Nirmal Singh Dhanjal v Joginder Singh Dhanjal & 4 others [2018] KECA 771 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that any deal distributing a deceased person's property before a grant is confirmed is completely void — no exceptions.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the 1st respondent had the locus standi to institute the proceedings
- 2.Whether the court erred in voiding the settlement agreement and ordering rectification of the register of members of Dhanjal Investments Limited
Key legal issues
#Whether the 1st respondent, a beneficiary without a grant of letters of administration, had locus standi to bring the application
Yes. An interested beneficiary may file a summons for revocation of grant under section 76 and rule 44, and was not bound to take out a limited grant under section 54.
Section 76 permits revocation of a grant on the application of any interested party, and rule 44 allows any person interested in the estate to seek such relief. The 1st respondent instituted the application as an aggrieved dependant within the estate matter. Section 54 empowers the court to limit grants but does not oblige a beneficiary protecting his own interest to obtain a limited grant first. The authorities cited by the appellant were distinguishable because they concerned persons purporting to act as administrators, which was not this case.
Whether the High Court erred in voiding the settlement agreement dated 9th March 2006
No. The agreement executed dispositions of the deceased's assets before the grant was confirmed, contrary to section 55 of the Law of Succession Act.
It was undisputed that the settlement agreement was executed by the 2nd respondent on 9th March 2006, before letters of administration issued on 26th July 2006 and before confirmation on 20th April 2007. Section 55 forbids distribution of capital assets before confirmation of the grant. Disposition by an unauthorised person prior to confirmation is void, consistent with Musa Nyaribari Gekone v Peter Miyienda. The learned Judge's inherent discretionary finding could not be faulted.
Whether the share transfers effected in 2008, after confirmation, were valid
No. The consideration for the transfers was the void settlement agreement, so the transfers could not stand.
Although the 2008 transfers of shares to Dalip occurred after confirmation of the grant, clause 2.1 of the share transfer form recorded the consideration as 'certain agreements made in a settlement agreement'. Since the settlement agreement was declared void, the consideration failed and the transactions founded on it were equally void. The appellant's reliance on section 77 of the Companies Act and Table A did not avail because the underlying consideration was vitiated.
Whether the transferees were innocent purchasers deserving protection
No. The transferees were kin and co-directors who knew or ought to have known that letters of administration had not been confirmed.
The beneficiaries of the unlawful transfers were family members and co-directors in the family companies, positioned to know the deceased had died and that his estate had not been distributed under a confirmed grant. The public policy argument regarding the impact on Dalip's estate was never advanced at trial, and no claim was ever made regarding the shares allegedly surrendered by the brothers, so the court could not be faulted for making no finding on them.
Legal principles established
#- No distribution of capital assets of a deceased's estate may be made before the grant of letters of administration is confirmed; distribution done prior to confirmation is void.
- A beneficiary interested in a deceased's estate has locus standi to apply for revocation or annulment of a grant under section 76 and rule 44 without obtaining a full or limited grant.
- Where the foundational settlement agreement is void, all transactions springing from it, including share transfers founded on it as consideration, are equally void.
- An appellate court will not interfere with a judge's exercise of discretion unless the judge misdirected himself or was clearly wrong resulting in injustice.
Court orders
#- 1.Appeal dismissed in its entirety
- 2.Each party to bear their own costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Mombasa
- Probate and Administration Cause No. 20 of 2006
- Jurisdiction invoked
- First appellate jurisdiction over the High Court under the Court of Appeal's statutory appellate jurisdiction (appeal against a ruling in a succession cause); no specific constitutional provision invoked in the judgment.
Relief refused
#The appellant's prayer to set aside the High Court ruling voiding the settlement agreement and the share transfers
The transfers were undertaken prior to confirmation of grant in breach of section 55 of the Law of Succession Act; the void settlement agreement vitiated the consideration for the transfers
The appellant's contention that the 1st respondent required a full or limited grant to file the application
The 1st respondent filed as an interested beneficiary under section 76 and rule 44, and needed no limited grant under section 54 to safeguard his interest as a beneficiary
Costs
Each party to bear their own costs of this appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
In the upshot, we find no merit in this appeal, which we hereby order dismissed.
These being members of the same family, we have no desire of setting them against each other, we order each party to bear their own costs of this appeal.
No grant of representation, whether or not limited in its terms, shall confer power to distribute any capital assets, or to make any division of property, unless and until the grant has been confirmed as provided in section 71.
The 1st respondent, having filed as an interested beneficiary was thus possessed of the locus standi to file the application.
If the “settlement agreement” is void, then all that springs from it is equally void. The share transfer transaction cannot hold where the consideration thereof has been vitiated.
we wish to emphasize the need to ensure due diligence before undertaking massive commercial transactions by ensuring the parties involved have the relevant capacities or instruments to undertake the transfers.
Issues in the judgment
#The judgment states the grant of letters of administration was issued on 26th July 2006, yet also describes the same date as the date of confirmation and separately gives 20th April 2007 as the confirmation date, creating internal inconsistency on the grant chronology.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nirmal Singh Dhanjal v Joginder Singh Dhanjal & 4 others [2018] KECA 771 (KLR)", Case Analysis (2018). Civil Appeal No. 14 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/771/eng@2018-02-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.