Daniel Kabiru Ndungu & Lucy Nyambura Kabiru v Molyn Credit Limited, Wilson Kariuki t/a Wiskam Auctioners, Land Registrar & Attorney General (Environment and Land Case Civil Suit 658 of 2016) [2021] KEELC 1735 (KLR)
The bottom line
#A Kenyan lender that fraudulently converted a borrower's title into ownership lost the land but still recovered the unpaid loan debt.
What this practically means
#Executive summary
#Key legal issues
#Whether the transfer of the suit property to the 1st Defendant was fraudulent and illegal
Yes. The court found only one transaction existed - a secured loan - and that the 1st Defendant manipulated the papers to transfer the property to itself.
The property was valued at Kshs. 3,500,000/- by a Government valuer yet was allegedly sold for Kshs. 1,000,000/- to a party that simultaneously advanced a further Kshs. 1,000,000/- loan. The LCB consent to transfer was dated 10th March 2015, before the alleged sale agreement of 9th April 2015, and the transfer was registered before the loan was disbursed. The demand letter and CRB report described the loan as secured. No evidence of payment of the purchase price or of a tenancy was tendered.
Whether the Plaintiffs are entitled to the reliefs sought in the plaint
Entitled to declaration, cancellation of the 1st Defendant's title, restoration of the property to the 1st Plaintiff's name and an injunction; not entitled to an order for the charge document or loan statements.
Having found fraud, the court applied sections 143(1) and (2) of the Registered Land Act and sections 24, 25 and 26 of the Land Registration Act 2012 to order rectification. The prayer for the charge document failed because there was no evidence a charge was registered, and the loan statement had already been produced by the 1st Defendant in evidence.
Whether the 1st Defendant is entitled to the reliefs sought in its counter-claim
Partially. Eviction, mandatory injunction, buy-back and rent arrears refused; judgment granted for the outstanding loan balance of Kshs. 5,368,933/- with interest.
Because the acquisition of the property was unlawful, no possession or buy-back order could issue. However, the loan of Kshs. 1,000,000/- was proved and unpaid; the statement of account showed the outstanding sum as at 31st October 2017. The claim for rent arrears, raised only in submissions, was rejected as unpleaded and unsupported by any tenancy relationship.
Legal principles established
#- Fraud must be specifically pleaded, its particulars stated on the face of the pleading, and distinctly proved; it cannot be inferred from facts.
- A registered proprietor whose root of title is challenged must prove the legality of acquisition, not merely dangle the title instrument.
- Under the Registered Land Act (s.143) and the Land Registration Act 2012 (s.26), a registration obtained by fraud, mistake or through an illegal, unprocedural or corrupt scheme may be cancelled and the register rectified.
- Costs follow the event under section 27 of the Civil Procedure Act, but where there is no clear winner each party may bear its own costs.
Court orders
#- 1.Declared that land Title No. Ngong/Ngong/34016 was illegally and fraudulently transferred to the 1st Defendant.
- 2.Land Registrar, Ngong and/or Kajiado to rectify the register within 60 days by cancelling the 1st Defendant's registration and title deed and restoring the property to the 1st Plaintiff.
- 3.Land Registrar, Ngong and/or Kajiado to issue a new title deed in the name of the 1st Plaintiff, to be handed over to the 1st Defendant to hold on the terms on which it was handed over to it by the 1st Plaintiff.
- 4.Injunction issued against the 1st Defendant restraining it from levying distress against the Plaintiffs or interfering with their occupation of the suit property save as authorized by a court of competent jurisdiction.
- 5.Judgment entered for the 1st Defendant against the 1st Plaintiff in the sum of Kshs. 5,368,933/- with interest at court rates from the date of judgment until payment in full.
- 6.Each party to bear its own costs of the suit and the counter-claim.
- Jurisdiction invoked
- Original civil suit under the Environment and Land Court Act (land title and rectification of register); section 27 of the Civil Procedure Act on costs
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Daniel Kabiru Ndungu & Lucy Nyambura Kabiru v Molyn Credit Limited, Wilson Kariuki t/a Wiskam Auctioners, Land Registrar & Attorney General (Environment and Land Case Civil Suit 658 of 2016) [2021] KEELC 1735 (KLR)", Case Analysis (2021). Not stated in the extract provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/1735/eng@2021-09-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.