O & M Law LLP Advocates v Barongo Ombasa and Company Advocates [2022] KEHC 16420 (KLR)

O & M Law LLP Advocates v Barongo Ombasa and Company Advocates (Civil Case E080 of 2022) [2022] KEHC 16420 (KLR) (Commercial and Tax) (9 December 2022) (Judgment)

Neutral citation: [2022] KEHC 16420 (KLR)

Republic of Kenya

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

Commercial and Tax

Civil Case E080 of 2022

DAS Majanja, J

December 9, 2022

Between

O & M Law LLP Advocates

Applicant

and

Barongo Ombasa And Company Advocates

Respondent

Judgment

1. This ruling is in respect to the originating summons application dated March 11, 2022 filed pursuant to order 52 rule 7 of the Civil Procedure Rules seeking to enforce an Advocate’s undertaking. The application is supported by the affidavit of Starvine Kabunyi sworn on March 11, 2022 and his undated further affidavit. It is opposed by the respondent through the replying affidavit of Osike Daniel Ombasa sworn on May 18, 2022. The applicant seeks the following orders:a)That the honourable court be pleased to issue and order that the respondent do honour their written undertaking of August 10, 2021 and remit the sum of KES 10,000,000 to the applicant’s bank account held at KCB Westgate of account name O&M law LLP account no 12059xxxx080 with interest calculated at court rates as at September 7, 2021. b)That costs of this application be provided for.

2. The dispute relates to a sale agreement dated June 10, 2021 in respect to a parcel of land known as Ngong/ Ngong/26061 (‘’the suit property’’). The applicant represented the Irene Ndunge (‘’the vendor’’) while the respondent represented Equity Bank (‘’the bank’’) which financed Valery Moige Mauti (‘’the purchaser’’). The applicant states that the Bank issued a financial undertaking to the applicant dated August 9, 2021 while the respondent issued its professional undertaking on August 10, 2021 (‘’the undertaking’’) on the following terms:We hereby give our unconditional, unequivocal and irrevocable professional undertaking as follows; - 1. That we will hold the completion documents to your order, returnable on demand and we will not release them to any advocate or person whatsoever (save for the lands office for purpose of registration ) for any purpose without first obtaining your written consent and authority which will only be granted on such other advocate giving a professional undertaking in terms similar to the present one and on the understanding that whether such advocate complies with the undertaking or not, you will continue to hold us liable on our undertaking as herein provided.

2. That we will not utilize the completion documents for any purpose other than or registration and transfer of the purchaser and the charge in favour of the bank.

3. That we will ensure that the transfer and charge are presented for registration together with the intent that if any of the documents is rejected and/or not registered, then all the documents will be retrieved so as to avoid partial registration of any one document.

4. That we will upon presentation of the instrument of transfer in favour of the purchaser and all the securities for registration in the manner aforesaid forthwith furnish you with a copy of the booking form and pursue the expeditious registration of the documents at the relevant registry.

5. That we will within thirty days upon receipt of the completion documents or upon the successful registration of the transfer in favour of the purchaser and the charge in favour of the bank, hereby undertake that the bank shall forthwith remit by RTGS the sum of Kenya Shillings Ten Million (KES 10,000,000. 00 only) (the facility) into the vendor’s advocates bank account details states below:[Account details]

6. In the event that the bank fails to remit the facility to the vendor’s advocates bank account as stipulated under paragraph 5 above and in accordance with the terms of this undertaking, we hereby confirm we shall indemnify the vendor and keep the vendor fully indemnified and hold the vendor harmless for all loss, damage or expense including the payment of the said sum of KES 10,000,000. 00 only that the vendor may suffer or incur by reason of any breach by the bank and/or by us of the aforesaid conditions of this undertaking.

7. That this professional undertaking will remain in force until such time that you shall expressly release us from the same which release shall be granted upon our full compliance and settlement of the redemption amount.

8. That time shall be of essence in respect of all our obligations herein.

9. That this undertaking shall be governed by the Laws of Kenya.

3. The applicant states that the transfer and charge over the suit property were successfully registered but the respondent failed to honour their undertaking and remit the sum of Kshs 10,000,000. 00 as required and/or indemnify the vendor. The applicant contends that the respondent later claimed in a letter dated October 28, 2021, that the title and the whole transaction was inappropriate and that it was in the process of discharging the suit property from the bank. The applicant contends that the undertaking remains in force that the respondent should be ordered to comply with the undertaking.

4. The respondent confirms acting for the bank and issuing the undertaking supported by the bank’s financial undertaking. The respondent states that it lodged the transfer and charge documents for registration of suit property on September 7, 2021 but it was informed by the Land Registry staff that since the Ethics and Anti-Corruption Commission (“the EACC”) had a registered restriction over the suit property, it was required to obtain a clearance from the EACC. The respondent states that it communicated this position to the applicant who undertook to provide the clearance letter from EACC within a week. According to the respondent, the applicant provided a clearance letter dated October 30, 2019 which made the Purchaser doubt why the applicant had not furnished the letter at the time of making the sale agreement.

5. The respondent further states registration of the transfer and charge was difficult as the parcel file for the suit property went missing whereupon the purchaser instructed the respondent to cancel the whole transaction on October 5, 2021 but the registration had already taken place on September 21, 2021. The respondent contends that the transactions were not done with clean hands and that the vendor did not comply with the contractual obligations to ensure that title to the suit property was clean to facilitate smooth registration of the transfer and charge.

6. The application was disposed of by way of written submissions. From the brief and uncontested facts, the main issue for determination is whether the respondent is in breach of the undertaking and if so, whether the court should enforce it.

7. The applicant submits that it met the conditions required in the undertaking since it forwarded all the requisite documents, the registration of the transfer and charge of the suit property was effected and all formalities were confirmed by the Land Registrar through the issuance of the green card. It contends that the issues raised by the respondent are an afterthought.

8. The respondent submits that since the applicant concealed crucial information such as the restriction registered restriction by the EACC which vitiated the whole transaction thus compelling the bank to rescind the agreement. It therefore further submits that before the court issues an order for enforcement, it must be satisfied that there is breach of that undertaking. The respondent confirms that its intention when issuing the undertaking was to release the amount upon successful transfer and charge registration but when it came to light that the vendor was not acting in good faith it had to cancel the transaction and as such the court should not enforce the undertaking and dismiss the application with costs.

9. I do not think that there is any dispute about the legal principles applicable. They were discussed by the Court of Appeal in Harit Sheth t/a Harit Sheth Advocate v K Osmond Advocates NRB CACA No. 276 of 2001 [2011] eKLR. The court outlined the essence of a professional undertaking as follows:[A] professional undertaking is a bond by an advocate on the authority of his client. It is based on the relationship which exists between the advocate and his client. An advocate who gives such a professional undertaking takes a risk. The risk is his own and he should not be heard to complaint that it is too burdensome and that someone else should shoulder the responsibility of recovering the debt from his own client. A professional undertaking is a bond by an advocate to conduct himself as expected of him by the court to which he is an officer. No matter how painful it might be to honour it, the advocate is obliged to honour if only to protect his own reputation as an officer of the court.

10. The court reiterated the same position in Waruhiu K'Owade & Ng'ang'a Advocates v Mutune Investments Ltd [2016] eKLR as follows:A professional undertaking is an unequivocal promise made by a party to another either to do or to refrain from doing something or acting in a manner which may prejudice the right of the opposite party, to which liability may attach. See Equip Agencies Limited v Credit Bank Limited [2008] 2 EA 115 (HCK). Generally speaking, professional undertakings are given by advocates in order to make transactions easier, faster and more convenient. Where an advocate breaches a professional undertaking, the court has jurisdiction to order the enforcement of that undertaking.

11. Finally, in Arthur K. Igeria t/a Igeria & Co. Advocates v Michael NdaigaNRB CACA No. 51 of 2008 [2017] eKLR, the Court of Appeal outlined the conditions an applicant must satisfy before the court issues an order to enforce a professional undertaking. It recalled that:For the court to enforce a professional undertaking, it must be satisfied that the undertaking is clear in its terms and that there is no dubiety or ambiguity as to what the advocate has professionally undertaken. Secondly, that what is undertaken is capable of being performed. Thirdly, that if the undertaking is contingent on the happening or occurrence of an event, such event has occurred or happened.

12. The undertaking given by the respondent in this case is clear and unambiguous; what was being undertaken, payment of the agreed sum of money, was to be made upon the successful transfer and registration the charge over the suit property. The fact of registration of the transfer and charge over the suit property is not disputed and has already occurred. What the respondent now raises appear to be a change of mind by the purchaser. The only impediment to the transfer was the clearance by EACC demanded by the Land Registrar. The clearance was provided and there is no further evidence or proof that there is anything further to be done to complete the transaction envisaged in the undertaking.

13. There is no reason why the court should not enforce the undertaking. Consequently, I order as follows:a. The respondent be and is hereby ordered to honour its written undertaking of August 10, 2021 and remit the sum of KES 10,000,000 to the applicant within thirty (30) days from the date hereof.b. In default of such compliance, judgment be and is hereby entered for the applicant against the respondent for Kshs 10,000,000. 00 with interest at 12% p.a. from the date of filing suit until payment in full.c. The respondent shall bear the costs of this suit.

DATED and DELIVERED at NAIROBI this 9th day of DECEMBER 2022. D. S. MAJANJAJUDGECourt of Assistant: Mr M. OnyangoMr Attika instructed by O & M Law LLP Advocates for the applicantMs Munyasi instructed by Tindi Munyasi and Company Advocates for the respondent.