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Court of AppealDismissedCivil Appeal No. 175 of 2018· [2020] KECA 676 (KLR)

Peter Njoroge Ng’ang’a v Statutory Manager For United Assurance Company Limited & Another [2020] KECA 676 (KLR)

Court of Appeal
8 May 2020
Martha Karambu KoomeM.K. KoomeDMD.K. MusingaSKS. Gatembu Kairu
4,277 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal ruled that even an innocent property buyer loses protection if the seller's title was fraudulently re-issued.

What this practically means

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Executive summary

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This was a first appeal to the Court of Appeal at Nairobi from the Environment and Land Court at Kajiado (C. Ochieng, J.), which had dismissed the appellant's suit for a permanent injunction, allowed the respondents' counterclaim, declared the 2nd respondent (United Insurance Company Limited) the legal owner of the suit property, and ordered cancellation of the appellant's title. The appellant, who had bought the property in 2011 from Martin Karumba Koiyet (PW1) for Kshs. 21.5 million, argued that he was a bona fide purchaser for value protected under Section 80(2) of the Land Registration Act, and that the 2nd respondent's own title was defective for want of a written contract and land control board consent. The Court, in a single judgment of the bench (Koome, Musinga and Gatembu Kairu, JJ.A.), applied Selle v Associated Motor Boat Company and re-evaluated the evidence. It found that PW1 had sold the property to the 2nd respondent in the late 1990s, surrendered the original title to it, and later dishonestly procured a re-issue of the title in 2011 without the loss or destruction required by Section 33 of the Land Registration Act. The re-issued title was irregular and conferred no transferable interest. Relying on Arthi Highway Developers and endorsing Alice Chemutai Too, the Court held that under Section 26(1)(b) a title acquired illegally or unprocedurally is impeachable even against an innocent purchaser, and that Section 80(2) does not apply in such circumstances. The appeal was dismissed with each party bearing its own costs, the Court noting that PW1, not a party, was the party truly responsible.

Key legal issues

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01

Impeachability of title under Section 26(1)(b) of the Land Registration Act

Holding

The appellant's title, derived from a vendor who obtained a fraudulent re-issue of a title he had surrendered, was acquired illegally and unprocedurally and is impeachable notwithstanding the appellant's innocence

Reasoning

The court found PW1 sold the property to the 2nd respondent, never rescinded that sale nor refunded the purchase price, then dishonestly procured a re-issuance of the title from the registrar while the original remained with the 2nd respondent. The re-issue breached Section 33 of the Land Registration Act, which requires loss or destruction of a certificate before replacement. A title founded on that irregularity is illegally and unprocedurally acquired within Section 26(1)(b), consistent with Article 40(6) of the Constitution, and the appellant's innocence is immaterial.

p. 5
02

Whether Section 80(2) of the Land Registration Act shields an innocent purchaser from rectification

Holding

Section 80(2) does not apply where the title is impeached under Section 26(1)(b) as illegally, unprocedurally or corruptly acquired

Reasoning

The court accepted the view of Munyao, J. in Alice Chemutai Too that Section 26(1)(b) does not require the title holder to be a party to the vitiating conduct; its purpose is precisely to remove the protection of innocent purchasers and title holders. Consequently the proviso in Section 80(2) protecting a proprietor without knowledge of the fraud is inapplicable, and rectification may be ordered against an innocent but defectively-titled proprietor.

p. 6
03

First appellate court's duty on appeal

Holding

A first appeal is by way of retrial; the court re-evaluates the evidence and draws its own conclusions while making allowance for not having seen or heard the witnesses

Reasoning

The court restated the classic principles in Selle v Associated Motor Boat Company: it must reconsider and evaluate the evidence itself and draw its own conclusions, but is not bound by the trial judge's findings of fact where the judge failed to take account of particular circumstances or probabilities or where an impression based on demeanour is inconsistent with the evidence generally. Applying that standard, the court re-evaluated the testimony and affirmed the trial judge's findings.

p. 4

Legal principles established

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  • Under Section 26(1)(b) of the Land Registration Act, it is not necessary to show that the title holder was party to the illegality; the provision operates to remove protection even from an innocent purchaser or innocent title holder whose title was acquired illegally, unprocedurally or through a corrupt scheme
  • A title re-issued in breach of Section 33 of the Land Registration Act, where the original certificate has not been lost or destroyed, is irregular and unprocedural and confers no interest capable of transfer to a subsequent purchaser
  • An irredeemably fake or invalid title passes no proprietary rights to subsequent purchasers
  • Section 80(2) of the Land Registration Act, protecting a proprietor from rectification absent knowledge or contribution to fraud or mistake, does not apply where a title is impeached under Section 26(1)(b)

Court orders

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  1. 1.The appeal is dismissed
  2. 2.Each party to bear its own costs of the appeal

Authorities

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Legislation

  • Land Registration ActSection 26(1)
  • Land Registration ActSection 26(1)(b)
  • Land Registration ActSection 33
  • Land Registration ActSection 80(2)
  • Constitution of KenyaArticle 40(6)
  • Law of Contract ActSection 3(3)
  • Land Control ActSection 9(2)

Cases cited (9)

  • Willy Kimutai Kitilit vs. Michael Kibet
    [2018] eKLR
  • Lawrence P. Mukiri Mungai, Attorney of Francis Muroki Mwaura vs. Attorney General & 4 others
    [2017] eKLR
  • Katende vs. Haridas and Company Limited
    EALR [2008] 2 EA 173
  • Arthi Highway Developers Limited vs. West End Butchery Limited & 6 others
    [2015] eKLR
  • Agnes Naipanoi Pasha vs. Stephen K. Wangombe and 2 others
    H.C.C.C No. 123 of 2011
  • Wreck Motor Enterprises vs. Commissioner of Lands & 3 others
    (1997) eKLR
  • Faraj Maharus vs J. B. Martin Glass Industries & 3 others
    (2005) eKLR
  • Selle vs. Associated Motor Boat Company
    [1968] E.A. 123
  • Alice Chemutai Too vs. Nickso Kipkurui Korir & 2 others
    [2015] eKLR
On appeal from
Environment and Land Court at Kajiado
ELC Case No. 204 of 2017
Jurisdiction invoked
First appeal to the Court of Appeal under the appellate jurisdiction conferred on the Court over the Environment and Land Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Peter Njoroge Ng’ang’a v Statutory Manager For United Assurance Company Limited & Another [2020] KECA 676 (KLR)", Case Analysis (2020). Civil Appeal No. 175 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/676/eng@2020-05-08

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