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ELCPartially AllowedMeru ELC Case (further amended plaint dated 9th August 2015)· [2020] KEELC 3543 (KLR)

James Kironco Ituma Rwito v Mary Kingori & 2 others [2020] KEELC 3543 (KLR)

Environment and Land Court
10 February 2020
ECE.C. CheronoLML.N. Mbugua
4,753 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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A Kenyan court voided a land sale made without the bank's consent, but the buyer only got a refund because a later purchaser's title was protected.

What this practically means

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Executive summary

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The Plaintiff sued for ownership of L.R Meru Town Block 11/106 (subdivided as Block 11/669), seeking cancellation of the transfer to the 3rd Defendant, rectification of the register, injunctions, damages for illegal eviction and general/punitive damages. He relied on a sale agreement dated 28 March 1995 with the 1st Defendant and her late son, under which he paid Kshs. 1,025,368 out of Kshs. 1.5 million. The 1st and 2nd Defendants (the chargor and the chargee bank) denied the sale, contending the Plaintiff was a tenant and that Block 11/669 was lawfully sold by private treaty to the 3rd Defendant after default on a loan and the dismissal for want of prosecution of the Plaintiff's earlier suit (Meru Civil Case 53 of 1998) whose injunction had stalled an auction. The 3rd Defendant, purchaser for Kshs. 7 million in 2007, counterclaimed for Kshs. 2.1 million in rents it said the Plaintiff collected until his 2009 eviction. The court framed six issues and held: the 1995 agreement, though compliant with Section 3(3) formalities, was illegal and unenforceable because the land was charged to the bank and no chargee's consent was obtained; the suit was not time barred because the earlier suit kept the claim alive; fraud was not proved; the 3rd Defendant was an innocent purchaser for value; the eviction claim failed; and the counterclaim failed as an attempt to shift the burden of proof. The Plaintiff recovered only a refund of Kshs. 1,025,368 with interest; the defendants were ordered to pay half costs.

Key legal issues

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01

Validity of the sale agreement dated 28/3/1995

Holding

The agreement was illegal and unenforceable as the property was charged to the 2nd Defendant and no consent of the chargee was obtained

Reasoning

Although the agreement met Section 3(3) Law of Contract Act formalities, the property was charged to the bank. The agreement itself required the vendor to obtain the bank's consent to subdivide and transfer. Citing Mapis Investments, the court held it could not enforce an illegal transaction implicating the plaintiff, and under the implied terms of a charge the chargor could not transfer without written authority of the chargee.

p. 5
02

Limitation

Holding

The suit was not time barred because the plaintiff's claim was actively in court (Meru Civil Case 53 of 1998) until its dismissal in 2006, with the instant suit filed in 2008

Reasoning

The court traced the litigation history: the plaintiff sued in 1998, secured a temporary injunction which subsisted until dismissal for want of prosecution in 2006, then filed this suit in 2008. The claim was therefore continuously active and not caught by the Limitation of Actions Act, though the underlying agreement remained illegal.

p. 5
03

Remedy against the 1st Defendant

Holding

Only refund of the Ksh. 1,025,368 paid, with interest at court rates, was available

Reasoning

Since the contract was unenforceable, no order of specific performance or transfer could issue. The contract terms stipulated refund of monies on breach, and no penalty attached to failure to obtain consent, so the refund of the sum paid, with interest from 28/3/1998 until payment in full, was the sole remedy.

p. 5
04

Fraud and the 3rd Defendant's title

Holding

Fraud was not proved to the required standard and the 3rd Defendant is an innocent purchaser for value whose title is protected

Reasoning

The court found the plaintiff failed to establish fraud. After the temporary injunction in Civil Case 53 of 1998 lapsed upon dismissal for want of prosecution in 2006, the 1st and 2nd defendants sold to the 3rd Defendant, who had conducted a search, found no caveat, and paid Kshs. 7 million, hence an innocent purchaser for value.

p. 6
05

3rd Defendant's counterclaim

Holding

The counterclaim for Ksh. 2.1 million in rents failed for want of proof

Reasoning

Relying on Sections 107 and 109 of the Evidence Act, the court held the 3rd Defendant, who alleged the plaintiff was a mere tenant and collected rents, bore the burden of proving those facts. It could not use the plaintiff's own admissions to prove its claim, as that would unlawfully shift the burden of proof.

p. 6
06

Illegal eviction claim

Holding

The claim for illegal eviction failed as it was based on an unenforceable contract and the 3rd Defendant's title is protected

Reasoning

Since the sale agreement was illegal and unenforceable, any claim founded on it was untenable. The court had already found the 3rd Defendant to be a purchaser for value with protected title, so the plaintiff could not sustain an eviction claim against it.

p. 6

Legal principles established

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  • A chargor cannot validly transact a sale of charged land without the prior written consent of the chargee; a sale agreement concluded without such consent is illegal and unenforceable
  • Courts will not enforce an illegal contract even where the illegality is not pleaded, if the evidence proves it
  • A claimant whose suit was active in court until dismissal for want of prosecution is not barred by limitation
  • The burden of proof cannot be discharged by relying on an opponent's admissions to one's own benefit
  • The only remedy available on an unenforceable sale is refund of monies paid

Court orders

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  1. 1.The plaintiff's suit as against the 2nd and 3rd defendants is dismissed.
  2. 2.The 1st defendant shall pay the plaintiff a refund of Ksh. 1,025,368 plus interest at Court rates from 28/3/1998 until payment in full.
  3. 3.The 3rd defendant's counter-claim fails and is dismissed.
  4. 4.The defendants shall pay half costs to the plaintiff plus interest at Court rates.

Authorities

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Legislation

  • Law of Contract ActSection 3(3)
  • Land Registration ActSections 24, 25, 26, 59, 80(1)
  • Limitation of Actions ActSections 4, 26
  • Indian Transfer of Property ActSection 52 (lis pendens)
  • Registered Land Act (repealed)Section 69(g)
  • Land ActSection 79
  • Evidence ActSections 107, 109

Cases cited (8)

  • Nelson Kivuvani Vs Yuda Komora & Another
    Nairobi HCC No. 956 of 1991
  • Ardhi High Developers Limited Vs Westend Butchery Limited and Others
    Civil Appeal No. 246 of 2013
  • Elijah Nyangwara Vs Stephen Mungai Njuguna & Another
    Eldoret ELC Case No. 609 b of 2012
  • Bernadette Muriu Vs National Social Security Fund Board of Trustees and 2 others
    (2012) e K.L.R
  • Mawji Vs US International University and Another
    (1976) KLT 185
  • Alba Peroleum Limited Vs Total Marketing Kenya Limited
    Civil Appeal No. 43 of 2015
  • Daniel K Cheraisi & 2 Others Vs Kipkoech Kangogo & Another
    Eldoret ELC No. 47 of 2016
  • Mapis Investments Kenya Limited Vs Kenya Railways Corporation
    (2006) e K.L.R
Jurisdiction invoked
Original jurisdiction of the Environment and Land Court over land claims (Environment and Land Court Act); no specific constitutional article cited in the judgment

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, "James Kironco Ituma Rwito v Mary Kingori & 2 others [2020] KEELC 3543 (KLR)", Case Analysis (2020). Meru ELC Case (further amended plaint dated 9th August 2015). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2020/3543/eng@2020-02-10

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