Economy

Logistics firm tests professional limit for lawyers in Nairobi land sale battle

duo

Mr Richard Harney of Coulson Harney law firm (left) and Mr Stephen Mutoro, the Cofek secretary-general. PHOTO | FILE

Can a lawyer ignore his client’s instructions and proceed to conclude a transaction that the client expressly indicated that he is no longer interested in?

This is the question at the centre of a legal battle between logistics firm Acceler Global and Nairobi law firm Coulson Harney.

The battle also shines a light in the dark corners of the Land Registry that has left many land owners fighting for what they thought was rightfully theirs.

Acceler, which is based at Nairobi’s Jomo Kenyatta International Airport (JKIA), had hired Coulson Harney to help it acquire a prime plot on the city’s Mombasa Road and decided mid-course to stop the purchase altogether, having run into trouble with the authenticity of the documents and contested ownership.

But Coulson Harney allegedly ignored the instructions and went ahead to conclude the purchase of the land valued at Sh168 million, exposing the logistics firm to possible loss of money.

The law firm says in an objection to the suit that it was legally bound to release the funds to Rahil International, as a professional undertaking to do the same had been issued under the sale agreement.

This raises the question as to whether a professional undertaking supersedes a client’s instructions in the event of a conflict at the centre of the legal battle.

“Coulson Harney was professionally and legally obligated to release the balance of the purchase price to Rahil International’s counsels pursuant to a professional undertaking issued under the sale agreement,” the law firm says.

A professional undertaking is an enforceable agreement lawyers enter into on behalf of their clients. Breach of a professional undertaking can cause sanctions to be imposed on a law firm.

Acceler, which is owned by billionaire businessman Peter Muthoka, has put the Ministry of Land, Housing and Urban Development on the spot for providing varying ownership documents before and after it entered into a sale agreement with Rahil International — the company that claimed to be the registered owners of the plot.

READ: City billionaire sues top law firm in row over prime plot

Part of the due diligence process while buying land in Kenya is confirming with the Lands Ministry whether the property is registered to the seller and whether there is any conflict over its ownership.

Acceler is questioning the reliability of the Lands ministry’s registries yet again, following the conflicting search results it produced on the same piece of land.

Several land sale deals have over the years gone up in smoke because of the conflicted ownership arising from a lack of integrity in the ministry’s records.

The Ministry of Land has not been enjoined to the case, but it has been put to task over the conflicting search results from its records.

Coulson Harney is yet to respond to the suit but Rahil International says in its response that the registration of Acceler as the new owner of the land was successful.

It adds that Acceler’s status as owners was confirmed in a meeting between it, Acceler and the deputy chief land registrar in February 2015.

“Acceler raised several concerns regarding the genuineness of the title to the suit property. These concerns were due to the fact that the pre-registration search presented prior to the execution of the sale agreement differed greatly from the search conducted post-registration. The material differences are obvious even to the naked eye,” the logistics firm says in court filings.

But Coulson Harney says in its objection to the suit that Acceler’s claim has been overtaken by events as it has already released the balance of the funds to Rahil International as provided for in the sale agreement.

“The orders sought have been overtaken by events as the balance of the purchase price has been released to Rahil International’s counsels pursuant to the terms of the sale agreement dated October 17, 2014,” Coulson Harney holds.

Justice Eric Ogola has frozen Sh81 million paid to Rahil International as part of the final settlement, pending hearing of the suit. But Rahil has in its response claimed that it has spent the money to settle debts it owed lawyers and other parties.

Acceler says it had planned to purchase the land as part of its preparation to venture into the real estate market but that it is no longer interested in the contested plot and wants Coulson Harney stopped from paying Rahil any money for the transaction.

The logistics firm says Coulson Harney went against its instructions in releasing funds to Rahil despite the instruction it had issued stopping the land buying deal.

Acceler wants the court to rule that Coulson Harney defied the client’s instructions, and to order the law firm to refund all the money that had been advanced to it for purposes of buying the land.

Coulson Harney has challenged the Commercial and Admiralty Court’s authority to hear the matter and promised to file an opposition.

Acceler reckons that varying results from the Lands ministry and the difference in documents provided by Rahil show that there could be two title deeds for the same property.

The logistics firm adds that Rahil may be unable to hand over the land after payment because third parties appear to have taken forceful possession of the same plot.

Several land buyers have lost money to unscrupulous brokers who take advantage of the Land ministry’s unreliable records to ply their trade.

A survey done by the Kenya Institute for Public Policy Research and Analysis (Kippra) last year showed that poor record keeping at the Lands ministry is a key hindrance to land registration in the country.

The survey showed that the record keeping bug is a result of inept workers in the registries, outdated maps and the failure to digitise registers.

Acceler in its suit raises concerns that there could be two title deeds to the property, as the one provided by Rahil in 2014 when negotiations began is significantly different from the one given to Coulson Harney for registration in the logistics firm’s name.

But Rahil insists that the Land ministry and the Directorate of Criminal Investigations (CID) have all asserted that Acceler has been duly confirmed as the new owner of the land.

Rahil says it had already registered the property in Acceler’s name and that the logistics firm is only trying to forestall payment of the balance as agreed in the deal.

“The deputy chief land registrar confirmed to Coulson Harney that their client, Acceler Global, was the duly registered owner of the property. On March 20, 2015, the CID confirmed the authenticity of the title issued to Acceler,” says Rahil.

Acceler adds that during a planned visit to the site, its representatives were denied access to the land by unknown people claiming to have been hired by the real owners of the property.

Surveying equipment they carried for the excursion was allegedly confiscated by the same group of people.

The suit has attracted the interest of the Consumer Federation of Kenya (Cofek) which has asked the court to enjoin it to the case as an interested party.

The consumer rights lobby says it wants the court to determine whether “unspecified professional undertaking” is consistent with the Constitution and whether lawyers are culpable if they ignore a client’s instructions on the same basis.

The lobby also wants the court to determine the extent to which lawyers are culpable in the event they defy client instructions on the strength of a professional undertaking.