Joseph M. Mbuva v Pioneer Building Society Limited (In Receivership) & Peter Karanja Ngure [2016] KECA 99 (KLR)
The bottom line
#The Court of Appeal ruled that you cannot buy a valid property interest from someone whose title is already charged to a lender.
What this practically means
#Executive summary
#Key legal issues
#Whether the appellant acquired an enforceable interest by purchase from the vendor
No, because the property was encumbered by a registered charge and the vendor lacked capacity to sell or pass title.
The title was encumbered by a registered legal charge held by the 1st respondent; all title documents were in the chargee's possession and the vendor had neither authority from the chargee nor capacity to dispose of the property. Part of the purchase price was never remitted to the chargee. The appellant's failure to join or call the vendor drew an adverse inference. His remedy lies against the vendor only.
Whether the appellant purchased the suit premises from the 1st respondent
No; the offer of Kshs.450,000/- was rejected and there was no agreement or payment of any consideration.
The evidence showed only an offer by the appellant which the 1st respondent countered at Kshs.650,000/-; no sale agreement was executed and no consideration was paid. The appellant himself conceded in testimony that his offer was not accepted and that he had paid nothing to the official receiver, defeating his claim of purchase from the 1st respondent.
Whether the doctrine of lis pendens invalidated the sale to the 2nd respondent
No; the injunction orders had been discharged and the prior suit struck out before the auction, so no litigation or order was pending to trigger the doctrine.
The ex-parte injunction of 20th March 2003 was discharged on 3rd April 2003 for want of prosecution, and CMCC No. 2678 of 2003 was struck out. From that date no order barred alienation. The re-advertised auction of 9th May 2003 was proved by newspaper advertisement and proof of payment, and the appellant produced no credible evidence to the contrary.
Legal principles established
#- On a first appeal, the Court of Appeal's duty is to re-appraise and re-evaluate the evidence afresh and reach its own independent conclusions, while allowing for the trial court's advantage in observing witness demeanour.
- A chargor who has encumbered title by a registered charge cannot pass valid title to a purchaser without discharging the charge; nemo dat quod non habet.
- A purchaser of property under litigation is bound by the judgment in that litigation as though he had notice, under the doctrine of lis pendens.
Court orders
#- 1.Appeal dismissed
- 2.Costs of the appeal to the respondents
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 259 of 2004
- Jurisdiction invoked
- First appeal to the Court of Appeal under Rule 29(1) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Joseph M. Mbuva v Pioneer Building Society Limited (In Receivership) & Peter Karanja Ngure [2016] KECA 99 (KLR)", Case Analysis (2016). Civil Appeal No. 15 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/99/eng@2016-11-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.