Impact Properties Limited v Owiti & 2 others (Environment and Land Case 24 of 2013) [2026] KEELC 2777 (KLR)

Number 298, Section III, Mainland North, PDP Nos. 22, 23, 31, 34, 35, 36, 37, 38, 40, 41, 42, 43, 44, 61, 62, 63, 64, 153, 154, 295, 296, 297, 298, 299, 300, 301, 302, 303, 304, 305, 308, 309, 310. b) An order for the immediate refund of KSh. 10,370,000/= paid by the plaintiffs to the defendants. c) Interest on KSh.10,370,000/= from 17 June 2011 until full payment. d) Costs of and incidental to this suit. 2. The 1st and 2nd defendants did not participate in the proceedings. The 3rd defendant entered an appearance and filed a statement of defense after his attempts to have his name stricken from the suit failed. 3. Gerald Mwatha, the Plaintiff's director, testified in court. At the hearing, he adopted his witness statement dated 5th June 2013 (filed on 15th October 2013) as his testimony in chief. In support of the Plaintiff's case, the witness then produced copies of the documents listed in the Plaintiff's List of Documents, filed with the court on 3rd June 2022. 4. The Plaintiff's testimony in chief, as set out in the witness statement, can be summarized as follows.: Sometime in June and July 2011, the 1st and 2nd Defendants presented that they had an owner's interest in and were in a position to sell ELC NO. 24 OF 2013 Page 2 of 24

page 2 of 24

and transfer to the Plaintiff a parcel of land situated in Kilifi, known as Land Reference Number 298, Section IШ Mainland North, PDP Nos. 22, 23, 31, 34, 35, 36, 37, 38, 40, 41, 42, 43, 44, 61, 62, 63, 64, 153, 154, 295, 296, 297, 298, 299, 300, 301, 302, 303, 304, 305, 308, 309, 310 (the "suit properties"). 5. The 3rd Defendant, an advocate of the High Court of Kenya, acted for the 1st and 2nd Defendants and trading as Nyameta & Company Advocates. By four written agreements made on 17th June 2011 and 18th July 2011, the 1st and 2nd Defendants agreed to sell the suit properties to the Plaintiff. 6. The agreed cumulative consideration for the suit properties was KSh.37,350,000/=. Under the express terms of the agreements, the plaintiff was required to pay the cumulative deposit of KSh.5,750,000/= immediately, and the balance of KSh.31,600,000/= was to be paid to the 1st and 2nd Defendants through the 3rd Defendant upon the completion of the transfer of the property. 7. As at the date of signing the Agreements for Sale, the Plaintiff had paid the deposit of KSh.3,190,000/= on 17th June 2011 and a further KSh.2,560,000/= on 8th July 2011. ELC NO. 24 OF 2013 Page 3 of 24

page 3 of 24

The said Agreements for Sale also provided that the properties would be sold with vacant possession. The properties would be sold free from all encumbrances. The Plaintiff (Purchaser) would take possession of the properties upon signing the Agreements for Sale. The Plaintiff agreed with the Defendants that the 1st and 2nd Defendants would forthwith effect the legal transfer of ownership of the property to the Plaintiff by executing the Transfer in the Plaintiff's favor. The Plaintiff paid a further KSh. 4,260,000/= to the 3rd Defendant on 9th March 2012 after the 3rd Defendant requested the same via his letter dated 8th March, 2012. 8. In the Plaintiff's list of documents on pages 34 and 35, the 3rd Defendant received KSh. 4,260,000, as the 3rd Defendant clearly addressed the Plaintiff herein to obtain that amount, which was duly remitted to him. Although the Plaintiff paid the agreed deposit, the Defendants did not fulfill their part of the deal regarding the intended sale of the property. When the Plaintiff attempted to take possession of the property in accordance with the Agreements for Sale, the Plaintiff learned that the property was actually subject to a ELC NO. 24 OF 2013 Page 4 of 24

page 4 of 24

court case and that squatters were claiming an interest in it. After several futile attempts by the Plaintiff's advocates to contact the 3rd Defendant, it became clear to the Plaintiff that the Defendants had intended to defraud the Plaintiff all along. It became clear that they were not in a position to complete their part of the deal. The Plaintiff's witness personally followed up with the 3rd Defendant in an attempt to resolve the issues, to no avail. 9. On January 14, 2013, the Plaintiff's attorneys sent a letter to the Defendants rescinding the Agreement for Sale, demanding a refund of the deposit, and notifying the Defendants of the Plaintiff's intention to sue in the event of default. The Defendants have not responded to the Plaintiff lawyers' letter to date. 10. The 3rd defendant filed an application to strike out his name, which was dismissed. He filed a statement of defense and a preliminary list of documents and witnesses, both dated 23rd June 2014. With leave of court, the 3rd defendant filed a Supplementary List of Documents dated 6th May 2023, seeking to introduce documents he had filed in a related matter, Malindi ELC No. 30 of 2013. ELC NO. 24 OF 2013 Page 5 of 24

page 5 of 24

11. The 3rd defendant testified that he was an advocate of the High Court of Kenya. He was supplied with the particulars of the property involved in the transaction, which was the subject of the lawsuit filed by the parties. He expressed the view that the particulars of the land were insufficient to meet the requirements of the rules of court. However, when he received instructions to draw and prepare the agreements for the sale of various parcels of land, the parties had already identified the land in question on the ground, settled and agreed upon the purchase price, and the purchaser had already made a deposit in the name of the vendor company, Vros Produce Limited. Additionally, representatives of both the purchaser and the vendor had visited the land, identified the subdivisions involved in the transaction, and agreed on them. 12. On these grounds, and noting that he was not a party to any of these transactions or subsequent agreements, the 3rd defendant asserted that he could not be sued as if his firm was a contracting party herein. Furthermore, the 3rd defendant stated that he did not misrepresent himself as an advocate to any ELC NO. 24 OF 2013 of the contracting parties. He also Page 6 of 24

page 6 of 24

emphasized that he did not collude with any of the parties involved. Moreover, he contended that the allegations leveled against him were made in bad faith, with particulars of such bad faith outlined in Paragraphs 4 (i) to (xi) of the Statement of Defence. 13. The 3rd defendant denied receiving any payment personally or as an advocate in relation to the transactions in question. He maintained that the sale agreements were legally defective and that all such agreements were inchoate and repudiated due to improper execution. He further averred that Impact East Africa Limited, a third party to the transactions, independently transferred a sum of K.Sh. 4,260,000.00 to the client’s account of the 3rd defendant, intended for payment to Vros Produce Limited. 14. The 3rd defendant adhered to the instructions received, which required him to process the deed plans and facilitate the issuance of grants, and thus disbursed the funds in accordance with the directions of both Impact East Africa Limited and Vros Produce Limited, both of whom acquiesced in the transactions. He denied any fraudulent conduct or collusion with the 1st and 2nd defendants. ELC NO. 24 OF 2013 Page 7 of 24

page 7 of 24

15. The 3rd defendant also asserted that he was unable to disclose the details of the vendor company to the Plaintiff or its directors, as the representatives of both the vendor and the purchaser had visited him with instructions to finalize the agreement after all oral contracts and deposits had been concluded approximately one month earlier. Consequently, there was no basis for collusion. Impact East Africa Limited and Impact Trading Company Limited did not enter into any agreement with the 3rd defendant; hence, they lack any claim against him, which probably explains why they were not parties to this suit. 16. The court’s jurisdiction was also contested, on the grounds, among others, of the absence of complete and valid agreements for the sale of land. 17. The 3rd defendant said he drew up the agreements for the parties long after the buyer and sellers of the land had met, identified and agreed on the property to be sold, and made deposits to the seller, Vros Produce Limited. He could not explain the consideration that changed hands for the agreement evidencing the plot exchange dated 15 th March 2012. Most, if not all, payments of the purchase price under ELC NO. 24 OF 2013 Page 8 of 24

page 8 of 24

the various agreements were made by bankers’ cheques. The cheques were made out in the name of Vros Produce Limited. The witness identified Kshs. 6, 710, 000.00 as having been paid by banker’s cheques and a banker’s draft, made out in the name of Vros Produce Limited. 18. He further testified that the two directors of the purchaser did not execute the agreements, and that they were incomplete. The 3rd defendant said the money Kshs 4, 260, 000.00 was transferred to the firm’s client’s account by Impact East Africa Limited as ‘Vros payment’. 19. No issue arises from the remittances made by Impact East Africa Limited because the Bank Money Transfer Form clearly indicated that the purpose of the funds was payment to Vros Produce Limited. Moreover, the said Impact East Africa Limited, like Impact Trading Company Limited, is not a party in these proceedings. Neither can benefit from these proceedings. Another reason is that every limited liability company acts through its officials or directors. All six agreements, the subject of this suit, are made between the Plaintiff and Vros Produce Limited. Only some of the directors signed the agreements. No explanation is provided as to why ELC NO. 24 OF 2013 Page 9 of 24

page 9 of 24

two company officials did not attest to the seals of these companies. No Articles, Memoranda, or Constitutions from the various companies were provided to explain this anomaly. No authority of either Impact East Africa Limited, Impact Trading Co., Limited, or even Impact Company Limited was produced to demonstrate any nexus with the plaintiff. And all the correspondence, including the demand notice, was made for and on behalf of the plaintiff, and not for any other sister or related company or companies. 20. Based on the submissions and materials before me, the issues I frame for the determination of this court are whether Plaintiff has satisfactorily proved its case for fraud and misrepresentation against the Defendants jointly and severally, as pleaded in the Plaint; whether Plaintiff is entitled to the prayers sought; and who should bear the costs of the suit. 21. Plaintiff submits that, from the very definition of fraud and as reiterated in Ondari v Atandi (Environment & Land Case 4 of 2021) [2022] KEELC 3487 (KLR), Plaintiff has proved its case both jointly and severally against the defendants. ELC NO. 24 OF 2013 Page 10 of 24

page 10 of 24

22. Plaintiff reiterates that it has demonstrated that the Defendants - jointly and severally - intentionally perverted the truth to induce Plaintiff to part with KSh.10,370,000/=, for which Plaintiff now claims a refund. 23. Plaintiff submits that the 3rd Defendant expressly disbursed the funds and, in his own pleadings, even outlined how he allegedly distributed the monies received through checks issued by the Plaintiff and its sister companies. Having received, banked, and used the funds, the 3rd Defendant cannot now feign ignorance or deny the identity of the entities that made the payments. His conduct amounts to acceptance, and, in law, a party who accepts and benefits from payment is estopped from later denying the payer's relationship or authority. See Job Kilach v Nation Media Group Ltd, Salaba Agencies Ltd & Michael Rono [2015] KECA 846 (KLR). 24. Further, the Plaintiff submits that the 3rd Defendant's defense amounts to nothing more than a bare denial. It is clear from the cross-examination that he had faceless clients, as he failed to produce any evidence in Court by way of CR12 or otherwise to show the existence or identity of his ELC NO. 24 OF 2013 Page 11 of 24

page 11 of 24

alleged clients. His claim to have acted on behalf of clients, therefore, remains unsubstantiated. 25. Further, the 3rd Defendant did not tender any evidence to demonstrate that the cheques issued by the Plaintiff were forwarded to his clients. This omission reinforces the inference that the alleged clients were fictitious and that the 3rd Defendant's dealings were intended to defraud the Plaintiff. 26. Plaintiff submits that the evidence shows that it fulfilled its obligations and that the 3rd Defendant received and acted upon the payments. Having accepted the payments and benefited from the transaction, the 3rd Defendant cannot now deny knowledge of Plaintiff or disown the transaction. His conduct is inconsistent with his defense and amounts to approbation and reprobation. 27. On his part, the 3rd Defendant submitted that the claim before the court is for recovery of K.sh. 10, 370, 000.00, brought by a purchaser of land under four agreements for the sale of land; one plot exchange agreement; and an addendum. All the agreements are inchoate, as they were not properly and completely executed. Only one director of ELC NO. 24 OF 2013 Page 12 of 24

page 12 of 24

the purchaser company signed most of the agreements. All the agreements were neither sealed nor stamped with duty, and none was registered under the RDA. The 3rd defendant was not a party to any of the agreements. The vendor company in whose name the exhibited banker’s cheques were drawn, the company that purchased the bank draft, and Mashamba Properties Limited have, for unexplained reasons, not been sued. The deposits of purchase price under the four agreements were paid by bank cheques, except one, which was paid by a bank draft, all made out in the name of Vros Produce Limited. They were issued almost a month before the agreements for sale were made. 28. There is no evidence under section 178 of the Evidence Act from the issuing banks that the bank cheques were paid to the 3rd defendant or any other party. The only amount paid to the 3rd defendant’s client’s account is Kshs. 4, 260, 000.00. The funds transfer form contained specific instructions that the money was to be paid to Vros Produce Limited. The deposit was expended and disbursed as instructed by the vendor company. The 3rd Defendant has explained that every cent of those funds was paid from the ELC NO. 24 OF 2013 Page 13 of 24

page 13 of 24

client’s account. Neither the remitting company nor the intended payee has complained. And no authority under seal to lodge this claim or otherwise complain has been given to the Plaintiff by either Impact East Africa Limited or Vros Produce Limited. 29. The claim against the 3rd Defendant has not inured, as the inchoate agreements cannot be found to be a cause of action against a third party like the 3rd Defendant. Moreover, there is no privity of contract between the plaintiff and the 3rd defendant. Similarly, neither the company that paid Kshs. 4,260,000/= to the 3rd Defendant’s client’s account, nor has the recipient complained or sought an account. 30. Omission of the name of Vros Produce Limited in this suit is fatal to the suit. Vros Produce Limited is the registered owner of the suit land. It contracted with the Plaintiff and reportedly received the deposits made by banker’s cheques. The said Vros Produce Limited is the company that was defrauded under consideration was the 2nd paid. By agreement, choice, the in which no Plaintiff has contumaciously failed to join them in these proceedings. For this omission and all the arguments and explanations given ELC NO. 24 OF 2013 Page 14 of 24

page 14 of 24

above, the 3rd defendant submits that the Plaintiff's suit should be dismissed with costs on High Court scale to the 3rd defendant. 31. Should the Court find that any money is due to the plaintiff under any of the inchoate agreements, the 3rd defendant submits that he is entitled to complete indemnity, having issued and served third-party notices on the 1st and 2nd defendants. The said 1st and 2nd defendants should indemnify him. 32. From the materials and the parties' submissions, it is not in dispute that the parties entered into agreements for the sale of land, that partial payment was made, and that the land was the subject of court action brought by squatters, hence the agreement was rescinded. 33. The Plaintiff anchors its case on fraud, as alleged against the Defendants severally and jointly as follows: For the 1st and 2nd Defendants, at paragraph 11 of the Plaint, the Plaintiff set out the particulars of fraud and misrepresentation as follows: (i)The 1st Defendant did not disclose to the Plaintiff the identity or whereabouts of the 2nd Defendant. ELC NO. 24 OF 2013 Page 15 of 24

page 15 of 24

(ii) The 1st and 2nd Defendants, at different times and separately, gave the Plaintiff two purported Certificates of Incorporation for Vros Produce Limited that showed conflicting dates of incorporation. (iii) In breach of the warranty in the Agreement for Sale relating to the nonexistence of encumbrances affecting the suit property, the 1st and 2nd Defendants purported to sell to the Plaintiff a parcel of land that they knew was subject to a court case. (iv) In breach of the warranty in the Agreement for Sale relating to vacant possession of the suit property, the 1st and 2nd Defendants purported to sell to the Plaintiff a parcel of land that they knew was occupied by squatters. (v) The 2nd Defendant never executed some of the Agreements for Sale. (vi) The 1st and 2nd Defendants received payment from the Plaintiff when they knew they did not intend to effect the sale and transfer of the suit property in favor of the Plaintiff. (vii) The 1st and 2nd Defendants failed to honor scheduled meetings with the Plaintiff that were intended to clarify the status of the intended sale and transfer of the suit property. ELC NO. 24 OF 2013 Page 16 of 24

page 16 of 24

34. In paragraph 12 of the Plaint, the Plaintiff set out the particulars of fraud and misrepresentation against the 3rd Defendant as follows: (i)The 3rd Defendant did not disclose the identity or whereabouts of the 2nd Defendant and has not done so to date. (ii) The 3rd Defendant purported to witness the signatures of the 1st and 2nd Defendants, whom he knew to be faceless. (iii) The 3rd Defendant purported to witness blank signatures of the 2nd Defendant on the subject Agreement for Sale. (iv)The 3rd Defendants received payment from the Plaintiff when he knew that his alleged clients were not in a position to effect the sale and transfer of the suit property in favour of the Plaintiff. (v) The 3rd Defendant failed to respond to correspondence from the Plaintiff's Advocates seeking clarification on the legal status of the intended sale and transfer of the suit property. (vi) The 3rd Defendant did not honour scheduled meetings with the Plaintiff and its Advocates which were intended to clarify the legal status of the intended sale and transfer of the suit property. ELC NO. 24 OF 2013 Page 17 of 24

page 17 of 24

(vii) The 3rd Defendant had notice that the suit property did not belong to the 1st and 2nd Defendants, whether directly or indirectly. (viii) The 3rd Defendant knew or ought to have known that at least one of the two Certificates of Incorporation in respect of Vros Produce Limited was a forgery. 35. As submitted by the Plaintiff in Ondari v Atandi (Environment & Land Case 4 of 2021) [2022] KEELC 3487 (KLR), fraud was defined as follows: “21 According to the Merriam–Webster Dictionary, fraud means: “intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right.” 22 Under paragraph 13 (3) of her Plaint, the Plaintiff gave as particulars of breach attributed to the Defendant as: Misrepresenting facts thus misleading the Plaintiff to pay.” 23 Under paragraph 13 (4) Obtaining money by false pretenses from the Plaintiff.” 36. In the same case, the Court held: “In the case of Koinange & 13 others v. Charles Karuga Koinange 1986 KLR at page 23 Justice Amin citing the ELC NO. 24 OF 2013 Page 18 of 24

page 18 of 24

case of Ratilal Patel Makanji (1957) EA 314, observed as follows: “When fraud is alleged by the plaintiffs, the onus is on the plaintiffs to discharge the burden of proof. Allegations of fraud must be strictly proved, although the standard of proof may not be so heavy as to require proof beyond a reasonable doubt; something more than a balance of probabilities is required.” 37. From the evidence, at all times material to this suit: The 1st and 2nd Defendants represented themselves to be the directors of, or to be trading in the style and name of, Vros Produce Limited, though they have never entered an appearance or participated in the suit. The 1st and 2nd Defendants represented to the Plaintiff that they were in a position to sell and transfer to the Plaintiff parcels of land situated in Kilifi, known as Land Reference Number 298, Section III, Mainland North, PDP Nos. 22, 23, 31, 34, 35, 36, 37, 38, 40, 41, 42, 43, 44, 61, 62, 63, 64, 153, 154, 295, 296, 297, 298, 296,297,298, 300, 299,300,301, 302, 303, 304, 305, 308, 309, 310. By four written Agreements for Sale made on 17th June 2011, 17th June 2011, 17th June 2011, and 8th July 2011, the 1st and 2nd Defendants agreed to sell ELC NO. 24 OF 2013 Page 19 of 24

page 19 of 24

the suit properties to the Plaintiff, which properties were in the process of subdivision. 38. The Plaintiff fulfilled its part of the bargain under the original Agreements and addenda. The Agreements for Sale also provided that: the properties would be sold with vacant possession; the properties would be sold free from all encumbrances; and the Plaintiff (Purchaser) would take possession of the properties upon signing the Agreements for Sale. Although the Plaintiff paid the agreed deposit, the 1st and 2nd Defendants failed to fulfill their obligations under the intended sale of the property. 39. When the Plaintiff attempted to take possession of the property in accordance with the Agreements for Sale, the Plaintiff learned that the property was subject to litigation and that squatters claimed an interest in it. On January 14, 2013, the Plaintiff's advocates wrote to the Defendants rescinding the Agreement for Sale, demanding a refund of the deposit and notifying the Defendants of the Plaintiff's intention to sue in the event of default. 40. The 1st and 2nd Defendants did not defend the suit. The money paid as the initial deposit toward the purchase price ELC NO. 24 OF 2013 Page 20 of 24

page 20 of 24

has not been refunded. The allegations of fraud, deceit, and obtaining money by pretense remain against the 1st and 2nd Defendants, who used an entity called Vros Produce Limited, well knowing it did not exist. I find that the Plaintiff has proved its case, and is entitled to a refund, as pleaded in the plaint, from the 1st and 2nd Defendants. 41. As for the misrepresentation and fraud, as already alluded to, fraud allegations must not only be pleaded but also proved against a Defendant. Specifically, in this case, the 3rd defendant contends that, regarding his role in the sale transactions, he arrived late in the day, at a time when the parties had already exchanged money and had even gone to the suit properties for the initial six agreements. Kshs. 6,710,000.00 (six million, seven hundred and ten thousand) had already been paid to Vros Produce Ltd via bankers' cheques. This amount cannot be claimed from the 3rd defendant in any event, as it was paid before the written agreements were executed by two competent companies on June 17, 2011. 42. Besides, the Plaintiff did not prove that the 3rd defendant is the alter ego of Vros Produce Limited, making him ELC NO. 24 OF 2013 Page 21 of 24

page 21 of 24

personally liable for the money paid to the vendor company. There is also no reason why all the advocates' firms that attested the parties' signatures are not before the court, raising questions about the inclusion of the 3rd defendant as a party in this case. 43. Regarding the May 2011 transfer of Kshs 4, 260, 000.00 by Impact East Africa Limited to the 3rd Defendant’s client account for payment to Vros Produce Limited, the 3rd Defendant averred that the funds were transferred to a client’s account by Impact East Africa Limited, not by Impact Properties Limited or Impact Trading Company Limited. The purpose of the remittance was to pay Vros Produce Limited. This is discernible from p. 35 of the Plaintiff’s List of Documents. Money paid to a client’s account for a specified purpose can be withdrawn or refunded only on the paying client’s instructions. In this case, the Plaintiff has not demonstrated a nexus between itself and the paying company. Moreover, Impact East Africa Limited is not a party herein. It has not issued authority under seal to the common directors to appear and pursue recovery of the amount through this action. There is no evidence that a cause of ELC NO. 24 OF 2013 Page 22 of 24

page 22 of 24

action has accrued to the Plaintiff or to Impact East Africa Limited. In this suit, regardless of the relationship between the Plaintiff and Impact East Africa Limited, the disbursement of Kshs 4, 260, 000.00 by the 3rd Defendant’s law firm is not in question. Neither Vros Produce Limited nor Impact East Africa Limited has complained. 44. In a nutshell, no cause of action has accrued to the Plaintiff or to any of the other companies. The 3rd Defendant explained at length how the money received in his client’s account was disbursed to secure deed plans and grants for the plots subject to sale to Impact East Africa Limited. The money was not remitted under any of the agreements. It was remitted to meet disbursements for Vros Produce Limited. It was disbursed according to the intended payee’s instructions, as explained in cross-examination and in the documentary evidence from Equity Bank. 45. In a nutshell, the Plaintiff has not established a case against the 3rd Defendant showing that the 3rd Defendant acted in concert with the 1st and 2nd Defendants to defraud the Plaintiff through the entity known as Vros Produce Ltd. ELC NO. 24 OF 2013 Page 23 of 24

page 23 of 24

46. Consequently, the Plaintiffs' claim against the 3rd Defendant is dismissed. 47. In summary, the plaintiffs' claim succeeds as prayed for in the plaint against the 1st and 2nd Defendants, with costs. The claim against the 3rd defendant is 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. Gakuo for the Plaintiff Mr.Kimani for the 3rd Defendant Kendi: Court Assistant ELC NO. 24 OF 2013 Page 24 of 24

page 24 of 24