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ELCDismissedMavoko SPMCC No. 333 of 2018 (Appeal)· [2024] KEELC 5471 (KLR)

Ensi Investments Limited v Were (Environment and Land Appeal 36 of 2020) [2024] KEELC 5471 (KLR)

Environment and Land Court
24 July 2024
6,158 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court confirmed that land bought with other people's money is held in trust for them, even without a written sale agreement.

What this practically means

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Executive summary

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This is a first appeal to the Environment and Land Court at Machakos against the judgment of Hon. C. C. Oluoch, SPM, delivered on 23rd January 2019 in Mavoko SPMCC No. 333 of 2018, which had dismissed Ensi Investments Limited's claim seeking cancellation of three titles issued to the respondent (Mavoko Town Block 3/13447, 3/13450 and 3/13451) on the ground that no written sale agreement supported them under section 3(3) of the Law of Contract Act. The dispute arose from a CITAM Karen members' land-purchasing scheme in which members, including the respondent, deposited purchase monies with the appellant, which bought a 40-acre parcel (Mavoko Town Block 3/2359) from Mary Mulandi and then subdivided and transferred plots to members. A. Nyukuri, J, framed a single issue: whether the respondent's titles were unlawful for want of a written sale agreement. The court held that section 3(3) recognises three co-equal lawful modes of disposing of land interests - written contract, public auction, or a resulting, implied or constructive trust - and that since the appellant had purchased the land wholly with members' funds and applied none of its own, it held the land as trustee; the constructive trust rendered the writing requirement superfluous. The claim of inadvertent mistake was dismissed as dishonest. The trial court's finding of constructive trust was affirmed, and the appeal was dismissed with costs to the respondent.

Key legal issues

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01

Whether absence of a written sale agreement under section 3(3) of the Law of Contract Act renders the respondent's titles unlawful

Holding

No. A constructive trust existed because the appellant purchased the suit land as trustee using members' funds; where a trust exists, the writing requirement does not apply and the disposition is lawful.

Reasoning

The court held that section 3(3) permits three co-equal modes of lawful disposition: written contract, public auction, or a resulting, implied or constructive trust. The appellant received the purchase price from the respondent and other CITAM Karen members and used it to buy the land from Mary Mulandi; it applied none of its own resources. It therefore held the land on trust, and demanding a sale agreement was unconscionable and superfluous. The respondent's titles were lawfully acquired.

p. 11
02

The character of the appellant's acquisition of Mavoko Town Block 3/2359

Holding

The appellant did not own the land; registration in its name made it a trustee for the contributing members, and the real sale occurred when Mary Mulandi received the members' consideration.

Reasoning

The court found as a fact that the appellant purchased the 40 acres ON BEHALF OF the CITAM Karen members using money they deposited. Since the consideration was not the appellant's, the transfer to it did not confer beneficial ownership. Its claim of 'inadvertence and mistaken belief' in issuing three titles was dismissed as a red herring and pure dishonesty.

p. 10

Legal principles established

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  • Under section 3(3) of the Law of Contract Act, a written contract is not the only lawful mode of disposition of an interest in land; a public auction or a resulting, implied or constructive trust suffices equally.
  • A person who purchases land wholly with funds of others holds it as trustee for them and cannot rely on absence of a written sale agreement to defeat their titles.
  • A registered title enjoys constitutional and statutory protection only if lawfully acquired; an illegally obtained title cannot be accorded legal protection.

Court orders

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  1. 1.The appeal is dismissed with costs to the respondent

Authorities

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Legislation

  • Law of Contract Actsection 3(3)
  • Land Registration Actsection 26(1)
  • Land Registration Actsection 28
  • Land Actsection 38(2)
  • Constitution of Kenya, 2010Article 40(1) and (6)
  • Constitution of Kenya, 2010Article 10
  • Constitution of Kenya, 2010Article 65
  • Judicature Actsection 3
  • Civil Procedure RulesOrder 15 Rule 2
  • Auctioneers Act(Cap. 526)

Cases cited (10)

  • Gitobu Imanyara & 2 Others v. Attorney General
    [2016] eKLR
  • Funzi Development Limited & Others v The County Council of Kwale
    [2014] eKLR
  • Elijah Makeri Nyangw'ara v. Stephen Mungai Njuguna & another
    (2013) eKLR
  • Macharia Mwangi Maina & 87 Others v Davidson Mwangi Kagiri
    [2014] eKLR
  • Willy Kimutai Kitilit v Michael Kibet
    [2018] eKLR
  • Shah & 7 Others v Mombasa Bricks & Tiles Limited & 5 Others
    (Petition 18 (E020) of 2022) [2023] KESC (KLR) (28 December 2023)
  • Twalib Hatayan & Another v Said Saggar Ahmed Alheidy & 5 Others
    [2015] eKLR
  • Soulos v Korkontzilas
    [1997] 2 SCR 217
  • Murdoch v Murdoch
    [1975] 1 SCR 423
  • Yaxley v. Gotts
    [2000] Ch. 162
On appeal from
Senior Principal Magistrate's Court, Mavoko
SPMCC No. 333 of 2018
Jurisdiction invoked
First appellate jurisdiction over the Magistrates' Court (ELC appeal from Mavoko SPMCC No. 333 of 2018)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Ensi Investments Limited v Were (Environment and Land Appeal 36 of 2020) [2024] KEELC 5471 (KLR)", Case Analysis (2024). Mavoko SPMCC No. 333 of 2018 (Appeal). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2024/5471/eng@2024-07-24

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