Agri Seedco Ltd v Christine Chepchirchir Baig & another [2019] [2019] KECA 389 (KLR)
The bottom line
#The Court of Appeal upheld that a power of attorney labelled 'irrevocable' can still be revoked, and a buyer who ignores the owner's warnings loses the land.
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 power of attorney donated to the 2nd respondent was an irrevocable power of attorney
- 2.Whether the revocation of the power of attorney by the 1st respondent, that was registered, was valid and effective
- 3.Whether the transaction between the 2nd respondent and the appellant in regard to the suit property was tainted by fraud and collusion, or whether the same is valid and enforceable
- 4.Whether the learned judge of the High Court was right in dismissing the appellant's defence and counterclaim
Key legal issues
#Whether a power of attorney expressed to be irrevocable, given out of natural love and affection, is revocable
The power of attorney was revocable; the label 'irrevocable' does not make it so at common law unless supported by consideration and coupled with an interest of the agent.
Sections 50 and 51 of the Registration of Titles Act contemplate revocable powers of attorney and do not address irrevocable ones. At common law, per Bowstead and Reynolds, an authority is irrevocable only where given by deed or for valuable consideration to secure an interest of the agent. Here the power was donated out of natural love and affection for the benefit of the donor's children, not the agent, so it lacked both consideration and a coupled interest and remained revocable.
Effect of a registered revocation on a pending land transaction
Once the revocation of the power of attorney was registered, the registrar could not give effect to the conveyance or transfer, rendering the transaction invalid and ineffective.
The revocation was registered on 11 January 2012, before the appellant lodged the conveyance documents for registration on 6 February 2012. Under section 51 of the Registration of Titles Act the registrar is barred from giving effect to instruments signed pursuant to a revoked power. Because registration of the transfer had not been effected, the retrospective argument failed and the transaction could not be completed.
Whether the appellant was a bona fide purchaser for value without notice
The appellant was not a bona fide purchaser because it knew, through the 1st respondent's direct warnings and those of her relatives from November 2011, that the registered owner did not wish to sell, yet proceeded with the transaction.
Kassim, the appellant's general manager, conceded the 1st respondent called him from the US in November 2011 stating she was not selling the land. Despite this, the appellant paid the balance, lodged conveyance documents, and took possession. The transaction was also executed in the 1st respondent's name without disclosing the power of attorney, and the price of Kshs. 27 million was a gross undervalue against a valuation of about Kshs. 56.96 million. These circumstances defeated any claim to bona fide purchaser status.
Fiduciary duty of an attorney and the burden of proving good faith
The relationship of principal and agent created a fiduciary duty; the 2nd respondent, in a position of active confidence, failed to prove good faith and exhibited fraudulent intent by selling without the donor's knowledge or consent.
Under section 117 of the Evidence Act, the burden of proving good faith lies on the party in a position of active confidence. The 2nd respondent entered the transaction without consulting the 1st respondent, acted in his own interest, and only sought to resile when she discovered the sale. He called no evidence. His conduct exhibited fraudulent intention, and his defence did not discharge the burden on him.
First appellate court's duty on appeal
As a first appellate court, the Court of Appeal is obliged to subject the evidence adduced at trial to a fresh analysis and reach its own conclusion.
Citing Rule 29 of the Court of Appeal Rules and Zingo Investment Ltd v Maina Enterprises Ltd, the court restated that a first appeal is decided on the evidence heard at trial, with the appellate court re-evaluating that evidence and drawing its own conclusions, while allowing for the fact that it neither saw nor heard the witnesses.
Legal principles established
#- A power of attorney is not irrevocable merely because the word 'irrevocable' is used in it; it is only irrevocable where it is given for valuable consideration and is for protecting or securing the interest of the agent.
- Natural love and affection is not valuable consideration capable of supporting an irrevocable power of attorney.
- After registration of a revocation of a power of attorney, the registrar shall not give effect to any transfer or other instrument signed pursuant to that power.
- Fraud must be specifically pleaded with particulars on the face of the pleading, and fraudulent conduct must be distinctly alleged and distinctly proved; it is not allowable to leave fraud to be inferred from the facts.
- Where a question arises as to the good faith of a transaction between parties one of whom stands in a position of active confidence, the burden of proving good faith is on the party in the position of active confidence.
- A party who has knowledge that the registered owner does not wish to sell cannot be a bona fide purchaser for value without notice, even where the sale was executed under a power of attorney that was subsisting when the agreement was made.
Court orders
#- 1.The appeal is dismissed with costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya, Environment and Land Court at Kitale
- ELC Case No. 34 of 2012
- Jurisdiction invoked
- First appeal under the Court of Appeal Rules (Rule 29 of the Court of Appeal Rules invoked); appeal from the High Court sitting as Environment and Land Court
Relief refused
#Setting aside the finding that the revocation of the power of attorney invalidated the transaction
The revocation was registered before the appellant lodged the conveyance documents for registration, so under section 51 of the Registration of Titles Act the registrar could not give effect to the transfer
Refund of Kshs. 105,898 paid as land rent and rates
Payments were made after the 1st respondent had warned the appellant she was not selling and after revocation of the power of attorney
Refund of stamp duty of Kshs. 1,080,000
Included with the land rent and rates claim, dismissed on the same reasoning
Damages for loss of wages from May 2011 to November 2011
The claim was special damage which ought to have been specifically pleaded and proven, and the appellant acted at its own risk before registration
Costs
The appeal was dismissed with costs to the respondents.
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.
the power of attorney is only irrevocable where it is given for valuable consideration and is for protecting or securing the interest of the agent.
The consideration of natural love and affection cannot be measured in monetary terms, nor is it valuable consideration.
after the registration of revocation of the power the registrar shall not give effect to any transfer or other instrument signed pursuant to that power
It is also settled law that fraudulent conduct must be distinctly alleged and as distinctly proved, and it is not allowable to leave fraud to be inferred from the facts.
the burden of proving the good faith of the transaction is on the party who is in a position of active confidence.
The upshot of the above is that we find no substance in this appeal. It is accordingly dismissed with costs.
Issues in the judgment
#Paragraph numbering in the judgment duplicates paragraph [43], which contains both the particulars of fraud pleaded by the 1st respondent and a separate passage on the fiduciary relationship.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Agri Seedco Ltd v Christine Chepchirchir Baig & another [2019] [2019] KECA 389 (KLR)", Case Analysis (2019). Civil Appeal No. 264 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/389/eng@2019-07-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.