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Court of AppealDismissedCivil Appeal 51 of 1983· [1983] KECA 107 (KLR)

JOSEPH NDUNGU vs ONESMUS MBUGUA [1983] KECA 107 (KLR)

Court of Appeal
4 October 1983
CMC B MadanZCZ R ChesoniAKA A Kneller
707 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that a partner who withdraws partnership funds must account for the other partner's half, especially where he admits the withdrawals.

What this practically means

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Executive summary

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The Court of Appeal at Nakuru dismissed this first appeal against a High Court decision (Masime J, 28 April 1983) in a partnership dispute between the appellant and the respondent. The respondent had sued for accounts of the partnership; by consent the parties' advocates were to take the accounts, including shs. 43,000 being the proceeds of two cheques withdrawn by the appellant from the partnership account, and their findings were to be final and binding. The advocates reported there were no accounts to take, leaving only distribution of assets. The trial judge, disbelieving the appellant's claim that shs. 19,000 represented proceeds of his wheat, ordered him to account for half of shs. 22,000 on the basis of equal partnership and directed the sale of the remaining partnership assets with equal division of proceeds. The appellant's main complaint was that the judge ordered him to account for shs. 44,000 without the partnership accounts first being taken. Madan JA held the learned judge acted in accordance with the terms of the consent order recorded by the parties, and that the shs. 44,000 was taken from the partnership account upon the appellant's own admission, only half of which was lawfully his. Chesoni Ag JA agreed, noting the appellant failed to prove the withdrawn money was used for partnership purposes. Kneller JA concurred with both judgments. The appeal was dismissed with costs.

Key legal issues

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01

Whether the accounts had to be formally taken before an order to account could be made

Holding

No - the consent order governed, and the advocates appointed had reported there were no accounts to take, leaving only distribution of assets.

Reasoning

The parties themselves had, by consent, directed how accounts were to be taken, including the cheques totalling shs. 43,000. Their advocates reported that no accounts existed to be taken. The appellant admitted withdrawing shs. 24,000 and shs. 20,000 into his personal savings account. On the appellant's own admission the judge could order him to account for half of shs. 44,000, since only half was lawfully his under the equal partnership.

p. 1
02

Whether the appellant proved the shs. 19,000/22,000 was the proceeds of his wheat

Holding

The learned judge did not believe the money was the proceeds of the appellant's wheat, and the appellant was unable to prove the funds were used for partnership purposes.

Reasoning

Chesoni Ag JA noted the appellant admitted in evidence that he used two signed blank cheques to withdraw shs. 24,000 and shs. 20,000 from the Barclays Bank partnership account. The burden lay on him to show the money was for partnership use to be distributed; he failed to discharge it. The trial judge's finding that the sum was not the proceeds of the appellant's wheat was therefore open to him.

p. 2

Legal principles established

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  • A trial court may act on a consent order recorded by the parties themselves for the taking of accounts, and on a party's own admission of withdrawals from a partnership account.
  • A partner who clandestinely withdraws partnership funds into his personal account is bound to account to the other partner for the other partner's half share.

Court orders

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  1. 1.Appeal dismissed
  2. 2.Appellant to pay costs of the appeal
  3. 3.Judgment of the High Court (accounting for shs. 22,000, sale of remaining partnership assets and equal division of proceeds) affirmed
On appeal from
High Court of Kenya at Nakuru
Civil Suit No 164 of 1977
Jurisdiction invoked
First appeal to the Court of Appeal from the High Court (Judicature framework; no specific provision quoted in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "JOSEPH NDUNGU vs ONESMUS MBUGUA [1983] KECA 107 (KLR)", Case Analysis (1983). Civil Appeal 51 of 1983. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1983/107/eng@1983-04-10

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.