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Court of AppealPartially AllowedCivil Appeal No. 51 of 2008· [2017] KECA 709 (KLR)

Arthur K. Igeria T/A Igeria & Co. Advocates v Michael Ndaiga

Court of Appeal
3 March 2017
9,719 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~39 min to read original · ~4 min brief

The bottom line

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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

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Executive summary

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This was a first appeal from a ruling of the High Court (Waweru J, 4th March 2005) awarding an estate agent, Michael Ndaiga, the costs of an Originating Summons brought to enforce a professional undertaking by the appellant advocate to pay him commission of Kshs.285,000/= 'upon completion of the transaction' in the sale of L.R. No.21972, Unit A, Lavington, by Town Villas Limited. The commission had been paid before the ruling; the only live issue was costs, which turned on whether the suit, filed on 28th November 2002, was premature because the purchaser had not then paid the full purchase price. In a 2-1 decision the Court of Appeal allowed the appeal. The majority (Azangalala and Mohammed JJ.A) held that completion meant completion of the sale transaction in terms of the sale agreement, including payment of the entire purchase price, and that registration of the transfer on 9th October 2002 was not synonymous with completion; 'substantial completion' did not satisfy the undertaking. The commission became due only when the balance was paid on 19th February 2003, and the appellant paid it the next day, so the suit was premature and the High Court's costs order was reversed. Kariuki JA dissented, holding that the undertaking had to be construed as given and could not be unilaterally qualified by the sale agreement's completion terms; the transaction was finalized on transfer and payment of the bulk of the price, and he would have dismissed the appeal. The judgment binds lower courts on the strict construction of professional undertakings and the conditions for their enforcement.

Key legal issues

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01

When did 'completion of the transaction' occur for purposes of the professional undertaking?

Holding

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.

Reasoning

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.

p. 13
02

The nature and enforcement of professional undertakings by advocates

Holding

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.

Reasoning

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.

p. 5
03

Who bears the costs where a suit to enforce an undertaking is filed prematurely?

Holding

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.

Reasoning

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.

p. 13

Legal principles established

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  • 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

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  1. 1.The appeal is allowed with costs
  2. 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)
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)

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, "Arthur K. Igeria T/A Igeria & Co. Advocates v Michael Ndaiga", 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.