is that each party should bear their own costs of the suit.  It will be so ordered.

In the result and for all the following reasons the court enters judgment in favour of the plaintiffs as against the 1st Defendant in the following terms:-

h. Khs.8,719,850/- being refund of monies paid by the plaintiffs in the sale transaction together with interest at 20% p.a with effect from December 2004 until payment in full.

(ii)  Kshs.8,500,000/- being general damages for breach together with interest at court rates from the date of judgment until payment in full.

(iii)The plaintiffs suit against the 2nd, 3rd and 4th Defendants is hereby dismissed.

(iv)That each party shall bear their own costs of the suit.

Judgment dated signed and delivered at Nairobi this 2ND day of December  2014.

J. M. MUTUNGI

JUDGE

…………………………………………….  For the Plaintiffs

…………………………………………….  For the Defendants