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KENYATTA UNIVERSITY SCHOOL OF LAW PARKLANDS CAMPUS

GROUP NAME: GROUP 10 UNIT: LAW OF PROPERTY IN LAND II UNIT CODE: LPL 208 LECTURER: MR. STEPHEN AYIERA DATE OF SUBMISSION: 16TH NOVEMBER, 2020

GROUP MEMBERS. 1. KALEB OTTO NDUVA - L95/1610/2018 - GROUP LEADER 2. ELSIE WAMBUI NJOKA - L95S/12035/2018 3. PETER NDUNGI - L95/1603/2018 4. RAPHAEL GITAU NJOROGE - L95/1604/2018 5. PETER KARIUKI NG’ANG’A - L95S/12012/2018 6. NGUNJIRI VALLARIE JOY MUKAMI - L95/1601/2018 7. VICTOR KARANJA KOMU - L95S/12363/2018 8. DIANA WAMAITHA MURIUKI – L95S/14426/2015 9. DENNIS MUSWANYI – L95S/19664/2015 10. KELVIN ROBERT- L95S/14257/2015

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CONTENTS CONFLICT OF INTERESTS IN CONVEYANCING TRANSACTIONS.....................................................................3 Defining conflict of interest.....................................................................................................................3 What is the rationale for this?.................................................................................................................3 Situations where a conflict of interest can arise......................................................................................3 a)

Issue Conflict................................................................................................................................4

b)

Simultaneous representation.......................................................................................................4

c)

Successive representation...........................................................................................................4

d)

Expected Witness........................................................................................................................4

How to avoid conflict of interests............................................................................................................5 JUDICIAL DECISIONS ON CONFLICT OF INTEREST IN CONVEYANCING TRANSACTIONS................................6 Juma Muchemi v Charles Waweru Gatonye t.a Waweru Gatonye & Company Advocates (2006).......6 Serve in Love Africa (Sila) Trust v David Kipsang Kipyego & 7 others (2017)........................................7 Lucy Momany T/A L.N. Momanyi & Company v Nurein M.A Hatimy & another (2003).......................8 CONCLUSION...............................................................................................................................................9 References................................................................................................................................................... 9

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CONFLICT OF INTERESTS IN CONVEYANCING TRANSACTIONS Defining conflict of interest A conflicting interest is an interest which gives rise to substantial risk that the Advocate’s representation of the client will be materially and adversely affected by the Advocate’s own interests or by the Advocate’s duties to another current client, former client or a third person1. There are situations where the buyer and seller of property may decide to use on lawyer for the transaction. Normally, this will happen after the parties have come to an agreement on the necessities for the contract, including the payment of legal fees. To act in a professional manner, the lawyer is obliged to disclose to both parties that they should mutually accept that he or she will not give one client advice against the interest of the other. Most of the transactions usually go on smoothly. However, in the instance they lead to dispute in court, the advocate will be barred from advising or representing parties to both sides of the dispute due to the existence of the conflict of interest2.

What is the rationale for this? The advocate’s ability to represent the client may be materially and adversely affected unless the advocate’s judgment and freedom of action are as free as possible from compromising influences and the relationship between the advocate and the client is not materially impaired by the advocate acting against the client in any other matter3. The advocate must maintain loyalty and trust with the client. The advocate should avoid a situation where his interests are conflicting with those of the client4.

Situations where a conflict of interest can arise Conflict of interest may arise in:

a) Issue Conflict This is seen where the interests of one client are directly adverse to those of another client being represented by the same advocate. For instance, where the advocate finds himself in a situation where he/she is representing two clients in two different cases and where the decision of one 1 Provision 96, Rule 6 of the Advocates Code of the Law Society of Kenya Code of Standards of Professional Practice and Ethical Conduct, June 2016. (SOPPEC) 2 Provision 95 of SOPPEC 3 Provision 97 of SOPPEC 4 Provision 98 of SOPPEC

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court will set precedent for the other. If the issue is determined in one of the cases, it will have negative consequences for the case.

b) Simultaneous representation When the interests of one client collide with the interests of another client being represented by the same advocate or firm, such as when one client sues another client within the same firm. In King Woolen Mills & Another v Kaplan & Straton Advocates5, the court of Appeal emphasized that any information obtained from a retainer6 is confidential and that the advocate cannot use information from a retainer in any way against a former client. This demonstrated the instance where the scope of representation of one client will be limited by the responsibilities the advocate has to another client. It is advisable than an advocate should not represent two clients who are adversaries in a case.

c) Successive representation This occurs in the instance where the advocate risks using privileged information from a former client during the representation of his/her current client hence resulting to the former client being adversely affected in terms of confidentiality. Even if a court case comes to an end, advocateclient confidentiality is infinite and it does not end there. This was seen in the case of Simba Hills Farm Limited v Sultan Hasham Lalji & 5 others 7 where the advocate on record for one of the defendants was disqualified from the proceedings on the grounds that the plaintiff, who was a former client of the advocate, would suffer from conflict of interest since the advocate would likely be called as a witness since the advocate had handled most of his land transactions.

d) Expected Witness Rule 8 of the Advocates Practice Rules8 states that no advocate may appear as such before any court or tribunal in any matter in which he has reason to believe that he may be required as a written witness to give evidence, whether verbally or by declaration or affidavit; and if, while appearing in any matter, it becomes apparent that he will be required as a witness to give evidence whether verbally or by declaration or affidavit; he shall not appear. This position was asserted in Uhuru Highway Development & others v Central Bank of Kenya & 2 others 9 where 5 [1993] eKLR 6 To have an advocate on retainer means that the client pays a lawyer a small amount on a regular basis. In return, the advocate performs some legal services whenever the client needs them. 7 [2006] eKLR 8 1966 9

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the plaintiff applied that the firm of Oraro and Company Advocates be restrained from acting for the defendants. This was because the firm had acted for both parties in preparation of a charge that was a substantial matter in the suit. The court of appeal held that using the confidential information acquired during creation of the charge would lead to prejudice. This rules seeks to guard against conflict of interest where advocates may appear for many clients who have different interests and also to guard against professional misconduct where an advocate may be placed at risk of providing or using privileged information from one client in a different matter. 10

How to avoid conflict of interests The advocate is expected to provide the client with independent, honest and unbiased advice at all times11. However, this may be put at risk in such circumstances as when: o The advocate engages in business with the client. o Acquiring property rights colliding with the client’s property rights. o Acquiring financial interests in the same matter being handled. o Having any relationship with the adverse party or those connected to the adverse party. The advocate is required to disclose to the client immediately there arises a conflict of interest12. This should be full and honest. This will enable the client to make an informed decision as what action to take. An advocate who has acted for a client should not in another matter appear to act against the same client. This is because the advocate will be at risk of using privileged information he was given by that client13.

JUDICIAL DECISIONS ON CONFLICT OF INTEREST IN CONVEYANCING TRANSACTIONS

10 Advocates (practice) rules, 1966. 11 Provision 100 12 Provision 102 13 The Advocates Code of Standards of Professional Practice and Ethical Conduct of 2016.

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Juma Muchemi v Charles Waweru Gatonye t.a Waweru Gatonye & Company Advocates (2006)14. The defendant worked as the plaintiff’s advocate in purchasing five properties from M/s Williams & Kennedy for Kshs 30 million. However, the plaintiff sued the defendant alleging acts of negligence by the defendant in the following transactions. o Failure to conduct a thorough search on land L.R No. 5989/5/R. o Failure to advise the plaintiff that the parcel L.R No. 5989/5/R had a charge as security to another individual and therefore to stop the plaintiff from purchasing the land. o Advising the plaintiff to pay the vendor who is M/s Williams & Kennedy with knowledge that the property had a charge on it. o Failing to ensure the vendor’s advocates removed the said charge from the piece of land in order for the plaintiff to pay after that. o Engaging in conflict of interest on matters payment of the purchase price which led to the plaintiff losing his money. The defendant on replying, moved the court by an application brought under Order VI Rule 13(1) (b) and (d) of the Civil Procedure Rules to dismiss the suit on such grounds that the suit was frivolous, vexatious and an abuse of the court process. He argued that the plaintiff’s suit was without merit, and the said allegations of negligence had no bearing on the alleged loss. The plaintiff’s counsel argued that the defendant was engaged in conflict of interest when he asked the plaintiff to pay an amount above the 10% of the purchase price. This violated the terms of the agreement between them. They relied on the case between Kinluc Holdings Ltd and Mint Holding Ltd & another15 where it was held that “The law implies clearly that an advocate will protect the interests of his client henceforth a retainer binds an advocate to act for his client in such a manner as to protect his client’s interest and not to jeopardize his interest.”16

14 Civil Suit 853 of 2002. 15 [1998] eKLR 16 Juma Muchemi v Charles Waweru Gatonye t.a Waweru Gatonye & Company Advocates (2006) eKLR.

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Serve in Love Africa (Sila) Trust v David Kipsang Kipyego & 7 others (2017)17. The plaintiff was seeking orders that the firm of Bundotich & Co. Advocates be barred from representing the defendants or any party in this case. The grounds were that the firm prepared the sale agreement for this case and therefore the firm was a potential witness to the case. One trustee of the plaintiff organization in the affidavit also stated that the agreement being the subject matter was drawn and witnessed by Korir advocate trading as Bundotich Korir & Co. Advocates and was therefore a potential defendant and a potential witness to the case. Therefore, the said firm should be barred from representing the defendants in this matter. Mr. Korir on the other hand filed a replying affidavit stating that the major issue in this case was determination of who were the legitimate and bonafide trustees of the plaintiff organization. Therefore, it was immaterial whether of the facts that he drafted the sale agreements; he should be allowed to represent the plaintiffs as they have the right to choose any advocate of their choice. In the affidavit, Mr. Korir stated that the law applicable to the issues being raised was stated in the case of Tom Kuseinya & others v Kenya Railways Corporation & others18 where Mumbi Ngugi brought up Rule 8 of the Advocates (Practice Rules)19 that gives that shows the instance when an advocate can become a potential witness. However, the judge was of the opinion that the applicant must show that there would occur real mischief and prejudice should Mr. Korir continue to appear as the advocate for the defendant. Furthermore, the defendants have a right to be represented as is under the Constitution. The major issue in the matter is whether the testimony of the advocate is relevant, material or necessary to the issue. The judge insisted that such rules were relevant to prevent conflict of interest. The judge also stated that conflict of interest arises when an advocate is serving or attempting to serve two or more interests which are not compatible. This causes the advocate to go against the fiduciary duties he owes to the client.

17 Environment and Land case 21 of 2017. 18 [2013] eKLR 19 1966

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In conveyancing, conflict of interest can arise when an advocate acts for both parties in a matter or two parties on the same side of the record in litigation; an advocate acts for a former client having previously acted fro that party in a related matter where his own interest is involved, for example where an advocate acts in a transaction in which his company or company in which he is an associate is involved or has an interest; or where for some other reason his own interest or an associate’s may conflict with his client’s matter. A conflict of interest may be described as a conflict between interest and duty. Here, the advocate breaches his fiduciary duty to the client. There are four elements of the fiduciary duty: o The duty of loyalty to the client. o The duty of confidentiality. o The duty to disclose to the client or put at the client’s disposal all information within the advocate’s knowledge that is relevant in order to act in the client’s best interests. o The duty not to put the advocate’s own interests or anyone else’s interests before those of the client. It was decided that the plaintiff did not demonstrate that Korir will be called to testify as a material witness as to who is the bonafide trustee. The defendants have a right of representation by an advocate of their choice including Mr. Korir. The application was without merit and was dismissed with costs.20

Lucy Momany T/A L.N. Momanyi & Company v Nurein M.A Hatimy & another (2003)21 The appellant in this case had appealed from the decision of the High Court in which she had been accused and found guilty of being negligent and misrepresenting her client making the respondents purchase land worth Ksh. 2,000,000/= that was not free from any encumbrances as was alleged. The respondents acted on that misrepresentation and purchased the property. The High Court then ordered for the refund of the money lost, due to the fact that she had failed to make a search of the said title and directed the defendant to incur an extra expense of Ksh 400,000/= in fencing of the premises together with the charged advocates fees that totaled to Ksh 60,000/= which she wrongfully retained even after the misrepresentation. She had asked the 20 Serve in Love Africa (Sila) Trust v David Kipsang Kipyego & 7 others (2017) eKLR. 21 Civil Appeal 139 0f 2002

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respondent to deposit the said sums with her on the understanding that the premises would be in vacant possession and in any event the purchaser would in the event of default be entitled to specific performance of the agreement or refund of the purchase price. The respondents revealed that the sum for the purchase of the property was deposited in Kenya Finance Bank which then went into liquidation making it impossible to retrieve the sum for the completion of the sale transaction or failing such completion, its release to the appellant so that she can pass the over to the respondents. That necessitated the institution of the suit for the recovery for damages for what had been alleged to the negligent conduct and misrepresentation on the part of the appellant. The appellant denied the allegations that she had been negligent in her conduct and contended that the charges of negligence or those of misrepresentation cannot rise. This was because at the time of entering into the sale agreement, there was no encumbrances registered against the title and after drawing of the sale agreement, the third party then registered a caution three days later. The court found that the appellant could not at the time have been aware of the existence of that caution which was imposed long after her search of the title. Immediately she became aware of the existence of the caution, she withdrew it. The appeal court found that the high court judge was wrong in granting the application for summary judgement on admission where liability to pay was not admitted. The court relied on the case of Choitram v Nazari 22, where the court stated that admissions must be plain as a pikestaff and clearly readable that must leave no room for doubt. The court the set aside the judgement given by the High Court.

CONCLUSION In conclusion, we get to see that conflict of interest occurs where the advocate’s representation of a party to proceedings may hinder the effective administration of justice. Professionally, advocates should walk away when the get the slightest realization that the matter they are dealing with will amount to a conflict of interests. Dissatisfaction due to this usually ends up to litigation and if found liable the advocate will incur costs that could have been avoided in the first instance. Finally, so as to analyse situations where a conflict of interest may occur, one should find out the relations between the advocate and client that may lead to a conflict of interest and who stands to be harmed the most when it occurs. 22 [1984] eKLR

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Covenants condit ons and powers implied in ch 11

References Law Society of Kenya Code of Standards of Professional Practice and Ethical Conduct, June 2016 Advocate Practice Rules, 1966 www.kenyalaw.org Niccolawsolutions.blogspot.com

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