Mamta Peeush Mahajan [Suing on behalf of the estate of the late Peeush Premlal Mahajan] v Yashwant Kumari Mahajan [Sued personally and as Executrix of the estate and beneficiary of the estate of the late Krishan Lal Mahajan] [2017] KEHC 2062 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

COMMERCIAL & TAX  DIVISION

CIVIL CASE NO. 571 OF 2015

MAMTA PEEUSH MAHAJAN

[Suing on behalf of the estate of the late

PEEUSH PREMLAL MAHAJAN]…………………….….PLAINTIFF

VERSUS

YASHWANT KUMARI MAHAJAN

[Sued personally and as Executrix of

the estate and beneficiary of the estate of

the late KRISHAN LAL MAHAJAN]…....……………DEFENDANT

JUDGMENT

Introduction

1. The issues that have arisen in this case are not uncommon.

2. Some legal relationships are only binding upon the parties and  enforceable by the court when reduced into writing and executed by the parties. Others need no such formalities. There is however a common misconception that documented agreements must be completed and perfected, in the sense of being signed, attested and registered to create binding obligations. This misconception may be a prudent one as proof of consensus in unfinished agreements is a daunting task. It is nonetheless a misconception.

3. The instant case is a classic example of such dilemma.

4. The Plaintiff adopts the classic approach that agreements and binding obligations may arise absent formalities. The Defendant, on the other hand, seeks to send the reminder that consensus and binding obligations only arise when the dotted line of an engrossed, not draft, document is perfected through signatures, attestation and stamping.

5. Ultimately, the crux question in this case may be stated, generally, as follows: in what circumstances will a contract be concluded when the written and signed document states it is as a draft?

Background facts

6. The Plaintiff is a widow. Admittedly, she is the Defendant’s niece. Her husband Peeush Premlal Mahajan (“Peeush”) passed on in 2015. . The Plaintiff is also the executrix of the estate of Peeush.

7. The Defendant is the widow of Krishna Lal Mahajan (“Krishna”), who passed on in 2001. The Defendant is an octogenarian. She is also the executrix of the estate of Krishna. Krishna was uncle to Peeush.

8. The facts of this dispute are uncomplicated. I detail the background infra.

9. The origin may be traced back to certain companies (“the four companies”) incorporated during the last century.

10. In 1966 Krishna together with his four brothers founded East African Growers Limited (“EAG”) as a family business venture. The Mahajan brothers also founded Wilham (Kenya) Ltd (“Wilham”) in 1987, Shalimar Flowers Ltd (“Shalimar”) in 1991 and finally Maya Investments Ltd (“Maya”) in 1993. The Mahajan brothers held shares in the four companies. The Mahajan brothers are all now deceased. Over the years however, as was allowed by the respective four companies’ Memorandum and Articles of Association (“MemArts”), the Mahajan brothers transferred shares to their off-springs. Other Mahajan family relations and spouses were also invited to the family business and into the shareholding structures.

11. The instant dispute involves two members of the wider Mahajan family.

12. Both the Plaintiff and the Defendant like their late spouses before them, hold shares in at least one of the four companies. The instant dispute however only concerns the shares of Krishna and those of the Defendant in the four companies.

The dispute

13. The dispute may be stated in the form of the parties’ respective cases as follows.

Plaintiff’s claim

14. The Plaintiff alleges in her papers that in 2012, at least two years prior to his demise, Peeush agreed with the Defendant that the Defendant would sell to Peeush the entire Defendant’s as well as Krishna’s shares in the four companies. The shares aggregated 251,665 in number. Split, they were as follows: 1 share in Wilham held by Krishna’s estate; 33,332 shares in Maya held by the estate of Krishna; 125,000 shares in EAG held by the estate of Krishna and 93,332 shares in Shalimar owned by the Defendant. They were all ordinary shares.

15. An agreement was prepared by a lawyer then working for both parties. The agreement was signed.

16. According to the Plaintiff, the agreed purchase price was Kshs. 210,000,000/=. Payment was to be split over a period of time, 6 years to be precise.  The first payment of Kshs. 8,000,000/= was to be made in 2012. Completion was to take place upon the first payment with the Defendant availing the executed share transfer forms and the original share certificates. Peeush was to be responsible for obtaining the companies Form D in respect of the shares from the four companies’ auditors. Form D is required often where shares in a  company are sold for a cash consideration. It is required for purposes of assisting the Collector of Stamp Duty to assess the stamp duty payable on the transfer of share forms.

17. The Plaintiff contends that Peeush honored his part of the bargain. After the agreement was executed in 2012, Peeush paid the Defendant Kshs 8,000,000/= and then in 2013 paid another Kshs 10,000,000/=

18. The Plaintiff contends that the Defendant however failed to honor her part of the bargain. The Defendant is accused of failing to avail the executed share transfer forms to Peeush. The Defendant is also accused of failing to avail the original share certificates to Peeush despite Peeush pressing for compliance and honour until Peeush met his demise in July 2015.

19. In her suit therefore, the Plaintiff seeks an order to compel the Defendant to perform the agreement and for that matter sign all the necessary transfer documents and take all necessary steps to ensure that the 251,665 ordinary shares in the four companies are transferred to the Plaintiff, as the executrix of the estate of Peeush.

20. According to the Plaintiff the 2012 contract was never replaced.

The Defendant’s case

21. The Defendant, by contrast, says there is no contract. She denies having freely signed the agreement in respect of the sale of shares in the four companies. The Defendant denies being obligated to complete the agreement which she says is “uncertain, null and void, meaningless and absurd”. The Defendant then insists that Peeush’s conduct would have stopped him from enforcing the signed ‘draft’ agreement.

22. The Defendant also denies the existence of a lawful binding and enforceable agreement. In particular, the Defendant points to an alleged fraud and forgery on the part of the Plaintiff. The Defendant states that the agreement was dated and stamped post-humously. The Defendant states that the date was altered from 2012 to 2015. The Defendant asserts that a date of “28 September 2015” was fraudulently inserted. The Defendant states that the agreement was only a draft to be later perfected and in thus unenforceable as it was never perfected. The Defendant also asserts that the signatures of the parties to the agreement were never witnessed. The Defendant further states that all subsequent negotiations (post 2012) vacated the agreement sought to be enforced by the Plaintiff.

23. At the evidentiary hearing, it emerged that the Defendant does not deny having signed the agreement sought to be enforced by the Plaintiff but says it was signed under duress. It also emerged that the Defendant whilst acknowledging having received Kshs. 18,000,000/= denies that it was towards the sale of the shares.

Outline

24. From the background and the parties’ respective cases and emergent dispute, I was able to isolate three main issues which I have indexed at paragraph [60] below. I shall, in outline, first determine whether or not there was any agreement between the parties for the sale of shares in the four companies and, then determine the various points of law on the validity of the agreement as raised by the Defendant.

25. First though, I summarize the evidence.

The trial’s course

26. There is not much litigation history since the filing of the claim in 2015.

27. After settlement of all preliminaries, the trial proceeded on four different days. The Plaintiff called one witness.  In rebuttal the Defendant lined up three witnesses. Both parties also adduced evidence, with the Defendant testifying through a Hindi interpreter.

28. Mr. Allen Gichuhi assisted by Mr. Emmanuel Mueke appeared for the Plaintiff while Mr. Timothy Naiku represented the Defendant.

PW1

29. The Plaintiff was the first to testify, having filed three witness statements and two bundles of documents which met with no contest from the Defendant.

30. The Plaintiff’s testimony was to the effect that as the widow of Peeush and the executrix of the estate of Peeush she was seeking to enforce an agreement for the sale of shares entered into between her deceased spouse and the Defendant for sale and purchase of shares belonging to the Defendant and the estate of Krishna.

31. To prove the agreement,  the Plaintiff produced an agreement dated 28 September 2015 but pointed out that the agreement had been signed in 2012 left undated and only dated in 2015 for purposes of stamp duty. The Plaintiff also testified that she was familiar with Peeush’s signature. To help corroborate the testimony that the agreement existed prior to 2015, the Plaintiff produced a letter by the Defendant’s counsel dated 30 August 2013 in which the Defendant’s advocates Bowry & Co. Advocates confirmed that an agreement had been signed by both Peeush and the Defendant.

32. The Plaintiff then laid out the terms of the agreement as: the sale of 251,665 ordinary shares in the four companies for a consideration of Kshs. 210,000,000/= payable over a period of six years with the initial payment of Kshs. 8,000,000/= being made in December 2012.

33. It was the Plaintiff’s testimony that the Defendant had been paid the sum of Kshs. 18,000,000/=.  In support of such testimony the Plaintiff produced cheques and Real Gross Time Payment (RTGS) advice slips. The Plaintiff proceeded that the Defendant however failed to deliver pursuant to the agreement. Instead, the Defendant engaged the late Peeush with a view to renegotiating the agreement which attempts at renegotiation collapsed prior to the demise of Peeush and parties reverted to the original terms. In this regard the Plaintiff availed various correspondence exchanged between the advocates for Peeush, Messrs Raffman Dhanji Elms and Virdee Advocates (“Raffman”) and the Defendant’s advocates Messrs Bowry & Co. Advocates (“Bowry”).

34. The Plaintiff wound up her evidence by re-stating her ability readiness and willingness to complete the agreement, while insisting that Peeush had also always been ready able and willing to complete the transaction. In this regard the Plaintiff pointed in evidence to a letter dated 15 September 2014 from Raffman where Peeush had offered to put the balance of the purchase monies in an escrow account.

35. In her evidence in chief and during cross-examination, the Plaintiff insisted that the installments of Kshs. 8,000,000/= and Kshs. 10,000,000/= had been paid by Peeush whilst also confirming that both parties had counterparts of the agreement in question. The Plaintiff also, in answer to a question in cross-examination, insisted that the delay in completion had been occasioned by the Defendant who engaged in a long re-negotiation exercise. The exercise collapsed only for the Defendant to fail to execute the share transfer forms and avail the original share certificates when called upon to do so.

36. To prove that the amount of Kshs. 18,000,000/= had been paid to the Defendant as part of the purchase price for the shares and in part performance of the agreement, the Plaintiff relied partly on PW2’s evidence.

PW2

37. PW2 was Salim Alibhai. He is a partner at PKF Kenya, a firm of auditors and tax consultants. PW2 testified that none of the four companies declared dividends during the relevant period, that is to say the period between 2011 and 2013 and thus no shareholder was paid. He also testified that PKF Kenya audited the books of EAG. He further testified that he had reviewed the books of accounts for Shalimar, Wilham, EAG as well as Maya and detected that various payments had been made from the accounts of the directors and shareholders of these companies and in particular from Peeush’s account to the Defendant.

38. According to PW2, each shareholder had funds accordingly pro-rated per the shares held and any amounts paid on such accounts would be entered into a separate ledger. In answer to a question during cross-examination, PW2 stated that he was never formally told that any of the companies were buying shares but he “was verbally told that Peeush was buying shares”.

39. During re-examination, PW2 continued that there was no resolution authorizing the payments to the Defendant but re-asserted that the payments were made by the companies on behalf of Peeush.

40. PW2 availed the audited accounts for the four companies for the relevant period and took the court through the accounts in support of his testimony.

41. PW2 was presented to the court as an expert but I must point out at this early stage of the judgment that it is trite law that a court is not bound by expert evidence. It is the court that ultimately assesses the cogency of the expert’s evidence with which the court is seized. The inferential force or weight to be placed on such evidence is broad and hinges on the mode of assessment.

DW1

42. Mr. Pravin Bowry, a seasoned advocate of this court,was the first defence witness (DW1).

43. The evidence of the DW1 adduced in court confirmed to a large extent his evidence in the 15-page witness statement filed in court on 31 January 2017, that there were negotiations between Peeush and the Defendant post 2012 and various correspondences was exchanged.

44. Mr. Bowry testified that the Defendant approached him in 2013 for independent legal advice on the sale of share transaction. He had then been acting for the Defendant in the matter of an intended Will. Understandably, DW1 did not reveal the specific advice he had given to the Defendant. DW1 however testified how he communicated and met variously with both Peeush and also with Raffman. He availed correspondence to like effect. The correspondence touched on the sale of shares. The correspondence also focused on the distribution of properties (realty) jointly owned by the Mahajan brothers.

45. DW1 testified that both Raffman and Peeush confirmed to him that the agreement signed by Peeush and the Defendant was a draft. DW1 was aware of and did not contest the fact that both Peeush and the Defendant signed the agreement. He also confirmed that on 6 August 2013 he urged Peeush to have a “dialogue on the shares”. He confirmed that after various correspondence, meetings and engagements the transfer of the properties was finalized but not the issue of sale of shares. The negotiations in DW1’s testimony collapsed even after the parties had exchanged fresh draft contracts and a new price of Kshs. 240,000,000/= had been proposed.

46. In cross-examination, DW1 did not deny being aware that the agreement which he consistently referred to as “the draft” had been signed by both Peeush and the Defendant. DW1 however bemoaned the lengthy and unending negotiations. DW1 insisted that Peeush had never paid the Kshs. 18,000,000/= but confirmed that the Defendant was aware of Raffman’s letter dated 1 April 2015 which had insisted that the sale of share transaction be completed on the original terms but had declined to so complete the transaction.

DW2

47. DW2 was the Defendant herself. She testified through a Hindi interpreter. She endured full examination in chief not having been in a position to confirm the contents of her witness statement filed in court on 19 January 2016.

48. DW2 was adamant in her evidence that there was no binding and enforceable agreement. She willfully confirmed having signed an agreement which she identified in her bundle of documents but insisted that she never had an agreement with Peeush. She also denied the contents of the agreement. She complained the agreement constituted a forgery due to the date inserted of 28 September 2015 and the non-initialized page 1 and the further fact that there was no attestation of signatures.

49. Both in her direct evidence and in cross-examination, DW2 confirmed signing and initializing the agreement. DW2 also confirmed receipt of Kshs. 18,000,000/=, which she gleefully confirmed having spent. DW2 stated that she received the amount of Kshs. 18,000,000/= from the three companies (Shalimar, Wilham and EAG) and partly in cash, having been informed that she would get Kshs. 210,000,000/=. She was adamant that the amount was not for the sale of shares. She additionally testified that after she took a copy of the agreement to Bowry in 2013, she engaged Peeush through meetings, negotiations, correspondence and intermediaries, including through her son-in-law, to have another agreement signed but by the time of the demise of Peeush in 2015, none had been signed.

50. In cross examination, DW2 confirmed her ability to write and speak English. She also admitted that there was no evidence before the court to show that she had been forced by Peeush to sign the agreement.

51. Finally, in answer to a question whether Peeush gave a counterpart of the contract, DW2 answered in the affirmative and further stated she kept ‘it in the cupboard and later gave it’ to her daughter Chander.

DW3

52. Mrs. Chander Rajeshwar Sahi was the third witness called by the Defendant. She is the Defendant’s daughter. She had filed a witness statement on 19 January 2016 which she adopted.

53. In her oral testimony, she bluntly told of the acrimony between and among the Mahajan family members after the demise of Krishna. DW3 denied having been aware of any sale of shares agreement between Peeush and the Defendant until a meeting held at Bowry’s offices in August 2013 revealed the same.

DW4

54. Next was Rajeshwar Sahi (DW4). He is the Defendant’s son-in-law.

55. DW4’s evidence did not miss controversy.

56. First, he was a late-entrant witness. His witness statement was only filed on 12 April 2017 after  an opposed application,  made long after the case had been confirmed for trial, was allowed.  In court, on the trial day four, a portion of his documentary evidence was objected to.  I expunged the documents from the record. The documents in question constituted electronic documents in the nature of a computer out-put but no certificate of proof signed pursuant to Section 106B(4) of the Evidence Act (Cap 80) had been availed. His evidence was not however very contentious.

57. DW4 testified how the Defendant had confided in him that whilst in need of money, the Defendant had approached Peeush for help and Peeush had forced the Defendant to execute the sale of shares agreement in 2012. DW4 also testified on how he was involved in the negotiations to revise the terms of agreement. When asked what role he played, DW4 referred to the fact that he had objected to the original purchase price of Kshs. 210,000,000/= in the revised agreement(s) as the price was supposed to (now) be Kshs. 240,000,000/-

Filed Submissions

58. At the end of the hearing, I directed the parties to file submissions which they did. But even after filing counsel was not able to address me due to time limitations which continue to rip through our judicial process. I am thankful however for the extensive manner in which both counsel dealt with the identified issues in this case in their respective submissions.

59. I will now examine the issues in light of the evidence adduced both during the evidentiary hearings and on written statements as I also consider all the submissions made by the parties.

Discussion and Determination

60. From the pleadings, evidence and submissions,  I was able to isolate the following three issues (the parties were also generally in unison regarding the same):

60. 1   Was there a valid and enforceable agreement for the sale of the   Defendant’s shares and Krishna’s shares in the four companies to Peeush ?

60. 2   Was there any part-performance of the agreement?

60. 3   Is the Plaintiff entitled to an order for specific performance and, if so, on what terms.

61. I will deal with the issues seriatim.

The tale of a draft agreement

62. The Plaintiff’s case was and is simple.

63. There is in place a contract signed by the Defendant and Peeush. It is dated 28 September 2015 but only because stamp duty had to be paid. The contract was made in 2012. It is valid and enforceable. 251,655 Ordinary shares were to be transferred to Peeush for an agreed consideration of Kshs. 210,000,000/=. The contract included a schedule of payments.

64. The Plaintiff testified to like effect. PW2 also testified that he was aware, having been verbally told upon enquiry as an auditor of one of the four companies, that Peeush was buying the shares. The Plaintiff placed a composite reliance on the fact that the agreement had been signed by both parties.

65. In support of the contention that there was a valid agreement, the Plaintiff’s counsel, submitted that all the three essentials requirements of a valid contract had been met. According to counsel there was offer and acceptance to sell and purchase. There was also an agreed consideration of Kshs. 210,000,000/=. To counsel, the offer and acceptance was signaled when the Defendant signed  the agreement. Counsel relied on the cases of Charles Mwirigi Miriti v Thananga Tea Growers Sacco Ltd & Another [2014] eKLRand also Karmali Tarmohammed & Another v I.H Lakham & Company [1958] EA 567 for the proposition that offer and acceptance supported with consideration equate a contract. Additionally, counsel pointed to the fact of payment to the Defendant of Kshs. 18,000,000/= as evidence of the acceptance.

66. Counsel referred to the recent English Court of Appeal decision of Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443for the proposition that even a draft agreement which is signed has a binding effect and force, to counter the Defendants contention that what was signed was just “a draft”. In Reveille Independent LLCit was stated that:

“… a draft agreement can have contractual force, although the parties do not comply with a requirement that to be binding it must be signed, if essentially all the terms have been agreed and their subsequent conduct indicates this, albeit a court will not reach this conclusion lightly”.

67. The Defendant’s rebuttal was simple.

68. Though she had signed an agreement it was only a draft which was not binding. Her tale of the draft did not end there. During the evidentiary hearing, DW4 introduced a new version of defense. The Defendant, it was said, had executed the agreement under duress. The Defendant also added that the dating of the agreement was a forgery.

69. In his submissions, counsel for the Defendant reiterated the position taken by the Defendant, that the draft agreement did not constitute an agreement. Counsel then submitted that the Defendant who was advanced in age and illiterate was not aware of the sale transaction even when she signed the agreement and could not thus be held to it.

70. Additionally, counsel submitted that the negotiations subsequent to the execution of the agreement illustrated that the Defendant was never bound by the agreement signed in 2012. Counsel referred to the 27th Ed of Chitty on Contracts Vol. 1 on continuing negotiations, for the proposition that when parties carry on lengthy negotiations it is hard to confirm when an offer has been made and accepted and that the court is then duty bound to look at the correspondence and decide whether on its true construction the parties had agreed.

71. It was also Counsel’s submissions that there existed no agreement as the signed agreement was not only a draft but had not been dated and neither was the signature witnessed.

72. Counsel then relied on the case of Wallis v Learonal (UK) PLC [2003] EWCA Civ 98for the proposition that legal relations could only be presumed once the existence of a valid agreement was established and that no valid agreement could be established in the instant case as there were too many factors which had not been established as agreed upon. Besides, added counsel, there was no meeting of the minds in the instant case given the circumstances that led to signing of the sale of shares agreement.

Some legal principles

73. It is convenient to start by setting out some relatively uncontroversial propositions of law.

74. I start by quoting the very relevant words of Steyn LJ in G. Percy Trentham Ltd v Archital Luxfer Ltd [1993] 1 Lloyds Rep 25. Lord Steyn said:

“…It is important to consider briefly the approach to be adopted to the issue of contract formation ... It seems to me that four matters are of importance. The first is that… law generally adopts an objective theory of contract formation. That means that in practice our law generally ignores the subjective expectations and the unexpressed reservations of the parties. Instead the governing criterion is the reasonable expectations of honest men. … that means that the yardstick is the reasonable expectations of sensible businessmen. Secondly it is true that the coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to have been made by an exchange of correspondence. But it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance. SeeBrogden –v- Metropolitan Railway [1877] 2 AC 666; New Zealand Shipping Co Ltd v A M Satterthwaite & Co. Ltd. [1974] 1 Lloyd’s Rep. 534 at p.539 col.1 [1975] AC 154 at p. 167 D-E; Gibson v. Manchester City Council [1979] 1 WLR 294. The third matter is the impact of the fact that the transaction is executed rather than executory. It is a consideration of the first importance on a number of levels.See British Bank for Foreign Trade Ltd. v. Novinex [1949] 1 KB 628 at p. 630. The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised in negotiations as inessential. In this case fully executed transactions are under consideration. Clearly, similar considerations may sometimes be relevant in partly executed transactions. Fourthly, if a contract only comes into existence during and as a result of performance of the transaction it will frequently be possible to hold that the contract impliedly and retrospectively covers pre-contractual performance. SeeTrollope & Colls Ltd. v. Atomic Power Constructions Ltd. [1963] 1 WLR 333. ”

75. The Supreme Court of the United Kingdom later stated as follows in the case ofRTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co KG (UK Production) [2010] UKSC14,[45]:

“The general principles are not in doubt. Whether there is a binding contract between the parties and, if so, upon what terms depends upon what they have agreed. It depends not upon their subjective state of mind, but upon a consideration of what was communicated between them by words or conduct, and whether that leads objectively to a conclusion that they intended to create legal relations and had agreed upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations. Even if certain terms of economic or other significance to the parties have not been finalised, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a precondition to a concluded and legally binding agreement.”

76. The case law may only be of persuasive value but they set out sound and the correct legal principles applicable to common law jurisdictions on contract law. My task is evidently to review what the parties said and did and from the material before me to infer whether there existed an objective intention as expressed to each other to have a mutually binding contract. I may not impose the subjective thoughts of the parties.

77. In the course of evidence tendered in her support and written arguments by her counsel, the Defendant raised a new line of defence. The Defendant brought forth factors which always tend to defeat contractual liability or obligations. The vitiating factors which emerged from the Defence evidence were illegality, duress, fraud, undue influence, non-est-factum and unconscionable bargain. Duress was raised when DW4 testified, while undue influence and unconscionable bargain were raised for the first time by the Defendant’s counsel in his written submissions filed on 21 July 2017. They had not been pleaded.

78. I have no doubt that factors which vitiate contracts or defeat contractual liability constitute appropriate defences to any claim for specific performance. They ought to be pleaded with specific particularity. Where they are not even generally pleaded a party should not be allowed to lead evidence on the same or even raise such factors after closure of trial. The essence of pleadings being to enable each party to be aware of the case he or she faces and to prepare an answer to the same.

79.  Submissions of course do not constitute evidence. Besides, the court should not make findings on matters not pleaded: see Anthony Francis Wareham & Others vKenya Post Office Savings Bank CACA No 5 & 48 of 2002. I must therefore shortly and quickly deal with the factors raised by the Defendant’s counsel only in his submissions by disregarding the alleged undue influence and unconscionable bargain.

80. With regard to non-est-factumand duress which appeared in the course of the evidence of DW2 and DW4, I will consider the same at the end of this part of the judgment. I will then also determine the corollary issue of fraud, in the context of validity of the agreement.

81. It is common cause and trite law that not all agreements need be in writing. An agreement will be deemed duly formed and binding where there consideration in present and accepted having been offered. An agreement need not be in any special form or in writing unless statute expressly provides for it: see for example the Law of Contract Act (Cap 23), the Hire Purchase Act (Cap 507), the Bills of Exchange Act (Cap 27)and the Marine Insurance Act (Cap 390).

82. Where therefore parties reach an agreement on all the terms of contract they regard (or the law requires) as essential, a contract is deemed to have been formed. What is essential is the legal minimum to create a contract. These are the intention to create legal obligations and consideration. Other terms are secondary as far as formation of a contract is concerned. The reason is that the law does not require commercially sound terms or sensible terms. Parties may agree to any terms and the court will, once it is shown that the parties agreed and valid consideration exists, always hold the parties to their bargain. The court will not seek re-write the contract for the parties: see National Bank of Kenya Ltd vPipe Plastic Samkolit (K) Ltd & Another [2002] EA 503.

83. There are certain relevant common cause facts in this case.

84. The parties are in agreement that Peeush and the Defendant signed the agreement now dated 28 September 2015. The parties are also in agreement that the signing took place in 2012, not 2015. The signatures were not witnessed. The agreement provided for the sale to and purchase by Peeush of 251,665 shares ordinary shares in the four companies for a consideration of Kshs. 210,000,000/=.

Signatures, formalities and MemArts in the sale of shares

85. As I understand it, one of the core functions of a signature is to indicate that the parties whose signatures are applied to the document have read, understood and agreed to the terms of the agreement. A signature is one of the factors which prove and establish both offer and acceptance but not necessarily validity of a contract.

86. In the instant case both parties signed the agreement. It was an agreement for the sale of shares. There is no requirement in law that such agreement be in any prescribed form. I have also perused the MemArt of each of the four companies, which were produced in evidence by the Defendant in her first bundle of documents filed on 19 January 2016. There is no mandatory requirement under any of the MemArts that any sale of shares in any of the four companies be in writing.

87. The only requirement in law under the Companies Act (Cap 486) (now repealed but which was the statute in force at the time of the transaction) is that the instrument of transfer of shares be in a prescribed form. Likewise, s.54 of the Companies Act (now repealed) also requires the Company and parties dealing or trading their shares to file a formal return to the Registrar of Companies in a prescribed form (Form 221) providing particulars of the shares allotted for any cash consideration. Under the same statute,s.77 the transfer of shares was complete only when a formal and proper transfer instrument was lodged with the registrar of companies. This was notwithstanding any particular clauses in the MemArt.

88. The MemArt of each of the four companies also expected the party selling the shares to notify the individual company of the sale. There is no requirement for an agreement in writing. Effectively, Peeush and the Defendant could even have agreed orally and executed only the transfer of share(s) form. They opted to have their agreement in writing and signed a written document.

Of attestation

89. The agreement executed by both Peeush and the Defendant was also not executed in the presence of any attesting witness(es). Again, there is no requirement in law or under the MemArts that an agreement for sale of shares be executed in the presence of an attesting witness. Want of attestation would therefore not void such an agreement.

90. It is the want of attestation which is cited by the Defendant in support of her line of defence that the agreement executed by herself and Peeush was only a draft and thus not binding. The mere lack of attestation of signature to an agreement for the sale of shares does not void or invalidate such an agreement. Generally as well, attestation is necessary in some but not all agreements. It is not a pre-condition, in my view, to the existence of contractual obligations or relations. It operates as an assertion that one signed an agreement and is not necessary (unless the statute dictates otherwise) where the execution or signing is not denied.

Admission of a draft and the negotiations

91. To advance her line of defence that the agreement was a draft and thus not binding the Plaintiff also tendered evidence not only to show that Raffman had agreed that the agreement was a draft but that the parties engaged in negotiations subsequent to the execution.

92. It is true both parties engaged in negotiations from 2013. A plethora of correspondence was availed to the court by both the Plaintiff and the Defendant.

93. I may perhaps point out that an offer in a draft contract may be accepted even when not signed. It is all a matter of fact and the signing of a draft document only adds to show fact of acceptance and establishment of legal obligations. Thus in Brodgen v Metropolitan Railway Company [1876-77] L.R 2 App Cas 666, an English case which stands for the general proposition that a contract can be accepted by the conduct of parties, the claimant altered a draft coal supply agreement sent to him by the Defendant and returned it signed. The Defendant put it in a drawer and did not sign. The parties then had coal supplied and paid for. When a dispute arose the claimant argued that he was not bound by the agreement. The court held that there was a contract which came into existence after the coal was supplied and received but not earlier.

94. I would state that the same position still obtains nearly 150 years later. The mere fact that the parties sign a draft agreement and actually accept that it is a draft agreement of itself does not mean an agreement exists. Neither does it also mean that an agreement does not exist. What matters and is crucial are the events succeeding such signatures and especially the conduct of the parties.

95. In these respects, I find that the evidence of events after the execution of the agreement in 2012 by Peeush and the Defendant, is just as relevant as any evidence of events at the time of execution.

A myriad of letters

96. The evidence of events post-execution constituted mainly exchanged correspondence. The letters detailed how the parties engaged in relation to the ‘draft’ agreement. The evidence of events at time of execution relate to some of the vitiating factors. I will consider the former evidence first.

97. The documentary evidence availed and agreed to by parties mainly constitute correspondence exchanged between the parties’ advocates. The correspondence mainly focused on the distribution of 7 (seven) real properties registered in the names of the now deceased Mahajan brothers.  The letters which may be found in both bundles reveal that the meetings and exchanges focused on these seven properties. There was also discussion on the shares, the subject of this dispute.

98. I found the letters bearing the following dates to be relevant: Letter of 3 July 2013, 30 August 2013, 19 September 2013, 25  September 2013, 21 March 2014, 3 October 2014, 3 November 2014, 6 November 2014, 17 November 2014, 26 November 2014, 2 December 2014, 25 March 2015, 1 April 2015 and 19 May 2015. I detail and analyze them below.

99. I begin with the letter dated 3rd July 2013 by Bowry. It sought details from Peeush of properties owned by the Defendant to assist in the drafting of the Defendant’s Will. In part,  the letter stated:

“…We have been shown a signed, but undated, unstamped, unwitnessed Sale Agreement drawn by Raffman Dhanji Elms & Virdee. We are sure[sic]you have a fully executed copy of the same. Can we have the same.

We hope you will be able to comply with the terms of the Agreement”.

100. The letter of 3 July 2013 acknowledged the existence of the agreement. The letter also implored Peeush to ultimately complete the agreement. It was, in my view, not just an acknowledgment but also a confirmation that there was in place an agreement which needed to be completed. It is to be noted that the letter did not question or challenge the agreement.

101. Bowry was later to loop onto this letter with the letter dated 30 August 2013 to Raffman. The latter letter partly stated as follows:

“…Secondly, in the matters relating to businesses and companies. Knowing the background and the fact that your firm indeed drafted a draft agreement (which was “signed”) can we contrive to perfect the agreement and its terms afresh with the intention that our client exits from all the family companies”.

102. This letter of 30 August 2013, in my, again confirmed that an agreement had been negotiated and signed by both Peeush and the Defendant. The letter sought to have the terms re-negotiated of the agreement. And like the letter of 3 July 2013 to Peeush the letter did not offer resistance to the agreement. It sought to have the terms re-negotiated with the sole intention of the Defendant wholly exiting the four companies, amongst others.

103. Raffman’s response, relevant to the dispute herein, is contained in a letter to Bowry dated 19 September 2013. In their letter Raffman, included the following:

“With regard to the companies, our client proposes a meeting between the various parties to discuss matters further and agree on the way forward. In this regard could your client please review the audited accounts provided to her in our last meeting so that she may appreciate the financial position of the companies”.

Raffman and Peeush to whom the letter had been copied, effectively agreed to a meeting to discuss “matters further and agree the way forward”. Thus far, the only matters the Defendant had raised concerning the companies was to do with the sale of shares agreement. Raffman and Peeush were willing to discuss this further and, in my view, to assist the Defendant in such discussions urged the Defendant to review and appreciate the audited accounts.

104. The letter of 19 September 2013, in my view, confirmed the parties agreement to re-negotiate.

105. The next relevant letter in the series is the letter of 25 September 2013. It was drafted by Bowry to Raffman. Bowry, essentially confirmed that the Defendant was amenable to a meeting as suggested by Raffman (in the letter of 19 September 2013) but urged that the meeting be an internal matter chaired perhaps led by “a trusted elder of the family or community”. Bowry also sought to know if the draft agreement was going to be the basis of the meeting.

106. Following a series of correspondence and documents exchanged a meeting was finally held on 20 March 2014.

107. I have reviewed and analyzed the correspondence and documents exchanged in the intervening period after 25 September 2013 but before 20 March 2014. They relate mainly to the seven real properties (LR. Nos. 209/7445-7450 and 7452 inclusive), save for email messages seeking to convene and confirm the meeting of 20 March 2014.

108. On 21 March 2014, Raffman confirmed the meeting of 20 March  2014. With regard to the sale of shares agreement Raffman captured the issue as follows:

“With regard to the sale of Shares Agreement that had been executed by your client, could you please review the same and let us have your proposed amendments and comments to the same in order to move ahead”.

109. This was, in my view, an indication of Peeush’s willingness to re-negotiate the terms of the signed agreement.

110. On 3 October 2014 Raffman wrote to Bowry. Concerning the agreement, the letter read as follows:

“We refer to previous correspondence regarding the above matter.

Our client has informed us that a number of meetings have been held between him and Mrs. Rohini Bhasin, your client’s daughter, at which the consideration of Kshs. 210,000,000 for the transfer of your client’s shares in the four companies (Shalimar Flowers (K) Limited, Maya Investments Limited, East African Growers Limited and Wilham (K) Limited was agreed.

Given your client’s concern about payment of this amount over a period of time, our client suggests that the transfers of the shares be dealt with by four separate agreements.

In the first instance, our client suggests that we deal with the shares in Shalimar Flowers (K) Limited. In that regard, we enclose a draft of the Agreement, for your approval or comments. You will note that the completion period has been reduced for your client’s benefit, as she will now receive the consideration for the transfer of the shares much sooner, as she had wanted. Agreements for the other Companies will be in similar form.

We look forward to hearing from you further”.

111. The letter of 3 October 2014 confirmed the meetings which involved the sale of shares. The letter reconfirmed the parties’ agreement on the purchase price. The letter also suggested that      the parties had agreed to have separate agreements.

112. I will however impose little emphasis on this letter. The meetings referred to were not attended by the Defendant. Peeush met with one of the Defendant’s daughters Rohini Bhasin. There is no indication that Ms. Bhasin held a Power of Attorney from the Defendant at the material time. She was also not one of the witnesses before me. The letter however points to the fact that the parties were indeed talking even if through emissaries.

113. On 3 November 2014, Bowry wrote to Raffman. Urging that the issue of distribution of the 7 real properties be dealt with simultaneously with the sale of shares. Bowry also asked Raffman to forward the final draft of the sale of shares agreement.

114. Again, the letter of 3 November 2014 confirmed that the parties were talking and discussing the sale of shares. None of the parties       had bolted.

115. A couple of days later on 6 November 2014, Raffman forwarded to Bowry the sale of shares agreement and sought their approval. The letter of 6 November 2014 partly stated as follows:

“… In the meantime, we enclose a draft of the sale of Shares Agreement for the four (4) companies for your approval”.

116. The letter of 6 November 2014 confirmed the on-going negotiations. Such negotiations continued through 17 November 2014 when Bowry now wrote to Raffman and in part stated:

“… please confirm if your client has agreed, as we are informed by our client, that Kshs. 92,000,000/= will be paid forthwith and the balance will be by way of transfer of one of the company properties at the Airport.

This we believe is the new proposal”.

117. There was an instant reply by Raffman. It read as follows (in part):

“We refer to the above matter and acknowledge receipt of your letter dated 17th November 2014.

…

With regard to the transfer of shares, our instructions are that if your client wishes to have one Agreement for the same, then this will have to be completed once the loan over the airport property is fully repaid. Alternatively, there can be two (2) Agreements; one for the transfer of the shares in Shalimar Flowers (K) Limited, Wilham (K) Limited and Maya Investments Limited for the consideration of Kshs. 92,000,000. With regard to the second Agreement and in order to avoid any further delays, our client proposes that the same be drafted by yourselves to provide that our client will transfer the airport building for a price of Kshs. 100,000,000 (with all costs, including stamp duty on the same to your client’s account) and, in return, your client will transfer her shares in East African Growers Limited. Please confirm…”

118. The letters of 17 November 2014, in my view, not only confirmed the parties intention to sell and purchase the shares but also the       price of Kshs. 210,000,000/=. The letters also exhibited an    appreciation by Peeush of the Defendant’s wish to change the     nature of the consideration and time of payment.

119. Bowry was to later respond on 26 November 2014 and state as      follows:

“We reiterate that in our considered view all agreements must be executed simultaneously. As we perceive the matter, the agreements can be executed for the properties and for the sale of shares once the precise terms are agreed.

As we notified Mr. Virdee, the precise terms of the agreement remains the prerogative of our respective clients. Midstream, the parties seem to have at least discussed the payment of Kshs. 100,000,000 balance not by cash but by way of sale of a property called the “Airport” property. We need to have a sight of the title documents, the search, the details of tenants etc”.

120. However, on the same day Raffman responded and stated in part as      follows:

“1. Sale of shares

Due to delays on this matter, our client is now not willing to sell or transfer the airport property. In that regard, we have instructions to revert to the earlier Agreement where our client purchases shares in each company”.

121. The two letters of 26 November 2014 were to the effect that there were attempts to re-negotiate the nature of the consideration which collapsed.  The use of the phrase “revert to” was to clearly pass the message that Peeush would now stand by the earlier agreement     and not abandon it altogether.

122. Matters did not end there. On 2 December 2014 Raffman wrote to Bowry thus [partly] :

“1. Sale of shares

Our respective clients have agreed for the transfer of the shares in Shalimar Flowers (K) Ltd, Wilham (K) Ltd and Maya Investments Ltd for the consideration of Kshs. 110,000,000/=. We enclose the amended agreement, with amendments tracked for ease of reference, for your approval with regard to the second agreement for the transfer of shares in East African Growers Limited, this will be dealt with by the parties at a later stage”.

123. Evidently, the negotiations had not collapsed. The parties however went into a lull until 25 March 2015.  Bowry was not to let sleeping dogs lie. He wrote to Raffman indicating that the Defendant had a third party interested in purchasing the shares in the three companies. Bowry requested Raffman to confirm if Peeush was ready to waive the pre-emptive rights and or to consent to a value of the companies on market value.

124. The letter of 29 March 2015, prompted Raffman to write to Bowry as follows on 1 April 2015 [ in part]

“With regard to the sale of Shares Agreement, our clients position is that he has been in negotiation with yours on the same for many years now. Your client has confirmed to us numerous times that she is ready to sign the Agreement. As such, our client is no longer interested in any further discussions or negotiations on the same.

Our instructions are that the agreed price for the sale of shares remains at Kshs. 210,000,000/=.

Our client will make payment of the remaining balance once the sale of Shares Agreement has been executed by both parties. The onus is now on your client to finalize this matter”.

125. The import of this letter, in my view, was that Peeush was to pay the balance of the purchase price immediately. This appears have been the only variation.

126. One and half months later on 19 May 2015, Bowry replied. He asked for the agreements for the sale of shares “to put the matter to rest once and for all”. Bowry pointed out that it was DW4 who had intervened and the parties agreed.

127. The negotiations from a reading of the letters of 1 April 2015 and 15 May 2015 had collapsed. Cumulatively the following may be easily deduced and I do so.

128. Attempts to review the value and nature of consideration had not succeeded. Attempts to revisit the period of payment too had failed. The number of shares to be sold and transferred stuck at 251,655. The price was not revised to Kshs. 240,000,000/=. It remained at the old amount of  Kshs. 210,000,000/=. The Defendant through Bowry’s letter of 19 May 2015 confirmed that the agreement to sell the shares at the price stood put. Peeush too had on 1 April 2015 confirmed that the position was the same as it was before: 251,655 ordinary shares for Kshs. 210,000,000/=. Through the letters the Defendant was also resigned to the fact that the only balance now due was Kshs 192,000,000/=. The essentials of a contract were intact. The nuts and bolts, it may be said, were also not missing. The parties wanted to complete.

129. It is also not lost to the court that the draft agreements exchanged during negotiations did not vary or amend any essential. They only attempted to split the agreement and reduce the completion periods. They never increased the shares to be sold or decrease the same. They neither reduced nor increased the consideration payable.

130. In my view, it is not only the correspondence that was of import after 2012. There were other factors.

131. While the correspondence was critical to show whether the agreement was re-negotiated, the parties’ conduct post 2012 cannot be ignored.

132. The conduct may also be gathered from the correspondence. It is clear from the correspondence that Peeush always wanted to complete the agreement. It is also clear that the Defendant too wanted to pull through with the sale of shares. There was an “inexplicable reluctance” though on the Defendant’s part. There was an issue with the period of completion. The original agreement provided that Peeush would pay the purchase price over a period of 5 years .Peeush was willing to consider this. There was   an issue with the nature of consideration. Peeush was originally willing to consider all these until he seemingly got tired. I find that the conduct of both parties pointed to one of completion rather than avoidance. It was only about the nuts and bolts being tightened and not the essentials of the agreement being vacated.

133. I have not gathered from the evidence of any of witnesses any suggestion that the agreement signed in draft was incomplete or that the terms were uncertain. As the parties’ conduct appeared to reveal an intention to complete the transaction, I have reason to hold that the Plaintiff has shown to my satisfaction that the draft agreement signed by the parties constituted a binding agreement between them. I hold so.

134. The correspondence after 2012 was not about acceptance but evidence that the parties believed that there was a binding contract in place and they now wanted to vary the same with respect to payment details and days, value of consideration,nature of consideration and sooner completion. The attempted variation however collapsed and left intact was again the original contract.

135. It leads me to the vitiating factors raised by the Defendant.

Fraud, misrepresentation, illegality, duress, et al

136. It is trite that once the defendant’s signature is proved or admitted the plaintiff has discharged his or her burden and the burden is then on the Defendant to prove fraud, misrepresentation, illegality, duress or whatever defence he or she might have. The burden likewise shifts once it is shown that an agreement, oral or otherwise, exists.

137. In this instance, the Defendant during her evidence confirmed having signed the sale of Shares Agreement. She however denied that she knew what it was all about despite confirming that Peeush had informed her that she would get Kshs. 210,000,000/=. Then DW4 testified that the Defendant had been forced to sign the agreement. In answer to a question in re-examination, DW4 stated that it was the Defendant who had informed him that she had signed the agreement under duress.

138. By duress is meant the compulsion under which a person acts through fear of personal suffering, as from injury to the body from confinement, actual or threatened: see Halsbury’s Law of England 3rd Ed Vol 8 para 146. Duress essentially occurs where a party to contract has coerced the other and exercised domination as to undermine the others independence of decision substantially. It is all about illegitimate or unlawful pressure. Where proven, the related contract is deemed voidable.

139. Duress and its particulars should however be pleaded and the particulars proven at trial. This was not the case in the instant case. It marked a departure from the pleadings when DW4 pursued this line in evidence.

140. The Defendant, both in her evidence orally before the court and in her witness statement, made no mention of duress or coercion by Peeush. Instead, it was DW4’s hearsay testimony that brought up the issue. There was however no description of the alleged     duress.

141. I find that the Defendant did not sign the agreement under any form of duress.

142. It leads me to the issue of non est factum.

143. Again the Defendant testified that the Defendant signed the agreement without knowledge of what she was signing.

144. I do not believe that this defence of non est factum, which was not specifically pleaded, is open to the Defendant. First it is important to point out that the defence of non-est-factum (it is not my deed) is not one to be accepted lightly in the absence of clear proof. If it were to be so, commerce would suffer and uncertainty would reign. Parties to contracts would simply disown their signature by asserting that they did not understand that which they signed. It is thus critical that one must show that which he intended to sign and that which he actually signed. The Defendant has not shown that which she intended to sign and mistakenly did not sign.

145. The Defendant’s counsel submitted that the Defendant was an elderly lady who did not understand or comprehend the English language. Reliance was placed upon the fact that the Defendant testified through an interpreter.

146. I watched the Defendant as she took the witness stand for two consecutive trial dates. She struck me as relatively focused and alert. She answered questions put to her with relative ease. I however also observed that she was also evasive and hence part of her testimony was contradicted by her own witnesses. At the start of the Defendant’s testimony, I asked the Defendant why she needed a Hindi interpreter. Her answer was that she felt more comfortable testifying in Hindi. DW3 was however later to testify that her mother (the Defendant) spoke and understood English. I am not convinced that the Defendant does not appreciate or understand the English language as submitted by her counsel.

147. I also found it hard to comprehend how the Defendant would consistently be signing documents written in English and then disown the same so shortly thereafter. She signed a Power of Attorney in favour of DW3 and DW4 then appeared to doubt it while acknowledging it. She also signed the witness statement and again disowned it. I am not convinced that when the Defendant signed the agreement in 2012 she had no idea what she was signing or doing.

148. Additionally, the judicial nature of the defence of duress which the Defendant sought to rely upon also dictates that a person subjected to duress or undue influence be fully aware of the terms of contract he is coerced to enter. It would beat logic consequently to deem the Defendant as not having known about the transaction with Peeush in 2012 and at the same     time reflect that the Defendant was coerced into the contract. In my view, the defences of duress, undue influence and non-est-factumwere all after- thoughts. They lacked the proper basis and have indeed not been proven to my satisfaction.

149. There still remains the defence of fraud. Fraud must be specifically pleaded with particulars and proven: see Koinange & Others v Koinange [1986] KLR 23, Okere v Kiiyukia & others [2007] 1 EA 304.

150. The Defendant pleaded fraud. The particulars were however only that the year of the draft agreement signed by both parties was changed from 2012 to 2015. Secondly, was that the agreement was dated. Finally, it was stated, that the Defendant’s initials had been omitted or obliterated from page 1 of the document.

151. The agreement executed by the parties speaks for itself. It is true that the date of 28 September 2015 was inserted by the Plaintiff’s counsel.

152. Fraud, I must state, is proven when it is “shown that a false representation has been made, (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless, whether it be true or false”: see Derry –v Peek [1990] 14 A.C 337, 334. It is an act of dishonesty which is set or intended to mislead and which a party acts upon.

153. I do not view it that there was any act of dishonesty fetched on the Defendant by the Plaintiff and intended to mislead either the Defendant or the court. The Plaintiff owned up that the date was inserted for purposes of the Stamp Duty Act (Cap 480) so as to be able to present the document in court as evidence. The Defendant’s complaint may actually be thus appropriately dealt with as it was not intended to claim that an agreement had been executed in 2015. Indeed, the Plaintiff avers in the Plaint that the agreement was made in 2012. The date was inserted for purpose of stamping to enable the document be tendered in evidence as failure to pay duty on agreements or transactional documents generally render such documents inadmissible in any court proceedings for the enforcement of any contractual obligation. The court itself would have ordered the document to be stamped and, more importantly, both parties agree that the document was originally not dated.  The process of paying stamp duty enjoins the presenter of the document to date the document.

154. I have looked at both agreements produced by the parties in evidence. Page 1 of both documents has the Defendant’s initials. The allegation that the Plaintiff omitted or obliterated the Defendant’s initials is not well founded. I only add an accusation of fraud is a relatively serious issue and it is thus not necessary to plead fraud unless there is clear and sufficient material evidence to support it. This was lacking in the instant case.

155. I find that the Defendant has in this case not proven any of the vitiating factors.

Part Performance

156. The second issue was whether there was part-performance of the agreement.

157. According to the Plaintiff, Peeush performed part of the agreement entered into in 2012 by paying the Defendant Kshs. 18,000,000/= which was the prescribed deposit amount. It is common cause and admitted by the Defendant that the amount was paid to and received by the Defendant.

158. The Plaintiff contended that payment by Peeush of the amount of Kshs. 18,000,000/= which was acknowledged by the Defendant constituted executed consideration making agreement binding. For this proposition counsel relied on paragraph 308 in 5th Edition of Halsbury’s Law     of England Vol 22,as cited in the case of Charles Murigi Miriti v Thananga Tea Growers Sacco Ltd & Another  [2014] e KLR.

159. The Defendant as already pointed out, admitted receiving the Kshs. 18,000,000/=. It was however the Defendant’s contention that the payment was never made by the Peeush but rather a third party in the form of the three companies where the Defendant and Peeush were shareholders. The Defendant’s submission in this        regard was that there was no evidence to show that Peeush paid the amount of Kshs 18,000,000/=.

160. The part performance copiously referred to by both counsel in the instant case was not the equivalent of incomplete performance or substantial performance. It was about partial performance of Peeush’s legal obligations. Under the draft agreement. The Plaintiff asserted that such partial performance was further evidence of the existence of an agreement between Peeush and the Defendant. That the partial performance by Peeush and acceptance of monies by the Defendant was clear evidence of the parties intention to be bound as under the agreement Peeush was expected to pay the Defendant the amount of Kshs. 18,000,000/= in 2012 and 2013. Peeush did so within the fixed time under the Schedule to the agreement. The payment in 2013 further kept the contract alive.

161. On the face of the documentation availed by the parties in evidence, the payment was made through cheques written and drawn on the two companies and bank electronic transfers from the accounts of EAG. Additionally, a portion was paid in cash.

162. The Plaintiff called PW2 to prove support and explain the contention that the payment of the Kshs. 18,000,000/= to the Defendant was by the companies on behalf of and for the benefit of Peeush. PW2 is an accountant by profession and an expert in auditing and taxation matters. He was called by the Plaintiff as an expert witness. The qualifications, standing and experience  of  PW2 as an expert were not in dispute. I shall thus not go into any details thereof.

163. PW2 filed a witness statement. PW2 also filed audited accounts for the four companies. He confirmed that he had seen and reviewed the accounts. He took the court through the accounts and stated that the four companies had during the years 2012 and 2013 (or 2011) made no profit and therefore no dividends had been declared. PW2 explained that the directors held accounts from which funds could be drawn and monies paid on their behalf. PW2 also testified that there was no charge in the company share capital.

164. PW2’s evidence in court was that the amount of Kshs. 18,000,000/= had been paid on behalf of Peeush by the three companies from Peeush’s account which had been detailed accordingly. PW2 explained that there was no need for a board resolution before making such payment as the monies, strictly speaking, belonged to Peeush’s funds.

165. It is trite law that a court is not bound by an expert’s opinion: see Shah v Shah [2003] 1 EA 290andKimani v R [2000] 2 EA 417. It is the court that ultimately assesses the cogency of the expert’s evidence in the contextual and factual matrix of the case. The court may reject it if it is not based on sound grounds. As it were,expert evidence is currently also admissible on fairly simple rules of evidence under Section 48 of the Evidence Act (Cap 80). This affords the court broad discretionary powers to consider it along other evidence.

166. It is not in my view enough to simply say that an expert’s opinion evidence may only be challenged and rejected when another expert testifies as was submitted by the Plaintiff’s counsel. It all depends on the circumstances of each case and the factual matrix.

167. In so far as is relevant to the payment of Kshs. 18,000,000/=, the factual matrix and evidence is as follows.

168. The Defendant admitted receipt of Kshs. 18,000,000/= paid in quick succession between December 2012 and January 2013. DW4 testified that the Defendant had confirmed to him that the Defendant was in dire need of cash and had been to see Peeush. The financial statements of the four companies did not reveal any profit to warrant dividends to one shareholder worth Kshs. 18,000,000/=. In the subsequent negotiations involving the Defendant and Peeush as well as their lawyers not once was the amount of Kshs. 18,000,000/= disputed as having constituted part of the purchase price. Even the draft agreements forwarded to the Defendant’s lawyers on 15 September 2014 reflected the amount of Kshs. 18,000,000/= as having been paid.

169. PW2 did not even make it as a probability but was firm that this amount of just under Kshs. 18,000,000/= was paid for, on behalf of and to the benefit of Peeush and not the three payee companies. Through the audited accounts he explained what his forensics had revealed. He revealed that there was cross accounting which led him to the account and funds of Peeush within the companies’ accounts. He confirmed that this sort of arrangement is an internal matter which is relatively common in private companies.

170. I am persuaded that PW2’s evidence treated together with the documentary evidence available including the correspondence exchanged proves that Peeush paid the Defendant the amount of Kshs. 18,000,000/= in partial satisfaction and performance of the obligations of Peeush under the agreement between the parties for the sale of shares. This is conduct consistent with a person keen in pursuing a specific legal obligation and right. The acceptance of this sum which the Defendant freely admitted also established conduct in harmony or consistent with a person who had bound herself to a legal obligation.

171. The payment and the acceptance both exhibited earnest conduct on the part of either party to perform an agreement. It is also not lost to me that none of the parties in the course of their fairly protracted negotiations at any one time questioned the payment of Kshs. 18,000,000/=. Quite the contrary, the draft agreements exchanged in the course of such negotiations pointed to and acknowledged this amount as having been paid as earnest.

172. In the end, I accept the evidence of PW2 as credible and not from a ‘hired gun’ or a ‘hanger-on’ : see Lord Woolf in his 1995 report ‘Access to Civil Justice’ Lord, 1995 p. 183 and also Sir George Jessell MR  in the case Abringer v Ashton [1873] 17 LR Eq 358,374. PW2 gave his opinion based on the facts and company records. His evidence was, without contradiction, clear as to where the money came from. His evidence was also clear as to whose money it was and on whose benefit it was paid. It is also not lost to the court that the Defendant received a portion of the eighteen million in cash.

Breach of contract

173. Did the Defendant meet her legal obligations under the agreement?

174. I have found that there was an agreement for the sale of shares between Peeush and the Defendant. I have also found that the agreement was not and is not vitiated by any factor, including the alleged fraud, duress and the doctrine of non-est-factum.I have finally also found that there was partial performance of the agreement when an amount of Kshs. 18,000,0000/= was paid to the Defendant which the Defendant accepted. Under the agreement, the Defendant was then to avail to the Plaintiff executed share transfer forms and the original share certificates. The Plaintiff says the Defendant never did so. The Defendant confirms as much.

175. The Defendant was to have delivered the completion documents upon the first payment which was made in 2012/2013. It is however to be noted that in 2013 the parties engaged with a view to renegotiating some of the terms of the agreement. The negotiations as I have already found were never about whether or not to   complete the agreement but when and how. I do not therefore agree with the Plaintiff’s counsel that there was default in 2012 or 2013.

176. The negotiations collapsed in or about April 2015. Shortly, thereafter Peeush passed on. Demand to complete was then made in October 2015. The Defendant did not heed the demand. There was then default.

177. Even though the Defendant failed to deliver the completion documents, default on her part only occurred after the negotiations collapsed and there was demand. I so find there was default in on the part of the Defendant 2015.

178. The Plaintiff now seeks that the Defendant be ordered to make good her default and specifically perform the agreement by delivery of the completion documents.

Conclusion and disposal

179. The Plaintiff has in my view proven her case on a balance of probabilities. There were three distinct possibilities in this case: one, there was no contract, two there was a contract indeed and, three, there was a contract but on other terms. On the totality of the evidence and the circumstances of this case, it would be unrealistic to conclude that the parties never intended to complete the shares transaction. I have from the totality of the evidence concluded that the parties intended to be bound and wanted a contract in writing which they got and signed and exchanged. Their intention never ultimately took any other turn but to ultimately complete.

180. I am satisfied that the demise of Peeush did not frustrate the agreement. The agreement provided that the purchaser’s or vendor’s interest would also vest in his or her personal representative /executor. The Plaintiff is admittedly the executor of Peeush’s estate. She would be entitled to enforce the agreement. I am likewise satisfied that there was a binding agreement for the sale of shares in the four companies. The correspondence reveal as much. The conduct of the parties also point to existence of a contract. The parties attempted to renegotiate the same but the negotiations fell through. I am also satisfied that no vitiating factor has been proven by the Defendant. Instead the Defendant has been shown to have breached the agreement.

181. I am aware that specific performance is a discretionary remedy. The court has a choice and is entitled to consider whether it would be fair to grant it in any particular circumstances.

182. In the instant case, the subject matter of the agreement sought to be enforced were ordinary shares in private family companies. Shares constitute to any owner a unique asset of unique value depending on how the company is managed. I also take into account the Defendant’s conduct and position. Upon the transfer of shares the Defendant will exit the company and Plaintiff stays. It would not be tenable to order the Defendant to pay damages and still have both the Defendant and the Plaintiff run and manage the companies. It would mark the beginning of the end of the companies to the detriment of the other shareholders. Finally, the Defendants obligations under the agreement for the sale of shares are sufficiently clear. The Defendant was to deliver the transfer of share instruments and the original share certificates upon payment of the initial amount which, as I have found, was paid to her in 2012/2013. I am of the view that this is a case where specific performance would be appropriate.

183. It however still leaves me with the Plaintiff. The Plaintiff has performed her obligations under the contract but only partially. There is still an amount of Kshs. 192,000,000/= outstanding. If roles were to be reversed, the Defendant would be entitled to enforce a claim for this amount in exchange of the completion documents. Under the agreement however such payment would only be enforceable in the year 2018 (see the schedule of payments). I have however inferred that the sooner the contract is performed the better. The Plaintiff also testified that she was ready able and willing to complete the agreement and I will hold her to her word.

184. Business sense would dictate that completion be met by both parties forthwith and not in 2018. I would consequently make the following orders in favour of the successful Plaintiff:

185. There shall issue an order of specific performance on the following terms

i. The Defendant shall forthwith deliver to the Plaintiff the original certificate for the 1 Ordinary share in Wilham Kenya Limited in the name of the estate of Krishna Lal Mahajan and a Transfer of Share instrument of the said shares duly executed by the Defendant to the Plaintiff.

ii. The Defendant shall forthwith deliver to the Plaintiff the original certificate for the 33,332 Ordinary shares in Maya Investments Limited in the name of the estate of Krishna Lal Mahajan and a Transfer of Share instrument of the said shares duly executed by the Defendant to the Plaintiff.

iii. The Defendant shall forthwith deliver to the Plaintiff the original certificate for the 125,000 Ordinary shares in East African Growers Limited in the name of the estate of Krishna Lal Mahajan and a Transfer of Share instrument of the said shares duly executed by the Defendant to the Plaintiff.

iv. The Defendant shall deliver to the Plaintiff the original certificate for the 93,332 Ordinary shares in Shalimar Flowers Kenya Limited in the name of the Defendant and a Transfer of Share instrument of the said shares duly executed by the Defendant to the Plaintiff.

v. The advocates for the Plaintiff shall hold the said Original Share Certificates and the Transfer of Share Instruments delivered under (i),(ii),(iii) and (iv) above on an undertaking as stake holders pending payment by the Plaintiff to the Defendant of the sum of Kshs 192,000,000/= and which sum shall be paid in any event prior to the 15th  day of December 2017.

vi. The Defendant shall pay the Plaintiff the costs of this suit to be taxed if not agreed.

186. Decree accordingly.

Signed, delivered and dated at Nairobi this   9th day of November 2017

J. L. ONGUTO

Judge