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Court of AppealDismissedCivil Appeal 77 of 1994· [1995] KECA 64 (KLR)

Gilbert Kabage & another v J. Njenga Gichuki & 2 Others [1995] KECA 64 (KLR)

Court of Appeal
24 November 1995
ASA. B. ShahAAA. M. AkiwumiJGJ. E. Gicheru
1,518 words in judgment
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The bottom line

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A Kenyan sub-agent who finds a buyer cannot sue the property vendor for commission unless he has a contract directly with the vendor.

What this practically means

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Executive summary

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The Court of Appeal (Shah, Akiwumi and Gicheru JA) dismissed an appeal by Gilbert Kabage (trading as Pata Commercial Agencies), a sub-agent who had been engaged by the first respondent, an estate agent, to find a buyer for Ndurumo Farm, a 560-acre Laikipia property owned by the vendor, Wahome Gichachi. The sub-agent secured the Catholic Diocese of Nakuru as a purchaser at Kshs. 7,000/= per acre and, by agreement with the agent, was to receive 45% of the price obtained above Kshs. 5,000/= per acre. After the vendor's family intervened, the vendor's commission liability was reduced to Kshs. 613,040/=. The sub-agent sued both the agent and the vendor for the balance of his expected commission. The High Court (Rimita J, judgment of 23 November 1993) dismissed the claim against both, but the Court of Appeal found the trial judge erred on costs. The appellate court held that the maxim delegata potestas non potest delegare did not void the agent-sub-agent contract, since the agent had entered a direct contract with the sub-agent; but the sub-agent, being a total stranger to the vendor and lacking privity of contract, could not claim commission from the vendor directly, and his claim lay only against the agent. The trial judge's finding that the sub-agent had accepted the reduced commission and banked the cheque without demur could not be faulted, even though crucial exhibits were missing from the record of appeal, which Rule 85(1)(f) made obligatory to include and Rule 85(2A) did not permit to be supplemented. The appeal was dismissed, with costs of the appeal and of the suit below awarded to the respondents against the appellant, costs following the event.

Key legal issues

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01

Liability of the vendor/principal to a sub-agent with whom he had no contract

Holding

The vendor, being a total stranger to the sub-agent and not party to the agency agreement, is not liable to the sub-agent for commission.

Reasoning

The delegated authority principle (delegata potestas non potest delegare) means a sub-agent's authority derives from the agent, not the principal. The sub-agent first saw the vendor only in court and there was no agreement between them. Privity of contract was only with the agent, who paid him the agreed 45% share. The sub-agent's claim, if any, lies only against the agent.

p. 2
02

Whether the maxim delegata potestas non potest delegare voids the agent-sub-agent contract

Holding

The contract is not void; the agent by engaging the sub-agent entered into a direct contract with him.

Reasoning

The maxim prohibits an agent from delegating authority conferred on him, but it does not invalidate a direct contract the agent himself makes with a sub-agent. Here the agent agreed to share 45% of commission above Kshs. 5,000/= per acre with the sub-agent, who secured the able and willing buyer and was paid his share, which he accepted and banked.

p. 2
03

Omission of crucial exhibits from the record of appeal

Holding

The record of appeal omitted the exhibits on which the case turned, but Rule 85(2A) did not permit a supplementary record; the court decided on the trial judge's assessment of witnesses.

Reasoning

The exhibits (agency agreement, banking slip, correspondence and receipt) upon which the case hinged were absent from the record, making it impossible for the Court of Appeal to decide where the truth lay. Rule 85(1)(f) obliges the party preparing the record to include all relevant documents, and Rule 85(2A) does not enable even a supplementary record with leave. The court deferred to the trial judge's advantage of seeing and hearing the witnesses.

p. 3
04

Indemnity claim against the vendor without third-party proceedings

Holding

The agent, having taken out no third-party proceedings against the vendor for indemnity, cannot claim indemnity in the suit.

Reasoning

Procedural requirement: a party seeking indemnity from a non-party must bring third-party proceedings. The record showed none had been taken out, so the agent could not seek indemnity at trial or on appeal.

p. 3
05

Costs following the event

Holding

The successful defendants in the court below should not have been deprived of their costs; costs follow the event.

Reasoning

While dismissing the appeal, the Court of Appeal disagreed with the trial judge's order on costs, since there was no reason to deprive the successful defendants below of their costs, and directed that both the costs of the appeal and of the suit in the superior court be paid by the appellant to the respondents.

p. 3

Legal principles established

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  • A sub-agent appointed by an agent cannot claim commission directly from the vendor/principal who is a stranger to him; his claim lies only against the agent with whom he has privity of contract.
  • A contract between an agent and a sub-agent is not void by the maxim delegata potestas non potest delegare, because the agent thereby enters into a direct contract with the sub-agent.
  • It is obligatory upon the party preparing a record of appeal to include all relevant documents put in evidence at the hearing pursuant to Rule 85(1)(f) of the Court of Appeal Rules.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.The costs of this appeal and those occasioned by the appellant's suit in the superior court shall be payable to the respondents by the appellant
On appeal from
High Court of Kenya at Nakuru
H.C.C.C. No. 251 of 1991
Jurisdiction invoked
First appellate jurisdiction under the Court of Appeal Rules (appeal from 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, "Gilbert Kabage & another v J. Njenga Gichuki & 2 Others [1995] KECA 64 (KLR)", Case Analysis (1995). Civil Appeal 77 of 1994. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1995/64/eng@1995-11-24

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