IN THE COURT OF APPEAL FOR EAST AFRICA
CORAM :( NEWBOLD, P., DUFFUS AND SPRY, JJA.)
CIVIL APPEAL NO 28 OF 1968
1) GODFREY MUHURI}
2) NJUGUNA GITHUKA}
3) KIMANI KUNU }
4) KARIUKI GITHUKU}
5) MAINGI GITHUKU}…………………..………..APPELANTS
1) BARNABA KIRIU}
2) WAMBIRI GICHUNGI}
3) KIMANI MWAURA }
4) KAHUGU GAKURU }
5) MWENDIA GICHINGA}
6) DAVID KIBUI}
7) NDORO NGETHE}
8) NJOROGE GITHU }
9) NDUNGU MUCHIRI}………………………………RESPONDENTS
[Appeal from a Ruling of the High Court of Kenya at Nairobi (Rudd, J.) dated 7th March, 1967, in Civil Case No. 437 of 1963].
13th December, 1968.
The following Judgments were read:-
In 1959 Godfrey Muhuri applied for a road service licence under the Transport Licensing Act (hereinafter referred to as the Act), and his application was approved. At that time he owned He invited a number of other persons to contribute money for the purchase of a bus which was to be used in providing a transport service under the road service licence on the under I standing that the persons who made such contributions were each to receive a proportionate share of the profits.
It was also agreed that he was to manage the transport business, though some of those other persons performed some duties in that business. It is now accepted by all parties that this arrangement resulted in a partnership with all the contributors and Godfrey Muhuri being the partners.
It is not clear whether the bus which was purchased was partnership property, but without deciding such to be the position I shall assume it was so for the purposes of this judgment.
Following the arrangement I have referred to, a bus was purchased and registered in the name of Godfrey Muhuri and a road service licence was issued in the name of Godfrey Muhuri.This transport business was operated and some time later the original bus was sold and the proceeds from the sale, together with additional contributions from the partners, were used to buy another bus which was again registered in the name of Godfrey Muhuri.
Subsequently a dispute arose between the partl1ers and an action was brought by some of them against Godfrey Muhuri and the remaining partners, seeking, inter alia, an order that the partnership be dissolved and "that the accounts of the partnership be taken and that all assets of the partnership be sold. Godfrey Muhuri and the other defendants entered a defence.
Paragraph 9 of the defence contended that the partnership was entered into to carry on the transport business without obtaining a licence in the name of all the partners or without obtaining the prior consent to the transfer of the licence issued to Godfrey Muhuri and, consequently, that the partnership agreement could not be performed without a contravention of the provisions of the Act and that the agreement was therefore void for illegality.
When the matter came before Rudd, J. in the High Court it was agreed that the question of illegality raised by the defence should be dealt with as a preliminary issue. Evidence was taken and Rudd, J. ruled that Godfrey Muhuri was in law the owner of the bus and the holder of the road service licence and that under the arrangement he owned the bus and operated the transport business subject to equities in favour of all the partners. The judge also held that there was nothing in the contract resulting from the arrangement which neither was illegal in itself, nor was it a contract which could not be legally performed, accordingly, he held that that ground of defence failed. From that decision Godfrey Muhuri and other defendant partners have appealed.
On appeal it was not at first suggested that the partnership agreement was itself illegal, but in the end that point was made. I see nothing in the evidence or the law which could lead me to differ in any way from the decision of Rudd,J that the partnership agreement between a number of persons to purchase a bus and to operate a transport service under a road service licence is an illegal agreement. Accordingly that ground of appeal fails.
It was also argued by Mr. Nowrojee, who appeared for the appellants, that the partnerships agreement was one which, while legal in itself, could not be performed in any manner other than one contrary to the terms of the Act an, accordingly, that agreement was one which could not be enforced by the courts. Mr. Nowrojee accepted that there was a presumption in favour of legality and that the onus of proof of illegality lay on him as he was alleging illegality, but he submitted that by virtue of the provisions of section 4 of the Act the agreement could not be performed in a legal manner. In support of his submission he referred to the decision of Miles,J in the unreported case of Mwangi V Mwangi Civil case No 1303 of 1961, in which it was held, on facts which are all material respects indistinguishable, that the partnership agreement could not be carried out without infringing the provisions of the Act. Rudd, J., having considered the decision in that case, came to the conclusion that it was wrong and declined to follow it. Mr. Nowrojee submitted that Rudd, J was in error in so deciding and the basis of his argument was as follows.
Under section 4(1) (b) of the Act it is provided that:-
“No person shall, except under and in accordance with the terms of a licence ... for hire or reward convey any person by means of any motor vehicle"
and under section 5(5)(a)(i) it is provided that
"The vehicles authorised to be used under a licence shall be such motor vehicles, being vehicles belonging to the holder of the licence …, as are specified in the licence."
Mr. Nowrojee submitted that as the transport business was carried on by the partnership and as the road service licence was in the name of Godfrey Muhuri alone the partnership agreement could not be carried out without infringing section 4(1)(b), because the person carrying on the transport business, that is conveying other persons for hire or reward in a motor vehicle, was the partnership which was not licensed. He also submitted that the bus did not belong to Godfrey Muhuri as it was partnership property under the partnership agreement, and, consequently, that the partnership agreement could not be carried out without contravening section 5(5) (a) (i), because the vehicle which was used under the licence did not belong to Godfrey Muhuri, who was the holder of the licence.
On both these points Rudd, J. held that the partnership agreement could be carried out without contravening the sections in question. He held on the first point that it was Godfrey Muhuri, the holder of the road service licence, who was in fact operating the service on behalf of the partnership, that this position was specifically permitted under the terms of the partnership agreement, and, consequently that as Godfrey Muhuri was the person licensed and the person operating the transport business no contravention of section 4 was caused by the partner ship agreement.
I see no reason to disagree with Rudd, J., either on the facts or the law. The evidence satisfies me that Godfrey Muhuri was, with the agreement of the partners, to manage the transport business. The mere fact that some of the other parties performed duties in the transport business did not result in Godfrey Muhuri ceasing to be the manager. As manager he would operate the transport business on behalf of the partnership. In effect he would be the person responsible for conveying the passengers under the licence and he would be the person to whom the Transport Licensing Board would look for the proper compliance with the terms of the licence. Like the judge I do not think that such a position would involve a contravention of section 4(1) (b).
The position might well be different if Godfrey Muhuri in fact had not been managing the transport business; but I cannot see why merely because a person, who manages a transport business under a licence given to him, takes a partner, the continued operation of the transport business contravenes the provisions of section 4(1) (b). Mr. Nowrojee accepted, and I am quite sure that he was right in so doing that in such circumstances and in the circumstances of the present case there had been no contravention of section 12.The taking by the manager of a transport business of partners does not amount to the transfer or sale of the business for the purposes of section 12 or 14.
On the second point Rudd, J. held that as the bus was registered in the name of Godfrey Muhuri the bus; in law, belonged to him subject to the equities arising under the partnership agreement and, accordingly, that no contravention of section 5(5) (a) (i) had been committed as, for the purposes of that section, the bus authorised to be used under the transport licence belonged to the holder of the licence.
Again, I see no reason to differ from Rudd, J. The bus was registered in the name of Godfrey Muhuri and thus even if it was partnership property I consider that it belonged to Godfrey Muhuri, the holder of the licence, for the purposes of section 5(5) (a) (i).
I see nothing in sections 16 and 11 and the Regulations made under the Act which lead me to the view that the partnership agreement could not be carried out without contravening the provisions of the Act and the Regulations made under the Act.
For these reasons I consider the decision of Rudd, J. to be correct and that of Miles, J. in Mwangi v. Mwangi (supra) to be incorrect and that the decision of Miles, J. should be over-ruled.
Accordingly I would dismiss the appeal with costs. As the other members of the Court agree it is so ordered.
SPRY, J .A.