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Court of AppealPartially AllowedCivil Appeal 14 of 2005· [2005] KECA 358 (KLR)

Mapis Investment (K) Ltd v Kenya Railways Corporation

Court of Appeal
18 November 2005
ROR. S. C. OmoloEOE. O. O'KubasuWDW. S. Deverell
2,267 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled that illegality in a contract can be raised on appeal even if never pleaded, but other unpleaded defences cannot.

What this practically means

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Executive summary

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This is an interlocutory ruling of the Court of Appeal at Nairobi (Omolo, O'Kubasu and Deverell, JJ.A.) on a preliminary objection arising in a first appeal by Mapis Investment (K) Ltd against the High Court's dismissal of its claim for Shs 17.5 million commission on the sale of L.R. No. 209/6524 Nairobi to the Japanese Embassy. The appellant objected to the respondent's Grounds for Affirming the decision, which raised for the first time the illegality and unenforceability of the agency agreement (allegedly in violation of the Estate Agents Act Cap 533 and the Kenya Railways Act Cap 397), breach of public policy, and the appellant's lack of effective causation of the sale. The court applied the Privy Council decision in Mistry Amar Singh v Serwano Wofunira Kulubya, holding that illegality may be raised whether or not pleaded, and found the record (Mr Shompa's evidence and the appellant's non-denial of non-registration under section 18(1) of the Estate Agents Act) sufficient to allow the respondent to canvass Grounds 1 to 4. However, the court distinguished illegality from unenforceability on public policy grounds: Grounds 5 and 6 were not pleaded, not in the agreed issues, unsupported by evidence, and could not stand. The objection to Grounds 1-4 was dismissed; costs of the objection hearing were made costs in the appeal. The substantive appeal remained to be decided on the merits.

Key legal issues

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01

Whether unpleaded illegality may be raised in a first appeal

Holding

Grounds founded on illegality may be relied on by the respondent and should not be struck out, following Mistry Amar Singh v Kulubya

Reasoning

The court applied the ex turpi causa principle as approved by the Privy Council: no court should enforce an illegal contract if the illegality is duly brought to its notice, regardless of pleading. The oral and documentary evidence of Mr Shompa, plus the appellant's non-denial of lack of registration under section 18(1) of the Estate Agents Act, sufficed in the peculiar circumstances where the respondent did not appear at the trial.

p. 3
02

Whether public policy and effective-cause grounds could stand without pleading or evidence

Holding

Grounds 5 and 6, not based on illegality, were not pleaded, not raised in the agreed issues, not considered below, and unsupported by evidence; the Kulubya principle does not apply to them

Reasoning

The court distinguished illegality from unenforceability on public policy. Since no evidence was led on the alleged public policy or its breach, and none on whether the appellant was the effective cause of the sale, these grounds could not be entertained for the first time on appeal under the Securicor and Visram line of authority.

p. 4

Legal principles established

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  • A court ought not to enforce an illegal contract where the illegality is brought to its notice, whether or not the defendant pleaded the illegality
  • A distinction exists between a contract being illegal and a contract being unenforceable as contrary to public policy
  • A new issue may be raised for the first time on appeal only where it turns on construction of a document or facts proved beyond controversy and the evidence establishes the plea beyond doubt

Court orders

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  1. 1.The appellant's objection to Grounds for Affirming numbers 1, 2, 3 and 4 is dismissed; those grounds will not be struck out and will be considered on their merits
  2. 2.The respondent is permitted to canvass Grounds 1, 2, 3 and 4 for affirming the decision
  3. 3.The costs of the hearing on the objections shall be in the appeal

Authorities

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Legislation

  • Estate Agents ActCap 533
  • Estate Agents Actsection 18(1)
  • Kenya Railways ActCap 397
  • Court of Appeal Rulesrule 91(1)

Cases cited (7)

  • Mistry Amar Singh v. Serwano Wofunira Kulubya
    [1963] EA 408

    Ex turpi causa: a court ought not to enforce an illegal contract whether or not the illegality was pleaded

  • Scott v. Brown, Doering, McNab & Co
    [1892] 2 QB 724

    Source of the ex turpi causa passage quoted with approval in Kulubya

  • Securicor (Kenya) Ltd v. E.A. Drapers Ltd. & another
    [1987] KLR 338

    Principle for raising a question of law for the first time in a court of last resort

  • Connecticutt Fire Insurance Co v. Kavanagh
    (1882) 61 LJ PC 60

    Competence of entertaining a new question of law on admitted or proved facts

  • Visram & Karsan v. Bhatt
    1965 EA 789

    New issues should be raised in pleading and canvassed before the trial judge; leave refused unless facts established beyond doubt

  • United Marketing Co v. Hasham
  • Warehousing & Forwarding Co v. Jafferali & Sons Limited
On appeal from
High Court of Kenya at Milimani Commercial Courts, Nairobi
H.C.C.C. No. 335 of 1998
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal Rules (rule 91(1) referenced for Grounds for Affirming the decision)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Mapis Investment (K) Ltd v Kenya Railways Corporation", Case Analysis (2005). Civil Appeal 14 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/358/eng@2005-11-18

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