Campanini & 2 others v Tamu Real Estate Limited (Environment and Land Case E022 of 2025) [2026] KEELC 2765 (KLR)

5. The applicant contends that Article 65 of the Constitution of Kenya provides in extenso that a person who is not a citizen may hold land only on leasehold tenure, and that any such lease, however granted, shall not exceed ninety-nine years 6. Applicant avers that it is not in dispute that, as pleaded by the Plaintifis in paragraph 6 of the Plaint, the land, the subject matter of the suit before the court, was held by a foreigner who died, and pursuant to succession proceedings, his heirs, including two non-Kenyan citizens, inherited the land. Notwithstanding the description of the land on the title, and pursuant to Article 65(2) above, 'interest in land greater than a ninety-nine year lease, the provision shall be regarded as conferring on the person a ninety-nine year leasehold interest, and no more,' meaning that the property was no more than a leasehold. 7. The applicant asserts that the conversion from freehold to leasehold is self-executing and does not require any action on the part of the Defendants, as held in Paragon Electronics Limited v Chief Land Registrar & 2 others; Ngum & 2 others (Interested Parties) [2025] KEELC 3209 (KLR). 8. The applicant contends that it is not in dispute that, upon acquiring plot No. Kilifi/Jimba 1870, the Defendant began changing the property's use for a proposed residential development in Kilifi/ Jimba. The relevant authorities approved the terms. The Certificate of Lease confirming the change of use is dated 1 September 2022. The Defendants subsequently applied to subdivide the property, and subdivision was allowed on 28 November 2023. Certificates of Lease for the three subdivisions, namely, Kilifi/Jimba 2017, 2018, 2019, and 2020, were issued. 9. Further to the above, on 22 February 2024, the Defendants' application for development approval was granted, and the Defendants began developing Dunia Resort in April 2024. Pursuant to the preliminary agreement for the sale of Apartments 7B and 7D, the Defendant sold the two apartments to the Plaintifis for € 168,000.00. The Plaintifis made various payments, and the balance of the purchase price, Ksh. 3,520,000.00 was due on 31 January 2025. The Plaintifis unlawfully failed to pay. 10. Article 2, clause 7 of the agreement provides that, in the event of non-payment by the promissory purchaser of the advances within the prescribed terms, as well as in the event of delay attributable to him in signing the notarial deed and making the simultaneous payment of the price, interest on arrears will be charged to the promissory seller and borne by the promissory purchaser, calculated on all parts of the price not yet paid. Also, as a penalty, in case of non-payment more than 120 days after the unpaid date, the deposit will be forfeited in full, and the sums paid will be forfeited at 50%. By the proceedings herein, the Plaintifis have expressed an intention not to be bound by the agreement and, in addition to failing to pay the balance of the purchase price in the sum of Kenya Shillings 10,354,907.00, now unlawfully and without any color of right, inter alia, seek the nullification of the sale and purchase agreement, a refund of the sum of € 126,000.00, general, punitive or exemplary damages, costs and interest. The failure to complete the agreement is prejudicial; it has caused the Defendant loss and damage. 10. The Defendant counterclaims the balance of the purchase price in the sum of Kenya Shillings 10,354,907.00, interest thereon as provided in Article 2(7) of the Preliminary Sale Agreement. 11. The Defendants aver that on various dates following the Plaintifis' failure to honor their obligations under the Preliminary Sale Agreement, the Defendant drew the Plaintifis' attention to the provisions of Article 2(7) of the agreement. On 4/04/2025, the Defendant issued a notice of rescission, as the Defendant was entitled to do. On 8/04/2025, the 1st Plaintifi, in an email to the Defendants, made it clear that they were pursuing their interest in the suit filed by their lawyer and were therefore not intent on completing the purchase. 11. As a result of the matters aforesaid, the Defendant counterclaims against the Plaintifis jointly and severally, and orders that the Plaintifis are in breach of the Preliminary Sale Agreement dated 25 January https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/2765/eng@2026-04-29 2

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2024 and are therefore liable to the Defendant in accordance with Article 2(7) of the said agreement. The Defendants aver that the Reply to Defense and the Defense to Counterclaim are scandalous, frivolous, vexatious, and a total abuse of the Court's process. The said Reply to Defense and Defense to Counterclaim will only delay the fair determination of the dispute between the Plaintifis and the Defendants. 12. In a rejoinder, the Plaintifi asserts that a change of user cannot be made belatedly to titles already sold to the Plaintifi without first regularizing the foundation of the freehold title (parcel of land number Kilifi/ Jimba/1870) that was transferred from the deceased Emmerich's estate to the defendant/applicant, a foreign company. The regularization must start with parcel of land number Kilifi/Jimba/1870, meaning that even the subsequent subdivisions by the defendant/applicant that created parcel of land numbers Kilifi/Jimba/2017, Kilifi/Jimba/2018, Kilifi/Jimba/2019, and Kilifi/Jimba/2020 from parcel of land number Kilifi/Jimba/1870 were illegal and fraudulent and must be collapsed/canceled and regularized. 13. That the suit filed herein has merit and cannot be struck out, as it would not seek the honorable court's invitation under the provisions of Order 2 Rule 15 of the Civil Procedure Rules as disclosing no reasonable cause of action, is frivolous, scandalous, and vexatious, or may embarrass or delay the fair trial of the action and/or is an abuse of the court process. 14. That the issues raised in the plaint under paragraphs 6(c), 7, 8, 9, and 11, including the particulars of fraud as reproduced hereunder, are not those that can be determined summarily under the provisions of Order 2 Rule 15 of the Civil Procedure Rules 15. On October 7, 2021, the beneficiaries of the deceased Emmerich's estate sold Kilifi/Jimba/1870 to the defendant, a company owned by foreigners who serve as its directors. Kilifi/Jimba/1870 was a freehold title. Still, it was sold to the defendant, a foreign-owned company with Mr. Massimo Nativi and Mr. Daniele Lo Coco, both Italian nationals, as its directors, without first changing the user to a leasehold title. On October 19, 2022, the defendant illegally and fraudulently converted the subdivisions therefrom, namely Kilifi/Jimba/2017, Kilifi/Jimba/2018, Kilifi/Jimba/2019, and Kilifi/ Jimba/2020, to leaseholds. 16. The foundation of the defendant's titles in respect to the two purchased apartment numbers 7B and 7D within Dunia Resort, built on parcel of land number Kilifi/Jimba/2020 as specified in the preliminary sale and purchase agreement dated 25th January 2024, is not tenable, is grounded on quicksand, and is tainted with fraudulent illegality that renders the preliminary sale and purchase agreement dated 25th January 2024 illegal and null and void ab initio. 17. The consequential title issued in respect to the subject parcel of land number Kilifi/Jimba/2020, a subdivision of parcel of land number Kilifi/Jimba/1870, is illegal and invalid under the constitutional stipulations in Articles 65(1) and 65(3), which prohibit the ownership of freehold titles by foreigners and/or foreign-owned companies registered locally. 18. The defendant had no locus and/or capacity to receive the transfer of a freehold title to parcel of land number Kilifi/Jimba/1870 before a change of use that would have converted the same to a leasehold was efiected. 19. The defendant, therefore, had no capacity to make the subdivisions that created parcel of land number Kilifi/Jimba/2020, where the plaintifis' two apartments were built. 20. It is the plaintifis' case that the preliminary sale and purchase agreement dated January 25, 2024, is unsustainable because it is fraudulent for the following reasons: The defendant had no locus and/or https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/2765/eng@2026-04-29 3

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capacity to receive the transfer of a freehold title to parcel of land number Kilifi/Jimba/1870 before a change of use that would convert it to a leasehold was efiected. 21. The defendant had no capacity to make the subdivisions that created parcel of land number Kilifi/ Jimba/2020, where the plaintifis' two apartments were built. Having entered into the preliminary sale and purchase agreement on trust without any due diligence, the plaintifis would, in the long run, sufier irreparable loss and damage from subsequent discoveries in the title documents that are tainted with fraud. 22. The foundation of the defendant's title in respect to the two purchased apartments, numbers 7B and 7D, within Dunia Resort, built on parcel of land number Kilifi/Jimba/2020, as specified in the preliminary sale and purchase agreement dated January 25, 2024, is not tenable, is grounded on quicksand, and is tainted with fraudulent illegality that renders the preliminary sale and purchase agreement dated January 25, 2024, illegal and void ab initio. 23. The consequential title issued in respect to the subject parcel of land, number Kilifi/Jimba/2020, a subdivision of parcel of land number Kilifi/Jimba/1870, is illegal and invalid under the constitutional stipulations in Articles 65(1) and 65(3), which prohibit foreigners from owning freehold titles. The preliminary sale and purchase agreement dated 25th January 2024 is therefore illegal and void ab initio. The said preliminary sale and purchase agreement dated 25th January 2024 was not entered into in good faith. The defendant betrayed the trust extended to it by the plaintifis by purporting to sell to them apartments whose title documents are questionable. 24. That additional representations under paragraphs 3, 4, 5, and 7 of our reply to defendant/applicant's defense and defense to counterclaim, as reproduced hereunder, are equally weighty matters that cannot be dealt with summarily. Page 3 of 7 3. 4. 5. In reply to paragraphs 14 and 15 of the defendant's statement of defense, it is the plaintifis' case that the provisions of article 65 (2) of the Constitution, reproduced therein, are correct, but that the conversion of a freehold title to a leasehold title does not take efiect automatically unless formalized. The title held by the defendant as at 7th October 2021 was freehold and ought to have been converted to a leasehold before it was sold to the defendant, which is a foreign company. The fact that the defendant saw fit to formalize the conversion of the freehold title to leasehold on 19th October 2022 defeats its interpretation of Article 65 (2) as reproduced under paragraph 14 of the statement of defense. The question that begs an answer is why the defendant found it fit to formalize the ownership of the suit property as a leasehold, yet, according to itself, as averred under paragraph 14 of its defense, Article 65 (2) is an automatic, self-regulating provision of the law that converts a freehold into a leasehold without formalization. It goes without saying, therefore, that the transfer of Parcel of Land No. Kilifi/Jimba/1870, before it changed use and before the conversion of the same into a leasehold to the defendant, a foreign company, as at 7th October 2021, was an illegality. 25. The plaintifis reiterate the contents of paragraph 9 of the plaint by restating that the defendant had no locus and/or capacity to be the recipient of the transfer of a freehold title to the suit property, Kilifi/ Jimba/1870, before a change of user that would have converted the same to a leasehold was efiected. The defendant, therefore, had no capacity to make the subdivisions that created the parcel of land numbered Kilifi/Jimba/2020, on which the plaintifis' two apartments were built. 26. By virtue of the averments in paragraph 4 hereinabove, the defendant's claim under paragraphs 18, 19, 20, 21, 22, 23, and 24 cannot stand because the sale agreement referred to and entered into therein between the plaintifis and the defendant became illegal, null, and void on account of fraudulent, irreconcilable irregularities that enabled the transfer of the freehold title, Parcel No. Kilifi/Jimba/1870, to the defendant before it was formally converted to a leasehold. https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/2765/eng@2026-04-29 4

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27. Plaintifi asserts that the contested issues in this matter are not ones this honorable court can determine summarily. Granting the prayers sought in the counterclaim itself would be tantamount to awarding the defendant/applicant the damages prayed for. Yet, paragraph 2(7) of the preliminary sale and purchase agreement, exhibited by the defendant/applicant as exhibit “DEX4” in its application herein and relied on to seek those damages, is totally ambiguous and irreconcilable. The said provision is vague and ambiguous, if not punitive. A summary determination, without a hearing on the merits, would be especially untenable now that the Plaintifis, in their defense to the counterclaim, at paragraph 8, seek nullification of the said preliminary sale and purchase agreement dated 25th January 2024. 28. Looking at the entire pleadings by the parties and the test laid out in DT Dobie & Company (Kenya) Limited v Muchina & another [1980] KECA 3 (KLR) for striking out suits: “ No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward, for a court of justice ought not to act in darkness without the full facts of a case before it.” 29. In this suit, based on the rival parties' submissions and pleadings, the Plaintifis challenge the basis of the preliminary sale agreement entered into with the Defendant and contend that the root of the title document was a freehold sold to a foreigner without conversion to a leasehold, as provided in Articles 65(1) and 65(3) of the Constitution. The Plaintifis plead fraud in the sale, while the Defendant contends that the constitutional provision regarding a foreigner's holding of a freehold is self-regulating and that, upon sale of a freehold to a foreigner, it automatically converts to a leasehold. 30. The defendant’s counterclaim is based on that provision of the Constitution, and the defendant pleads that the Plaintifi’s suit be struck out summarily and that the default clause of the preliminary agreement be enforced. 31. Each of the parties seems to interpret those provisions of the Constitution in their favor. 32. A review of the pleadings will show that the issue of converting a freehold to a leasehold in cases involving foreigners will not be the only issue in this matter. That issue must be decided together with the other clauses of the preliminary agreement to determine who would be in breach. Whether there was fraud and whether any of the parties is entitled to damages will all be issues for trial. It cannot be a summary issue as proposed by the applicant. A trial must be conducted. 33. Consequently, this is not one of those clear cases for a summary striking out. We must have a trial. Application dated July 23, 2025, dismissed with costs. DATED, SIGNED, AND ELECTRONICALLY DELIVERED IN NYERI ON THIS 29TH DAY OF APRIL, 2026. E. K. MAKORI JUDGE In the presence of: Mr. Sumba for the Plaintifi Mr. Ole Kina for the Defendant Kendi: Court Assistant https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/2765/eng@2026-04-29 5

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