Arthur K. Igeria t/a Igeria & Co. Advocates v Michael Ndaiga [2017] KECA 709 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a lawyer's promise to pay commission was only due once the property sale was fully paid for, not when the transfer was registered.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the respondent's suit for enforcement of the appellant's professional undertaking was instituted prematurely, i.e. whether the transaction had been completed as at 28th November 2002 when the suit was filed
- 2.The meaning of the term 'upon completion of the transaction' in the appellant's professional undertaking dated 23rd July 2002
- 3.If the suit was premature, which party should bear the costs of the suit in the High Court and of the appeal
Key legal issues
#When did 'completion of the transaction' occur for purposes of the professional undertaking?
The majority held that completion meant completion of the sale transaction between vendor and purchaser, including payment of the entire purchase price; registration of the transfer was not synonymous with completion and 'substantial completion' did not satisfy the undertaking. The suit filed on 28th November 2002, before payment of the balance on 19th February 2003, was premature.
The undertaking pegged payment of commission to completion of the transaction. The sale agreement, subject to the Law Society Conditions of Sale, required delivery of completion documents against payment of the balance of the purchase price, and gave the vendor rescission or interest options on default. Since the balance remained unpaid at registration, the transaction was incomplete; substantial completion is not completion in terms of the contract, and the learned Judge erred in importing a new completion date.
The nature and enforcement of professional undertakings by advocates
A professional undertaking is a solemn bond by an advocate, enforceable regardless of contract, given to protect the honesty of officers of the court; once the contingent event occurs the advocate must honour it and cannot resile.
Relying on Muiruri v Credit Bank, Kenya Reinsurance Corporation v Muguku Muriu, Domb v Isoz and Harit Sheth, the court reiterated that undertakings are enforced to secure the honesty of advocates rather than contractual rights, and that an advocate who gives an undertaking takes the risk of his client's default and must honour it. Kariuki JA added that the undertaking must be construed as given, without unilaterally importing the sale agreement's completion date.
Who bears the costs where a suit to enforce an undertaking is filed prematurely?
Since the suit was premature and the appellant honoured his undertaking immediately upon completion, the appellant was entitled to the costs of the suit and of the appeal.
The only issue remaining before the High Court was costs, the commission having been paid. On the majority's construction, the respondent sued before his right accrued, so the High Court's award of costs to the respondent was erroneous and was reversed; the appellant, not having reneged on the undertaking, could not be visited with the costs of the suit.
Legal principles established
#- A professional undertaking given by an advocate is a solemn, binding obligation enforceable by the court not on contractual considerations but to secure the honesty of its officers, and an advocate cannot resile from it.
- For a court to enforce a professional undertaking it must be satisfied that the undertaking is clear and unambiguous, that it is capable of being performed, and that any contingent event has occurred.
- A professional undertaking must be construed strictly in the form in which it is given; its terms cannot be unilaterally amended or supplemented by importing conditions from a collateral agreement to which the beneficiary was not privy, and where payment is contingent on 'completion of the transaction', completion must occur in terms of the underlying transaction (including full payment of the purchase price) before the obligation falls due.
Court orders
#- 1.The appeal is allowed with costs
- 2.The appellant is awarded the costs of this appeal and those of the High Court (the respondent to pay the costs of the suit in the High Court)
The bench
#Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.
Wrote the judgment
Kariuki JA found the transaction finalized upon transfer of the property on 9th October 2002 and payment of the bulk of the purchase price; the completion date in the sale agreement was not imported into the professional undertaking, which the appellant could not unilaterally qualify. He would have dismissed the appeal but, the other two judges differing, the appeal was allowed.
I find no merit in the appeal which I hereby dismiss with costs to the respondent. However, as my brother and sister judges are of contrary view, the appeal is determined in line with the majority decision and is consequently allowedp. 8
Wrote the judgment
Azangalala JA held that completion meant completion of the transaction between vendor and purchaser in terms of their express agreement, including payment of the entire purchase price, and that completion was not synonymous with registration of the transfer. The respondent's Originating Summons was therefore prematurely lodged and the appellant honoured his undertaking the day after receiving the balance.
Accordingly, I would allow this appeal. [23] I would also award the appellant the costs of this appeal and those of the High Court.p. 13
Wrote the judgment
Mohammed JA held that the undertaking had a condition precedent, and that the sale was not completed until the purchaser's advocates forwarded the full balance of the purchase price. Substantial completion did not satisfy the terms of the undertaking; the suit was premature and the appeal was allowed with costs.
I find that the transaction was not completed until the Purchaser's advocates forwarded the full balance of the purchase price to the Vendor's advocates. Accordingly, having so found, the appeal is allowed with costs.p. 18
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 1215 of 2005
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (Appeal against the ruling and order of the High Court, Waweru J, delivered 4th March 2005)
Relief refused
#Respondent's claim to costs of the suit in the High Court
The majority found the suit was filed prematurely, before completion of the transaction, and the appellant had honoured his undertaking immediately upon receipt of the balance of the purchase price
Costs
Appeal allowed with costs to the appellant; the appellant awarded the costs of the appeal and of the High Court (i.e. the respondent to pay the costs of the suit in the High Court and of this appeal).
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Accordingly, I find that the transaction was not completed until the Purchaser’s advocates forwarded the full balance of the purchase price to the Vendor’s advocates. Accordingly, having so found, the appeal is allowed with costs.
In my judgment, the appellant honoured his undertaking immediately the transaction between the vendor and the purchaser was completed and cannot be vilified for doing so. Accordingly, I would allow this appeal.
Completion was not synonymous with registration. Accordingly, in determining that completion occurred on registration of the transfer of lease in favour of the purchase, the learned Judge with due respect imported a new term into the agreement between the parties.
Having given a solemn professional undertaking to pay a certain sum of money an advocate is bound by the same and he cannot resile therefrom.
It requires no emphasis that a professional undertaking once given cannot be unilaterally amended. It must be understood and construed in the form in which it is given.
In my view, completion could only mean completion of the transaction between the vendor and the purchaser in terms of the express terms of their agreement. Completion was not synonymous with registration.
Issues in the judgment
#The judgment inconsistently records the unpaid balance of the purchase price as Kshs.386,000/= in places and Kshs.368,000/= or Kshs.415,000/= elsewhere, and inconsistently renders the buyer's name (Jane Wanjiku Ngunjiri / Jane Wanjiru Ngunjiri) and counsel submissions figures
The commission letter is quoted with the price 'Ksh.6 million' in the first judgment while the sale agreement and other judgments state the purchase price as Kshs.5,700,000/=, and Kariuki JA's dissent states the appeal 'is consequently allowed' contrary to his own conclusion, reflecting the 2-1 split
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Arthur K. Igeria t/a Igeria & Co. Advocates v Michael Ndaiga [2017] KECA 709 (KLR)", Case Analysis (2017). Civil Appeal No. 51 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/709/eng@2017-03-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.