Flavemart Enterprise Limited v Kenya Railways Corporation [2019] KEELC 740 (KLR)
The bottom line
#Kenya's Environment and Land Court cancelled a company's land title because the company signed the sale agreement and received the lease before it even existed.
What this practically means
#Executive summary
#Key legal issues
#Capacity of a non-existent company to contract and hold title
The plaintiff, incorporated on 16th August 2011, could not validly execute the sale agreement of 12th February 2011 or receive the Certificate of Lease on 11th March 2011; the agreement and the resulting title were nullities.
The plaintiff's own documents showed the sale agreement was dated 12th February 2011 and the Certificate of Lease issued 11th March 2011, both before incorporation on 16th August 2011. Following Charles Karaithe Kiarie and Haideral Bhimji Motani, a non-existent company cannot hold title, and following Macfoy v United Africa Co, a nullity cannot support derivative rights. No novation or fresh agreement after incorporation was shown; the pre-incorporation trade name was a different entity.
Protection of the plaintiff's title under Section 26(1) of the Land Registration Act
The plaintiff's certificate of lease, though prima facie evidence of ownership, was not indefeasible because it was obtained irregularly and could be impeached under Section 26(1) and cancelled under Section 80.
The court accepted the plaintiff's certificate was prima facie evidence of absolute and indefeasible proprietorship, but held that such protection cannot extend to one who acquired property illegally, unprocedurally or through a corrupt scheme, as provided in Section 26(1) of the Land Registration Act, with Section 80 empowering cancellation of such registration. Given the nullity of the root contract, the title could be impeached as sought in the counter-claim.
Defendant's ownership and the counter-claim
On the uncontroverted evidence, including the defendant's original 1976 lease and evidence that it never sold to Riegate Development Ltd, the defendant proved it is the rightful owner and the transfer to the plaintiff was illegal, null and void.
The defendant produced the original lease issued on 10th December 1976 to the East African Railways Corporation. Its witness, Stanley Gitari, testified uncontrovertedly that the defendant never transferred the property to Riegate Development Ltd, and the attempted transfer to Dube Holdings Ltd was blocked by the Land Registrar. Riegate was not a party, and on this evidence the court found no legitimate interest on Riegate's part to enable it to transfer the property to the plaintiff.
Legal principles established
#- A company that did not exist at the time it was purportedly registered as owner of property cannot hold title to that property
- A contract made with a non-existent company is a nullity, and everything that flows from a nullity is itself a nullity
- The indefeasibility of title under the Land Registration Act does not protect a title acquired illegally, unprocedurally or through a corrupt scheme
Court orders
#- 1.The plaintiff's suit is dismissed with costs to the defendant
- 2.Judgment is entered for the defendant as prayed in its Counter-Claim together with costs
- Jurisdiction invoked
- Original jurisdiction of the Environment and Land Court over disputes relating to title to land (Land Registration Act; counterclaim for cancellation and rectification of register)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Flavemart Enterprise Limited v Kenya Railways Corporation [2019] KEELC 740 (KLR)", Case Analysis (2019). Not stated in the judgment (ELC Kisumu; heard during the ELC Kisumu Service Week). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/740/eng@2019-11-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.