THE GOVERNMENT OF THE UNITED STATES OF AMERICA v JOSEPH MUIRURI GITHONGO [2000] KECA 25 (KLR)

REPUBLIC OF KENYA

IN THE COURT OF APPEAL OF KENYA

AT NAIROBI

Civil Appeal 27 of 1999

THE GOVERNMENT OF THE UNITED STATES OF AMERICA.....APPELLANT

AND

JOSEPH MUIRURI GITHONGO........................................................RESPONDENT

(Appeal from the judgment of the High Court of Kenya atNairobi (Mbito J) dated 1st September, 1998

in

H.C.C.C. NO. 1315 OF 1991

CONSOLIDATED WITH

H.C.C.C. NO. 2040 OF 1996)

JUDGEMENT OF OMOLO, J.A:

I had the advantage of reading in draft form the judgment ofAkiwumi, J.A. and I entirely agree with his reasoning andconclusions. It is clear from a reading of the judgment of the superiorcourt that the learned trial Judge wholly misapprehended theevidence which was placed before him by the parties. The lease-purchase agreements were placed before the trial Judge. None ofthem contained the stipulation contended for by the respondent thatthose agreements were conditional upon the respondent himselfobtaining a loan or the appellant obtaining a loan on behalf of the respondent, from the Standard Chartered Bank, Ltd. True, therespondent was in need of money from that Bank, but the only thingthe appellant ever offered to do in respect of that need of moneyby the respondent was that instead of paying directly to therespondent the sums due to him under the lease-purchase agreements, the appellant would instead remit the monies to Standard CharteredBank Ltd. That is exactly what Ms Ann Dotherow told the StandardChartered Bank Ltd in her letter dated 28th January, 1988 to Mr. Itela of that bank.  In that letter, Ms Dotherow stated:"The United States Agency for InternationalDevelopment has just concluded a Lease-Purchase Agreement with Mr. Joseph Githongoconcerning four residential properties locatedin Spring Valley. Mr. Githongo has informed usthat he is entering into an agreement withyour bank whereby future payments under theterms of these agreements are to he madedirectly to you. We have no objection indoing so, but several items are required forus  to process payments to your organization.

(a)   We will require Mr. Githongo's approval ina letter to us to permit processingfuture payments directly to your bank;

(b)   Account number to which future paymentsare  to be  deposited;

(c)   The terms of the agreement betweenyourself and Mr. Githongo specifying theamounts and number of years payment is tobe made  to your organization.

Upon receipt of this information withcertifications by Mr. Githongo, we will processfuture payments per his instructions, with acopy of this agreement to your bank. Pleaseadvise if you require any additionalinformation.

Sincerely

B.  Ann Dotherow

Executive Officer

cc:  Mr. Joseph Githongo"

As is obvious from the letter itself, it was written after thelease-purchase agreements had been concluded and it was copied tothe respondent. The respondent did not protest to anyone that noagreements had been concluded or that the agreements wereconditional upon Standard Chartered Bank granting a loan to him.Instead, by his letter of 2nd February, he told Ms Dotherow:

"1. I acknowledge with thanks your copy of aletter to, Mr. Itela of the StandardChartered Bank Kenya Ltd, Moi Avenuedated 28 January, 1988 on the abovesubject.

2.   I am pleased to give my firm andirrevocable authority to the USAIDMission to pay all future rents directlyto the Standard Chartered Bank Kenya Ltdas already agreed between all of us.This irrevocable authority to the USAID Mission remains in full force until thetotal sum advanced to me relating to theagreed purchase price is settled in full.

3.   I most sincerely hope that this matterwill now be concluded shortly and that Iwill be enabled to draw-down to settlesome urgent matters which were thereasons for this particular sale.

Thank you,

Yours sincerely,J.M.  GITHONGO.”

I have said that the respondent was obviously in urgent need of money, and that was probably why he offered to sell his fourproperties to the appellant. But he equally knew that theappellant was not in a position to pay in a lump sum the agreedpurchase price of some Shs.6 million. The inability of theappellant to pay in a lump sum the agreed purchase price was thereason for the lease-purchase agreements under which the appellantwas to pay by installments.

At the same time, the appellant himself was arranging for aloan from Standard Chartered Bank. If his intention had been thatthe sale would only take place in the event that Standard CharteredBank granted the loan to him, then nothing could have been easierthan to put that understanding in the lease-purchase agreements.But if that was the respondent's intention and he kept it tohimself, he cannot now be allowed to get out of the agreements dueto his private intention kept away from the appellant. That cannotconstitute a mutual mistake; nor can it constitute a frustration ofthe agreements. I agree with Akiwumi, J.A. that this appeal oughtto be allowed with costs on the terms proposed by him.

As Tunoi, J.A. also agrees, the orders of the Court on thisappeal shall be those proposed in the judgment of Akiwumi, J.A.

Dated and delivered at Nairobi this 14th day of July, 2000.

R. S. C. OMOLO

JUDGEOF APPEAL