Housing Finance Company of Kenya Limited v Attorney General & another [2015] KECA 119 (KLR)
The bottom line
#Kenya's Court of Appeal cancelled a land title issued without notifying the bank holding a charge over it, confirming chargeholders must be heard before their interests are wiped out.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the trial judge erred in finding that the 2nd respondent was not a party to the motion before him
- 2.Whether the 1st respondent acted in excess of jurisdiction and in breach of natural justice by registering the vesting order and issuing a provisional certificate of title without notifying the appellant chargee
- 3.Whether the notice in the Kenya Gazette contained falsehoods warranting quashing of the provisional title
- 4.Whether the appellant's interest as chargee was a superior legal interest
Key legal issues
#Whether the Registrar of Titles breached natural justice by registering a vesting order over charged land without notifying the chargee
Yes - the registration and issuance of a provisional certificate without notice to the chargee breached natural justice and was in excess of jurisdiction.
The register held by the 1st respondent showed the suit property was charged to the appellant, yet the vesting order was registered and a provisional certificate issued without notifying the appellant, which resulted in deregistration of the charge. The court held the vesting order should have been quashed since the chargee was completely locked out of the proceedings in RMCC No. 687 of 1991.
Whether the trial judge erred in finding the 2nd respondent was not a party to the motion
Yes - the 2nd respondent was named as an interested party, filed an affidavit, grounds of opposition and a list of authorities, and was represented during the proceedings.
Maxwell Olola, a director of the 2nd respondent, swore an affidavit in the application, and the 2nd respondent filed grounds of opposition and a list of authorities on 8th January 1996 and was represented by the firm of Iseme Kamau who urged its case on 19th October 2000. It was therefore incorrect for the judge to hold that the 2nd respondent was not a party.
Whether the judge's refusal to quash the vesting order on the ground that the underlying court order would remain intact was sound
No - the motion sought to quash the proceedings in RMCC No. 687 of 1991; if quashed, the order would not remain intact.
The judge reasoned that undoing the Registrar's action while leaving the court order intact would cause absurdity. The Court of Appeal rejected this because the motion sought certiorari to quash the proceedings in the subordinate court itself; quashing them would eliminate the vesting order, not leave it intact. Quashing would also assist determination of HCCC No. 2959 of 1995 between the two purchasers.
Whether the Gazette notice preceding the provisional certificate contained falsehoods
Yes - the notice falsely stated the certificate of title was lost and that the 2nd respondent was the registered proprietor, when the title was in the chargee's custody and the chargors were the registered owners.
The Registrar advertised that the certificate of title had been lost, yet the title was held by the appellant as chargee and the records should have shown the registered charge. It was also incorrect to describe the 2nd respondent as the registered owner since the chargors were the registered owners. Acting on these falsehoods, the Registrar issued a provisional title in excess of jurisdiction.
The relative priority of the appellant's charge
The appellant's interest as chargee was superior to any other unsecured interest, including that of the City Council of Nairobi.
Relying on Kenya Commercial Bank Limited v Jeremy Will Tsuma, which quoted Gravells' Land Law, the court noted the advantage of real security is that a secured creditor takes priority over general unsecured creditors even if the borrower becomes insolvent. Accordingly the judge ought to have found the applicant's interest superior to that of the City Council.
Legal principles established
#- Judicial review is concerned with the decision-making process, not the merits of the decision.
- A registrar of titles acts in excess of jurisdiction and in breach of natural justice by registering a vesting order over charged land without notifying the chargee whose charge appears on the register.
- A chargee's interest is a superior legal interest vis-à-vis unsecured interests, including statutory rate claims.
- Mandamus compels performance of a public duty imposed by statute where failure to perform prejudices a party with a legal right to its performance.
- A provisional certificate of title founded on a notice containing falsehoods (that a title was lost when it was in the chargee's custody) is issued in excess of jurisdiction and is null and void.
Court orders
#- 1.Set aside the order of Kuloba, J dismissing the appellant's motion
- 2.Substituted an order of certiorari to remove into the Court of Appeal and quash the proceedings of the Resident Magistrate's Court in Case No. 687 of 1991 and all consequential orders
- 3.Declared the provisional title issued to the 2nd respondent and registered in the Land Titles Registry in Nairobi as entry No. IR 12012/12 null and void
- 4.Ordered the 1st respondent to cancel the provisional title
- 5.Costs of the appeal to be borne by the 1st and 2nd respondents jointly and/or severally
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- HC. Misc. No. 1316 of 1995
- Jurisdiction invoked
- First appellate jurisdiction under the Civil Procedure Act over appeals from the High Court (appeal from a ruling in a judicial review motion brought under Order 53 of the Civil Procedure Rules, the Law Reform Act and the Registration of Titles Act)
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.
We set aside the order of Kuloba, J dismissing the appellant's motion and substitute thereto an order of certiorari to remove into this Court and to quash the proceedings of the Resident Magistrate's Court in case No. 687 of 1991 and all the consequential orders.
We further direct that the provisional title issued to the 2nd respondent and registered in the Land Titles Registry in Nairobi as entry NO. IR 12012/12 is declared null and void and the 1st respondent is hereby ordered to cancel the same.
having found that the chargee was completely locked out of the happenings in RMCC 687/1991, it was only proper to quash the vesting order that resulted in deregistration of the appellant's interest as a charge as failure to do so was a breach of the rules of natural justice
We find that the 1st respondent acted in excess of its jurisdiction in placing the advertisement containing falsehood and based on this falsehood proceeded to issue a provisional title in favour of the 2nd respondent.
judicial review deals with the procedure of making the decision and not the merits of the decision or lack of it
Issues in the judgment
#The judgment inconsistently records the date of the legal charge - the affidavit narrative refers to a charge dated 30th December, 1982 while the court's own summary of facts refers to 30th December, 1983.
The judgment inconsistently records the registry entry number for the provisional certificate of title - the prayers refer to entry number I.R. 12012/20 while the final order refers to entry NO. IR 12012/12.
The judgment inconsistently describes the relief sought - it states the motion sought an order of mandamus to quash the decision, whereas mandamus and certiorari are distinct remedies and the final order grants certiorari.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Housing Finance Company of Kenya Limited v Attorney General & another [2015] KECA 119 (KLR)", Case Analysis (2015). Civil Appeal No. 264 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/119/eng@2015-12-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.