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ELCDismissed· [2022] KEELC 1781 (KLR)

Nortis Investments Limited & another v Mary Abondo Achungo & 3 others [2022] KEELC 1781 (KLR)

Environment and Land Court
27 January 2022
13,269 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~53 min to read original · ~4 min brief

The bottom line

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Buyers who don't fully pay for Kenyan land, and aren't named in the sale agreement, can lose their claim to the title.

What this practically means

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Executive summary

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The plaintiffs sued over land known as L.R No. 209/9680/9, Nairobi, sold by the Achungos to the 1st plaintiff in July 2002 for Kshs. 2,000,000/-. Following an agreement between the Achungos and Basil in 1984, Basil re-transferred the suit property in July 2010 to the 2nd plaintiff 'as nominee of Peter Omondi Achungo and Mary Abondo Achungo'; title issued in those terms. The plaintiffs sought rectification of the title to remove the nominee words, general damages for fraud, an injunction, and directions for a government caveat, alleging that the mutual advocate and the Land Registrar had erred, and that the 1st defendant had instead purported to resell the property to the 2nd and 3rd defendants and had rescinded the sale agreement. The 1st defendant counter-alleged that the transfer to the 2nd plaintiff was fraudulent, effected after the death of Peter Achungo and without authority, and that the agreement had been lawfully rescinded for non-payment. The court framed six issues and held that there was no error in the certificate: the sale agreement made no provision for the 1st plaintiff to appoint a nominee, the 2nd plaintiff was not privy to it, and no Achungos' nomination of the 2nd plaintiff under the Basil agreement was proved, making the registration unlawful rather than erroneous. Rectification would sanction an illegality; cancellation, not rectification, was the proper remedy, though no party had sought it. The purported rescission was premature and ineffective for want of a completion notice under the Law Society Conditions of Sale, but the agreement remained uncompleted since the balance of the purchase price was unpaid. The alleged resale to the 2nd and 3rd defendants was not proved. The suit was dismissed with costs to the 1st and 4th defendants, and the Deputy Registrar was directed to return the unbanked Kshs. 600,000/- cheque deposited in court.

Key legal issues

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01

Whether the certificate of title contained an error

Holding

There was no error; the registration of the 2nd plaintiff as nominee of the Achungos was lawful in form but the transfer itself was unlawful for want of contractual basis

Reasoning

The sale agreement between the 1st plaintiff and the Achungos made no provision for the 1st plaintiff to appoint a nominee, and the 2nd plaintiff was not privy to it. The Basil-Achungos agreement permitted re-transfer only to the Achungos or their nominee, and no nomination of the 2nd plaintiff by the Achungos was proved. The words 'as nominee' therefore matched the only lawful route open to Basil, but the registration of the 2nd plaintiff at all was unlawful, not erroneous.

p. 10
02

Whether rectification could be compelled from the 1st and 4th defendants

Holding

No; the certificate should be cancelled rather than rectified, and neither defendant could be compelled to rectify

Reasoning

Rectification removing the nominee words would confer absolute ownership on a party not privy to the sale contract and would alter the Basil-Achungos agreement. The 1st defendant was not a party to the instrument of re-transfer and the deed of rectification ignored the underlying document. The 4th defendant cannot rectify a title whose defect lies in the conveyancing documents. Anomalies in dates of registration and title issuance also point to cancellation, not rectification.

p. 10
03

Whether the agreement of sale was lawfully rescinded

Holding

The purported rescission was premature and ineffective because no completion notice was served under condition 4(7) of the Law Society Conditions of Sale

Reasoning

The agreement did not make time of the essence. Completion was due on the seventh day after registration; the balance became payable only on registration in the 1st plaintiff's name, which never occurred. A completion notice giving 21 days was a precondition to rescission; the letter of 18th October 2011 rescinded with immediate effect and could not qualify as a completion notice. However, the court also rejected the plaintiffs' argument that the completed agreement could not be rescinded.

p. 12
04

Whether the 1st defendant agreed to sell the suit property to the 2nd and 3rd defendants

Holding

Not proved; no agreement or correspondence was produced

Reasoning

No evidence was placed before the court of any agreement between the 1st defendant and the 2nd and 3rd defendants. The property remained registered in the 2nd plaintiff's name with a caveat by the Land Registrar, making the alleged resale improbable. No agreement or correspondence was exhibited.

p. 12

Legal principles established

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  • A transfer of land to a party not privy to the agreement of sale, and not nominated as nominee under any contract, is unlawful rather than merely erroneous
  • A court cannot order rectification of a certificate of title in a manner that would confer ownership on a person who acquired it unlawfully, as that would sanction an illegality
  • Where a sale agreement is subject to the Law Society Conditions of Sale and time is not of the essence, a vendor must serve a completion notice giving 21 days to complete before rescission
  • A sale agreement remains uncompleted and capable of rescission so long as the balance of the purchase price remains unpaid
  • A certificate of title cannot be rectified in isolation from the underlying conveyancing documentation that gave rise to it

Court orders

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  1. 1.The plaintiffs' suit is dismissed with costs to the 1st and 4th defendants
  2. 2.The Deputy Registrar shall on request return to the plaintiffs' advocates the banker's cheque for Kshs. 600,000/- dated 7th November 2011 forwarded to the court and lying in the file

Authorities

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Legislation

  • Land Registration Actsection 26
  • Registration of Titles Act (now repealed)section 23(1)
  • Government Proceedings Actsection 13
  • Civil Procedure Act, Chapter 21 Laws of Kenyasection 27
  • Law Society Conditions of Sale (1989)Condition 4(7)

Cases cited (4)

  • Njamumu v Nyaga
    [1983] KLR 282
  • Anastacia Wangui Muriithi v Jean Wamarwanyamu
    [2019] eKLR
  • Samuel Odhiambo Oludhe & 2 others v Jubilee Jumbo Hardware Limited and another
    Kisumu ELCC No. 417 of 2015
  • Alice Chimutai Too v Nickson Kipkurui Korir and 2 others
    2015 eKLR
Jurisdiction invoked
Original civil jurisdiction of the High Court/Environment and Land Court in a land suit (Civil Procedure Act, Chapter 21)

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, "Nortis Investments Limited & another v Mary Abondo Achungo & 3 others [2022] KEELC 1781 (KLR)", Case Analysis (2022). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/1781/eng@2022-01-27

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