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Court of AppealDismissedCivil Appeal E738 of 2021· [2024] KECA 1954 (KLR)

LWN v PLM & 3 others

Court of Appeal
20 December 2024
ASASIKE-MAKHANDIAKMK M'INOTIJLJW LESSIT
5,494 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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What this practically means

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Executive summary

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The Court of Appeal dismissed an appeal by LWN (W) against the judgment of the Environment and Land Court at Nairobi (Komingoi, J.) which had dismissed her suit challenging the transfer of a suit property to PLM (M), its charge to Consolidated Bank, its sale to CGK (G) in exercise of the bank's statutory power of sale, and its subsequent charge to Equity Bank. W claimed she had transferred the property to M only as security for a staff-rate loan which she repaid, and that the subsequent sale was fraudulent, violated a registered court order and the doctrine of lis pendens, and was to her brother-in-law G at an undervalue. On appeal, W's counsel framed only three issues: violation of the court order, non-joinder of the registrar, and alleged conspiracy. The Court observed that W conspicuously failed to challenge the trial court's foundational finding that she willingly sold and transferred the property to M under a written agreement complying with section 3(3) of the Law of Contract Act. That finding, unchallenged, left W a total stranger to all subsequent transactions, with no locus standi to challenge them. The Court added that even if the issue had been raised, W's forgery claim was unsupported, fraud requires proof above a balance of probabilities and cannot be inferred, and the clear written agreement admitted no extrinsic evidence under section 97(1) of the Evidence Act. The appeal was dismissed with no order as to costs, each party bearing its own costs in light of the family relationship between W and M.

Key legal issues

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01

Whether W could challenge the sale to G and subsequent charges without challenging the transfer of the property to M

Holding

No. The foundational finding that W willingly sold and transferred the property to M was not challenged on appeal, leaving W a stranger to all subsequent transactions.

Reasoning

The court noted that W's grounds of appeal omitted any challenge to the trial court's finding on the transfer to M, on which all other issues hinge. Having accepted that finding, W had no enforceable interest in the property and no locus standi to attack the charge to Consolidated Bank, the sale to G, or the charge to Equity Bank. Determining secondary issues where the primary issue fails would be an academic exercise.

p. 7
02

Whether the sale agreement and transfer to M were valid despite W's claim of forgery and an alleged oral re-transfer understanding

Holding

Yes. The written agreement dated 6th June 2001 complied with section 3(3) of the Law of Contract Act, contained no re-transfer condition, and W adduced no evidence of forgery.

Reasoning

The trial court found the agreement was executed before an advocate and met section 3(3) of the Law of Contract Act. Under section 97(1) of the Evidence Act, no extrinsic evidence could contradict its clear written terms. W claimed forgery but called no document examiner, and the standard of proof for fraud is above a balance of probabilities. W, a police inspector, could hardly have signed without knowing what she was doing.

p. 8
03

Whether fraud and conspiracy were proved against M, Consolidated Bank and G

Holding

No. W failed to discharge the heightened burden of proof for fraud; the mere in-law relationship between M and G was not evidence of conspiracy.

Reasoning

Applying R.G. Patel v Lalji Makanji and Demutila Nanyama Pururu, the court held that fraud must be strictly proved and cannot be inferred from facts. W produced no valuation report to show the property was undersold, and the sale was above the forced sale value. The relationship between M and G, without more, did not establish fraud or conspiracy warranting nullification of the transaction.

p. 8

Legal principles established

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  • A party who does not challenge the finding that the root transfer of title was lawful cannot challenge subsequent dealings with the property by the registered proprietor; such a party is a stranger to those transactions.
  • Allegations of fraud must be strictly proved to a standard above a balance of probabilities, and fraud cannot simply be inferred from facts.
  • Where a contract is in writing and its terms are clear and unambiguous, no extrinsic evidence may be called to add to or detract from it.
  • On a first appeal, the court has a duty to analyse, evaluate and assess the evidence and arrive at its own independent conclusion, while being slow to interfere with trial court credibility findings.

Court orders

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  1. 1.The appeal is dismissed
  2. 2.Each party in this appeal to bear its own costs

Authorities

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Legislation

  • Registration of Titles Act (repealed)section 23
  • Transfer of Property Act (repealed)section 69(1)
  • Evidence Act, cap 80 Laws of Kenyasection 97(1)
  • Law of Contract Act, cap 23 Laws of Kenyasection 3(3)
  • Civil Procedure RulesOrder 1 rule 9

Cases cited (19)

  • Bellamy v. Sabine
    [1857] 1 De J. 566

    Rationale of the doctrine of lis pendens - preventing defendants from alienating property subject of litigation to defeat plaintiff's claim

  • Naftali Ruthi v. Patrick Thuita Gacheru & Another
    [2015] eKLR

    Purpose of lis pendens is to preserve the suit property pending hearing and determination of the suit

  • Shimmers Plaza Ltd v. National Bank of Kenya Ltd.
    [2015] eKLR

    All parties are bound to respect a court order unless set aside, even if they believe it invalid

  • William Kiprono Towett & 1597 others v. Farmland Aviation Ltd & 2 Others
    [2016] eKLR

    A suit cannot be defeated by misjoinder or non-joinder of a party

  • Republic v. Registrar of Titles, Mombasa & 4 Others ex parte A. K. Abdulgani Ltd
    [2018] eKLR

    The registrar is obliged to follow the right process

  • Katende v. Haridar & Co. Ltd.
    [2008] 2 EA 173

    Attributes of a bona fide purchaser for value

  • Charles Karathe Kiarie & 2 others v. Administrators of the Estate of John Wallace Mathare & 5 Others
    [2013] eKLR

    Indefeasibility of a bona fide purchaser's title under the Torrens system

  • Kenya Power & Lighting Co. Ltd. v. Margaret Akoth Olang
    [2017] eKLR

    Court entitled to draw adverse inference from failure to call a witness

  • Jennifer Nyambura Kamau v. Humphrey Mbaka Nandi
    [2013] eKLR

    Burden of proof of fraud rests on the party alleging it

  • Central Bank of Kenya Ltd v. Trust Bank Ltd & 4 Others
    [1996] eKLR

    Failure to discharge burden of proof as regards fraud, illegality and conspiracy

  • Thugi River Estate Ltd & another v. National Bank of Kenya Ltd
    [2008] eKLR

    Sale by private treaty by a mortgagee is a lawful sale

  • Savings & Loan (K) Ltd v. Kanyenye Karangaita Gakombe & Another
    [2015] eKLR

    No privity of contract; refusal to accede to a third party's request is not evidence of fraud

  • Demutila Nanyama Pururmu v. Salim Mohamed Salim
    [2021] eKLR; CA No. 138 of 2018

    Standard of proof of fraud; fraud cannot simply be inferred from facts

  • Seascapes Ltd v. Development Finance Co. of Kenya Ltd.
    [2009] KLR 384

    Duty of a first appellate court and deference on witness credibility findings

  • Kukal Properties Development Ltd v. Tafazzal H. Maloo & 3 others
    [1993] eKLR

    No extrinsic evidence may be called to add to or detract from a clear written contract

  • Fanikiwa Ltd & 2 others v Sirikwa Squatters Group & 17 Others
    Pet. No. 32 (E036) of 2022

    Approval of Halsbury's statement excluding extrinsic evidence to contradict a written document

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

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

  • Munyu Maina v. Hiram Gathiha Maina
    [2013] eKLR

    A registered proprietor whose root of title is challenged must prove legality of the acquisition beyond the instrument

  • Dina Management Ltd v. County Government of Mombasa & 5 Others
    Pet. No. E010 of 2021

    A party whose root of title is successfully challenged cannot benefit from the bona fide purchaser doctrine

On appeal from
Environment and Land Court at Nairobi
ELCC No. 358 of 2010
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (appeal from 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 (6)

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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, "LWN v PLM & 3 others", Case Analysis (2024). Civil Appeal E738 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/1954/eng@2024-12-20

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