Patrick Kanyagia & Another v Damaris Wangechi & 2 others [1995] KECA 141 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that an unregistered property sale agreement gives no rights against auction buyers, who got to keep the land.
What this practically means
#Executive summary
#Key legal issues
#Whether a contract of sale confers an equitable interest enforceable against third parties under the Transfer of Property Act
No. The Walsh v Lonsdale equity is excluded by the statutory registration requirements; the purchaser's protection is a caveat under section 116 of the TPA.
The Court of Appeal for Eastern Africa in El Subhi v El Miskinia held that the equity of Walsh v Lonsdale does not apply where statutes regulate the matter. Section 54 of the TPA provides that a contract of sale creates no interest in the property, and section 99 of the GLA requires registration of transactions affecting title. Wangechi's counsel could produce no authority for the constructive-trust proposition, which was also never pleaded. A prudent purchaser's advocate lodges a caveat; absent that, the bona fide purchaser for value without notice prevails.
When the equity of redemption is extinguished on exercise of the statutory power of sale
On execution of a binding contract of sale at the auction, by virtue of the 1985 amendment to section 60 of the TPA.
Section 60 as amended provides that the right of redemption must be exercised before the mortgagee enters into a binding contract for sale by public auction or private contract. All three judges in Mbuthia v Jimba were agreed on this point. Accordingly Muchemi's equity of redemption ended when the Kanyagias signed the contract on the date of auction, and registration of transfer followed later.
Whether the auction purchasers were bound to inquire into the occupant's rights
No; a purchaser for value without notice, not involved in any fraud, stands on a different footing and section 69B(2) of the TPA protects the title.
Counsel for Wangechi frankly conceded he could find no authority imposing such a duty, and there was no evidence the purchasers knew of Wangechi's interest. Under section 69B(2) the title is not impeachable on the ground that no case had arisen for the sale, notice was not given, or the power was irregularly exercised; the remedy of anyone damnified lies in damages against the mortgagee.
Whether Shields J correctly set aside his own eviction orders
No; he misdirected himself on the applicable law, including the erroneous view that the vendor must give vacant possession, and the appeal had to be allowed.
The learned judge held that a valid contract of sale arises on the fall of the hammer and that the vendor must give vacant possession, which ignored the statutory provisions of the TPA. He erred in not considering the effect of sections 54, 60 and 69B of the TPA and wrongly stayed the eviction he had properly granted. The purchaser buys subject to occupants' rights and may seek vacant possession from the court.
Legal principles established
#- A purchaser at a properly advertised mortgagee auction who pays the price without notice and without fraud obtains an unimpeachable title, and is not concerned to inquire whether a case has arisen to authorise the sale.
- Under section 60 of the Transfer of Property Act as amended in 1985, the mortgagor's equity of redemption is extinguished the moment a binding contract of sale is concluded in exercise of the statutory power of sale.
- An unregistered contract for the sale of land creates no interest in or charge on the property, and equity does not avail where statute prescribes registration.
Court orders
#- 1.The appeal was allowed and the orders made by Shields J on 20th May 1992 were set aside
- 2.Leave granted to the appellants to execute the order for eviction before assessment of mesne profits and/or damages, such execution not to take place before 30th September 1995
- 3.Mesne profits and/or damages to be assessed by a judge of the superior court
- 4.The first respondent to pay the appellants their costs of the suit in the High Court
- 5.The superior court to decide if the second respondent is liable to indemnify the first respondent in respect of costs of suit in the superior court
- 6.The second and third respondents to bear their own costs of this appeal
- 7.The costs of suit as between the third respondent and second respondent to be decided by the superior court
- 8.No order as to costs of this appeal
- On appeal from
- High Court
- Jurisdiction invoked
- First appeal to the Court of Appeal from the High Court (superior court) ruling
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Patrick Kanyagia & Another v Damaris Wangechi & 2 others [1995] KECA 141 (KLR)", Case Analysis (1995). Civil Appeal (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1995/141/eng@1995-08-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.