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Court of AppealDismissedCivil Appeal No. 98 of 2008· [2014] KECA 677 (KLR)

Jane Wanja Gahiengo v David Wanjohi Kamau & another [2014] KECA 677 (KLR)

Court of Appeal of Kenya
20 March 2014
3,534 words in judgment
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The bottom line

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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

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Executive summary

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The Court of Appeal at Nakuru (Visram, Koome and Odek, JJ.A) dismissed a first appeal against a High Court judgment (Kimaru, J., 14th June 2006) which held that the respondents, as legal representatives of two deceased men, were entitled to equal shares with the appellant, as legal representative of her deceased husband, in two Nakuru properties, and directed payment of rental income and two-thirds of the value of the properties. The deceased men and the appellant's husband had in 1963 jointly purchased a share in Nakuru Taifa Hotel and, by an agreement dated 11th August 1971, agreed that the share would be held by the appellant's husband in trust for the others with profits shared equally. After their deaths, profits continued to be paid to their representatives, and after the hotel's dissolution in 1998 the parties held meetings as equal partners, opened a joint account and managed the suit properties together. Applying the repealed Partnership Act, Cap 29, and citing authority that partnership may be proved by the parties' conduct, the court concurred with the trial judge that a partnership between the three deceased persons was proved on a balance of probabilities and that their legal representatives succeeded to it. It rejected the appellant's arguments that the partnership ended on death and that the accounts and rental awards rested on unpleaded issues, noting accounts were pleaded and the appellant had admitted the rents received. It also rejected the contention that the orders were unenforceable because Block 10/19 was jointly registered with Felista Wanini Theuri, since the property had been split and the appellant's portion clearly identifiable. The appeal was dismissed with costs to the respondents.

Key legal issues

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01

Existence of a partnership between the three deceased persons

Holding

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.

Reasoning

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.

p. 5
02

Succession of legal representatives to a partnership continued by conduct

Holding

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.

Reasoning

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.

p. 5
03

Award of rental income where accounts were pleaded

Holding

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.

Reasoning

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.

p. 6
04

Enforceability of orders over jointly registered property

Holding

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.

Reasoning

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.

p. 6

Legal principles established

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  • 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

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  1. 1.The appeal is dismissed
  2. 2.Costs of the appeal are awarded to the respondents

Authorities

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Legislation

  • Partnership Act (Cap 29, Laws of Kenya) (repealed)Section 3(1)
  • Partnership Act (Cap 29, Laws of Kenya) (repealed)Section 4
  • Partnership Act (Cap 29, Laws of Kenya) (repealed)Sections 43, 47 and 48

Cases cited (5)

  • Ndiema Samburi Soti -vs- Elvis Kimtai Chepkeses - Civil Appeal No. 136 of 2005
  • Mwanasokoni -vs- Kenya Bus Service
    (1985) KLR 931
  • Mworia & Another -vs- Kiambati
  • J.K Kinoti -vs- G.J. Kibanga - Civil Appeal No. 343 of 2010
  • Joseph Chesire Sirma -vs- Erick Kipkurgat Kiprono
    (2005) 1 KLR 197
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

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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, "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.