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Court of AppealDismissedCivil Appeal No. 273 of 2010· [2017] KECA 776 (KLR)

Wanyororo Farmers Co. Ltd v Nakuru Kiamunyeki Co. Ltd

Court of Appeal
23 February 2017
RNR. N. NambuyeGKG. B. M. KariukiPKP. O. Kiage
4,700 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that registering jointly purchased land in one company's name alone is fraud, and the other owner can still claim a half share.

What this practically means

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Executive summary

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The respondent sued the appellant in the High Court at Nakuru claiming a half share of three suit parcels (LR Nos 4149, 5249 and 10458) allegedly jointly purchased from Mugwathi Farms Limited, seeking declarations of a resulting trust, an order for transfer, and a perpetual injunction. The trial judge (Emukule, J) allowed the claim and dismissed the appellant's defence and counterclaim on 23rd July 2010. The appellant appealed on seven grounds, contending it alone purchased the parcels, that the joint venture agreement of 21st July 1973 never materialised, and that the trial judge disregarded its documentary evidence. The Court of Appeal (Nambuye, Kariuki and Kiage, JJ.A) restated the first-appeal standard from Selle v Associated Motor Boat Co and Jabane v Olenja, then affirmed the trial judgment on every issue. It found the joint resolution of 21st July 1973, the AGM minutes of 15th December 1974, the Kamere & Co letter of 4th May 1978 and the corrigendum gazette notice - none of which the appellant ever challenged - proved a joint purchase with contributions of Kshs 600,000 by the respondent and Kshs 400,000 by the appellant. The common directorship of the two companies blurred their identities and defeated the appellant's claim to sole beneficial ownership. On fraud, the Court held the standard of proof lies above a balance of probabilities but below the criminal standard, found the pleading requirements met, and held that registering the property solely in the appellant's name after it had taken its own 50% share amounted to fraud - stealing a march on the respondent - creating a trust notwithstanding the absence of a trust reference in the title. The appeal was dismissed in its entirety with costs to the respondent.

Key legal issues

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01

Whether the parties jointly agreed to purchase and sub-divide the suit parcels on a 50:50 ratio

Holding

Yes. The joint resolution of 21st July 1973, the AGM minutes of 15th December 1974, the Kamere & Co letter of 4th May 1978, and the corrigendum gazette notice, all unchallenged, proved a joint purchase.

Reasoning

The Court found the minutes of the 20th January 1973 and 21st July 1973 meetings critical. The joint meeting resolved joint purchase with contributions of Kshs 600,000 from the respondent and Kshs 400,000 from the appellant. Under section 85 of the Evidence Act the gazette notices were prima facie evidence, and the appellant never impugned the corrigendum or the Kamere & Co correspondence at any stage.

p. 6
02

Effect of the common directorship of the two companies

Holding

The common directorship and shareholding accounted for the ease of the joint transaction and blurred the identities of the companies, ousting the appellant's claim to be sole beneficiary.

Reasoning

Unchallenged evidence of the founder directors showed common directorship and shareholding despite separate memoranda. Individual directors could participate in either company's affairs at will, which explained the joint purchase agreement and 50:50 subdivision, defeating the appellant's assertion of exclusive beneficial ownership based on sole registration.

p. 6
03

Whether the appellant was culpable for fraud or breach of trust

Holding

Yes. Causing registration of the suit property in its sole name, to the exclusion of the respondent after both had shared the parcels, amounted to fraud and breach of trust.

Reasoning

The respondent pleaded and particularised fraud, satisfying the strict pleading standard. The appellant registered the property solely in its name despite having received its own 50% share, settled its shareholders and issued titles. This was 'stealing a march' on the respondent; the resulting title was not immune from challenge and the appellant held the property in trust for the respondent.

p. 8
04

Whether the respondent proved its claim to the required threshold

Holding

Yes. The claim, including the resulting/constructive trust and overriding interest, was proved to the required standard.

Reasoning

Applying the principles in Mwangi v Mwangi, Kanyi v Muthiora, Arumba v Mbega and Muthuita v Wande, the Court held that registration in the appellant's sole name, whether in ignorance or defiance of available information, did not destroy the respondent's equitable interest; the prima facie title stood impugned on the ground of fraud.

p. 5

Legal principles established

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  • On a first appeal, the Court reconsiders and evaluates the evidence itself, drawing its own conclusions, while making allowance for not having seen or heard the witnesses.
  • An appellate court will not lightly differ from findings of fact of a trial judge who saw and heard the witnesses, and will interfere only where findings are based on no evidence or wrong principles.
  • Fraud is a serious accusation which must be specially pleaded, particularised, and proved to a standard above a balance of probabilities but not beyond reasonable doubt.
  • Registration of title is a creation of law; a court may inquire into the circumstances surrounding a registration, and a registered proprietor may hold land in trust notwithstanding the absence of a trust reference in the instrument of acquisition.

Court orders

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  1. 1.The judgment and decree of the High Court (Emukule, J) dated 23rd July 2010 is affirmed
  2. 2.The appeal is dismissed in its entirety
  3. 3.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Land Control ActCap. 302
  • Evidence ActSection 85
  • Registered Land ActSection 2 (definition of fraud)
  • Registered Land ActSection 28
  • Registered Land ActSection 163
  • Kenya Gazette / Legal Notice No. 69 of 1978 and corrigendum of 7th July 1978Presidential exemption from the Land Control Act

Cases cited (18)

  • Selle versus Associated Motor Boat Co.
    [1968] EA 123

    Duty of a first appellate court to reconsider and evaluate the evidence and draw its own conclusions.

  • Abdul Hameed Saif vs. Ali Mohamed Sholan
    (1955), 22 E.A.C.A 270

    Allowance to be made for the appellate court not having seen or heard the witnesses.

  • Jabane vs. Olenja
    [1986] KLR 664

    Reluctance to interfere with trial judge's findings of fact unless based on no evidence or wrong principles.

  • Ephantus Mwangi vs. Duncan Mwangi Wambugu
    (1982-88) 1 KAR 278

    Interference with findings of fact only where based on no evidence or wrong principles.

  • Mwanasokoni vs. Kenya Bus Services
    (1982-88) 1 KAR 870

    Same principle on appellate interference with findings of fact.

  • Mwangi –Vs- Mwangi
    [1986] KLR 358

    Registration of title is a creation of law; circumstances surrounding registration may be considered.

  • Kanyi Versus Muthiora
    [1954] K.L.R. 712

    Registered land subject to law of England as modified by equity; trustee not relieved by section 28 duties.

  • Arumba Vs. Mbega & Another
    [1988] KLR 121

    Equal contribution of purchase money creates a tenancy in common.

  • Muthuita Vs. Wande
    [1942] K.L.R. 166

    Absence of trust reference in the acquisition instrument does not affect enforceability of a trust.

  • Arthi Highway Developers Limited Vs. West End Butchery Limited & 6 Others
    Nai. CA No. 246 of 2013

    Definition of what does or does not amount to fraud.

  • Insurance Company of East Africa Vs. The Attorney General & 3 Others
    HCCC 135 of 1998

    Whether there was fraud is a matter of evidence.

  • Vivo Energy Kenya Limited Vs. Maloba Petrol Station Limited & 3 Others
    [2015] eKLR

    Fraud must be specially pleaded with particulars, and proved beyond mere balance of probabilities.

  • R.G. Patel Vs. Lalji Makanji
    [1957] EA 314

    Allegations of fraud must be strictly proved; something more than balance of probabilities required.

  • Richard Akwesera Onditi Vs. Kenya Commercial Finance Co. Ltd
    CA No. 329 of 2009

    Fraud and collusion require a very high standard of proof, above mere balance of probability.

  • Wallingford V. Mutual Society
    (1880) 5 App. Cas. 685

    Clear and distinct allegation of fraud required on the pleadings.

  • Garden Neptune V. Occident
    [1989] 1 Lloyd's Rep. 305

    Pleading standard for fraud.

  • Lawrence V. Lord Norreys
    (1880) 15 App. Cas. 210

    Statement of claim must contain precise and full allegations supporting the inference of fraud.

  • Davy V Garrett
    (1878) 7 Ch.D. 473

    Fraudulent conduct must be distinctly alleged and distinctly proved; general allegations insufficient.

On appeal from
High Court of Kenya at Nakuru
H.C.C.C. No. 201 of 2007
Jurisdiction invoked
First appeal to the Court of Appeal under its appellate jurisdiction (the judgment does not cite a specific provision)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (8)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Wanyororo Farmers Co. Ltd v Nakuru Kiamunyeki Co. Ltd", Case Analysis (2017). Civil Appeal No. 273 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/776/eng@2017-02-23

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.