FESTUS OGADA v HANS MOLLIN [2009] KECA 428 (KLR)
The bottom line
#Kenya's Court of Appeal cancelled a property transfer made mid-appeal, held that claims built on illegal foreign-exchange dealings deserve no court help, and restored the appellant as owner.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether this Court has jurisdiction over the 2nd respondent (Joyce) who was not a party to the proceedings in the superior court
- 2.Whether there was evidence before the trial court to show that the 1st respondent paid for the purchase of the plot and financed construction of the house
- 3.Whether the court should decline to assist the 1st respondent because his alleged remittances violated the Exchange Control Act (illegality/ex turpi causa)
- 4.Whether the transfer of the suit property to Joyce was in breach of the doctrine of lis pendens under section 52 of the Transfer of Property Act
- 5.Whether the transfer to Joyce should be cancelled and the appellant reinstated as registered owner
Key legal issues
#Jurisdiction over a transferee who was not a party in the superior court
The Court had jurisdiction to determine the appeal as against the 2nd respondent, a subsequent transferee, since rule 76(1) requires service on all persons directly affected and the Court ensured she was served and appeared by counsel.
Rule 76(1) of the Court of Appeal Rules, made under section 5 of the Appellate Jurisdiction Act, places a duty on the intending appellant to identify and serve all persons directly affected by the appeal, reflecting the natural justice principle against condemning a person unheard. Joyce was served after extension of time and appeared by counsel without claiming prejudice. The Court followed its own precedent in Mahira Housing where transferees of subdivided litigation property were similarly enjoined.
Illegality and ex turpi causa - foreign exchange violations underlying the claim
The 1st respondent's claim rested on illegal clandestine foreign currency transactions under the Exchange Control Act; the court should decline to assist him, and equity will not grant relief founded on the illegality of the claimant's own conduct.
The alleged remittances were smuggled into Kenya in violation of the Exchange Control Act (then in force), a criminal offence, as the respondent's own witnesses admitted, including undeclared cash and diamonds changed in the black market. Relying on Jones v Merionethshire Permanent Building Society, Lakhan v Vaitha, Mistry Amar Singh v Serwano Wofunira and Scott v Brown Doering McNab & Co, the Court held that a plaintiff who must rely on his own illegality to make his case cannot invoke the court's aid, and public policy forbids assisting flouters of the law.
Adequacy of the trial court's evaluation of the evidence
The trial Judge failed to fully analyze the evidence; had he done so he would have found both parties engaged in illegal activity and doubted whether the 1st respondent remitted the alleged sums.
As a first appellate court, the Court re-evaluated the evidence and found the payments suspicious: large sums carried by friends with no written acknowledgment, payments allegedly at a demolished hotel, travellers' cheques in the wrong name, and most money allegedly sent in 1995 although the house was complete by December 1994. The trial Judge also ignored the appellant's sale of his Kiembeni house and the delayed filing of the suit in 2000.
Lis pendens and the transfer to Joyce
The transfer of the suit property to the 2nd respondent during the pendency of the appeal breached section 52 of the Transfer of Property Act; the circumstances showed she had notice, and the transfer was a nullity.
The transfer was effected on 30th August 2007, after the appeal was filed and the 1st respondent served with the record. The instrument of transfer was backdated to 24th August 2007, the sale price of Kshs.5 million was far below the property's value of over Kshs.14 million, and the speed of the transaction suggested a hurried arrangement between persons known to each other, all pointing to knowledge of the pending appeal and an intention to defeat it.
Legal principles established
#- All persons likely to be directly affected by an appeal must be served with the notice of appeal under rule 76(1), as an application of the rule of natural justice that a person should not be condemned unheard; a person not a party below may properly be enjoined in an appeal where affected.
- A court must decline to grant relief to a litigant whose claim rests on his own illegality where the illegality is duly brought to the notice of the court; ex turpi causa non oritur actio.
- The doctrine of lis pendens preserves the status quo over property subject to pending litigation; a transfer intended to defeat the outcome of a pending appeal is a nullity.
- A first appellate court is duty bound to consider, analyze and evaluate all the evidence adduced before the trial court, bearing in mind that it did not see or hear the witnesses.
Court orders
#- 1.Appeal allowed and the orders made by the trial Judge set aside
- 2.Declaration that the transfer of the suit property to the 2nd respondent (Joyce) was a nullity and cancellation of that transfer
- 3.Reinstatement of the appellant's name as owner of the suit property if for any reason it was deleted
- 4.No order as to costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- High Court of Kenya at Mombasa
- H.C.C.C. No. 284 of 2000
- Jurisdiction invoked
- Section 3(1) of the Appellate Jurisdiction Act, Cap 9 - jurisdiction to hear appeals from the High Court, with the right conferred by the Civil Procedure Act and rules made thereunder
Relief refused
#Forfeiture of the property to the State for breach of the Exchange Control Act
The Exchange Control Act having been repealed, the power of forfeiture went with it; the appellant was not the plaintiff invoking the court's assistance
Judgment on the DM 6000 allegedly withdrawn from the 1st respondent's bank account
The trial Judge never pronounced judgment on this head of claim and the appeal court set aside the judgment below
Costs
No order as to costs - 'As regards costs, considering the background to this matter we make no order as to costs.'
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
It appears to us to be the policy of the law that all persons likely to be affected by an appeal need to be given an opportunity to be heard in that appeal.
Rule 76(1), above, is couched in mandatory terms clearly showing that the law places much importance on the principle that a person should not be condemned unheard.
this Court, as a first appellate court in this matter is duty bound to consider all the evidence which was adduced before the trial court, analyze and evaluate it before coming to a decision one way or the other
No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality.
It offends public policy to aid flouters of the law to benefit from their illegal acts.
The transfer was obviously intended to defeat the outcome of the appeal. The transfer was a nullity and we so declare. Consequently we order the cancellation of the transfer of the suit property to her as well.
For the reasons we have given above, we allow the appellant's appeal, and set aside the orders made by the trial Judge.
we order that his name be reinstated as owner of the suit property if for any reason it was deleted.
As regards costs, considering the background to this matter we make no order as to costs.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "FESTUS OGADA v HANS MOLLIN [2009] KECA 428 (KLR)", Case Analysis (2009). Civil Appeal 100 of 2007. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2009/428/eng@2009-10-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.