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ELRCPartially Allowed· [2015] KEELRC 887 (KLR)

Alphonse Mwangemi Munga & 12 others v African Safari Club Limited [2015] KEELRC 887 (KLR)

Industrial Court of Kenya (Employment and Labour Relations Court)
19 June 2015
MNMathews Nderi Nduma
553 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that a Kshs.30 Million auction deposit must sit in an interest-earning account run by the parties' lawyers, not the auctioneer.

What this practically means

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Executive summary

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This interlocutory ruling by the Principal Judge, Mathews Nderi Nduma, dealt with a Notice of Motion dated 5th November 2013 arising from a public auction of Land Parcel No. L.R. 1515/1/M.N. The Claimant sought three substantive reliefs: dispensation of service on the 2nd Interested Party, joinder of Mr. Stephen Kimani Karuu t/a Kiriiyu Merchants (the auctioneer) as 2nd Interested Party, and an order that a deposit of Kshs.30 Million paid by Erdemmann Property Limited, the successful bidder at the auction, be banked in an interest-earning joint current account. The 2nd Interested Party's Replying Affidavit confirmed it conducted the auction, received the Kshs.30 Million deposit, and held it in a client account at Family Bank (K) Limited earning no interest. The Auctioneer submitted that if the money were moved to a joint interest-earning account, the entire purchase price of Kshs.120 Million should be deposited, and that its only interest was payment of its auction fees and costs. The advocates for the Claimant and the purchaser agreed the Auctioneer's interest was limited to fees and costs. The Court joined the Auctioneer, found its sole interest to be fees, and allowed the motion in terms of prayers 1 and 2, amending prayer 2 to exclude the Auctioneer from operating the joint interest-earning account, which is to be run by Mr. Henry A. Karauka and Mr. Zadarack Achoki until the parcel is transferred to Erdemmann Property Limited. The advocates were jointly directed to ensure the Auctioneer's taxed fees and costs are paid, and each party was ordered to bear its own costs of the application.

Key legal issues

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01

Custody of the Kshs.30 Million auction deposit pending conclusion of the sale transaction

Holding

The deposit to be placed in a joint interest-earning account operated by the Claimant's and purchaser's advocates, excluding the Auctioneer

Reasoning

The 2nd Interested Party (Auctioneer) admitted conducting the auction and receiving the deposit, held in a non-interest-earning client account. Parties' advocates agreed the Auctioneer's only interest was fees and costs. The Court therefore ordered the money into a joint interest-earning account of the two advocates, with the Auctioneer's fees protected by taxation.

p. 3
02

Protection of the Auctioneer's fees and costs

Holding

The advocates for the Claimant and purchaser were directed to jointly ensure the Auctioneer's fees and costs are paid upon taxation

Reasoning

Having removed the Auctioneer from operation of the joint account, the Court preserved its commercial interest by directing joint responsibility of the two advocates to ensure payment of fees and costs once taxed by the Court.

p. 3

Legal principles established

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  • Where an auctioneer's only interest in a deposited purchase sum is payment of its fees and costs, the deposit should be released to a joint account of the parties' advocates, with the auctioneer's fees secured by taxation.

Court orders

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  1. 1.Notice of Motion dated 2nd November 2013 granted in terms of prayer 1 and 2
  2. 2.Prayer 2 amended to remove the Auctioneer, so that the Kshs.30 Million is deposited into a joint interest-earning account operated by Mr. Henry A. Karauka (Claimant's Advocate) and Mr. Zadarack Achoki (purchaser's Advocate) until Land Parcel No. L.R. 1515/1/M.N. is duly transferred to Erdemmann Property Limited
  3. 3.Advocate for the Claimant and Advocate for the purchaser to jointly ensure the Auctioneer's fees and costs are duly paid upon taxation by the Court
  4. 4.Each party to meet their own costs of the application
Jurisdiction invoked
Not stated in judgment

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, "Alphonse Mwangemi Munga & 12 others v African Safari Club Limited [2015] KEELRC 887 (KLR)", Case Analysis (2015). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/887/eng@2015-06-19

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