Regional Institute of Business Management v Ondong [2023] KEHC 23228 (KLR) | Agency Relationships | Esheria

Regional Institute of Business Management v Ondong [2023] KEHC 23228 (KLR)

Full Case Text

Regional Institute of Business Management v Ondong (Civil Appeal 420 of 2019) [2023] KEHC 23228 (KLR) (Civ) (5 October 2023) (Judgment)

Neutral citation: [2023] KEHC 23228 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 420 of 2019

AA Visram, J

October 5, 2023

Between

Regional Institute of Business Management

Appellant

and

Lucas Otieno Ondong

Respondent

(Being an appeal from the judgment dated 24th June, 2019 of Hon. K.I Orenge (Mr.) Senior Resident Magistrate in Civil Suit No. 5113 of 2009)

Judgment

1. This judgment determines that Appellant’s appeal dated 11th October, 2019 vide its Memorandum of Appeal dated 23rd July, 2019.

2. The Respondent (Plaintiff in the lower court) filed a suit in the lower court vide a plaint dated 7th August, 2009. He alleged that during the month of May 2006, he enrolled in the Defendant’s institution for a Masters degree in Business Administration under a programme allegedly offered by Makerere University under collaboration with the Appellant.

3. Following his enrolment, and after a period of study, he later learned that the Appellant had nothing to do with Makerere University. It had fraudulently misrepresented its collaboration without the express authority of the Commission of Higher Education, and he was forced to withdraw and complete his Masters degree elsewhere. He claimed a refund of the fees paid to the Appellant, and damages for breach of contract and or fraudulent misrepresentation.

4. The lower court proceeded to hear and determine the suit and delivered its judgment on 24th June, 2019. The court found the Appellant had breached its duty of legitimate expectation and accordingly awarded the Respondent the sum of Kshs. 300,000/= as damages together with costs and interest.

5. Aggrieved by the above judgment, the Appellant filed this appeal dated 23rd July, 2019 on the following grounds:-i.The Learned Magistrate erred in law and in fact in failing to determine and/or find that the Memorandum of Understanding dated 17th October 2005 between the Appellant and Makerere University was valid and enforceable for the Respondent’s benefit, notwithstanding absence of accreditation by the Commission for Higher Education (CHE) or termination of the collaboration.ii.The Learned Magistrate erred in law and in fact in failing to determine and find that the Appellant was merely an agent of Makerere University, which was disclosed principal.iii.The Learned Magistrate erred in law and in fact in finding that the Appellant offered a degree course to the Respondent, in disregard of available and overwhelming evidence that the courses were offered and administered by Makerere University, only at the facilitation of the Appellant as an agent.iv.The Learned Magistrate erred in law and in fact in failing to determine and/or find that there was no breach of contract by the Appellant.v.The Learned Magistrate erred in law and in fact in wrongfully and/or selectively applying the doctrine of legitimate expectations to the parties relationship, and absent any pleadings or submissions therefor by the Respondent.vi.The Learned Magistrate erred in law and in fact in failing to find the Makerere University or the Appellant also had legitimate expectations of the Respondent conducting himself as a student in accordance with the set rules/regulations which would enable him to fully pursue his course and eventually graduate.vii.The Learned Magistrate erred in law and in fact in failing to determine and find that the Respondent voluntarily discontinued and abandoned his course and joined Moi University, thereby terminating his relationship with Makerere University and determining all/any expectations between the Respondent and Makerere University, or at all.viii.The Learned Magistrate erred in law and in fact in failing to find that the Respondent did not consider, pursue or exhaust available and known channels of dispute resolution to enable him complete his studies.ix.The Learned Magistrate erred in law and in fact in finding that the Respondent was entitled to a refund of the school fees paid; despite admissions by the Respondent that he attended school for two semesters on premises leased/rented by the Appellant, and was well taught and sat for examinations at the facilitation of the Appellant.x.The Learned Magistrate erred in law and in fact in putting undue weight on the evidence and submission by the Respondent, while disregarding the pleadings, evidence and submissions of the Appellant.xi.On the whole, the decision of the Senior Resident Magistrates Court (Hon.Orenge K.I (MR) is inexplicable on facts and the law, it is contrary to pleadings/submissions, evidence, precedent and the law; hence it is unlawful and inequitable /unfair.

6. The parties agreed that this appeal be disposed of by way of written submissions. The Appellant filed its submissions dated 26th January, 2023 and the Respondent, in turn, filed their submissions dated 17th February, 2023.

Appellant’s Submissions 7. The Appellant submitted that it was an agent of a disclosed principal, Makerere University. In support of the above, it cited the Black Law Dictionary ,10th Edition defines as agent as:-Someone who is authorized to act for or in place of another; a representative.”And further:-“Generally speaking, anyone can be an agent who is in fact capable of performing the functions involved. The agent normally binds not himself but his principal by the contracts he makes; it is therefore not essential that he be legally capable to contract.”

8. On the other hand, a principal is defined as someone who authorizes another to act on his or her behalf as an agent. In support of the above, the Appellant relied on the decision of the High Court decision of Lucy Ngigi & 4 Others v National Bank of Kenya Limited & another (2015) eKLR, where the court defined an agency relationship as follows:-“... a relationship which exists between two persons, one whom expressly or impliedly consents that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly consents so to act or so acts.”

9. The Appellant submitted, based on its Memorandum of Understanding with Makerere, Makerere University was providing its courses at the Appellant and it was a mere agent acting on its behalf. Makerere, and not the Appellant, considered the applications for admission, made a decision on whether to admit qualified students and issue admission letters; issued student IDs; issued certificates and degrees in its name despite the course having been pursued at the Appellant institution.

10. In short, Makerere University was providing its courses at the Appellant institution without having to establish its own campus in Nairobi or elsewhere in Kenya, and the Appellant represented Makerere University in the provision of the said courses.

11. In further support of the above, the Appellant submitted that the Respondent’s documentation relating to his degree had been issued by Makerere University, and not the Appellant. This included the Respondent’s admission letter, Student ID; and the brochure relating to his MBA was in the name of Makerere University.

12. The Appellant submitted that the Memorandum of Understanding dated 17th October, 2005 was a valid and enforceable MOU conferring benefits on the Respondent. Further, that the Respondent as a third party benefitting under the terms of the MOU, had a right to enforcement of the same, and ought to have done so.

13. The Appellant contended that the Respondent could not hold it liable for the actions of the principal based on the doctrine of privity of contract in an agency relationship. It relied on the decision of the High Court in Mayfair Holdings Ltd v Ahmed (1990) eKLR cited with authority Montgomerie v United Kingdom Mutual Steamship Association (1891) for the proposition that no action may be filed against an agent of a disclosed principal and in the event of the same, no cause of action may be found against the agent. It contended the suit ought to be struck out. In further support of the above, the Appellant relied on the further decisions of the High Court in Meru Farmers Co-operative Union v Abdul Aziz Suleiman (No.1) (1966) EA.436; Kofinaf Company Limited & another v Nahashon Ngige Nyagah & 20 Others (2015) eKLR; and Antony Francis Wareheim t/a Wareheim & 2 Others v Kenya Post Office Savings Bank, Civil Appeal No.5 and 48 of 2002.

14. The Appellant submitted that the correct position was the said MOU had been frustrated through no fault of its own. It contended that in this regard, Makerere University published a notice in the East African Newspaper rejecting its collaboration with the Appellant based on unexplained external forces, which led to a misunderstanding between it and Makerere University. This misunderstanding was thereafter resolved and Makerere University withdrew the above notice by way of a letter dated 8th December, 2006.

15. Further, that based on the contents of the said letter dated 8th December, 2006, the Respondent was entitled to continue and complete his course at Makerere University if he so wished, and could have enforced his contractual right to do so. In support of the above, it relied on the decision of the High Court in Lucy Ngigi & 4 Others v National Bank of Kenya Limited & another (Supra).

16. The Appellant contended that based on its Financial Memorandum with Makerere University, the terms stipulated that in the unlikely event of any party terminating the MOU before the expiration of the five-year period, all students already enrolled would be permitted to complete their courses at Makerere University.

17. The Appellant submitted that there was never any understanding that once a student decided to leave the institution, his money would be refunded; rather, all fees paid were non-refundable. Further, that the Respondent was aware that he had the option to complete his degree at Makerere University but chose not to.

Respondent’s Submissions 18. The Respondent submitted that the background to his enrollment with the Appellant was based on an advertisement by the Appellant in a brochure offering a Masters in Business Administration at Makerere University. He applied for the said course with the Appellant based on his understanding that the Appellant was working with Makerere University.

19. He submitted that he received a letter of acceptance to Makerere University, with the programme set to begin on 2nd May, 2006, and run through 2nd May, 2008. Accordingly, he paid the requisite fees to the Appellant through their account and not Makerere University. Based on the same, he contended that a contract had been formed between himself and the Appellant. In support of the above, he relied on the decision of Court of Appeal in William Muthee Muthami v Bank of Baroda (2014) eKLR, where the court stated as follows:-“In the law of contract, the aggrieved party to an agreement must, in addition, prove that there was offer, acceptance and consideration. It is only when those three elements are available that an innocent party can bring a claim against the party in breach.”

20. He submitted that the Appellant was required to receive accreditation form the Commission of Higher Education before implementation of the MOU between itself and Makerere, which it had not received. And further, that the Appellant had never been accredited for an MBA course. Accordingly, the Appellant had fraudulently misrepresented its collaboration with Makerere University to him.

Analysis and Determination 21. I have read the record in its entirety and considered the grounds of appeal raised by the Appellant. I have also considered the rival submissions of the parties.

22. As this is a first appeal, I have a duty to re-evaluate the evidence before me. This principle as set out in the Court of Appeal decision of Selle and Another Versus Associated Motor Boat Company Ltd & Others [1968] EA 123, where the court stated that:-“An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusion. Though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this Court is not bound necessarily to follow the trial Judges findings of fact if it appears either that he has clearly failed in some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanour of a witness is inconsistent with the evidence on the case generally.”

23. The primary issue that arises for my determination is whether or not the Appellant was licensed to provide an MBA course at the time the Respondent was enrolled in the course at Makerere?

24. To my mind, all the remaining issues will be moot once the above is determined. The point is quite simple, if the Appellant had no authority or license to provide the MBA course, it could not have offered the same pursuant to its MOU, or otherwise.

25. No relationship, agency or otherwise, is a defence to an illegality, and accordingly, the issue before me is a question of fact. The Appellant, as a matter of fact, could either have provided the course lawfully, or it misrepresented that it had lawful authority to do so.

26. I have considered the record in entirety and note that the letter produced by the Appellant in support of its valid license (produced before the lower court) to offer the course in dispute, is dated 10th September, 2007. The relevant part of the letter reads as follows:-“I am pleased to inform you that an assessment of your institute based on submitted documents and the subsequent visitation and inspection, the curriculum Accreditation Committee of the Commission has considered and recommended to the Commission approval of Grant of Authority to collaborate with Makerere University, Kampala,in offering the Bachelor of Business Administration (BBA), in accordance with the University Rules, 2004 and section 6(q); Universities Act; Cap 210 B, Laws of Kenya.Once the commission at a meeting approves grant of authority to collaborate, you will be informed and this will be gazette accordingly”(emphasis mine)

27. Looking at the above letter, it is clear to me that the same refers to a totally different course from the one the Respondent was enrolled in, namely, BBA as opposed to MBA. Based on the undisputed facts, the Respondent was to be enrolled in an MBA course, not a BBA course. Further, he was enrolled at Makerere in the year 2006. It is not lost on me that the above letter is dated an entire year after the Respondent’s enrollment at Makerere. Additionally, a reading of the letter demonstrates that the letter in itself was not intended to be a grant of authority. The same clearly states that a recommendation for a grant of authority had been made. Further steps were still required in order to give effect to the grant of authority, namely, a further meeting of the commission, approval by the commission, and finally, gazettement of such authority. No evidence is available in the record to show that these further steps took place in respect of an MBA course, or even the BBA course referred to the in the letter.

28. In short, based on the evidence on the record, I am persuaded that the Appellant was not licensed to provide the MBA course it offered at Makerere University at the time the Respondent was enrolled in the course.

29. Having found that the Appellant had no authority to offer the said course, and to enroll the Respondent in the MBA course, the issue of agency and principal is moot. An agent cannot hide behind its principal in respect of an illegality, or acts that it had no lawful authority to carry out. To my mind, in the absence of a license from the appropriate statutory and regulatory licensing body, the entire MOU between the Appellant and Makerere was an illegality.

30. It is trite that no court of law may give effect to an illegal contract. This principle was captured well in the decision of the Court of Appeal in Heptulla v Noormohamed NRB CA Civil Appeal No. 62 of 1983 [1984] eKLR where the court stated as follows:-“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 court, and if the person invoking the aid of the court is himself implicated in the illegality.”

31. And further distilled in Royal Media Services v Independent Electoral & Boundaries Commission & 3 others ML HCCC No.352 of 2014 [2019] eKLR where the court stated that it ought to enforce the doctrine captured in the Latin maxim; ex turpi causa non oritur action which implies that no court should enforce an illegal contract nor allow itself to be made an instrument of enforcing obligations that arise from illegal transactions. This court intends to uphold that principle.

32. The consequence thereof, is that the Appellant misrepresented to the Respondent that it could lawfully facilitate his enrollment to Makerere University to pursue his study in the MBA course when it simply had no legal authority to do so at the time.

33. Based on the reasons as stated above, I find that the appeal is without merit and the same is accordingly dismissed with costs to the Respondent.

DATED AND DELIVERED VIRTUALLY VIA MICROSOFT TEAMS THIS 5TH DAY OF OCTOBER 2023ALEEM VISRAMJUDGEIn the presence of;…………………………………………………for the Appellant……………………………………………… for the Respondent