Renom Agency Limited v Muthoga Gaturu & Company Advocates, Joseph Rashidi Masengo, Pauline Ndito Masengo & Luc Rashid Masengo [2016] KEHC 2406 (KLR) | Professional Undertakings | Esheria

Renom Agency Limited v Muthoga Gaturu & Company Advocates, Joseph Rashidi Masengo, Pauline Ndito Masengo & Luc Rashid Masengo [2016] KEHC 2406 (KLR)

Full Case Text

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL CASE NO.  17 OF 2015

RENOM AGENCY LIMITED    ………………..………………...PLAINTIFF

VERSUS

MUTHOGA GATURU & COMPANY ADVOCATES…………DEFENDANT

AND

1.  JOSEPH RASHIDI MASENGO

2.  PAULINE NDITO MASENGO

3.  LUC RASHID MASENGO……………….....….INTERESTED PARTIES

RULING

1. This ruling determines the preliminary objection dated  22nd  September  2015; the notice  of motion dated  22nd September  2015  and another notice of motion  application  dated 9th July  2015.

2. In the  application dated  9th July  2015, the interested  parties seek for  orders striking  out the plaintiffs’ suit ( Originating Summons)  as against  the defendants  and that the defendant advocate be ordered  to release  and pay the interested parties  the balance of the purchase price.

3. The grounds upon which that application is predicated are that:

a)The defendant acted for the interested parties in the sale of their property LR NO.  1338/89 Athi River   for the consideration of shs  128,250,000 where the plaintiff purported  to act  as agents;

b)The defendant  has paid the  interested  parties  a sum of shs 45,939,570 from  the purchase  price  leaving a balance of  shs  82,310,430 now  wrongly held:

c)The plaintiff  and the defendant  colluded  not to disclose  the true price  and deceived  the interested parties  that the property  had fetched  only shs  97,500,000

d)The undertaking   relied   upon by the plaintiff and given by the defendant giving rise to the present claim by the plaintiff   was issued without instruction, illegal and no court ought to enforce an illegal contract.

e)The plaintiff has brought this claim seeking kshs 35,125,000 being undisclosed  portion of the purchase price  allegedly in addition to commission earned  as an Estate Agent;

f)The commission is chargeable  under Estate  Agents  Remuneration Rules;

g)It has come to the fore that the plaintiff is not a registered Estate Agent and therefore   not authorized to offer such services   or levy a commission.

h)The plaintiff has contravened Section 2 and 18 of the Estate Agents Act and paragraph 7 of the Estate Agents Remuneration Rules.

i)The orders sought are necessary to restore money to the proper owner.

4. The application is supported by the affidavit  sworn by Joseph  Rashidi  Masengo  sworn on 9th July  2015  wherein  it is deposed  that in 2013  the interested party  placed LR No. 1338/89 Athi River  on sale  and appointed defendant  advocates to facilitate the sale and  conveyance, whereas  the plaintiff presented  himself as an Estate Agency  and  was allowed to market the property.

5. That the plaintiff found a buyer   and informed the  interested  parties  that the buyer had offered  the price of  shs 97,500 ,000. 00 which  was accepted and Sarah Hillman  was authorized to sign the sale  agreement  on  behalf of the interested parties at the defendant’s office.

6. That the interested parties executed a memorandum of understanding dated     29th March 2014   agreeing   to pay the plaintiff   a commission of  sh 4,875,000 pursuant    to the representation made by the plaintiff that   was an Estate Agent.

7. That unknown  to the interested parties, the purchaser  had paid  shs  128,250,000 and the plaintiff  and defendant  reached  a secret deal  to share shs  30,750 over   and above the  disclosed  sum of  shs  97,500. 000.

8. That when the  interested parties  learnt of the deal, they wrote to the defendant  advocate  informing them that they  were aware of the scheme  to defraud  the interested  parties and insisted that the entire   purchase price  be released to the interested parties.  That owing to the conduct of the plaintiff, the interested parties conducted a search   to establish whether it was licensed to carry out business as an Estate Agent.

9. That by letter dated 20th March 2015  the Registrar of Estate Agents  Registration Board   wrote stating that Mumo Mweu   was  not a registered  Estate Agent  and the plaintiff Renom Agency  Limited is not eligible  for Registration  to practice  as an Estate Agent  as only individuals are registrable under Cap 533 of the Estate Agents Act.  That that  being the case, the plaintiff  and its  directors  are barred by law from providing  the services of Estate Agency and cannot enforce  the present  claim; and that it  has expressly  contravened  Section  2  and  18 of  the Estate Agent Act  and cannot  seek the aid of this court.

10. Further, that this suit   was brought through collusion of the plaintiff and defendant to have the court to sanctify their illegal actions.  That therefore the suit should be struck out to keep the streams of justice pure and effectual.

11. The plaintiff opposed the interested parties’ application for striking out the suit.  They filed grounds of opposition  dated  22nd July  2015   and  a replying  affidavit sworn by  Mumo Mweu  on 22nd  September  2015.

12. In the replying affidavit, the plaintiff denies ever representing   itself as an Estate Agent and that the defendant and interested parties were aware that it was a general agent.  Further, that it is  the interested parties who approached  the plaintiff to procure a buyer and not vice versa, which the  plaintiff did  and found  a buyer who  was willing to pay sh 8,550,000 per acre as opposed to  the shs  6,500,000 given by  the interested parties agent Sarah Hillman.  That no transaction was concluded and a memorandum of understanding was reached and the defendant advocates executed a professional undertaking.

13. The plaintiff  also denied  any knowledge of a sum of  shs  128,250,000 alleged to  be the purchase price and  even denies  the sale  agreement  for that sum and blames the defendant for  colluding with   the interested parties  to deny if  it’s just  dues s as per  the professional undertaking  given by  the defendant  advocate  which cannot  be  vitiated  as it is  a distinct   and independent  contract hence  it cannot be questioned.

14. Further, that as s the notice of motion  raises  serious issued  of integrity  of the defendant, those issues cannot be  determined   in an application because  fraud cannot  be proved by affidavits  and that interested parties  have to  commence fresh proceedings  against  their advocate.

15. That in any case, the Estate Agents Act  does not provide that  a non  registered  Estate agent  is not  entitled  to  its commission hence the  allegations by the interested  parties  have no legal basis.

16. Further, that the interested parties have  no locus standi in these proceedings  which are  brought under Order 52 Rule  7(1) (b)  and (10) (I)  of the Civil Procedure  Rules purely to enforce  a professional  undertaking between the  defendant  advocate and the plaintiff.

17. By another  dated  22nd September  2015, the plaintiff  filed a Notice of Motion seeking  orders:

1. That pending   hearing  and determination  of this  application, the defendant  be restrained  from paying out to any  party in this  dispute the sum  of shs 81,810,420 it is holding on  account of sale of LR  1338/89  Athi River  between Joseph Rashidi  Masengo & 3 Others as named, acting  through their Attorney Sarah Hilda  Nyiva  Hillman and Kabansora Millers Limited;

2. that   within  14 days of making of the orders, the defendant do pay  to the plaintiff a sum of kshs  4,875,000; that the balance  of shs 76,935,430 be deposited  in court  or in a joint  interest   earning  Bank Account in the joint  names of  the plaintiff’s  advocates, the defendant  and the advocates  for the interested parties.

18. That  application is  supported by the affidavits  of Mumo Mweu and grounds  , among  others that Patrick Rugo Githinji  advocate  do attend court  to confirm the  contents of his affidavit sworn  on  5th February  2015; that the defendant  firm of advocates  represented  the  interested parties in the sale  of LR No. 1338/89 Athi River for a sum of shs  128,250,430 deposited with the defendant   advocated by the purchasers.

19. That the advocate  undertook to  honour a professional  undertaking  on 16th August  2015  in the sum of shs  35,625,000 but that  to date  only shs  500,000 has been paid; that shs 4,875,000 is  due to the plaintiff which  is not  a contested issue.  That the balance of shs 76,935,430 should be deposited in court or in a joint interest earning account.

20. In the supporting affidavit  of Mr  Mumo Mweu  dated sworn on 22nd  September, 2015, it is deposed  that in 2013  he  was engaged to  procure  a purchase  of LR No.  1338/89 Athi River  measuring  15 acres  at a  reserve  price  of shs 6,500,000 per acre  and it  was agreed that  he would be  entitled  to a commission  of  5 %  of the reserve  price.  That the property was registered in the names of the interested parties.  That the interested parties aforesaid engaged Sarah Hillman as their law Attorney and agent to act on their behalf.  That   the plaintiff procured Kabansora Millers   Ltd who agreed to purchase the property at 8,550,000 per acre, which was sh 2,050,000 above the reserve price which came to shs 128,250,000.  That there  was an agreement   between the plaintiff and interested  parties that  any amount  over  and above  the reserve  price would be for the  plaintiff   for their marketing  efforts hence , the interested  parties  would be paid  shs 97,500,000,  and the plaintiff shs  30,750,000 as  consideration  for  aggressive  marketing , and that agreement was made on  16th August  2013  in the presence of Patrick Rugo Githinji  advocate who confirmed the same vide letter  dated  16th August   2013  as  per annexture  MM3.  That on the same date the defendant facilitated conclusion of the sale transaction by giving a professional undertaking, with instructions of the interested parties upon which the sale was concluded and shs 128,250,000 made of shs 8,500,000 per acre paid to the defendant.

21. That  the professional undertaking  was clear  that the plaintiff would get 5%  commission  on the reserve  price of shs  6,500,000 per acre  and shs 30,750,000 being  consideration for aggressive  marketing  of the said property.

22. That on   19th March 2014  the plaintiff and  interested parties entered into a memorandum of understanding  over the reserve  price  of shs  6. 5 million per  acre whereby he interested party  would be  entitled to shs 97,500,000 and the plaintiff shs  4,875,000.  That to date, only shs 500,000 was paid to the plaintiff by the defendant despite reminders, the defendant is unwilling to honour the professional undertaking therefore necessitating the suit.

23. The plaintiff also deposes that the interested parties  has admitted that that the plaintiff is entitled to the 4,875,000 by  their affidavits   sworn on  9th July  2015  and  24th June   2015; that   since the payment of that money  to the plaintiff is not  disputed it should be paid forthwith.

24. The plaintiff also seeks orders that the defendant advocate Mr Rugo Githinji should attend d court to shed light on the issues at hand.

25. Simultaneous with the filing of the Notice of Motion dated 22nd September 2016 the plaintiff also filed Notice of preliminary objection dated the same day.  The preliminary  objection is said  to be on a point of law against  the interested parties   application dated  9th July  2015   on the ground that:

i.The issues raised  by the interested parties  in the said notice of  motion touches  on advocate /client  relationship  which is a sole  preserve of the   disciplinary  tribunal established  under the  Advocates Act Cap 16 Laws of  Kenya; and

ii.The interested parties have no  locus standi  to institute  this suit  having donated  a general power of  attorney to Sarah Hilman which is  valid up to date.

26. In response    to the plaintiff’s  notice of motion dated   22nd September  2015, the interested parties  swore  a replying affidavit  sworn by  Joseph Rashidi Masengo  on 4th October   2015  contending that the whole transaction giving rise to the claim by the interested parties is riddled  with illegalities  and fraud   committed by the plaintiff; That the interested parties’  complaint concerns the concealment  of the true  purchase  price to the interested parties   being kshs   128,250,000 and that  instead  the plaintiff and defendant   advocate misrepresented  to the interested parties  that  the best  price obtained  was shs  6. 500,000. 00 per acre  hence a total of  shs 97,500,000 and that  it  was a result of  the misrepresentation that the memorandum of understanding    was reached; that the handsome  reward for the marketing efforts    was the  5% commission, of the  purchase price  and no other.

27. The deponent  also denied   ever attending  a meeting on  15th August  2013  at the  defendant’s  offices  where the plaintiff  was to  be rewarded with all the amount  in excess  of the reserve price, noting that the letter  of 16th August  2013  was not even copied to the interested parties, a sign of concealment  of the time  purchase  price.  That shs 30,750,000 is not   based on any contract between the plaintiff and the interested parties.

28. Further, it   was deposed that the professional undertaking   was entered into   on 6th March 2013, a clear manifestation that the professional undertaking   was entered into to perpetuate the fraud upon the interested parties by the defendant and the plaintiff.

29. The interested  party  also deposed that  neither  the plaintiff nor the defendant  disclosed to him  the subsequent  purchase price or the purported  professional  undertaking by the defendant  firm and further, that the defendant  had no instructions to give the said undertaking which was fraudulent  and therefore  unenforceable in law.

30. That in the memorandum  of understanding of  19th March 2014  the plaintiff at clause C  only disclosed  the purchase  price of shs  97,500,00 and not  shs 128,250,000.

31. Further, that in the said memorandum of understanding the plaintiff agreed that it had no claim or right to any money over and above shs 97,500 disclosed in the memorandum of understanding.

32. The interested  parties also contend  that shs  4,875,000 being   balance  of the  5%  commission  is not due or payable  since the  plaintiff  contravened  the Estate Agents Act as  it  was not registered  or even  registrable  under that Act hence  it  cannot  benefit from its own crime  or transgression  of the law  and further, that the  suit herein is brought to enforce  proceeds of crime  and in collusion  with the defendant advocate.

33. It is  also contended that there is no  legitimate  question to be  tired   and that on the issue   of power of  Attorney to Sarah Hilman, it   was  revoked  upon discovery  that she  was  part of the conspiracy  perpetuated by the   plaintiff and  the defendant.

34. All parties’   advocates filed written submissions   which they also argued orally, substantially covering all the issues raised in the applications, and preliminary objection.  They also filed authorities for this court to consider.

35. The interested  parties  counsel,  Mr Ojiambo  submitted  that the  interested parties   were misled  by the plaintiffs the defendant /advocate  into signing  an memorandum of understanding   and an agreement  for sale of their land on the  understanding that  the purchase  price  paid  was  97. 5  million only for them to learn later that  the  purchase  price  was shs  128 million.

36. Further, that from the documentation  exchanged  between the plaintiff and  the defendant, the two of them agreed  to share the  excess  purchase  price between themselves and  that they  colluded not to account to  the interested  parties  without the  latter’s consent.

37. The interested  parties  also submitted that they sought   to be enjoined  to this suit  after learning of being  defrauded  and that when  they inquired  from the Estate  Agents Board, they were  informed that  the plaintiff  was not a  registered  estate agent  hence not  authorized to practice  as an estate  agent   and therefore  his practice  offends Section  2 and  18 of the Estate Agents Act, Cap  533 Laws of Kenya.  In that  regard, the Interested parties  argued that the plaintiff  had no capacity to transact  on behalf of the interested party and is therefore   not entitled to  the commission since the ‘Act’ criminalizes  practicing  as an estate agent without  a license of the Estate Agents Board.  Accordingly, it was also argued that the plaintiff had no locus to bring this suit against the defendant to recover   the purported commission.

38. Reliance  was placed on the case  of Maps  Investment  (K)  Ltd  V Kenya  Railways  Corporation [2006] e KLR  where the Court of Appeal declined to enforce  the claim for  commission noting that  Maps  was not an Estate  Agent, and  that the court   was concerned  with the situation where   a party contravened  an Act of   Parliament  but sought a remedy on  an agreement   to enforce it.

39. The Interested Parties  maintained that the letter  of undertaking by the defendant not to account to  the Interested Parties  shs  30,750,00 and to pay the same being the excess purchase price to   the  plaintiff  was illegal and therefore  the plaintiff would not  be entitled  to the said money  and not  even the commission.  They urged the court not to enforce the illegal undertakings and or transactions but strike out the suit   and order the defendant to release   all the money it is holding to the Interested Parties.

40. On the  plaintiff’s application  dated 7th  September  2015   it  was argued   that there is no  way  the court   can order for  release of  shs  76,935,40  to the plaintiff as held  by the defendant, when the originating Summons filed by the plaintiff seeks for  shs  35,000,000 being the undertaking  and shs  4,875,000 the commission.

41. On the preliminary objection filed by the  plaintiff urging  the court to dismiss  the  Interested Parties application  and that the Interested parties  have no right to participate  in these proceedings, it   was submitted that  the preliminary objection   has no legal basis since the plaintiff should have  enjoined  the Interested Parties  as defendants and that the  Interested Parties   could not   have gone to the Advocates Disciplinary Tribunal  to complain   against the  defendant  until after  the court had  thrashed out  the issues.  Reliance   was placed  on Ann Marie  Cassiede & Another  V Peter Kimani Kairu[2009]  e KLR  where Kimaru  J held that the relationship between  client  and advocate  is not a special relationship.

42. It was  also  submitted  that the preliminary Objection  in incompetent  since there is  no reason why the plaintiff who  was claiming   that the defendant   advocate  had refused  to honour  an undertaking, could not  complaint to the Advocates Disciplinary Tribunal  but expected the Interested Parties to complain to the  said tribunal.  Counsel maintained that their clients   had interest in the money held   by the defendant hence they   were proper parties as interested parties, relying on Supreme Court Petition No. 20 of 2013.

43. In response, Mr Thuku  for the plaintiff  submitted that the Originating Summons  concerns  failure by the defendant   to honour  a professional undertaking  to pay  shs  35,000,000 to the plaintiff and not for enforcement  of  the memorandum of  understanding   between the plaintiff and  the interested  parties.  He denied  that  the plaintiff  ever  represented  itself  as an Estate Agent  hence the  Estate Agents  Act is   inapplicable.  It   was submitted that the interested party is   a spoiler, since it   had a  retainer  relationship with the  defendant  yet  the plaintiff is only  seeking  for enforcement   of a professional  undertaking     which is a  contract.  Further,  that there was no application for  joinder  of parties hence, the Interested  Parties are wrongly joined to these proceedings  and therefore the Supreme Court  Petition No. 20/2013  is  irrelevant   and that the Interested Parties are therefore  strangers and they should be  struck out  and that they  have no mandate  to ask the court to strike  out  the plaintiff’s  suit. Counsel maintained that the Interested Parties should have complained against the defendant to the Advocates Disciplinary Tribunal for breach of trust, professional negligence or misconduct.

44. Further, that there  are no  substantive  pleadings for  alleging  fraud  against  the advocate   and that  fraud  cannot be decided on affidavit  evidence. Reliance was further placed on  the case of Patel V Kairu & Mangat  V Wesley  Chepkoinet where the court  held that the Interested  Party is not  strictly a plaintiff or defendant  and therefore it  cannot be  allowed to  ask for  substantive  prayers.

45. On  vitiating  contracts, reliance   was placed   on National Bank of Kenya Vs  Anaj Warehousing    Ltd  SC Pt  36/2016  where the court   held that it cannot  invalidate  all documents  filed  by an unqualified   advocate who had  no practicing certificate and that  what  was  important  was the  intention of the parties hence  no law   can invalidate a professional undertaking.  He urged the court to   dismiss the Interested Parties’ application dated 22nd September 2015.

46. On behalf of the defendant, Mr Khaseke counsel  submitted that they did not file any  replying  affidavit  because  they left  the matter for  the court   to determine  who should  be paid the money that  the  defendant admits  holding, after  the interested party  raised  the issue with the  money being  paid  to the  plaintiff.  He also submitted that the defendant is willing to deposit  the shs  35  million into court.

47. Mr  Khaseke   also submitted that  the issue of fraud  cannot be  determined summarily  and that the  Interested Party  cannot be the recipient of the alleged  fraud  and collusion  which are  issues that can only be determined  by hearing  the main  originating summons.

48. Further, that the interested  party  has not lodged any counterclaim or a claim hence the court  cannot  summarily  order for the money to be paid  to  them.

49. On the prayer  for injunction by the plaintiff, it  was  submitted  that what   was in issue  as per  the Originating Summons  was  35 million  yet  the injunction   seeks  to restrain  payment  of over  81 million  without  a basis.  Further, that there should be no apprehension that the money  will be paid to third parties  as  the defendant   was waiting  for a determination  by the court for them to comply.

50. Further, that a mandatory injunction  cannot issue   before all the issues  of the legality  or otherwise of the memorandum of  understanding are determined    hence the matter should be  dealt with  in the Originating Summons. Reliance   was placed  on Nakuru  Veterinary Centre  Ltd V Mary W. Kariuki [ 2003] e KLR  and  Papindea  Kaur  Atwal V Harbans  Singh Amrit  & Another  [2015] e KLR.

51. In a rejoinder, Mr  Ojiambo counsel  for the interested  parties submitted that on  23rd March  2015  the interested  party  was  enjoined to this suit by  consent of all the parties.  He  maintained that  his client’s  claim  is for the  balance  of the purchase  price  which the plaintiff  and the defendant  undertook  between  themselves not to disclose  to the interested parties.  Further,  that if the court  does not  strike out  the  suit  then the  extra purchase  price  should be paid  to the interested parties  which is not  disputed.  Further, that  the Interested Parties  never agreed  to give to   the plaintiff amount  in excess of  97 million  reserve price.  Further, that the so called  letter of undertaking  was never copied  to the interested  parties hence  it  is fraudulent and cannot  be enforced  being  an illegal  contract.

DETERMINATION

52. This court  has carefully considered  the two  applications on record  and  a preliminary objection filed by the  interested party.  As a cardinal rule, a preliminary  objection raised   should  be considered  first before any other   proceeding since if found to be validly  raised, is  likely to dispose of the  whole  matter.

53. The big   question   therefore   is whether  the preliminary  objection filed on 23rd  September  2015  and dated  22nd September  2015   should be  allowed.  To answer  that  question, the court must  determine  what a preliminary  objection is, in law. The legal  delimitations for a  preliminary objection  were set out in the Mukisa Biscuit  Manufacturing  Company Ltd  V West End Distributors Ltd[1969] EA that :

“ so far  as I am aware, a preliminary  objection consists  of a point of law which  has been pleaded, or  which arises  by clear  implication out of  pleadings, and  which if  argued  as a  preliminary point may dispose  of the suit  per Sir Law J.A.”

54. Sir Charles Newbold  P. in the same case stated that:

“ A preliminary  objection is in the  nature  of what  use to be a  demurer.  It raises  a pure  point of law  which is argues on the assumption that all the facts  pleaded by the  other side are  correct.  It cannot  be raised if  any fact  has to be  ascertained or if what is sought  if  exercise of  judicial discretion.”

55. Ojwang  J.B. J ( as  he then  was ) made it  more simpler  when he stated  in  Oraro  V Mbaja  [2005] e KRL that:

“ I think the principle  is abundantly  clear.  A “ preliminary objection” correctly  understood I snow  well identified  as, and declared  to be the  point of law  which must  not be  blurred  with factual  details  liable to be contested  in any event, to be  proved  through the processes of evidence.

Any assertion which claims  to be a preliminary objection, and yet it  bears factual  aspects  calling for  proof, or seeks  to adduce  evidence for  its  authentication, it not, as a matter of  legal principle,  a true  preliminary   objection which the  court should  allow to proceed.  I am  in  agreement…..that where  a court  needs   to investigate   facts, a matter  cannot be  raised   as a preliminary point.”

56. Applying  the above tests to the Preliminary Objection raised by the plaintiff, the Preliminary Objection dated  22nd September  2015 is two pronged  namely:

i.That the issues raised by the  interested  parties in the  Notice of Motion  touches  on advocate/client  relationship  which is  a sole  preserve  of the Disciplinary Tribunal established under  the Advocate Act  Cap  16 Laws of  Kenya; and

ii.That the interested  parties have  no locus  standi to institute  this suit having donated a general  power of  Attorney to Sarah Hillman  which  is still valid up-to-date.

57. For  this court  to strike out  the interested  parties’  application dated  10th July 2015   on the ground that  the issues  raised therein  touch  on advocate/client  relationship which is the sole preserve  of the  Disciplinary Tribunal  as established  under the Advocates Act Cap 16 of Laws of  Kenya, it must  investigate  the facts surrounding  the circumstances under which  the claim for  payment of balance of the purchase  price   was made.

58. From the submissions of parties  and  the affidavit  evidence, there  are  factual details which  require  determination by the court  only  after proof   and authentication, and not  just a matter of legal principle.

59. Consequently, I find that the first  ground  of the Preliminary Objection fails  for not  being a true  preliminary objection in the sense of the law   as spelt  out in the  above cited cases.

60. As to whether  the second ground  that the interested parties have  no locus   standi  because  they had donated a power of Attorney to Sarah  Hillman which power of attorney  was still subsisting  to date, in order  for this court to determine  that issue, it has to hear evidence  as to  whether  or not the  power of attorney granted by  the Interested Party  to Sarah Hillman respecting  the transaction for sale of property is subsisting  or  was revoked  and  if so, at what  point in time  since  the Interested Parties were enjoined  to these  proceedings  not through  their  representatives but on their own  behalf.

61. Furthermore, the cases  of Joseph Leboo V Director, Kenya Forest  Service  & Others ( Eldoret ELC  273/2013  and Mangat Group Ranch  & 3 Others V Wesly  Chepkoimet & 19 Others[ 2014] e KLR  are only  applicable  in so far as there  was   a pending  application by persons  who  wished to be enjoined  as interested  parties.  In this case, the  interested parties  are already  enjoined  by consent  and that  notwithstanding, nothing  bars them to apply to be enjoined  as  either  plaintiffs or as defendants  to these proceedings  upon which  they can adequately  articulate  their  claim in the matter.  Justice shall be   administered   without undue regard to procedural technicalities   as such   technicalities would only go to ousting a genuine litigant from the seat of justice.

62. Accordingly, the second limb of the preliminary point fails to meet the threshold    set out in the Mukisa Biscuit case and others as cited.

63. In the end, I find  that the two  preliminary points of law raised by  the  plaintiff  are incapable  of disposing  of the interested  parties’ application    dated  7th September  2015.  The Preliminary Objection rose, in my view, does nothing but confuses the issues.  I therefore  dismiss  the preliminary  points of  law   raised  by the plaintiff dated  22nd September  2015  for want of merit.

64. On the merits   of the application dated  7th September  2015,  the interested parties are seeking  to have the suit  herein filed against the defendant advocates struck out and  that the  balance  of the purchase  price  to be  paid to the  Interested  Parties.

65. I will commence with the issue  raised  by the plaintiff  that the  Interested  Parties  are strangers  to this suit and  therefore  they cannot  ask to  be paid  any money  or  to  have  the suit struck out.

66. On 23rd March 2015, the record  clearly shows that all the parties herein   were ably represented  in court by their  advocates and on that  date, all the parties  advocates  consented  to the interested herein being  enjoined  as such  to this  suit   and the court made   an order to that effect, with leave  of  14 days  to the interested parties to file a replying affidavit  in the dispute.  A Mr Orina advocate held brief for Mr Gitonga for the applicant whereas Mr Mwiti   was for the defendant and Mr Ojiambo appeared for the interested parties.

67. For  the above reason, that  the matter  of joinder of the interested parties  to these  proceedings  was  by consent, and as that  order of     23rd March  2015 has not been challenged  or sought   to be  varied, discharged or set aside, I find the objection by the  plaintiff ill motivated   and unwarranted.  I would not even go into the merits  of  whether or not  the  interested parties   should have  been  enjoined  to these proceedings  since  the merits  thereof   was spent  by the consent  of the parties  as recorded  by the court on 23rd March  2015.  Similarly, it would  be a waste  of judicial time to discuss  whether or not the  interested parties  should have  come to court  on their own  or through  their  agent Sarah Hillman.  This is so because  the  affidavit   evidence  on record  is clear that  Sarah Hillman  had  the Power of Attorney  to represent  the interested parties  in the transaction  for sale of the interested parties’ land and which she  did act.  No facts or law was cited before this court to the effect that the donor cannot sue on his own   or in his own name   and behalf   where there    is a Power of Attorney donated to a donee.  In any case, parties ought to know that a donee of the Power of Attorney can only sue and conduct proceedings in the name of a doner.  This is what the courts have held in Grovindji Malhirada V N.M. Patel HCC No. 94/1994; Jones V Gurney [1913] W.N. 72, Daleys  Agency Law  in EA  [1966]; Abdalla  Wilji Hirji V Dhanji Buwji & Company  [1921] 8 EALR  206; Turri Sidpra & Another  Vs  Uganda  Rehabilitation Development  Foundation  Kampala  HCC 199/93, Republic V Public procurement  Administrative   ……….Board  Exparte  Sympony Technologies  Limited (K) &  2 Others  [2016] e KLR.

68.  Further, in Francis   Kamande V Vanguard  Eletrical  Services  Ltd CA 152/1996, it  was  held that  a donee  of Power of  Attorney  cannot  sue in his own  name unless  the debt  is  assigned  to him/her.

69. For the above reasons, I find that the objections rose relating to the capacity or locus standi of the interested parties to this suit are    misconceived and the same    are dismissed.

70. On the issue  of whether  the application dated  9th July 2015  is incompetent  because it touches on advocate/client  relationship governed by the Advocates  Act  and therefore   in the preserve of  Advocates Disciplinary  Tribunal, I have  considered  the submissions by the parties  for and  against  the objection.  Whereas  I agree that  the affidavit   evidence  on record is  clear that  there   was advocate/client  relationship between  the defendant  and interested party, nonetheless, the interested party  cannot  be compelled, and  no law compels  them to file their  complaint to the Advocates  Disciplinary Tribunal  to claim for  the balance of  the purchase   price  allegedly withheld  by their  advocate.

71. Order 52  of the Civil Procedures  Rules under  which the plaintiff herein has filed the Originating Summons seeking to enforce   a professional undertaking  too permits the Interested Party herein, who is  claiming for balance of purchase  price  received  by  his advocate  to be released to him in view of the  trust bestowed  on the advocate  to apply for an order of accounts. More Specifically, Order 52 Rule 4 of  the Civil Procedure Act  pursuant  to the Advocates  Act provides:

1)“  where the  relationship of advocate and clients exists  or has  existed the court may, on  the application of the client   or his legal  personal representative, make an order for:

a)The delivery of an advocate  of a cash account;

b)The payment  or delivery  up by  the advocate  of money by securities

c)The delivery  to the applicant  of  a list of   the money or securities  which the  advocate  has in his possession or control on behalf of the applicant;

d)The payment into or lodging  in court of  any such  money or securities;

e)The delivery up of papers and documents to which the client is entitled.

2)Applications under this rule shall be by originating summons, supported by affidavit, and shall be served on the advocate.

3)If the  advocate  alleges that he has  a claim  for costs the  court may make such order  for the taxation and payment, or securing  the payment, thereof  and the protection of the advocates lieu, if any, as the court deems  fit.”

72. From   the above  provision, it is  clear that  the jurisdiction  of this court  to hear any claim by  a client  against an advocate  is clearly  conferred  by statute  and  not ousted  or at all.  In the case of Velji Shah mad Vs Shany, Bros & Popatlal Karman & Company CA7/1956[1957]EA438, the then  Supreme Court of Kenya, applying the examples   given in  Maxwell  on the  interpretation statutes  9th Edition pages  246-249 and 250 stated  that:

“…….whether there is anything that makes it the duty on which the power is conferred to exercise that power”……  “ where   a statute   confers   an authority  to do a judicial act, in a certain  sense  there  would   be here  such a right   in the public  as to make it the duty  of the justices to  exercise  that power: to put it  in another  way where  the exercise of an authority  is duly  applied for by a party  interested and having a right to make the application, the exercise depends  upon  proof of the particular  case out of  which the  power arises.”

73. Furthermore, the provisions of Section 6) of the Advocates Act are couched in discretionary and not mandatory terms.  It provides:

“ 60(1) A complaint  against  an advocate  of professional misconduct which expression includes  disgraceful  or dishonorable  conduct  incompatible  with the status  of an advocate, may be made to the tribunal  by way person……..”

74. The above  Section, read together with Section 55 under Part  X1  of the Advocates  Act which provides that:

“ Every advocate  and every person   otherwise entitled  to act as  an advocate  shall be an  officer  of the court  and  shall be  subject  to the jurisdiction  thereof  and, subject to his Act, to the  jurisdiction of the Disciplinary  Committee.”

75. From the above  provisions, it is clear  to my mind that   the interested  party  had the option  of either  filing a  complaint  with the Advocates Disciplinary  Tribunal, concerning  the   defendant’s  conduct or filing  an Originating Summons  under Order  52(4) of the  Civil Procedure Rules.

76. In the instant case, noting that the  plaintiff, who is not  an advocate  and therefore since the complaint  being  raised against   the defendant  touches  on the  plaintiff  as well, I find  that it  was  in order for   the interested party to be enjoined  to  these proceedings   as a party to ventilate their grievances  against both  the plaintiff and the defendant, who are alleged to have  jointly conspired to defraud  the interested parties  of their extra  amount raised on the sale  of the interested  parties’ land to some  third parties.

77. Having  exhausted  the preliminary  issues raised by the plaintiff against   the interested parties  application dated  7th September  2015, I shall  proceed to examine  the substance of that   Notice of Motion.  The Notice  of Motion dated  7th September  2015  seeks for:

a)Striking out of the suit herein  filed by the plaintiff against the  defendant and

b)That the  defendant be  ordered  to release   and pay the  interested  party  the balance of the  purchase   price for the  sale of  LR  1338/89 Athi River.

78. The application is brought under the provisions of Section 3A of the Civil procedure Act and Order 2 Rule 15(1) (b) and (d) of the Civil Procedure Rules.  The grounds  upon which  the application is premised  are  as reproduced  in this ruling  which are also  to be found on  the face of the application and   replicated  in the deposition  by the interested  parties’ affidavit   in  support of the application.

79. The law  regarding  striking out  of suits or  pleadings  and entry  of judgment  is now settled, as  applied in  the DT Dobie  & Company (K) Ltd  Vs  Muchira  [1982] KLR  1  that:

a.That the court should not strike out if there is a cause of action   with some chances of success.

b.The power should only be used in plain and obvious cases and with extreme caution.

c.The power should only be used in cases   which are clear and beyond all doubt.

d.The court should not engage in a minute and protracted examination of documents and facts.

e.If a suit shows a semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward.

80. Madan J in  the above  case  succinctly stated,  adopting  Sellers  J in Wenlock v Maloney  [1965] 1 WLR  1238:

“ This summary jurisdiction of the  court  was  never intended to be exercised  by a minute  and protracted  examination  of documents   and the facts of  the case  in order to see  whether  the plaintiff  really   has a cause of action.  To do that is to usurp the  position  of the trial  judge  and  to produce   a trial  of the case  in  chamber  on affidavits only, without  discovery  and without oral  evidence  tested by  cross  examination in the  ordinary  way.  This seems to me to be an abuse of the inherent   power of the court and not a proper exercise of that power.”

81. Danckwerts  LJ in the same case stated that:

“  The power  to strike out  any pleading or any part of a pleading  under this rule is not mandatory: but  permissive  and confers   a discretionary  jurisdiction  to be  exercised  having regard to the  quality and all the circumstances relating to the  offending  pleading.”

82. On the other hand, Madan J in the  D. T Dobie  (supra)case  stated that:

“No suit ought to be summarily  dismissed  unless it appears so  hopeless  that it plainly and obviously discloses  no reasonable  cause  of action  and is so week  as to be beyond  redemption and incurable  by  amendment.  If  a suit shows a  mere semblance   of a cause  of action, provided it  can be injected  with real life by  amendment,  it  ought to be allowed to go forward  for a court of justice  ought not to act  in darkness without the full  facts of the case before it.”

83. And Ringera J ( as he then  was )  in the Dr  Murray Watson  Vs Rent  -a  plane  Ltd  HCC 2180/94, quoting  from Halsbury’s  Laws of England  4th  Edition Volume   36 paragraph   73  stated that:

“ In judging the  sufficiency of a  pleading  for this purpose , the court will  assume all  the allegations  in it   to be  true and  to have been  admitted by the other  party.  If the   statement  of  claim  then shows on the face  of it that  the action is  not maintainable   or that the absolute  defence exists, the court  will strike  it out.  Its pleading will not, however be struck out if it is merely demurrable, it must be so bad that no legitimate amendment could cure the defect.  The jurisdiction to strike out a pleading ought to be exercised with extreme caution and only in obvious cases….”………..

“ The Pith and Marrow  of it is  that  where on a consideration of only the allegations  in the plaint  he court concludes  that a cause of action  with some  chances  of success is shown  then that  plaint  discloses reasonable cause of action.”

84. Waki J on a similar issue of striking out a party’s pleading in the Bank of Credit & Commerce International (overseas) Ltd Vs  Giogio Fabrise  & Another HCC 711 of  1985 stated that:

“ summary  determinations of cases are  draconian and drastic and should  only be  applied  in plain and  obvious  cases  both   as regards the  facts and  the law.  In a matter  that alleges   that the suit is  scandalous, frivolous and vexatious  and  otherwise  and abuse of the court  process, I must  be satisfied   that the suit  has no  substance, or is  fanciful or the  plaintiff  is trifling  with the court or the suit not  capable of reasoned  arguments, it  has  no foundation, no chance  of succeeding  and is only  brought merely  for purpose  of annoyance or to gain fanciful advantage and will lead to  no  possible  good.  A suit would be an abuse of the court process where it is frivolous and vexatious.”

85. Order  2 Rule  15 1 9b) and  (d)  of the Civil Procedure   Rules  provides  that:

“ 15(1)  at any stage  of the proceedings  the court  may  order  to be struck  out or  amended any pleading  as the ground that;

a)“….

b)It is  scandalous, frivolous or

c)It is  otherwise  an abuse of  the process of  the court, and may order  the suit  to be stayed  or dismissed  or judgment to be entered  accordingly, as the case may be,

d)So far as applicable this rule shall apply to an originating summons and a petition.”

86. The suit   which is  sought to be   struck out   is the Originating Summons  dated  21st  January  2015   wherein  the plaintiff herein  Reno Agency  Limited  sought for  the following  orders under  Order  52  Rules  7(1) (b)  and 10(1)  of the Civil Procedure  Rules  and Section 3A  of the Civil Procedure Act:

1. That the defendant advocates do honour  their  professional undertaking  can pay the  plaintiff  a sum of  kshs  35,125,000 within fourteen (14) days  from the date of service of  an order  of this Honourable  court do issue   an order  in enforcement  to compel the defendant firm to pay  the sum of kshs  34,125,000 plus interest at commercial  rates  thereon immediately.

2. That the costs of this summons be awarded   to the plaintiff.

87. In support of the Originating Summons is a detailed affidavit of Mumo Mweu, the plaintiff’s Director, annexing documents in support of his depositions.  Among those documents are an alleged professional undertaking, memorandum of understanding between the plaintiff and the interested parties through their appointed agent   Sarah Hillman with power of attorney.

88. The purported undertaking is  dated  16th  August   2013, which is  highly contested  by the interested  parties, who claim that the so called  undertaking   was a conspiracy  to defraud   them of the  excess  purchase  price  fetched   from the  sale of their  land over  and above the  reserve  price.

89. The interested parties also contend that they never agreed to give to the plaintiff any amount in excess of the reserve price. They accuse the plaintiff and the defendant of conspiring   to withhold and or fail to disclose to the interested parties that the property   was sold     at   kshs   128 million and not 97 million   which latter   was the disclosed   amount.

90. The interested party   has also  deposed and annexed   the agreement  and memorandum of understanding  which  in their  view, were  he documents disclosed  to them by the plaintiff and defendant advocate only for the interested parties to learn  later that there  were other  agreements between the  plaintiff and  defendant  to defraud  the Interested parties  of the extra purchase  price negotiated  over and above  the reserve price.

91. To my mind, and without  delving  into the merits or demerits of the claims by the plaintiff  against  the defendant on the  one hand  and the interested  parties claims  against both the  plaintiff and defendant, the  plaintiff’s suit, as against  the defendant is not  scandalous, frivolous or an  otherwise   an abuse of  the process  of the court.  It is  not obvious   that this  suit is of  no substance  or is fanciful or that  the plaintiff is  trifling  with the  court or that the suit is not  capable  of reasoned  argument; has no foundation, or brought for annoyance  or to gain  fanciful advantage. An arguable suit is not necessarily one that must succeed but that there are triable issues of whether or not there is a valid professional undertaking between the plaintiff and defendant advocate to pay the plaintiff a sum of kshs 35,125,000.

92. The  interested parties have nonetheless  raised very serious  issues  of fraud against  the plaintiff  and the defendant, jointly which issues, in my humble  view, are triable   after all the parties  have  agreed  on the mode  of proceeding with the Originating Summons, discovery made and the court giving  directions in the  matter.

93. Although the interested  parties  as enjoined  to these  proceedings, are neither   plaintiffs  nor defendants, they have an interest  in the subject  matter  which is  balance of the purchase  price on excess of what   was reserved price for the sale of their property.  They must therefore properly lay their claim against both the defendant advocate   and plaintiff in order for the court to give directions on how   the matter shall proceed.  They cannot  be enjoined  into  the proceedings   today  and the next   day, they are  seeking  to strike  out the  suit  and judgment   be entered in their  favour  where  serious   issues  of fraud   which are denied by the plaintiff and  the defendant are raised.  In Uganda Commercial Bank Vs Mukoome Agencies [1982] HCB 22, it was held that where fraud it alleged, the party alleging it must be given an opportunity to prove it.  And that a substantial allegation of fraud   raises a triable   issue entitling a defendant leave to defend the suit.

94. In this  case, the triable issues  between the plaintiff and  the defendant  and as between  the defendant, plaintiff  jointly and the interested parties include:

1)Whether there   was any  valid  professional  undertaking  by the defendant to the plaintiff;

2)Whether  the ‘professional  undertaking”  is  legal or fraudulent  for want of  instructions  from the interested  parties;

3)Whether  the plaintiff  is entitled  to any commission, not  being  a registered  and or licensed  Estate Agent  under the Estate  Agent Act;

95. A perusal   of the memorandum of understanding dated 19th March 2014    does not reveal the fact of the plaintiff describing itself as ‘Estate Agent’.  It therefore  follows that  there is a triable  issue  as to whether  a commission  agent must  be as a matter  of law be  a registered   and licensed  Estate  Agent  under  the Estate Agents Act.

96. All those and many other  issues  raised  in the parties’  submissions  are highly triable  and therefore  it would be a traversity of justice  for this court  to determine this  suit on the basis of  allegations raised in affidavits  which evidence has not  been tested in cross-examination.  The issues raised are better canvassed at the full hearing of the merits of the suit and not by way of these   interlocutory proceedings.

97. For those above   reasons, I decline to grant the prayers sought in the Notice of Motion dated 7th September 2015 and proceeded to dismiss it.

98. On the merits of the  application by the plaintiff  dated  22nd September 2015, the application  seeks for  an injunction to restrain the defendant  from paying  a sum  of shs  81,810,830 it is  holding  on account  of sale of LR  1338/89 original 1338/4/58 Athi River  between  the interested parties  herein through  their Attorney Sarah Hilda Hillman  and Kabansora Millers  Limited; an order for payment  to the  plaintiff by the defendant; an order for  payment  to the plaintiff  by the defendant   a sum of kshs  4,875,000 within 14  days; the balance of amount   held by  the defendant upon grant  of the prayer  2 and  3   ie  shs  76,935,430 be deposited  in court or in a joint interest earning  account in  the joint names of   the plaintiffs’ defendant’s and the interested parties advocates, and that Patrick Rugo Githinji advocate  do personally  attend court   during the hearing of this application of the interested  parties dated  9th July 2015   for cross examination of his affidavit sworn on 5th February 2015.

99. From the onset, the prayer  for injunction  on the amount of shs  81,810,430  must fail  for reasons   that there  is no prima facie  evidence  explaining  or justifying  that claim  since  the Originating Summons  seeks for  enforcement  of a professional undertaking  in the sum  of  kshs  35,125,000/- and no more.  secondly, the defendant  admits that they  are holding  the sum of money shs  30. 75 million  which is  the excess  amount on  the reserve  price  fetched  following  the sale  of the interested   parties’ land to  Kabansora Ltd.  However, they  contend  that as the said  sums of money is being claimed  by both the plaintiff and the interested parties, and that therefore  they would  not release  it to any party  except  with the  court’s determination of the issues raised.

100. In my humble  view, that is  not an admission of a claim  by the defendant especially where  there  is an intervention by  interested  parties laying claim to the  said amount  claimed by the plaintiff.

101. On the  claim of   4,875,000 being commission on the 97. 5 million  , I decline to grant that   prayer  at this stage for  reasons  that the interested  parties had laid  claim to it, subject to proof, that  the plaintiff not being  an estate agent, registered  or  licensed  by the Estate Agents   Board  under the Estate Agents   Act, is not entitled  to a commission or at all.

102. Therefore, in view of the highly contentious issues herein, it is only fair and just that any monies held by the defendant are preserved until the suit herein is heard and determined on merits.

103. On the prayer for  cross examination of Mr Patrick  Rugo Githinji  advocate  on his affidavit of  5th February  2015,  I note that  the plaintiff’s  counsel  abandoned   that prayer in his rejoinder  submissions.  Even if that  were not  to be the  case, the court notes that the affidavit  of Patrick Rugo Githinji  advocate  sworn on 5th February 2015   was in reply to the Originating Summons  dated  21st  January 2015  and  not in reply to these  interlocutory  applications/proceedings.  That being the case, the said affidavit being a defence to the Originating Summons can only be subject of cross examination   at the hearing of the main Originating Summons.  The prayer was therefore misplaced and I would have proceeded to dismiss it.

104. In the end, I make the following final orders:

1. The preliminary objection by the plaintiff dated 22nd September 2015 is hereby dismissed.

2. The application by the interested party dated 7th September 2015 is hereby dismissed.

3. The application dated  22nd  September  2015   by the  plaintiff  is allowed only in part to the extend that:

a)All  the sums of money held by the defendant as conceded, regarding  the transaction between the interested parties  herein and Kabansora  Ltd  respecting LR 1338/89 Athi River  wherein the plaintiff acted  as ‘agent’ for the interested  party  for purposes of procuring a  buyer    of the above stated    land shall  within  21 days  from the date   hereof  be deposited  in a fixed   joint interest  earning    bank account  to be opened and held  jointly by the advocates for  the plaintiff, the defendant  and  the interested  parties  until further orders of this court  or until the suit herein is heard and  determined.

4. The parties to this suit to expedite   the hearing of this suit, which shall be given a hearing date on a priority bases.

5. Costs of the preliminary objection  dated  22nd September, 2015, the applications dated  22nd September   2015  and 7th September  2015   shall be in the main suit  and to the  successful litigant(s).

Dated, signed and delivered at Nairobi this 19th day of August 2016.

R.E. ABURILI

JUDGE

In the presence of :

Mr Thuku for the plaintiff

Mr Mwiti  holding brief for Mr Khaseke for the defendants

N/A for Interested Parties

C.A: Adline