Eastend Limited v Ben Njau Kayai t/a Njau Kayai & Co. Adv [2017] KEELC 3730 (KLR)
The bottom line
#A Kenyan court ordered an advocate to personally refund Kshs 7.2 million after breaching his written promise to hold deposit money as stakeholder.
What this practically means
#Executive summary
#Key legal issues
#Existence and nature of the professional undertaking
The respondent, by letter dated 24th June 2014, irrevocably undertook to hold Kshs.7,200,000/= as stakeholder and refund it if the sale failed, making him personally bound
The court applied the Halsbury definition of an undertaking as an unequivocal declaration of intention addressed to someone who reasonably places reliance on it, by which a solicitor becomes personally bound. On the evidence, the respondent's letter of 24th June 2014 was such an unequivocal declaration; the applicant relied on it in paying over the second instalment, and the respondent undertook to remit the entire sum, not part of it.
Breach of the undertaking despite release of funds to a third party
The respondent could not escape liability by alleging that part of the stakeholder funds was released to a third party, absent evidence of the applicant's authorisation
Although the respondent deposed that part of the Kshs.7,200,000/= had been released to a third party holding the title, the court found no evidence that the applicant authorised any release, and the alleged third party was not named. An advocate who gives an undertaking takes the risk personally and must honour it regardless of the difficulty of recovering funds already disbursed.
Entitlement to interest on the stakeholder deposit
Interest earned on the stakeholder money in the respondent's client account belongs to the applicant, as provided under clause 13 of the sale agreement
The money was held as stakeholder in the respondent's client account at Commercial Bank of Africa and must have accrued interest. Since the money belonged to the applicant, the interest accrued also belongs to the applicant, and the sale agreement's clause obliging the stakeholder to refund the second payment together with interest reinforced this entitlement.
Legal principles established
#- A professional undertaking by an advocate constitutes a separate agreement independent of the underlying transaction and is personally enforceable
- An advocate who gives an undertaking bears the risk personally and cannot complain that honouring it is too burdensome
Court orders
#- 1.Judgment entered for the applicant against the respondent in terms of prayers 1, 2 and 3 of the Originating Summons
- 2.Respondent ordered to pay the applicant Kshs.7,200,000/= being refund of the part purchase price held as stakeholder
- 3.Respondent ordered to provide an account of all interest accrued on the sum of Kshs.7,200,000/= from 9th July 2014 until the date of filing the suit
- 4.Respondent ordered to pay to the applicant all interest accrued on the sum of Kshs.7,200,000/= from 9th July 2014 until the date of filing the suit
- 5.Respondent to bear the costs of the Originating Summons
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court under the sale and purchase of L.R No. 7785/646, Nairobi (Originating Summons)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Eastend Limited v Ben Njau Kayai t/a Njau Kayai & Co. Adv [2017] KEELC 3730 (KLR)", Case Analysis (2017). ELC NO. 1077 OF 2015 [OS]. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2017/3730/eng@2017-01-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.