Muiruri & another v Thathi & 4 others

leasing or exercising statutory power of sale or otherwise disposing o or developing the suit land. d. A mandatory order of injunction be issued directing the Land Registrar Kajiado North Land Registry to cancel any title and rectify the land register to reect the Plaintis as the registered owners of the suit land. e. A mandatory order of injunction be issued directing the Land Registry Kajiado North Land Registry to cancel the charge registered in favour of the fourth Defendant and discharge the suit land forthwith. f. General damages. g. Costs of the suit. h. Any other relief as the court may deem t and proper to issue. 2. The Plaintis’ case is as follows. Both of them are brothers and sons of the late Peter Karanja Muiruri who died on 24/7/2011. Their father was the owner of the suit land. Upon the demise of their father, the two Plaintis became the jointly registered owners through a succession cause. 3. During his lifetime, the Plaintis father charged the suit land to Family and Equity Banks on 29/8/2007 and 9/2/2011 respectively. Around the years 2012/13, the title deed to the suit land went missing but the Plaintis were able to obtain a duplicate thereof vide Gazette Notice No. 1932 of 15/2/2013. Later on, they were able to discharge the charge order over the suit land, in favour of Equity Bank on 27/2/2013. The Plaintis became the registered owners of the suit land through transmission on 27/2/2013. They are also in possession of the suit land. 4. On 5/3/2020, the Plaintis received information that some people had visited the land to value it with a view to selling it to third parties. They decided to visit the land registry to nd out if all was well with the land. They were shocked to nd out that their land had been transferred to third parties without their knowledge. 5. According to the records available the Plaintis had purportedly transferred the suit land to the rst Defendant on 18/10/2018. The rst Defendant then transferred the suit land to the second Defendant on 11/1/2019. Then on 19/2/2019 the second Defendant transferred it to the third Defendant who again transferred it to one Antony Gaita Warui on 8/8/2019 who then transferred it back to the third Defendant on the same date. After the suit land was transferred to the third Defendant by Antony Gaita Warui, he charged it with the fourth Defendant for Kshs. 15.2 Million on 2/10/2019. 6. The Plaintis plead the following particulars of fraud, irregularity, illegality and corruption against the rst Defendant and the Land Registrar at Kajiado North Land Registry. a. Fraudulently altering the land register to remove the names of the Plaintis. b. Transferring the title of the Plaintis’ land without instruments of transfer being duly executed by the Plaintis. c. Fraudulently retransferring the suit property to the 1st defendant (sic). d. Transferring the suit property without the consent and knowledge of the Plaintis who were the legally registered owners. e. Transferring the suit land illegally and unprocedurally. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 2

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7. f. Failing to ascertain the rightful registered owners to the suit land. g. Transferring the suit land without ascertaining whether the rightful registered owners had obtained the requisite land control board consent to transfer the suit property. h. Failing to ascertain whether the rightful owners had consented to the transfer of the suit land. In support of their case, the Plaintis led the following evidence. a. Witness statement by the second Plainti dated 8/5/2020. b. Copies of title deed for the suit land in the names of the Plaintis’ father, the 1st, 2nd and 3rd Defendants. c. Copies of grant and certicate of conrmed grant. d. Copy of Gazette Notice No. 1932 of 15/2/2013. e. Copies of charge to Family and Equity Banks. f. Copy of discharge of charge on Equity Bank. g. Copies of the application for transfer, registration, documents and title deed. h. Copies of the extract of the register. i. Copy of transfer from the 1st to the 2nd Defendant. j. Copy of charge to NIC Bank Ltd, now CBA. k. Copy of extract of the title. 8. The rst and third Defendants did not enter appearance or le a defence. The second Defendant led a written statement of defence dated 24/2/2022 in which he denies the Plaintis’ claim against him. He denies having been part of the scheme that fraudulently acquired the Plaintis’ land. He led a witness statement in support of his defence in which he says that the signatures on the transfer form are not his and he suspects that his documents in the land registry relating to his own land in Kajiado County were used fraudulently in this case and without his knowledge. He has nothing to do with the Plaintis’ land and he does not even know where it is situated. He blames the land registry for the use of his documents in the fraud perpetrated against the Plaintis. 9. The fourth Defendant, in a written statement of defence dated 28/9/2020 avers that the third Defendant was its customer. In July and September 2019, he applied for a commercial loan for Kshs. 15.2 million. When the fourth Defendant asked him for the requisite documents like copy of agreement for sale between him and the seller, title document in his name and all other relevant documents, he was able to present them. The fourth Defendant obtained a valuation report and a certicate of ocial search. After being satised that everything was in order, the fourth Defendant proceeded to create a legal charge over the suit property on 30/9/2019. Later on, the third Defendant defaulted on his loan repayment whereby the fourth Defendant instructed its advocates to issue the requisite statutory notice as a prerequisite to exercising its statutory power of sale. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 3

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In the absence of any caution, inhibition or court order being registered against the suit property, it was not possible for the fourth Defendant to know if there was any problem with the suit land. The fourth Defendant was therefore justied to presume that the vendor and the third Defendant held a good title. It therefore prays that the Plaintis suit as against it be dismissed with costs. 10. In support of its case, the fourth Defendant led the following evidence. a. A witness statement by Ibrahim Mbogo, a legal ocer of the fourth Defendant and another one by Anne Waiganjo. b. Copy of letter of oer dated 16/7/2019. c. Copy of agreement for sale dated 29/5/2019. d. Copy of title deed in the name of Antony Gaita Warui. e. Copy of valuation report dated 11/9/2019. f. Copy of certicate of ocial search dated 20/8/2019. g. Copy of transfer form dated 18/10/2019. h. Copy of title deed in the name of the third Defendant. i. Copy of rst legal charge dated 30/9/2019. j. Copy of certicate of ocial search dated 2/10/2019. k. Copy of statutory notice dated 11/5/2020. l. Statement of account. 11. In addition to the above, the fourth Defendant served a notice of claim against the 3rd and 5th Defendants dated 4/3/2022, pursuant to Order 1 Rule 24(1) Civil Procedure Rules. In the notice the fourth Defendant claims full indemnity and or contribution for any judgment that may be entered in favour of the Plaintis. The indemnity sought is for Kshs. 16, 850,685.98 as at 3/3/2022. The particulars of fraud for each of the two Defendants are particularized in the notice. 12. The fth Defendant in a written statement of defence dated 19/6/2020 generally denies liability to the Plaintis. It avers that if there was any transfer of the suit property, this was done in compliance with the fth Defendants’ statutory mandate. Finally, it is pleaded that the fth Defendant was not served with the mandatory notice of intention to sue government as required by Section 13A of the Government Proceedings Act. No witness statements or documents were ever led by the fth Defendant. 13. At the trial on 8/10/2022 the second Plainti, the second Defendant and one Ibrahim Mbogo, a witness for the fourth Defendant, are the only witnesses who testied. They adopted the evidence led earlier and they were then subjected to cross-examination. 14. Counsel for the Plainti and the fourth Defendant led written submissions on 23/3/2023 and 24/3/2023 respectively. The fourth Defendant identied the following issues. i. Whether the 4th Defendant acquired equitable interest over the suit property as an innocent chargee for value by virtue of the charge dated 29/5/2019 without notice of any defect in title. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 4

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ii. Whether the 4th Defendant is entitled to the reliefs sought against the 3rd Defendant. iii. Whether the fourth Defendant is entitled to the reliefs sought against the 5th Defendant. iv. Who bears the costs of the suit. On the other hand the Plaintis’ counsel identied the following issues. i. What is the eect of failure by the 5th Defendant to call a witness. ii. Whether the Plaintis have ever transferred the suit land to the rst Defendant. iii. Whether the 2nd, 3rd and 4th Defendants acquired good title over the suit land. iv. Whether failure to join Antony Gaita Warui as a Defendant is fatal to the plaintis’ suit. v. What reliefs should the court issue under the circumstances. 15. I have carefully considered all the evidence adduced by all the parties including the witness statements, documents and testimony at the trial. I have also considered the written submissions by the counsel for the Plaintis and the fourth Defendant including the case law cited therein. I make the following ndings on the issues raised by the parties. 16. On whether the fourth Defendant acquired an equitable interest over the suit property as an innocent chargee without notice of defect in title, I nd that it did not. Article 40(6) of the Constitution of Kenya provides as follows. “ The rights under this Article do not extend to any property that has been found to have been unlawfully acquired” There is no doubt that the Plaintis’ property was acquired unlawfully by the rst and third Defendants. I am satised that the Plaintis did not transfer the suit land to the rst Defendant or to any other person and the purported transfer to the rst Defendant was fraudulent null and void as are the subsequent transfer. In the case of Dina Management Limited v County Government of Mombasa and 5 others Petition No. 8 (E010) of 2021, it was held as follows at paragraph (iii) “ Article 40 of the Constitution entitles every person to the right to property, subject to the limitations set out therein. Article 40(6) limits the rights as not extending to any property that has been found to have been unlawfully acquired. Having found that the rst registered owner did not acquire title regularly, the ownership of the suit property by the Appellant thereafter cannot therefore be protected under Article 40 of the Constitution. The root of the title having been challenged, as we already noted above the Appellant could not benet from the doctrine of bona de purchaser”. 17. On the second and third of the fourth Defendant’s issues, I nd that it is entitled to the reliefs sought against the third and fth Defendants. The third Defendant did not defend the suit. Since he is a beneciary of a fraudulent transfer from a person who had no title, he too did not acquire title. He is a fraudster. Under the terms and conditions of the letter of oer dated 16/7/2019, the third Defendant https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 5

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covenanted to pay the principal sum with interest. He is therefore bound to indemnity the fourth Defendant. 18. The Land Registrar at Kajiado North Land Registry is equally liable to indemnity the fourth Defendant for the loss that it may suer as a result of this decision. Under Section 7 of the Land Registration Act, it is the duty of the Land Registry to maintain among others, (1) (c), “parcel les containing the instruments and documents that support subsisting entries in the land register”. (e) presentation book in which shall be kept a record of all applications numbered consecutively in the order in which they are presented to the registry”. Had the Land Registrar maintained these records as he is required to do by the law, this unfortunate fraud would not have occurred. To add insult to injury, the land registry did not care about participating in this case to shed light as to exactly what happened and to assure us that it would not happen again. 19. To answer the rst of the Plaintis’ issues, the eect of failure by the fth Defendant to call a witness is an admission of the averments made against the oce. This is especially so when Land Registrar is under a duty imposed by law to maintain all the records outlined in Section 7 of the Land Registration Act. Though the Land Registrar had no burden of proof in this case, a rebuttal of the agrant fraud proved by the Plaintis was necessary especially when such fraud seems to have been perpetuated in the registrar’s oce. He was expected to avail records of the Land Control Board including the consents and the application forms for such consent, the transfer instruments duly executed by all the parties especially the Plaintis, the assessment of stamp duty etcetera. Failure to appear means that such records do not exist and that the suit land was transferred from the lawful owners, the Plaintis, unprocedurally. 20. Regarding the issue of the Plaintis transferring the suit land to the rst Defendant, I nd that they did not. As already mentioned in paragraph (19) above, none of the documents which precede the lawful transfer of the suit land were availed by the Land Registrar or any of the other Defendants. For the same reasons given here and in paragraph 19, above, I nd that the 2nd, 3rd and 4th Defendants did not acquired good title to the suit land. Since the owners of the suit did not transfer it to the rst Defendant, there was no lawful transfer at all to any of the Defendants. 21. Failure to join Antony Gaita Warui who transferred the land to the third Defendant is not at all fatal to the Plaintis’ case. Since there was no lawful transfer in the rst place, the fraudulent transaction between the Defendants do not qualify to be called transfers. The necessary parties in this case are the Plaintis’, the Land Registrar and the bank. The rst and third Defendants were necessary parties too but as has been proved, they were fraudsters. The only Defendant who has acquitted himself is the second one because he at least came forward and explained that he too was a victim of the fraud committed by the rst and third Defendants together with the Kajiado North Land Registry. 22. In conclusion, I enter judgment for the Plaintis against the rst, third, fourth and fth Defendants as prayed for in the plaint. Secondly, I enter judgment for the fourth Defendant against the third and fth Defendants as per the notice of claim dated 4/3/2022. Finally on costs, I order that the costs of the Plaintis, the second and fourth Defendants be borne by the rst, third and fth Defendants. https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 6

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It is so ordered. DATED SIGNED AND DELIVERED AT KAJIADO VIRTUALLY THIS 17TH DAY OF OCTOBER, 2023. M.N. GICHERU JUDGE https://new.kenyalaw.org/akn/ke/judgment/keelc/2023/20877/eng@2023-10-17 7

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