Mapis Investment (K) Limited v Kenya Railways Corporation
The bottom line
#Kenya's Court of Appeal refused to pay an unregistered estate agent Kshs. 17.5 million in commission because its contract was illegal.
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 alleged agency agreement, if it existed, was illegal under the Estate Agents Act, Cap 533 and the Estate Agents (Remuneration) Rules, 1987 because Mr. Shompa and the appellant were not registered estate agents
- 2.Whether a special fee or commission in excess of the scale fee could lawfully be agreed for sole agency instructions under rule 2 and paragraph 5 of the Schedule to the Remuneration Rules
- 3.Whether the Kenya Railways Act, Cap 397 rendered the alleged agreement illegal (ground for affirming No. 4, not pursued)
- 4.Whether the court could entertain the illegality point though not raised in the superior court
Key legal issues
#Illegality of the alleged agency contract for non-registration under section 18 of the Estate Agents Act
If the contract existed, the conduct of Mr. Shompa and the appellant was in breach of express statutory provisions and illegal, so no further commission could be awarded
The letter of 20th November 2002 stating that neither Mr. Shompa nor the appellant was registered was produced by Mr. Shompa without denial, amounting to an admission. Section 18(1) prohibits unregistered practice as an estate agent. The court allowed the point though not raised below, applying the ex turpi causa principle that a court will not enforce an illegal contract once illegality is apparent from the plaintiff's own evidence.
Whether a fee above the scale could be agreed under the Estate Agents (Remuneration) Rules 1987
Paragraph 5 of the Schedule permits a special fee or commission for sole agency instructions, so agreeing a fee above the scale with a registered agent would not breach the Rules
The instructions of 15th January 1998 confirmed the appellant as sole selling agents, which were 'sole agency instructions'. Paragraph 5 of the Schedule to the Rules expressly allows a special fee or commission to be agreed for such instructions, so ground for affirming No. 2 failed on its own terms.
Whether the Kenya Railways Act rendered the agreement illegal
Nothing in Cap 397 rendered the alleged agreement illegal; the ground was abandoned
The court found no provision in the Kenya Railways Act supporting the proposition that the Act made the alleged agreement illegal, and counsel for KRC rightly abandoned ground for affirming No. 4 at the renewed hearing.
Legal principles established
#- A contract to perform estate agency services can only be legal if entered into with a registered estate agent; unregistered practice under section 18 of the Estate Agents Act renders the contract illegal and unenforceable
- A court should not enforce an illegal contract even where illegality was not pleaded, if the evidence adduced by the plaintiff proves the illegality
- A special fee or commission may lawfully be agreed for sole agency instructions notwithstanding the scale of fees in the Estate Agents (Remuneration) Rules
Court orders
#- 1.The appeal be and is hereby dismissed with costs
- 2.The cross appeal be and is hereby allowed but with no orders as to costs since the grounds on which the cross appeal are being allowed were never raised in the superior court
- 3.The judgment of the superior court is sustained but for different reasons stated herein
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Milimani Commercial Courts, Nairobi
- H.C.C.C. No. 335 of 1998
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (appeal from the High Court)
Relief refused
#Kshs. 17.5 million plus interest at 34% claimed by the appellant
The alleged contract was illegal as the appellant and Mr. Shompa were not registered estate agents contrary to section 18 of the Estate Agents Act
Costs
Appeal dismissed with costs to the respondent; cross-appeal allowed with no orders as to costs.
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.
The appeal be and is hereby dismissed with costs
The cross appeal be and is hereby allowed but with no orders as to costs since the grounds on which the cross appeal are being allowed were never raised in the superior court
The judgment of the superior court is sustained but for different reasons stated herein
it is clear that a contract to perform estate agency services can only be legal if entered into with a registered Estate Agent
No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Mapis Investment (K) Limited v Kenya Railways Corporation", Case Analysis (2006). Civil Appeal 14 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2006/344/eng@2006-06-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.