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Court of AppealDismissedCivil Appeal No. 215 of 1996

Central Kenya Ltd v Trust Bank Limited & 4 others (Civil Appeal 215 of 1996) [1996] KECA 197 (KLR)

Court of Appeal
17 December 1996
RKR. O. KwachPhilip Kiptoo TunoiP. K. TunoiGPG. S. Pall
3,793 words in judgment
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The bottom line

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Kenya's Court of Appeal confirmed that registered land titles are protected unless fraud is clearly proven, and silence does not equal admitting fraud.

What this practically means

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Executive summary

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This was an appeal to the Court of Appeal at Nairobi against a ruling of Mbogholi Msagha, J. dated 24th April 1996 in H.C.C.C. No. 3590 of 1995 dismissing Central Kenya Ltd's application for an interlocutory injunction restraining the respondents from interfering with, alienating or wasting L.R. 7705/2 Thika. The appellant alleged that charges registered in favour of Trust Bank and Trust Finance, the subsequent transfer to Floriculture International Ltd and the charge to First National Finance Ltd were unauthorised, fraudulent and void ab initio. The Court of Appeal, in a unanimous judgment of Kwach, Tunoi and Pall, JJ.A., dismissed the appeal on all grounds. First, affidavits from the record of the earlier struck-out suit H.C.C.C. No. 1597 of 1994 (O.S.) were admissible under section 34(1)(b) and (d) of the Evidence Act because the earlier suit was still a judicial proceeding between the same parties on substantially the same issues, and the appellant had the right and opportunity to cross-examine; tendering them from the bar was an irregularity causing no miscarriage of justice. Second, the absence of replying affidavits did not amount to admission of fraud, the onus lying on the appellant, for whom fraud attracted a heavier prima facie burden. Third, the judge made only a prima facie finding, not a final determination of fraud. Applying Govindji Popatlal v Nathoo Visandjee, the court held the registered charges conclusive of validity and the transfer to Floriculture indefeasible absent prima facie evidence of fraud. The appeal was dismissed with costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the learned judge erred in treating as evidence affidavits from the records of previous proceedings tendered from the bar
  2. 2.Whether the allegations of fraud and conspiracy against Trust Bank and Trust Finance were uncontroverted and should have been so found
  3. 3.Whether the learned judge made a final determination on the issue of fraud on an interlocutory application by finding Floriculture was a purchaser for value without notice
  4. 4.Whether the appellant established a prima facie case with a probability of success warranting an interlocutory injunction

Key legal issues

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01

Admissibility of affidavits from records of previous proceedings tendered from the bar

Holding

The affidavits were admissible under section 34(1)(b) and (d) of the Evidence Act; the earlier struck-out suit was still a judicial proceeding, the parties and issues were the same, and the appellant had the right and opportunity to cross-examine. Tendering from the bar was a procedural irregularity causing no miscarriage of justice.

Reasoning

Section 34(1)(b) and (d) of the Evidence Act admits evidence from prior judicial proceedings between the same parties where there was a right and opportunity to cross-examine and substantially the same issues. The earlier suit, though struck out as incompetent, was a judicial proceeding. Counsel should have introduced the documents by formal affidavit, but the judge allowed the appellant to peruse them and object fully, so no miscarriage of justice arose.

p. 4
02

Effect of failure to file a replying affidavit on uncontroverted allegations of fraud

Holding

Failure to deny allegations of fraud by affidavit does not amount to admission; the onus of proving fraud and conspiracy lies on the appellant, whose refusal to serve summons had curtailed the respondents' right to file defences.

Reasoning

Trust Bank and Trust Finance filed only grounds of opposition. The court held that an allegation of fraud is never admitted by silence, particularly where the appellant had not served summons, thereby curtailing the respondents' right to file defences. Fraud and conspiracy are serious allegations attracting a heavier onus of proof than in an ordinary civil case, and the appellant's vague, general allegations did not discharge it.

p. 5
03

Whether the judge made a final determination of fraud on an interlocutory application

Holding

No; the judge made only a prima facie finding that no case with a probability of success existed, leaving the appellant free to prove fraud at trial.

Reasoning

The judge correctly stated the Giella principles and, on analysing the evidence, concluded the transactions were not void ab initio and that no prima facie case existed. This was an interlocutory assessment, not a final determination. The appellant would have its chance to prove the allegations at trial, so the third ground of appeal failed.

p. 5
04

Indefeasibility of registered title under the Registration of Titles Act

Holding

Registration of the charges was conclusive evidence of the chargees' title absent prima facie evidence of fraud; the transfer to Floriculture conferred indefeasible title and the subsequent charge to First National was likewise unimpeachable on the material before the court.

Reasoning

Relying on Govindji Popatlal v Nathoo Visandjee (EACA and Privy Council), the court held that under sections 23 and 32 of the Registration of Titles Act a duly proved registered charge is conclusive of validity including due execution. The statutory power of sale exercised by the chargees passed indefeasible title to Floriculture, and First National's charge was equally conclusive. The appellant retained no right or title unless it proved fraud at trial.

p. 6

Legal principles established

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  • Evidence given in a prior judicial proceeding is admissible in subsequent proceedings under section 34(1)(b) and (d) of the Evidence Act where the parties are the same or their representatives, there was a right and opportunity to cross-examine, and the issues are substantially the same - even if the earlier suit was struck out, it remains a judicial proceeding.
  • A party who had the right and opportunity to cross-examine a deponent but did not exercise it is treated as having cross-examined for purposes of admissibility of the earlier deposition.
  • Uncontroverted allegations of fraud are not admitted merely because no replying affidavit was filed; the burden of proving fraud remains on the allegor.
  • Under the Registration of Titles Act, registration of a charge duly proved is conclusive of the validity of the document including its due execution, and a transfer by chargees exercising statutory power of sale confers an indefeasible title on the transferee absent prima facie evidence of fraud.
  • A finding on an interlocutory injunction application that no prima facie case exists is not a final determination of the issues, which remain open at trial.

Court orders

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  1. 1.Appeal dismissed with costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

RK
majority
Philip Kiptoo Tunoi
majority
GP
majority
On appeal from
High Court
H.C.C.C. No. 3590 of 1995
Jurisdiction invoked
First appeal to the Court of Appeal from the High Court (ruling on an interlocutory injunction application)

Relief refused

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Interlocutory injunction restraining the respondents from interfering with, alienating or wasting the suit property

The appellant failed to establish a prima facie case with a probability of success; the registered charges and transfer conferred indefeasible title in the absence of prima facie evidence of fraud

p. 6

Costs

The appeal was dismissed with costs to the respondents.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the final result therefore, the appeal fails, and it is hereby dismissed with costs.
p. 6Disposition
Although the earlier suit was struck out as being incompetent nevertheless it was a judicial proceeding.
p. 4Admissibility of evidence from prior proceedings
If the party has a right of cross examination at a particular stage of proceeding and there is opportunity of exercising that right, it is equivalent to actual cross examination.
p. 4Opportunity to cross-examine suffices
Fraud and conspiracy to defraud are very serious allegations. The onus of prima face proof was much heavier on the appellant in this case than in an ordinary civil case.
p. 5Burden of proof of fraud
the registration under the Ordinance of a mortgage or charge on land, if duly proved shall be accepted by the courts as conclusive of the validity of the document effecting it
p. 6Indefeasibility of registered charges
We fully agree with the trial judge that conspicuous exclusion of Gachoka and Barretto puts into question the genuineness of the appellant's claim.
p. 5Non-joinder of key actors undermining fraud claim

Issues in the judgment

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minor

The judgment contains typographical garbling in the passage quoting Govindji Popatlal and in the plaint particulars, e.g. the corrupted text around the citation and the phrase '(g)The purpproorpteerdt y.t ransfer'.

minor

The judgment inconsistently dates the registration of the second charge, first stating 'on or about 17th June, 1993' for the first charge and then 'on or about the same 15th June, 1993' for the second.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (16)

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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, "Central Kenya Ltd v Trust Bank Limited & 4 others (Civil Appeal 215 of 1996) [1996] KECA 197 (KLR)", Case Analysis (1996). Civil Appeal No. 215 of 1996. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1996/197/eng@1996-12-17

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