Otim & another v Elsek and Elsek Company Limited & 2 others

2. The rst Plainti’s case is as follows. In the year 1998 together with Dr. Joseph Gitari, they purchased LR. Kajiado/Kisaju/506 measuring 40.5 hectares from Jacaranda Holding properties Limited through Kenna Ranching Company Limited, a company that the rst Plainti and Dr. Gitari owned jointly. At that time, the rst Plainti was a Ugandan Diplomat employed by the United Nations working and living outside of Kenya. 3. In July 2013, LR. No. 506 was subdivided into two parcels namely Kajiado/Kisaju/7947 and 7948 measuring 16.22 and 24.282 hectares respectively. LR. No. 7947 was transferred to the rst Defendant while LR. No. 7948 remained in the name of the Kenna Ranching Company Limited. The rst Plainti contends that the transfer of the suit land to the rst Defendant is not only void ab initio but also tainted with fraud for the following reasons. 4. Firstly, the rst Defendant being a foreign owned company could not own land in Kenya under a freehold tenure. 5. Secondly, no consent of the Land Control Board was ever obtained to authorize the transfer of the suit land to the rst Defendant. 6. Thirdly, the rst and third Defendants transferred the suit land to the rst Defendant when there was no agreement for sale. 7. Fourthly, there were other irregularities such as failure to pay consideration by the rst Defendant to the rst Plainti, failure by the second and third Defendants to carry out due diligence and establish that the rst Defendant could not lawfully own a freehold interest in land in Kenya, to name but a few of the failures. 8. As a result of the above shortcomings, the rst Defendant was able to obtain a loan of about Kshs. 48 million from the second Defendant which it failed to service. The rst Plainti is in danger of losing his land due to the unlawful activities of the three Defendants. 9. Earlier on, the rst Defendant had approached the rst Plainti through its director, Mr. Osman Erdnic Elsek and convinced the rst Plainti to enter into a development agreement whereby the two would partner and develop a housing project, build houses and later sell the houses at a prot. Even though the Plainti verbally accepted the oer, the development agreement was never signed by the two parties. It is for the above reasons that the Plainti instituted this suit seeking for the above orders. 10. In support of his case, the rst Plainti led the following evidence:i. His witness statement dated 5/3/2018. ii. Copies of title deeds for Kajiado/Kisaju/506, 7947 and 7948. iii. Copy of mutation form for LR. 506. iv. Copy of draft development agreement. v. Copy of an incomplete transfer form between the Plaintis and the rst Defendant. vi. Copy of consent of the Land Control Board dated 10/7/2013 in respect to the suit land. vii. Copy of CR 12 for the rst Defendant dated 25/9/2015. viii. Email communication between the rst Plainti and the rst Defendant’s Director. ix. Other relevant documents. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/17462/eng@2023-05-16 2

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11. The rst Defendant, in a written statement of defence dated 26/2/2016 denies the rst Plainti’s claim. It is its defence that the rst Plainti willingly transferred the suit property to the rst Defendant. The rst Defendant contends that it is the rst Plainti who frustrated the housing project by selling some of the houses at Kshs. 1.5 million instead of Kshs. 4.5 million and directing the proceeds of sale from the project instead of paying the loan advanced by the second Defendant. Consequently, the housing project failed due to the rst Plainti’s own fault. 12. In support of its case, the rst Defendant led:- 13. i. A witness statement by Osman Elesek dated 26/2/2016. ii. Copy of email communication between the rst Plainti and Mr. Elsek dated 16th and 17th July, 2013. The second Defendant in a written statement of defence dated 12/3/2018 denies the Plainti’s claim in general and the fraud in particular. It is the second Defendant’s contention that the rst Defendant obtained credit facilities from the second Defendant by securing two legal charges over the suit land. The rst Defendant defaulted in its loan repayment obligations. A dispute arose regarding the sale of the suit land by the chargee. It culminated in HCCC 236 of 2015 at the Nairobi Commercial Division which case has been stayed pending the determination of this suit. Further to the above, the second Defendant avers that before advancing the loan to the rst Defendant, it conducted due diligence and a search at the Kajiado Land Registry conrmed that the rst Defendant was the registered proprietor of the suit land. 14. 15. Finally, the second Defendant raises two fundamental issues vide paragraph 10A of the amended defence namely:a. The rst Plainti has no locus standi to commence this suit. b. The rst Plainti did not le any authority from the second Plainti under seal to enable him le this suit. The second Defendant therefore called for the dismissal of the suit. In support of the defence, the second Defendant led the following evidence. i. Witness statements by Francis Kiranga and Michael Ndungu. ii. Copy of letter of oer dated 1/2/2013. iii. Copy of letter of oer dated 19/7/2013. iv. Copy of letter of oer dated 3/9/2013. v. Copy of statement of account running from 21/6/2012 to 30/4/2015. 16. At the trial, only three witnesses testied. They included the rst Plainti, a director of the rst Defendant and a representative of the second Defendant. The witnesses adopted their witness statement and documents in their examination in chief. They were then cross –examined by counsel for the adverse parties. The Land Registrar who was expected to testify in court on 29/11/2021 did not turn up on that day. Neither did the counsel from the State Law Oce. 17. On 6/4/2022, the second Plainti led a notice of motion dated 1/3/2021 seeking leave to discontinue its suit against the Defendants herein. It also seeks to have the costs of the application borne by the rst Plainti. The motion is supported by an adavit by Joseph Bradley Gitari in which he deposes that he is the sole director of the second Plainti since the rst Plainti resigned as director on 25/6/2013. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/17462/eng@2023-05-16 3

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Secondly, this suit was led without the authority or consent of the bonade director and the unlawful actions of the rst Plainti may cause irreparable loss and damage to the second Defendant. 18. To expedite the conclusion of this old matter, the court directed that the parties le and exchange written submissions covering the discontinuance of the suit as well as the other issues raised on the entire suit. 19. Counsel for the parties led written submissions on 22/2/2022, 7/3/2022, 21/6/2022, 13/12/2022 and 14/12/2022. The issues raised in the submissions are as follows;- 20. i. Whether the suit land was legally and properly charged to the second Defendant? ii. Whether the Plaintis transferred the suit parcel to the rst defendant? iii. Whether the Plaintis have proved any fraud on the part of the third Defendant? iv. Whether a transfer of an interest in land without a sale agreement is valid in law? v. Whether a foreign owned company can own land in Kenya? vi. Whether the rst and third Defendants illegally and fraudulently transferred the suit land? vii. Whether the third Defendant illegally and fraudulently issued an absolute title to a parcel of agricultural land to the rst Defendant, a foreign owned company? viii. Whether the illegally, unprocedurally or fraudulently acquired land title can be impeached and cancelled? ix. Whether the second Defendant connived with the rst Defendant to charge the illegally or fraudulently acquired title to the suit land, and what is the eect of cancellation on the charge? x. Whether the rst Plainti is the registered owner of the disputed property? xi. Whether the rst Plainti has any legal interest in the suit property to have locus standi to institute this suit? xii. Whether the rst Plainti is recognised in law as the person to seek relief under Section 103 of the Land Act? xiii. Whether the rst Plainti is entitled to the reliefs sought? xiv. Whether this suit is properly before the court? xv. Whether the second Plainti can be compelled to proceed with the suit against the Defendants? I have carefully considered all the evidence adduced by all the parties including the witness statements, documents and testimonies at the trial. I also considered the written submissions by the learned counsel for the parties, the issues raised therein including the law cited. I nd that the following issues will determine the dispute. i. Whether the second Plainti could properly have been joined as a Plainti to this suit without its consent? ii. Whether the rst Plainti, who has admitted that he is not a Kenyan national, can or could lawfully own freehold land in Kenya? iii. Whether this suit is properly before this court? https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/17462/eng@2023-05-16 4

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21. On the rst issue, I nd that the second Plainti could not have been properly joined in this suit as a Plainti without its consent. This is because under Order 1, Rule 13(2) Civil Procedure Rules it must give its authority in writing. In this case, the rst Plainti did not le any such authority together with the original plaint or the amended one dated 3/2/2018. The requirement for such authority prior to the ling of the suit is mandatory as per the wording of Order 1, Rule 13(2) Civil Procedure Rules and its absence is fatal to the inclusion of the second Plainti as a party to the suit. 22. On the second issue, I nd that the rst Plainti, not being a Kenyan Citizen cannot own or hold land in Kenya under a freehold tenure because of Article 65(1) of the Constitution which forbids such ownership. 23. On the third and nal issue, I nd that this suit is not properly before the court because the rst Plainti who lacks capacity to own land under the freehold tenure and not owning the suit land under the leasehold tenure, has no locus standi to institute this suit. He could only have had capacity to sue if he owned the suit land with a Kenyan Citizen like it was the case before 25/6/2013 when he resigned as a director of the second Plainti. For the above stated reasons, I nd no merit in the Plainti’s suit which I dismiss with costs to the second Plainti and the Defendants. DATED, SIGNED AND DELIVERED VIRTUALLY AT KAJIADO THIS 16TH DAY OF MAY, 2023. ........................................... M. N. GICHERU JUDGE https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/17462/eng@2023-05-16 5

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