Joseph Muriithi Njeru v Mary Wanjiru Njuguna & another [2018] KECA 265 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a property title obtained through a fraudulent court decree is worthless and cannot protect even an innocent-looking buyer.
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 appellant proved that he fulfilled the terms of the sale agreement with the 1st respondent's husband
- 2.Whether the transfer of the suit property to the 1st respondent pursuant to the decree in HCCC No. 4539 of 1994 was lawful
- 3.Whether the 2nd respondent was a bona fide purchaser for value without notice
- 4.Whether the Land Registrar acted unlawfully in cancelling the certificate of lease issued to the 1st respondent and issuing one to the appellant
- 5.Whether the appellant's counterclaim ought to have been allowed, including claims for special damages and mesne profits
Key legal issues
#Whether the appellant complied with the sale agreement with PW2
The trial judge erred; there was overwhelming evidence that the appellant lawfully purchased and fully paid for the suit property.
The written sale agreement fixed the price at Kshs.530,000/= with part paid by motor vehicle KAB 255P. PW2 executed a registered Deed of Assignment, consented to Council approval, and never demanded any balance or complained of non-transfer of the vehicle. His belated oral testimony five years later contradicted written terms and offended the parol evidence rule.
Legality of the decree in HCCC No. 4539 of 1994 and subsequent transfers
The consent and decree were fraudulent and null and void; all subsequent transactions founded on them were nullities.
The appellant was never served; no formal proof was undertaken; the plaintiff and her husband (plaintiff and defendant) colluded in a consent divesting a co-defendant of registered title without any cancellation order; the court file cannot be traced; the Deputy Registrar denied signing the decree. A bad title cannot pass good title, so the sale to the 2nd respondent was also a nullity.
Whether the 2nd respondent was a bona fide purchaser for value without notice
She was not; she held no certificate of title, the vendor's title was fraudulently obtained, and the head lessor's consent was never obtained.
Applying Katende v Haridar, a bona fide purchaser must hold a certificate of title, purchase in good faith for value, and be free of fraud notice. The 2nd respondent held no title, her vendor's title was a nullity, and as at March 1997 the City Council had given no written consent to the leasehold transaction, which the law required.
Whether the Land Registrar acted unlawfully in cancelling the 1st respondent's certificate of lease and issuing one to the appellant
The learned judge erred; the Registrar's action was correct in the circumstances.
The first certificate of lease had been issued in error and the Land Registrar, after summoning all parties and hearing representations, cancelled it and gazetted the notification. Since the 1st respondent did not lawfully acquire the first certificate, the judge's view that mere rectification sufficed fell away; the Registrar's power under section 142 of the repealed Registered Land Act was properly exercised.
The appellant's counterclaim for eviction, special damages and mesne profits
The counterclaim succeeds; the appellant is entitled to vacant possession, special damages of Kshs.2,644,000/= and mesne profits at Kshs.18,000/= per month from 1st January 2013.
The appellant lawfully obtained eviction of the initial occupants; the 2nd respondent and her husband then forcibly re-entered with no right to do so. Uncontroverted valuation evidence established lost rent of Kshs.2,644,000/= to December 2012. As trespassers on residential property, the respondents are liable for mesne profits at the ordinary letting value of Kshs.18,000/= monthly until vacant possession is delivered, jointly and severally.
Legal principles established
#- A person who holds a bad title cannot pass a good title to a purchaser; a decree obtained by fraud is a nullity and every transaction premised on it is of no legal consequence.
- Courts will not enforce or lend their aid to illegal or fraudulent transactions between parties, including collusive consents in litigation.
- The requirements for a bona fide purchaser defence include holding a certificate of title, purchasing in good faith for valuable consideration, and having no knowledge of or participation in fraud.
- Under the parol evidence rule, extrinsic evidence may not be adduced to contradict or vary the written terms of an agreement.
- An appellate court will not interfere with findings of fact unless based on no evidence, a misapprehension of the evidence, or wrong principles.
- A court may order rectification of the register where registration was obtained by fraud or mistake.
Court orders
#- 1.Appeal allowed; judgment of the High Court set aside in its entirety and substituted with judgment in favour of the appellant in terms of his counterclaim
- 2.2nd respondent and/or any other person in occupation of the suit property to vacate forthwith and grant the appellant vacant possession
- 3.Appellant awarded special damages of Kshs.2,644,000/= being lost rent up to December 2012
- 4.Appellant awarded mesne profits at Kshs.18,000/= per month from 1st January 2013 until vacant possession is given
- 5.Special damages and mesne profits payable by the respondents jointly and severally
- 6.Appellant awarded costs of the appeal and costs of the High Court proceedings
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C.C. No. 999 of 2001
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Constitution of Kenya, 2010 (Article 164) and the Court of Appeal Rules; appeal as of right from the High Court
Relief refused
#2nd respondent's claim to be registered as bona fide purchaser with right to certificate of lease
She did not hold a certificate of title, her vendor's title was fraudulently obtained, and she lacked the lessor's consent
Costs
The appellant is awarded costs of this appeal as well as costs of the High Court proceedings.
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.
In conclusion, we allow this appeal, set aside the judgment entered by the trial court in its entirety and substitute therefor judgment in favour of the appellant in terms of his counterclaim as stated hereabove. The appellant is also awarded costs of this appeal as well as costs of the High Court proceedings.
We hereby order the 2nd respondent and/or any other person in occupation of the suit property to vacate forthwith and grant the appellant vacant possession of his property.
We find that the appellant is entitled to special damages of Kshs.2.644,000/= being the lost rent upto December, 2012 and we so order.
It is settled law that a person who holds a bad title cannot pass a good title to a purchaser.
It is unjust and inequitable to dispossess an innocent proprietor of his property through fraudulent acts of conspirators in a suit.
Where the intention of parties has been reduced into writing, under the parole evidence rule, it is generally not permissible to adduce extrinsic evidence, whether oral or written, to contradict, vary or add to the terms of the agreement.
A purchaser who does not hold a title to a property and who did not exercise due diligence in acquiring a registered property cannot be described as a bona fide purchaser or innocent purchaser.
Issues in the judgment
#Typographical inconsistency in the special damages figure: the pleadings and evidence refer to Kshs.2,644,000/= but the order records 'Kshs.2.644,000/='.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Joseph Muriithi Njeru v Mary Wanjiru Njuguna & another [2018] KECA 265 (KLR)", Case Analysis (2018). Civil Appeal No. 145 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/265/eng@2018-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.