Njuguna t/a Propensity Properties Consultants v Githunguri & another [2023] KEHC 26582 (KLR) | Agency Contracts | Esheria

Njuguna t/a Propensity Properties Consultants v Githunguri & another [2023] KEHC 26582 (KLR)

Full Case Text

Njuguna t/a Propensity Properties Consultants v Githunguri & another (Civil Suit 129 of 2010) [2023] KEHC 26582 (KLR) (Commercial & Admiralty) (8 December 2023) (Judgment)

Neutral citation: [2023] KEHC 26582 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Admiralty

Civil Suit 129 of 2010

A Mshila, J

December 8, 2023

Between

Francis Ben Njuguna T/A Propensity Properties Consultants

Plaintiff

and

Hon. Stanley M Githunguri

1st Defendant

Tassia Coffee Estate Ltd

2nd Defendant

Judgment

1. The Plaintiff brought this suit against the Defendants claiming agency commission of Kshs.79,000,000/- arising out of an agency agreement for the sale of two properties, L.R No.10916 measuring 510 acres and L.R No.4299 measuring 280 acres. He contended that in October 2007 the Defendants jointly and severally through the 1st Defendant allegedly instructed him to seek for purchasers for the two properties at Kshs.650,000/- per acre. It was agreed that the Plaintiff would be paid a commission of 3% of the total purchase price.

2. The Plaintiff began working on the instructions by receiving offers on the properties, vetting the potential buyers’ capability to purchase and updating the Defendants on the progress. In November, 2008, the 1st Defendant on his and on behalf of the 2nd Defendant changed the purchase price from Kshs.650,000/- per acre to Kshs.1,200,000 per acre but retained the commission at 3% of the total purchase price. The Plaintiff managed to procure a purchaser who was willing to buy the properties at Kshs.1,300,000/- per acre. Later the 1st Defendant on his own behalf and on behalf of the 2nd Defendant agreed with the Plaintiff to change the commission from 3% of the total purchase price to Kshs.100,000/- per acre, totaling to a commission of Kshs.79,000,000/-.

3. The Plaintiff organized meetings between the Defendants and the potential purchaser in which the Defendants and the purchaser agreed on a purchase price of Kshs.1,500,000/- per acre. The Plaintiff received a letter of offer which he relayed to the Defendants. The Defendants accepted the offer.

4. Subsequently a sale agreement was entered into between the Defendants and the purchaser’s investment company, Milele Investment Company. When the Plaintiff requested for the payment of the agreed commission, the 1st Defendant on his behalf and on behalf of the 2nd Defendant refused to pay and stated that the Plaintiff was not part of the transaction. This precipitated the instant suit for breach of contract for the commission of Kshs.79,000,000/-.

The Defence 5. The Defendants filed a statement of defence dated 9th April, 2010 stating that the affairs of the 2nd Defendant are conducted through company resolutions and no such resolution was made to engage either the Plaintiff or the 1st Defendant. The purchase price was not varied as alleged by the Plaintiff. There was no agency agreement and that the purchaser, the Presbyterian Church of East Africa (hereinafter referred to as the church), approached and engaged the Defendants directly.

6. Without prejudice to the preceding averments, the initial agreement between the Defendants and the church was that the properties would be sold at Kshs.1,300,000/- per acre and upon payment of 10% of the purchase price the purchaser was to pay the balance within 3 months. The purchaser did not make the payments as agreed and the transaction was cancelled. Consequently if the Plaintiff had any interest in the initial transaction, the said interest lapsed when the transaction was cancelled.

7. The Defendants received fresh offers and settled on one by Milele Ventures Ltd for Kshs.1,500,000/- per acre. L.R No.10916 measuring 510 and L.R 4299 measuring 280 are no longer separate properties as alleged by the Plaintiff but were amalgamated to one property being L.R 28328 which was further subdivided into smaller portions. In the absence of an agreement between the Plaintiff and the Defendants, no commission was payable.

The Evidence 8. PW1, the Plaintiff, stated that that he is an estate agent registered under the Estates Agent Registration Board. In mid-2007 the 1st Defendant instructed him to offer for sale 2 parcels of land, LR No. 10916 and L.R No.4299. The 1st Defendant is the chairman of the 2nd Defendant. The Plaintiff and the 1st Defendant first met at Nairobi Safari Club and later at the 1st Defendant’s offices where he was given the properties’ title deeds, status reports and a development plan. The Plaintiff started scouting for buyers. The 1st Defendant advised the Plaintiff that the sale should be discreet without any open advertisements.

9. The first potential buyer was an Arab whom the Plaintiff later realized had no capacity to buy after several meetings with him and upon sharing of the outcomes of the meetings with the 1st Defendant. The Plaintiff continued to receive many letters of offer which he shared with the 1st Defendant. He evaluated the offers and in December, 2008 he settled on one by the name PCEA Church Kambui Presbytery.

10. He arranged a meeting between the representatives of the church and the 1st Defendant on 23rd December, 2008 at Agip House. Parties agreed that the purchase price would be Kshs. 1. 3 million per acre. The 1st Defendant informed the church representatives that they would only deal with the Plaintiff regarding the transaction. The 1st Defendant checked the church’s ability to pay the purchase price. Equity Bank called the 1st Defendant and informed him that the bank would finance the church for the transaction. On 29th December, 2008 the church wrote to the Plaintiff confirming the purchase. This letter was followed by another one dated 30th December, 2008 detailing the precise reference of the properties and the purchase price. The church later wrote to the 1st Defendant on 23rd January, 2009 confirming the transaction. The church also forwarded the financier’s commitment letter dated 7th February, 2009 to the Plaintiff.

11. The Plaintiff received a letter dated 12th February, 2009 from the church indicating that the church headquarters wished to take over the negotiations from the local parish. The Plaintiff relayed this information to the 1st Defendant and arranged a meeting on 16th February, 2009. In a letter dated 12th February, 2009 the Plaintiff reiterated the agreed commission to be Kshs.100,000 per acre.

12. The firm of advocates, Theuri Advocates, later wrote to the Plaintiff stating that it would act for the purchaser in the transaction. The Plaintiff passed on all the necessary documents to the said advocates to do the necesary legal paper work.

13. The Plaintiff later realized that the purchaser was now one Milele Ventures Ltd which was indeed a venture of the church. Some of the directors of the company were among the attendees of the sale negotiation meetings. The properties were transferred to the company and the Plaintiff wrote a letter dated 19th November, 2009 requesting for his commission. The 1st Defendant’s advocates replied that the transaction in which the Plaintiff was involved in had been repudiated and that the Plaintiff was not part of subsequent negotiations and transaction. Although he wrote subsequent letters to both the 1st Defendant and the advocates, he did not receive any further reply on the commission. He later learnt that the property was sold at Kshs.1. 5 million per acre making his commission to be Kshs. 79,000,000/-.

14. In cross-examination, the Plaintiff agreed that he had no documents to show that he was requested to find buyers for the properties. He had no records of negotiations of his commission. The offers that he procured on behalf of the Defendants and sent to the 1st Defendant did not bear stamps of the recipient. The letter from Equity Bank was addressed to the church and the Plaintiff was not copied.

15. The minutes of the meeting with church members and the 1st Defendant were written by the Plaintiff and not countersigned by other attendees. The letters dated 15th May, 2009 repudiating the contract from the Defendants to the Defendant’s advocates were not copied to the Plaintiff. None of the documents produced by the Plaintiff emanated from Milele Ventures Ltd. He admitted receiving a letter from the Defendant’s advocates dated 18th May, 2009 indicating that the transaction had been repudiated but still went forward to request for his commission via a letter dated 8th December, 2009.

16. In re-examination he stated that he did not have any documents from the 1st Defendant because the transaction was supposed to be discreet. He only knew of the repudiation on 25th November, 2009. Theuri advocates were the only lawyers involved and were acting for Milele Ventures Ltd.

17. PW2 was a member of the church. He stated that between 2008-2009 the church started looking for a project to invest in. He was appointed the Treasurer of the team mandated to look for land to invest in. A person known as David Kihara directed them to one Owen Ngethe who told them that the 1st Defendant had property for sale in Ruiru. They couldn’t reach the 1st Defendant but someone introduced them to the Plaintiff who helped them to arrange a meeting with the 1st Defendant on 23rd December, 2008 at the Agip House, the 1st Defendant’s office.

18. The 1st Defendant informed the representatives of the church that he would only sell the property through the Plaintiff. The purchase price was agreed at Kshs. 1. 3 million per acre. The church had problems raising the purchase price. Equity Bank informed the church that it was not possible give a loan directly to the church but it could offer a loan through individuals in the church. The church representatives registered Milele Ventures Ltd as a vehicle to acquire the loan. The directors and shareholders of the company are church members from the church headquarter and the local presbytery.

19. In cross-examination, PW2 stated that although they agreed to pay 10% of the purchase price on the 23rd December, 2008 meeting, he did not know whether the amount was paid by the church or by Milele Ventures Ltd. He agreed that the church and the company were not the same. He accepted that the first payment cheque bounced. He stated that this made the 1st Defendant angry but he did not cancel the transaction. Every subsequent meeting with the 1st Defendant was through the Plaintiff. The purchase price was later raised from Kshs.1. 3 million per acre to Kshs.1. 5 million per acre. In re-examination, he stated that prior to the alleged repudiation on 15th May, 2009 the church had paid Kshs.50,000,000/- and a cheque for Kshs.40,000,000 bounced leaving Kshs.10,000,000.

20. PW3 adopted his witness statement dated 24th January, 2012 as part of the evidence. He stated that he was a PCEA church elder and part of the committee selected to purchase land. He referred to the letter dated 29th December, 2008 addressed to the 1st Defendant in which the church offered to buy the 1st Defendant’s land. He identified the Plaintiff as the 1st Defendant’s agent. He referred to the offer letter dated 29th December, 2008 addressed to the 1st Defendant through the Plaintiff in which the church proposed to buy the property at Kshs.1. 3 million per acre. The Plaintiff gave the church representatives details of the property which measured 790 acres.

21. PW3 stated that they wrote a letter dated 23rd January, 2009 offering to purchase the property at a total purchase price of Kshs.1. 027 billion. Equity Bank informed them that the bank could not finance the church but advised them to form a company. They formed Milele Ventures Ltd for that purpose. He stated that all the directors of the company were members of the church and were well known to him.

22. DW1 adopted her witness statement dated 6th May, 2016 as evidence. In the said statement, DW1 averred that in 2009 she was approached by one Owen Ngethe who introduced some clients from the Presbyterian Church seeking to buy land from the 1st Defendant. She agreed to represent the clients who wanted to buy the property through an entity called Milele Ventures Limited. She was informed that the directors of the company had met the 1st Defendant and had agreed on the purchase price. The said Owen Ngethe informed DW1 that he was a sales agent and that he was working with the Plaintiff.

23. The 1st Defendant later instructed DW1 to act for him in the transaction. The property measured 790 acres. L.R 10916 belonged to the 1st Defendant and measured 510 acres and LR 4299 measuring 280 acres belonged to Tassia Coffee Estate Limited where the 1st Defendant was the majority shareholder and the beneficial owner of the company. On 13th March, 2009 the Defendants separately entered into a sale agreement for the sale of the entire land for a total of Kshs. 1. 027 billion. The purchaser paid a total of Kshs. 50,000,000 in two cheques- one for Kshs.40,000,000 and another for Kshs.10,000,000. The Kshs.40,000,000 cheque bounced. The 1st Defendant wrote to DW1 informing her of the bounced cheque and that he wished to cancel the transaction.

24. The church pleaded with DW1 to convince the 1st Defendant to re-open negotiations. This was because the purchaser, Milele Ventures Ltd had already started receiving payment from third party purchasers and some of these third parties had already taken possession of their parcels. The 1st Defendant agreed to re-open negotiations on fresh terms. On 23rd July, 2009 the 2nd Defendant entered into a sale agreement with Milele Ventures Ltd for Kshs.420,000,000 over LR 4299. On 15th August, 2009 (sic) the 1st Defendant entered into a. sale agreement with Milele Ventures Ltd for Kshs. 1,020,000,000 over LR 1096. DW1 represented all the parties in both transactions.

25. In testimony DW1 verified that the actual purchase price was a total of Kshs.1. 44 billion. In cross-examination she stated that the initial sale agreement was not concluded and that there was notice of rescission. The agent cannot be entitled to commission if the sale is incomplete. She admitted that she did not formally tell her client that the sale had been cancelled.

26. DW2 adopted her witness statement dated 29th November, 2018 as part of the evidence. She stated that she was the Personal Secretary of the 1st Defenant. For a transaction of over Kshs.1 Billion, her boss could not have proceeded without a written agreement. The 1st Defendant swore an affidavit dated 9th April 2010 in which he denied having instructed the Plaintiff as an agent in the sale of land. The Plaintiff has not exhibited any agency agreement between himself and the Defendants showing the Defendants’ acceptance of the alleged terms of agency. The sale agreement dated 13th March 2009 upon which the Plaintiff based his claim was rescinded by the 1st Defendant on 15th May, 2009 due to a bounced check by the purchasers.

27. In cross-examination, DW2 admitted that she did not have a power of attorney from the 1st Defendant and that she was not a director of the 2nd Defendant. She agreed she did not know more on the matter. She confirmed from documents presented in ELC 825/2013 that the 1st Defendant received payment on 16th March 2009. She contradicted DW1 that the 1st Defendant did not receive Kshs.1. 44 billion.

28. DW3 was Registrar of Estate Agency board who made reference to the letter dated 12th February 2013 and testified that the Plaintiff did not have a practicing licence for the period between 2007 to 2009. The Plaintiff paid up amount owing of Kshs.28,500/- on 20th March 2013. In cross-examination, DW3 stated that she was familiar with the provisions of section12(2) (b) of the Estate Agents Act. The section bars the Registrar from appearing in a matter where the Registrar is not a party unless ordered by court for special cause.

29. In reference to a letter dated 28th February, 2019 from the Estate Registrar of the Estate Agents Board, she admitted that the Plaintiff’s current status is that he is active and has not been struck off. She agreed that she was aware of L.N No. 20 of 1989 but did not know that prior to 1989 which it was not mandatory for estate agents to take out an annual licence. She agreed that Section 8A of the Act which made it mandatory to have an annual licence was repealed in 2001. Section 8A was therefore not in operation between 2007 and 2009, during the period of the impugned sale transactions. In re-examination, DW3 stated that Section 12 (2)(b) of the Act allowed her to testify since there was leave of court. Further Section (8)(4) requiring estates agents to renew their registration every year had not been repealed.

Written Submissions 30. At the end of each party’s case, counsel filed and exchanged written submissions which were highlighted as follows;-

The Plaintiff’s Submissions 31. The Plaintiff’s counsel submitted that the Plaintiff was a registered estate agent and was engaged as the sole agent to look for a purchaser for the Defendant’s parcels of land, L.R No.10916 measuring 510 acres and L.R No.4299 measuring 280 acres, all adding up to 790 acres. The 1st Defendant on his own behalf and on behalf of the 2nd Defendant agreed to pay Kshs.100,000 per acre as commission totaling to Kshs. 79,000,000. There were previous discussions with the 1st Defendant on the commission but the parties eventually agreed that the same be Kshs.100,000 per acre. The property was to be sold to the purchaser PCEA Church through Milele Ventures Ltd.

32. The PCEA Church made an offer through a letter dated 29th December 2008 to the 1st Defendant through the Plaintiff at Kshs.1,300,000 per acre. The Plaintiff advised PCEA church to amend the offer and produce evidence of availability of funds to purchase the property. The church followed the advice and wrote a letter dated 23rd January 2009. The church further sent another letter dated 12th February 2009 to the 1st Defendant through the Plaintiff indicating financial accommodation by Equity Bank Ltd. In a letter dated 7th February, 2009, the bank stated that it would not directly give a loan to the bank but could be given a loan through a company formed by individual members of the church. The church officials consequently formed Milele Ventures Ltd.

33. Following a meeting arranged by the Plaintiff on 16th February, 2009 involving the Plaintiff, the 1st Defendants and the church officials, Milele Ventures Ltd requested for the necessary documents from the Plaintiff to enable their advocates to draft the sale agreement. The Defendant’s advocate testified that the actual amount that the 1st Defendant received as a total purchase price for the property was Kshs. 1,440,000,000.

34. The Defendants stated that the initial agreement with Milele Ventures Ltd was frustrated and fresh negotiations were conducted. New terms were arrived at and the purchase price was raised from Kshs.1,300,000 to Kshs. 1,500,000 per acre. This indicates that there was no new sale agreement but only the price changed. In fact when the purchasers failed to pay the agreed purchase price, the Defendants sued Milele Ventures Ltd based on the initial sale agreement dated 13th March, 2009 in ELC No.825 of 2013. DW1 and DW2 herein confirmed that no refund of the deposit was made to the purchasers despite the fact the Defendants alleged cancellation of the initial contract.

35. The Plaintiff submitted that it is wrong for the defendants to receive payment through the instrumentality of the Plaintiff as their agent and refuse to pay him his commission. The Defendants rely on the lack of a written agency agreement. The Plaintiff testified that he had known the 1st Defendant for a long time and in dealings the 1st Defendant was averse to written undertakings unless it was highly necessary like execution of a sale agreement. A contract can be inferred from the conduct of the parties. The Plaintiff relied on UK Supreme Court decision in Wells v Devani (2019) UKSC 4 where the court held the following after upholding an oral agreement in favour of an estate agent against a landlord;-“Courts are reluctant to find an agreement is too vague or uncertain to be enforced where it is found that the parties had the intention of being contractually bound and have acted on their agreement. In this case it would naturally be understood that payment would become due on completion and made from the proceeds of the sale.”

36. On failure of the Defendants to produce evidence to support their defense, the Plaintiff relied on the Court of Appeal decision in Douglas Odhiambo Apel & Another v Telcom Kenya Ltd where the court observed that a plaintiff is under duty to present evidence to prove his claim. The Court was of the view that such proof cannot be supplied by the pleadings or submissions because cases are decided on evidence that is adduced.

37. The Defendants averred that the initial agreement was cancelled on 15th May, 2009 and that a fresh one was negotiated without the Plaintiff and was entered into in July, 2009. The Plaintiff would still be entitled to his commission because the period from cancellation of the contract to negotiating a new one is barely 3 months. Rule 3 of the Estate Agents (Remuneration) Rules 1987 provides as follows;-“If a sale of property, whether arranged or not, is effected within three months after the withdrawal of instructions but to a party originally introduced by the agent, commission on price realized shall be payable to the agent on the appropriate scale, in which any fee for non-scale shall merge in then payable”

38. The Plaintiff also relied on Rule 5 which provides that a special fee or commission may be agreed for sole agency instructions. The Plaintiff submitted that he had agreed with the 1st Defendant on his own behalf and on behalf of the 2nd Defendant for a commission of Kshs.100,000 per acre totaling to Kshs. 79,000,000. Alternatively, the court is still at liberty to award the Plaintiff 3% of the purchase in accordance with Scale 1 of the Estate Agents (Remuneration Rules) 1987. The Defendant’s advocates for the transaction testified that the Defendants received a total of Kshs.1,440,000,000. This means that the Plaintiff would be entitled to Kshs.43,200,000 being 3% of the total purchase price. The Plaintiff also prayed for interest at court’s rates from the date of filing suit to payment in full and costs of the suit.

The Defendants’ Submissions 39. The Defendants submitted that the Plaintiff did not differentiate the commission amounts claimed from each Defendant despite the fact that the two are separate entities. One would have to guess how the liability would be shared between the parties if proved. The Plaintiff claims existence of agency not only between himself and the Defendants but also between the 1st and 2nd Defendant. Both the alleged agency relationships do not exists in law and in fact.

40. There is no proof that the 2nd Defendant instructed the 1st Defendant to act on its behalf. The affairs of the 2nd Defendant can only be carried out through company resolutions and no such resolution was made to engage either the Plaintiff or the 1st Defendant. The Plaintiff’s claim is illegal since evidence was produced to show that for the period between 2007 and 2009 the Plaintiff was not authorized to practice as an estate agent.

41. The Defendants relied on Directline Assurance Company Ltd v Tomson Ondimu (2019) eKLR to support its position that the 2nd Defendant being a limited liability company that it could only act through its organs namely the board of directors and shareholders as evidenced by past resolutions. The Plaintiff had wrongly treated 1st and 2nd Defendants as one and that any could bind the other. The claim against the 2nd Defendant must fail for want of proof to show that the 2nd Defendant passed a resolution appointing the Plaintiff as its agent or that it authorized the 1st Defendant to engage the Plaintiff as the 2nd Defendant’s agent.

42. The Plaintiff’s claim against the 1st Defendant must also fail because of lack of evidence of the alleged oral contract made on an unspecified date in October, 2007. There is no evidence of a meeting of minds or offer and acceptance. The Defendants relied on Vincent M. Kimwele v Diamond Shield International Ltd (2018)eKLR and Carlill v Carbolic Smoke Ball Company (1892) EWCA Civ for the position that the law of contract requires that there must be an offer and acceptance for the formation of a legally binding contract.

43. Assuming that there was a binding oral contract between the parties, there was no proof of performance to warrant payment of a commission. The Plaintiff did not prove that he and he alone identified and introduced the purchaser and the sale was complete. The Plaintiff’s own letter dated 19th November 2009 refers to “I and the selling team” meaning there were other agents. In any event the initial transaction in which the Plaintiff was involved was cancelled due to the purchaser’s default and the Plaintiff was informed via a letter dated 25th November, 2009 by the parties’ mutual advocate. The contract was renegotiated afresh on separate terms without the Plaintiff.

44. The Plaintiff was not licenced or authorized to carry out the work of real estate agents for the years between 2007 and 2009 and hence his claim was illegal. The Defendants cited Mapis Investment (K) Ltd v Kenya Railways Corporation (2006)eKLRC where the court held against an estate agent who was claiming fees but had failed to prove that he was registered under Cap 533 contrary to Section 18 of the Act. The Defendants submitted that the Plaintiff’s case should be dismissed with costs for illegality and want of proof.

Issues For Determination 45. This matter raises the following germane issues for determination;-a.Whether there was an agency contract between (i) the 1st Defendant and the Plaintiff and (ii) between the 2nd Defendant and the Plaintiff;b.Whether the agency contract if proved between any of the involved parties was performed and whether there was breach of the contract;c.If either a) or b) is proved, is the Plaintiff’s claim illegal for want of a practicing licence or registration at the time he engaged in the transactions?d.The requisite damages in case of breach;

Analysis Whether There Was An Agency Contract Between (i) The 1st Defendant And The Plaintiff And (ii) Between The 2nd Defendant And The Plaintiff; 46. The Plaintiff averred that he was approached by the 1st Defendant in mid 2007 to procure purchasers for 2 parcels of land, L.R 10916 and L.R 4299. He started marketing the properties and met various potential buyers. His instructions were that the transaction should be discreet so he did not openly advertise the properties. His commission was to be paid per acre and the total acreage of the properties was 790. They had various discussions on the amount of commission per acre but eventually agreed that he would be paid Kshs.100,000 per acre making his total commission to be Kshs.79,000,000. He managed to procure a buyer, the PCEA church which bought the property at Kshs. 1,500,000 per acre through a venture of the church, Milele Ventures Ltd.

47. The Defendants on the other hand denied the claim and stated that there was no binding written agency agreement. If there was any oral agreement, the same was unenforceable since the initial sale agreement in which the Plaintiff was involved had been rescinded due to default on the part of the purchaser. Fresh negotiations were initiated and another contract was entered into which had nothing to do with the Plaintiff.

48. The standard of proof in civil cases was enunciated in the Court of Appeal decision in Civil Appeal 15 of 2016, Samuel Ndegwa Waithaka v Agnes Wangui Mathenge & 2 others [2017] Eklr where the Court observed;“12. In Civil cases such as this case, the standard of proof is on the balance of probabilities. This standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not.”

49. It is a principle of law that whoever lays a claim before the court against another has the burden to prove it. Sections 107 and 108 of the Evidence Act provide as follows:107“(1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.(2)When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.108. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.”

50. The Halsbury’s Laws of England, 4th Edition, Volume 17, at paras 13 and 14 describes the burden of proof thus:“The legal burden is the burden of proof which remains constant throughout a trial; it is the burden of establishing the facts and contentions which will support a party’s case. If at the conclusion of the trial he has failed to establish these to the appropriate standard, he will lose. The legal burden of proof normally rests upon the party desiring the court to take action; thus a claimant must satisfy the court or tribunal that the conditions which entitle him to an award have been satisfied. In respect of a particular allegation, the burden lies upon the party for whom substantiation of that particular allegation is an essential of his case. There may therefore be separate burdens in a case with separate issues.”(16)The legal burden is discharged by way of evidence, with the opposing party having a corresponding duty of adducing evidence in rebuttal. This constitutes evidential burden. Therefore, while both the legal and evidential burdens initially rested upon the appellant, the evidential burden may shift in the course of trial, depending on the evidence adduced. As the weight of evidence given by either side during the trial varies, so will the evidential burden shift to the party who would fail without further evidence?”

51. The Plaintiff herein admits that there is no written agency agreement between him and the 1st Defendant on his own behalf and on behalf of the 2nd Defendant. Section 119 of the Evidence Act however provides the following on oral agreements:-“The Court may presume the existence of any fact which it thinks likely to have happened, regard being to the common course of natural events, human conduct and private and public business, in relation to the facts of the particular case”

52. A contract need not be in writing but can be inferred from the conduct of the parties. The Court of Appeal in Ali Abid Mohammed versus Kenya Shell & Company Limited (2017) eKLR, stated that a contract between parties can exist where no words have been used but where it can be inferred from the conduct of the parties that a contract has been concluded. The court said;“It therefore follows that a contract can exist where no words have been used but where it can be inferred from the conduct of the parties that a contract has been concluded. See Timoney and King v King 1920 AD 133 at 141. In the circumstances of the instant case, there existed an enforceable contract between the parties by reason of Conduct. Indeed, it was not disputed by the respondent that it supplied petroleum products to the appellant at a specific amount per liter and for a certain period of time.”

53. The Plaintiff has produced multiple documents indicating that he was engaged as an estate agent by the 1st Defendant on his own behalf and on behalf of the 2nd Defendant for the sale of the properties. He received a letter of offer dated 14th November 2008 from Havi & Co. Advocates on behalf of Acres and Homes Ltd for the purchase of both the properties. J.M Theuri & Associates, who later represented the Defendants and the final purchasers, also sent the Plaintiff an offer later dated 4th December 2008 confirming that they had a client who was willing to purchase the 790 acres for Kshs.850,000 per acre. The Plaintiff informed the 1st Defendant about this offer via a letter dated 8th December 2008 in which he further informed him that the properties could fetch high amounts if sold separately.

54. The PCEA church, the final purchaser of the properties, also sent an offer to the Plaintiff dated 29th December 2008 for both the properties at Kshs.1. 3 million per acre. The Plaintiff responded to the church with its letter dated 30th December 2008 seeking amendment of the offer and some clarifications.

55. This is to mention but a few of the Plaintiffs’ endeavors to execute his duties as instructed by the 1st Defendant on his own behalf and on behalf of the 2nd Defendant. The Plaintiff eventually settled for the PCEA church since it had a good offer and the capability to complete the transaction. The church sent the letter dated 12th February 2009 to the Plaintiff expressing its intention to purchase the properties. J.M Theuri later sent a letter to the Plaintiff dated 26th February, 2009 requesting for the necessary documents for the conveyancing on behalf of Milele Ventures Limited, a venture of the PCEA church. Both properties were subsequently sold to Milele Ventures Limited. This is evidenced by the testimony of DW1 who stated;-“I am aware of ELC No. 414/2010 in which I testified…The court held that the sale of the land was a church project. Church meant PCEA church…the court captured my testimony that I attended a meeting called by the Defendant in that suit. The Defendant Milele Ltd. Its formed by the church. We held a meeting at PCEA at South B HQS. The actual price was 1. 44 Billion. That is what the Defendants received.”

56. All the Plaintiff’s witnesses substantially collaborated and bolstered his case. PW2 stated that he was a member of the church and part of the team the church had selected to look for property in which the church could invest. He stated that even if they came to know that the 1st Defendant had some properties on sale, they could only access him through the Plaintiff. On their first meeting with the 1st Defendant on 23rd December, 2008 the 1st Defendant told them that he would only sell the property to them if they went through the Plaintiff. The church registered Milele Ventures Ltd to be able to acquire a loan to buy the properties. PW3 was a PCEA church elder and part of the committee mandated to purchase the land. He identified the Plaintiff as the 1st Defendant’s agent who gave them details of the properties.

57. The Defendants argue that the initial agreements in which the Plaintiff was involved were rescinded via the 1st Defendant’s letter dated 15th March, 2009. The alleged rescission is implausible probably concocted to avoid payment of the commission since it was not brought to the attention of the agent until when he sent a letter dated 19th November to the 1st Defendant requesting for his commission.

58. J.M Theuri & Associates responded on the 1st Defendant’s behalf via a letter dated 25th November, 2009 with the shocker that the initial transaction was rescinded and that a new one was entered into on 23rd July, 2009. This response unfortunately appears duplicitous. In Ocra Realtors Ltd v Abdulghani Kipkemboi Komen & 2 others [2019] eKLR the court observed that the role of an agent is to look for customers, in this case, buyers of the suit land. Once an agent gets a buyer, what the agent is supposed to do is to refer that buyer to the seller, so that the buyer and seller can now enter into a written sale agreement for the property being sold. The Plaintiff herein discharged that core mandate. Any subsequent default by either the buyer or the seller or minor mutually agreed changes to the agreement after completion of the transaction has nothing to do with the agent and would not affect the agent’s commission.

59. The Defendant’s also submitted that the 2nd Defendant is a limited liability company that had nothing to do with the 1st Defendant. The 2nd Defendant could only appoint an agent through a resolution of its directors which was not done. This argument is thin air because the 1st Defendant is a director and a shareholder of the 2nd Defendant. He had been holding out to have authority to bind the 1st Defendant into a contract. For example, in the letter dated 15th May, 2009 he stated as follows;-“I write this letter in my personal capacity as the owner of L.R No.10916 and as a chairman of Tassia Coffee Estate Ltd, the owner of L.R No. 4299. ”

60. Further DW1 stated the following in her witness statement dated 6th May, 2016;-“I also learnt that Stanley Munga Githunguri (the 1st Defendant) was the majority shareholder and the beneficial owner of Tassia Coffee Estate Limited (the 2nd Defendant).”

61. In Total Kenya Limited v D Pasacon General Construction & Electrical Services (Civil Appeal 119 of 2019) [2022] KECA 593 (KLR) (8 July 2022) (Judgment) the Court of Appeal held that a party may have ostensible authority to bind another in a contract regardless of whether or not he had the express authority to enter into a contract on behalf of the other if a third party rightly believed he had the authority to enter into such a contract. The Court cited Black’s Law Dictionary 9th Edition, at page 72 which defines an apparent agent thus:-“A person who reasonably appears to have authority to act for another, regardless of whether actual authority has been conferred – also termed ostensible agent.”

62. The 1st Defendant therefore had ostensible authority to engage the Plaintiff on behalf of the 2nd Defendant and he so engaged. This court is satisfied that the Plaintiff proved on a balance of probabilities that there was an oral agency contract between him and the 1st Defendant on his own behalf and on behalf of 2nd Defendant.

Whether The Agency Contract If Proved Between Any Of The Involved Parties Was Performed And Whether There Was Breach Of The Contract 63. As enumerated above there was an oral agency contract between the Plaintiff and the Defendants. The contract was performed by the Plaintiff by sourcing and introducing the purchaser, the PCEA church which bought the properties through the church’s venture company, Milele Ventures Ltd. A breach of contract is committed when a party, without lawful excuse, fails or refuses to perform what is due from him under the contract, or performs defectively, or incapacitates himself from performing. The Defendants breached the oral contract by refusing to pay the Plaintiff his commission.

If Either A) Or B) Is Proved, Is The Plaintiff’s Claim Illegal For Want Of A Practicing Licence Or Registration At The Time He Engaged In The Transactions? 64. The Plaintiff proved that he was a registered estate agent and produced his registration number as evidence. DW3, the Registrar of the Estate Agents Board, stated that the Plaintiff did not renew his practicing licence in the years between 2007 and 2009 when he contends to have been conducting the impugned transaction as an estate agent. She stated that the Plaintiff paid the owing amount on 20th March, 2013.

65. The evidence indicates that at the time of the transaction, the Plaintiff was still in the register of estate agents. He had however not taken out his practicing licence. The question would be, what are the consequences of failure to take out a practicing licence as an estate agent? The answer can only be gleaned from the Estate Agents Act Cap 533.

66. Looking at the entire Estate Agents Act, there are no provisions for annual licensing. The Requirement for annual licence was under section 8A which was repealed by Section 120 of Finance Act 2000. The reason for this repeal could have been that the mandatory registration lasts one year only and is renewable and the annual licence was also valid for one year and was also renewable. This was an obvious duplication of qualification requirements that called for a reconsideration for ease of provision of agency services. Now that there was no requirement for an annual licence, was registration permanent? And what are the consequences of failure to renew registration?

67. Section 8(4) of the Estate Agents Act provides;-“A certificate of registration issued by the registrar shall be valid and shall remain in force for one year, but shall be renewable on the payment of the prescribed fee; and if the prescribed fee has been paid before the renewal date and there is no order for the name of the holder of the certificate to be removed from the register, the certificate shall remain in force until it is renewed.”

68. The import of this provision is that a certificate of registration as an estate agent is not permanent. It is only valid for a year and can be renewed. The certificate of registration only remains valid if the prescribed fee has been paid before the renewal date and the person has not be removed from the register. The Plaintiff misinterpreted the law when he submitted that registration is only done once during the lifetime of a qualified person and it can only be revoked, suspended or cancelled under Section 15 of the Act.

69. Section 15 only provides for various circumstances under which a registered person may be removed from the register by the Board. This could well be a way of decluttering the register. The consequences of failure to renew one’s certificate of registration are found under Section 18 of the Act which prohibits practicing as an estate agent without a current annual certificate of registration. Any businesses conducted without such annual certificate of registration is criminal and a court cannot condone criminality. In addition to failure to recover a commission criminal penalties may be imposed. Section 18 provides;-“(1)After the expiration of six months from the commencement of this Act or such further period as the Minister may, by Notice in the Gazette, allow either generally or in respect of any particular person or class of persons—(a)no individual shall practice as an estate agent unless he is a registered estate agent;(b)no partnership shall practice as estate agents unless all the partners whose activities include the doing of acts by way of such practice are registered estate agents;(c)no body corporate shall practice as an estate agent unless all the directors thereof whose duties include the doing of acts by way of such practice are registered estate agents.(2)Any person who contravenes subsection (1) shall be guilty of an offence and liable to a fine not exceeding twenty thousand shillings or to imprisonment for a term not exceeding two years or to both.”The Court of Appeal in the case Mapis Investment (K) Limited V Kenya Railways Corporation [2006] eKLR stated:“In the case of Mistry Amar Singh v. Serwano Wofunira Kulubya 1963 EA 408 the Privy Council, on appeal from a judgment and order of the East African Court of Appeal at page 414 of the report, of Lord Morris of Borth-y-Guest in his speech quoted with approval the following quotation from the judgment in Scott v. Brown, Doering, McNab & Co (3), [1892] 2 QB 724 Lindley LJ at p.728:-“Ex turpi causa non oritur actio. This old and well-known legal maxim is founded in good sense, and expresses a clear and well recognized legal principle, which is not confined to indictable offences. No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality the court ought not to assist him.”In the letter dated 20th November 2002 in which it was stated that the appellant and Mr. Shompa were not registered, was produced in evidence by Mr. Shompa, a director of the appellant without any denial of the non registration. This was in our view tantamount to an admission of the facts giving rise to the illegality. That being the case it was then a matter of law as to whether the non registration resulted in the illegality of the contract; it is clear that a contract to perform estate agency services can only be legal if entered into with a registered Estate Agent.”

70. DW3 adduced evidence that the Plaintiff did not have a practicing licence in the years 2007 to 2009 and only paid the owing amount on 20th March, 2013. The practicing certificate referred here was the annual registration certificate since there is no requirement for an annual practicing licence under the Act. The Plaintiff only produced a certificate of registration dated 20th July, 1988 and none was produced for the years in which the Plaintiff executed the Defendants instructions as an estate agent.

71. This court is satisfied that the lack of a registration certificate for the periods of the transaction renders his entire claim for the commission fees and damages for breach of any contract are not only unsustainable but illegal and must fail.

Findings & Determination 72. For the forgoing reasons this court makes the following findings and determinations;i.This court finds that due to the lack of a registration certificate for the periods of the transaction renders the entire claim to be illegal and unsustainable in law;ii.This court finds the Plaintiff’s claim to be devoid of merit in its entirety and it is hereby dismissed with costs to the Defendants.

Orders Accordingly

DATED SIGNED AND DELIVERED VIA TEAMS AT KIAMBU THIS 8THDECEMBER, 2023A. MSHILAJUDGEIn the presence of;Mourice – Court AssistantGichuru – for the PlaintiffAjak- h/b for Mbaluto for the Defendant