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Court of AppealDismissedCivil Appeal No. 224 of 2016· [2020] KECA 753 (KLR)

Esther Ndengi Njiru & another v Leonard Gatei Mbugua [2020] KECA 753 (KLR)

Court of Appeal
24 April 2020
WKW. KaranjaHOHannah OkwenguFSF. Sichale
2,537 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 cancelled land buyers' title because their seller had no valid title to begin with and they kept no proof of purchase.

What this practically means

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Executive summary

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This Court of Appeal judgment at Nairobi (Karanja, Okwengu and Sichale, JJ.A) disposed of a first appeal from the Environment and Land Court (Mutungi, J) in ELC No. 128 of 2011, delivered 30th September 2014, in a dispute over Title No. Ruiru Kiu/Block 2/3104. The appellants claimed as innocent purchasers for value from James Kinuthia Waiharo, who held a certificate of title issued in 2004; the respondent counter-claimed as purchaser of the original owner's shares in Githunguri Constituency Ranching Co. Ltd, alleging Waiharo's title was procured by forgery and fraud. The trial court found for the respondent, cancelled the appellants' title and dismissed their suit. On appeal, the appellants faulted the trial court for failing to apply section 143 of the Registered Land Act protecting first registrations, and for finding them not to be bona fide purchasers despite due diligence by search. The Court, applying the first-appeal retrial mandate in Selle v Associated Motor Board Company, reviewed the evidence exhaustively. It agreed with the trial judge, expressly following the five-Judge Bench decision in Embakasi Properties Limited, that a certificate of title is prima facie indefeasible but is impeachable where acquired by fraud or misrepresentation or illegally, unprocedurally or through a corrupt scheme. It held the Land Registration Act, 2012, not the repealed RLA, applied, since by section 106(1) the repealed Acts ceased to apply on the effective date. Waiharo's failure to answer the counter-claim admitted the fraud allegations, so he had no valid title to pass. The appeal was dismissed with costs on 24th April 2020.

Key legal issues

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01

Applicable statute: RLA (repealed) vs LRA, 2012

Holding

The Court upheld the trial judge's application of the LRA to the suit property, holding that the RLA had ceased to apply on the effective date and that titles under repealed Acts were deemed titles under the LRA

Reasoning

Counsel for the appellants argued that the property was registered under the RLA before the LRA commenced, and that accrued rights should be governed by the prior law. The Court agreed with the trial judge that by dint of section 106(1) of the LRA, the repealed Acts ceased to apply, and by sections 104 and 105 registers and titles under repealed Acts were deemed registers and titles under the LRA. The rectification regime of the LRA therefore governed the dispute.

p. 3
02

Indefeasibility of title and rectification

Holding

Ownership under a certificate of title is prima facie absolute and indefeasible, but may be challenged and rectified where the title was acquired by fraud, misrepresentation, or illegally, unprocedurally or through a corrupt scheme

Reasoning

Relying on its own five-Judge Bench decision in Embakasi Properties Limited, the Court confirmed that a certificate of title is prima facie conclusive evidence of ownership but is not guaranteed where acquired by fraud or misrepresentation or illegally, unprocedurally or through a corrupt scheme. Section 80(1) of the LRA permits rectification of the register where any registration was obtained by fraud or mistake; no registration is exempt.

p. 4
03

Whether Waiharo had a valid title to pass to the appellants

Holding

Waiharo held no valid title; he did not appear in the Company's register and did not defend the fraud allegations, which were thereby admitted

Reasoning

The Chairman of Githunguri Constituency Ranching Co. Ltd testified that Waiharo did not appear in the Company's register, and the deceased's shares had been transferred to the respondent. Waiharo entered appearance to the counter-claim but filed no defence, so the fraud allegations were admitted. Without a valid root of title, Waiharo had nothing to pass to the appellants.

p. 3
04

Whether the appellants were bona fide purchasers for value without notice

Holding

The appellants failed to demonstrate bona fide purchase, as they produced no sale agreement and did not call Waiharo to substantiate the sale

Reasoning

The appellants claimed to have purchased the property from Waiharo for Kshs 400,000 but produced no sale agreement. The trial judge found their title impeachable under section 26(1)(b) of the LRA because the title transferred to them was obtained illegally and unprocedurally, even though they were not party to the fraud. As purchasers from a person with no valid title, they could not claim protection as innocent purchasers for value.

p. 3

Legal principles established

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  • Upon commencement of the Land Registration Act, 2012, the repealed Registered Land Act ceased to apply to land to which the LRA applies, and titles held under repealed Acts are deemed titles under the LRA, so rectification provisions of the LRA govern
  • No registration is exempt from rectification; titles obtained fraudulently or illegally, unprocedurally or through a corrupt scheme are prone to cancellation, including under section 26(1)(b) of the LRA and section 80(1) of the LRA
  • A party named as a defendant in a counter-claim who enters appearance but files no defence admits the allegations of fraud made against him

Court orders

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  1. 1.The appeal is dismissed with costs

Authorities

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Legislation

  • Registered Land Act (repealed)section 143(1)
  • Registered Land Act (repealed)section 106(3)(a)
  • Land Registration Act, 2012section 106(1)
  • Land Registration Act, 2012section 23(3)
  • Land Registration Act, 2012section 26(1)(a) and 26(1)(b)
  • Land Registration Act, 2012section 80(1)
  • Land Registration Act, 2012section 104
  • Land Registration Act, 2012section 105
  • Land Actsection 162(1)
  • Interpretation and General Provisions Actsection 23(3)
  • Constitution of Kenya, 2010Article 40(6)

Cases cited (6)

  • David Peterson Kiengo & 2 Others vs. Kariuki Thuo
    [2012]
  • Gibbs vs. Messer
    (1981) AC 247
  • Regal Constellation Hotel Ltd Re
    2004 CanLII 2006
  • Lawrence P. Mukiri Mungai, Attorney of Francis Muroki Mwaura vs. Attorney General & 4 others
    [2017] eKLR
  • Selle & Another versus Associated Motor Board Company Ltd and others
    [1968] 1 EA 123
  • Embakasi Properties Limited & Anor. vs. Commissioner of Land & Anor.
    [2019] eKLR
On appeal from
Environment and Land Court
ELC No. 128 of 2011
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (first appellate court mandate as stated in Selle & Another v Associated Motor Board Company Ltd)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (16)

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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, "Esther Ndengi Njiru & another v Leonard Gatei Mbugua [2020] KECA 753 (KLR)", Case Analysis (2020). Civil Appeal No. 224 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/753/eng@2020-04-24

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