Jane Wanja Gahiengo v David Wanjohi Kamau & another [2014] KECA 677 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that family business partnerships survive death when heirs keep collecting profits and managing property together.
What this practically means
#Executive summary
#Key legal issues
#Existence of a partnership between the three deceased persons
The respondents proved the existence of a partnership between their fathers and the appellant's deceased husband under the repealed Partnership Act, on the strength of the 1971 written agreement, the equal contributions, the sharing of profits twice annually, and the treasurer's testimony.
Section 3(1) of the Partnership Act defines partnership as the relation subsisting between persons carrying on business in common with a view of profit. Section 4 makes receipt of a share of profits prima facie evidence of partnership. The 11th August 1971 agreement showed equal contributions and that the share was held in trust for the other two, and PW3 the treasurer confirmed payment of profits to the respondents' fathers twice annually.
Succession of legal representatives to a partnership continued by conduct
The parties succeeded the deceased partners in the partnership, evidenced by continued payment of the deceased's share of profits and, after dissolution, by the meetings, joint account and shared management of the suit properties.
After the deaths, the parties' share of profits was paid to them until dissolution in 1998. Thereafter meetings were held in which the respondents attended as equal partners, a joint account was opened for rental income, and decisions were made by consensus. The court upheld the trial court's rejection of the claim that the 2nd respondent was a mere employee, since conduct clearly pointed to a partnership.
Award of rental income where accounts were pleaded
The trial court did not err in ordering payment of rental income because accounts were expressly pleaded in the plaint, and the appellant admitted in her evidence the monthly rents she received from 1st August 1998.
The appellant contended the order rested on an unpleaded issue. The court perused the plaint and found the respondents had sought an order compelling the appellant to tender accounts for rental income collected. The amounts awarded were grounded on the appellant's own admission of receiving Kshs. 6,000/= and Kshs. 30,000/= monthly as rent from the respective properties.
Enforceability of orders over jointly registered property
The order was enforceable despite joint registration with Felista because Block 10/19 had been split into two between Felista and the appellant, so the appellant's portion was clearly identifiable.
The appellant argued the title in Block 10/19 was jointly held with Felista and so the property could not be sold or her shareholding bought out. Ernest testified that the property had been split into two between his mother Felista and the appellant. That meant the appellant's identifiable portion could support the trial court's orders.
Legal principles established
#- A first appellate court is under a duty to re-appraise the evidence and reach its own conclusion but should be slow to interfere with the trial court's findings of fact, interfering only where the findings are based on no evidence, a misapprehension of evidence or wrong principles.
- In determining whether a partnership exists, the conduct of the parties, the mode they have dealt with each other and with other people, may prove the material terms of an oral partnership agreement.
- It is the conduct of the parties to a business that determines whether there exists a partnership.
Court orders
#- 1.The appeal is dismissed
- 2.Costs of the appeal are awarded to the respondents
- On appeal from
- High Court of Kenya at Nakuru
- H.C.C.C No. 303 of 1999
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction over decisions of the High Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Jane Wanja Gahiengo v David Wanjohi Kamau & another [2014] KECA 677 (KLR)", Case Analysis (2014). Civil Appeal No. 98 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2014/677/eng@2014-03-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.