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ELCPartially AllowedNot stated in the judgment (as extracted)· [2020] KEELC 1236 (KLR)

Marcello Perrucchetti & another v Kinuthia Holdings Ltd & 4 others [2020] KEELC 1236 (KLR)

Environment and Land Court of Kenya
28 September 2020
CYC.K. Yano
5,738 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

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What this practically means

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Executive summary

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The plaintiffs, Italian nationals, bought KWALE/GALU KINONDO/2368 (0.60 Ha) for Kshs.13,500,000 from the 2nd defendant, engaging the 3rd defendant advocate for due diligence, sale agreement and transfer, and paying the full price through her firm. After receiving a title deed from the advocate, they were confronted by the 1st defendant, Kinuthia Holdings Limited, holding an original 1980 title to the mother parcel KWALE/GALU KINONDO/397, from which the suit parcel had purportedly been subdivided. The plaintiffs sued for injunction, a declaration of ownership, refund and damages; the 1st defendant counter-claimed for cancellation of the fraudulent registrations and rectification of the register. The suit against the 1st defendant was withdrawn by consent. The court found the 1st defendant's title uncontroverted and held the 2nd defendant's 2012 title was forged, the product of a fraudulent scheme involving the 2nd and 3rd defendants, giving the 4th defendant (Registrar) the benefit of the doubt. The plaintiffs were held to be innocent purchasers for value without notice, but having bought from a party without title, their title was cancelled. The 1st defendant's counter-claim succeeded; the register is to be rectified restoring Kinuthia Holdings Limited as owner of parcel 397. The plaintiffs' case partly succeeded on refund: the 2nd and 3rd defendants were ordered jointly and severally to refund Kshs.14,500,000 and pay Kshs.1,000,000 general damages, plus costs of all parties.

Key legal issues

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01

Whether the 2nd defendant had a valid title to pass to the plaintiffs

Holding

He had none; his 2012 title was forged because the 1st defendant had held title since 1980 and never transferred the land

Reasoning

The 1st defendant produced its 1980 certificate of title and gave uncontroverted evidence that it never sold or transferred the land. No evidence showed how the 2nd defendant acquired title in 2012. The court found a fraudulent scheme between the 2nd and 3rd defendants, possibly with registry officers, rendering the title and subdivisions liable to cancellation under Section 26 of the Land Registration Act.

p. 5
02

Whether the plaintiffs were innocent purchasers for value without notice

Holding

Yes; they carried out due diligence, relied on an advocate, and no evidence linked them to the fraud

Reasoning

The plaintiffs conducted a search, engaged an advocate, paid the purchase price through banking channels and were shown a title appearing regular. There was no evidence they participated in the fraud, and they were under no duty to trace root title beyond the registry records. They were therefore innocent purchasers entitled to refund notwithstanding cancellation of their title.

p. 5
03

Who is liable to refund the purchase price

Holding

The 2nd and 3rd defendants jointly and severally, including Kshs.1,000,000 paid as legal fees and expenses to the advocate

Reasoning

The purchase price of Kshs.13,500,000 was paid to the 2nd and 3rd defendants as shown by bankers' cheques and fund transfers. The 3rd defendant, who neither entered appearance nor filed defence, received the funds and handed over the fake title, making her a key player in the impugned transaction; the plaintiffs' case against her was undefended and wholly succeeded.

p. 6
04

Whether the 4th defendant (Land Registrar) was liable

Holding

Not liable; given the benefit of doubt as the advice about the missing Green Card suggested no complicity

Reasoning

The registrar had advised the 1st defendant to open a new Green Card when the original went missing, conduct inconsistent with participation in the fraud, and it was the 3rd defendant who gave the plaintiffs their title. The court therefore declined to fix liability on the 4th defendant.

p. 5
05

Whether general damages were payable

Holding

Kshs.1,000,000 general damages awarded against the 2nd defendant for failure to make good title

Reasoning

Where a vendor is in breach due to defect in title, damages are at large. The plaintiffs, foreign purchasers intending a retirement/holiday home, suffered a total failure of consideration, and the court awarded general damages with interest from the date of judgment.

p. 6

Legal principles established

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  • Any title to land obtained fraudulently and through a corrupt scheme is subject to impeachment under Section 26 of the Land Registration Act and cannot stand.
  • A vendor who cannot make good title occasions total failure of consideration, entitling the purchaser to recover money paid.
  • Subsequent transactions by a party without title are null and void and must be cancelled.

Court orders

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  1. 1.Declaration that Kinuthia Holdings Limited is the legal owner of KWALE/GALU KINONDO/397
  2. 2.Cancellation of the 2nd defendant's title to KWALE/GALU KINONDO/397 and the subdivisions KWALE/GALU KINONDO/2366, 2367 and 2368 as improperly procured
  3. 3.Declaration that the sale and transfer of KWALE/GALU KINONDO/2368 to the plaintiffs was unprocedural and illegal
  4. 4.Cancellation of the plaintiffs' title to KWALE/GALU KINONDO/2368
  5. 5.Order compelling the 4th defendant to cancel the impugned titles and registrations
  6. 6.Order compelling the 4th defendant to rectify the register so KWALE/GALU KINONDO/397 reverts to Kinuthia Holdings Limited
  7. 7.2nd and 3rd defendants jointly and severally to refund Kshs.14,500,000/= to the plaintiffs
  8. 8.2nd and 3rd defendants jointly and severally to pay Kshs.1,000,000/= general damages to the plaintiffs
  9. 9.Permanent injunction restraining the plaintiffs, 2nd and 3rd defendants from dealing with KWALE/GALU KINONDO/397
  10. 10.2nd and 3rd defendants jointly and severally to bear the costs of the plaintiffs and of the other defendants

Authorities

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Legislation

  • Land Registration ActSection 26(1)(a)-(b)
  • Land Registration ActSection 80(1)-(2)

Cases cited (13)

  • Katende –v- Haridar Company Limited
    (2008) & 2 E.A 173
  • Lawrence Mukiri –v- Attorney General & 4 Others
    (2013) eKLR
  • Eunice Grace Njambi Kamall and Another –v- The Hon. Attorney General and 5 Others
    Civil Suit NO. 976 of 2012
  • Fletcher –v- Peck
    10. U.S 87 (1810)
  • Kinyanjui Kamau –v- George Kamau
    (2015)eKLR
  • Vijay –Morjaria –v- Nansingh Madhusingh Darbar & Another
    (2000) eKLR
  • Kuria Kiarie & 2 Others –v- Sammy Magera
    (2018)eKLR
  • Duncan Githiga Mwangi –v- Kanu Maendeleo Ya Wanawake Muranga Branch & 4 Others
    (2019)eKLR
  • Sukhdev Singh Lady –v- Philip Ojwang Kamau & 3 Others
    (2018)eKLR
  • Samuel Odhiambo Oludhe & 2 Others –v- Jubilee Jumbo Hardware Limited & Another
    (2018)eKLR
  • Alice Chemutai Too –v- Nickson Kipkurui Korir & 2 Others
    (2015)eKLR
  • Elijah Makeri Nyang’ra –v- Stephen Mungai Njuguna & Another
    (2013) eKLR
  • Petronillah Nafuna Khaemba –v- Attorney General & 7 Others
    (2017)eKLR
Jurisdiction invoked
Original civil jurisdiction over land disputes; suit by plaint under land registration law (Land Registration Act, 2012)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Marcello Perrucchetti & another v Kinuthia Holdings Ltd & 4 others [2020] KEELC 1236 (KLR)", Case Analysis (2020). Not stated in the judgment (as extracted). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/1236/eng@2020-09-28

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