Marteve Guest House Limited v Njenga & 3 others
The bottom line
#A bank that sells a deceased person's property without following proper legal procedures can invalidate the sale, even for an innocent 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 service of a statutory notice and a redemption notice upon a person who was not an administrator of a deceased's estate but later appointed as administrator was proper service
- 2.What was required of a bank, as chargee, to exercise its statutory power of sale over a deceased chargor's property where letters of administration had not been issued
- 3.The guiding principles on the obligation of a mortgagee in the exercise of the statutory power of sale
- 4.Whether a deceased's right of redemption became extinct upon death
- 5.The impact of wrongful exercise of a bank's statutory power of sale on a purchase by an innocent purchaser for value without notice
- 6.The role of a court when confronted with a claim of fraud in the exercise of a bank's statutory power of sale
- 7.The standard of proof required to prove fraud
- 8.The elements for qualification as a bona fide purchaser
- 9.Whether the appellant was an innocent purchaser where the title had its roots in a flawed exercise of the statutory power of sale
- 10.Whether a deceased's charged property was free property inheritable by beneficiaries
- 11.The elements of unjust enrichment
- 12.Under what circumstances a court may consider issues not contained in pleadings
- 13.The guiding principles of the doctrine of estoppel and whether it operated in favour of the bank
Key legal issues
#Proper service of statutory notices on a deceased chargor's estate
Service on beneficiaries before they obtained letters of administration was not proper service on the estate; the bank should have pursued appointment of administrators under section 66 of the Law of Succession Act before exercising its power of sale
The bank exercised its statutory power of sale after the chargor's death but before a grant issued. Under section 45(1) of the Law of Succession Act only persons holding a grant may transact business with a deceased's property. The RLA contained nothing exempting the bank from compliance with the LSA. The estate was thus never given an opportunity to redeem, so the statutory power of sale had not accrued.
Fraud in conversion of the charge into overdraft facilities
The conversion of the charge and further charge into overdraft facilities without the deceased's consent, contrary to section 71 RLA, was fraud proved to the required standard, rendering the exercise of the statutory power of sale void
The overdraft documents were purportedly signed before an unidentified bank official, not an advocate, were not registered against the title, and a document examiner found the signatures were forgeries. The 4th respondent admitted the deceased did not sanction the conversion. Fraud must be specifically pleaded and distinctly proved; the respondents discharged that burden against the bank and the 4th respondent.
Protection of an innocent purchaser in a void sale
An innocent purchaser for value without notice is protected in an irregular sale under section 77(3) RLA, but not in a sale that is void because the statutory power of sale never accrued or was vitiated by fraud; the purchaser's remedy is damages against the chargee
The court distinguished irregular sales from void sales. Section 77(3) RLA gives a remedy in damages only for irregular exercise of the power of sale and does not provide blanket protection. Unlike section 99(3) of the Land Act 2012, the RLA had no equivalent protection for sales where no default or notice existed. Since the bank was complicit in fraud and the power of sale never accrued, the appellant acquired no title.
Whether the charged property was free property and whether the right of redemption survived death
The charged property remained free property of the estate subject to the encumbrance, and the right of redemption devolved to the personal representatives rather than becoming extinct
Free property is property the deceased was legally competent to dispose of during lifetime and whose interest was not terminated by death. The charge encumbered but did not terminate the deceased's interest. The bank, as a privileged creditor under section 66 LSA, could have sought appointment of administrators to enable service of notices and redemption, but did not.
Estoppel and waiver against the estate
Any estoppel or waiver arising from the 1st and 2nd respondents' pre-grant dealings with the bank bound only their personal interests, not the estate or other beneficiaries, and could not override the Law of Succession Act
Administrators act for all beneficiaries, and pre-grant compromises were made in personal capacity. Equitable doctrines do not override clear statutory provisions, so the respondents' holding out as administrators could not sanitise the bank's flawed process.
Consideration of unpleaded issues
Parties and the court are bound by the pleadings, but a court may determine an unpleaded issue where the parties' conduct at trial left it to the court
Although the appellant did not specifically plead bona fide purchaser status, the issue was litigated throughout the trial, engaging the Odd Jobs v Mubia exception. The first appellate court must reappraise the whole record under rule 29(1) of the Court of Appeal Rules.
Legal principles established
#- Service of statutory and redemption notices on persons who were not administrators of a deceased chargor's estate, though later appointed, is not proper service on the estate
- Non-compliance with prerequisites for service of notices on the chargor renders the entire exercise of the statutory power of sale invalid
- A sale void for fraud or because the statutory power of sale never accrued confers no title on a purchaser, even an innocent one, whose remedy lies in damages against the chargee
- A deceased chargor's right of redemption does not become extinct on death but devolves to the personal representatives
- Estoppel and waiver cannot override clear provisions of law such as the Law of Succession Act
Court orders
#- 1.The appeal is dismissed with costs to the 1st and 2nd respondents
- 2.The trial court's decision is affirmed
The bench
#Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.
Wrote the judgment
Wrote the lead judgment holding that service of statutory and redemption notices on persons who were not administrators of the deceased chargor's estate was improper; the bank's exercise of its statutory power of sale was flawed, rendering the appellant's title tainted with fraud, nullity and illegality; appeal dismissed.
the appeal herein has no merit. It is accordingly dismissed with costs to the 1st and 2nd respondents. The trial court's decision is accordingly affirmed.p. 23
Wrote the judgment
Concurred in dismissal, holding the sale void because the statutory power of sale had not accrued (no proper service on the estate) and was vitiated by fraud in converting the charge into overdraft facilities; an innocent purchaser in a void sale cannot rely on section 77(3) RLA and the remedy lies in damages against the bank.
I come to the conclusion that the sale of the suit property to the appellant is void and the appellant's remedy lies in damages against the Bank and not the estate of the deceased.p. 31
Wrote the judgment
Dissented: the appellant was protected by section 99 of the Land Act as a purchaser without notice of irregularities; the respondents' conduct amounted to unjust enrichment; the appeal should be allowed and the respondents' claim dismissed with recourse in damages against the bank.
I am convinced that this appeal ought to be allowed. I would therefore allow it with costs as against all the respondents jointly and or severally.p. 39
- On appeal from
- Environment and Land Court (High Court), Milimani, Nairobi
- ELC Case No 328 of 2013
- Jurisdiction invoked
- First appeal under the Court of Appeal Rules (rule 29(1)) from the Environment and Land Court
Relief refused
#Declaration of the appellant as a bona fide purchaser for value without notice and restoration/protection of its title
The appellant's title had its roots in the bank's flawed and fraudulent exercise of its statutory power of sale; a void sale confers no title and section 77(3) RLA protects only irregular, not void, sales
Claim of unjust enrichment against the 1st and 2nd respondents
Not pleaded or canvassed at trial and no evidence that the balance of proceeds was actually paid to them
Costs
Appeal dismissed with costs to the 1st and 2nd respondents
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.
Service of statutory and redemption notices to persons who were not administrators of a deceased's chargor's estate but later on appointed as administrators is not proper service.
when a registered proprietor's root of title is under challenge, it is not sufficient to dangle the instrument of title as proof of ownership.
Want of compliance with the Law of Succession Act provisions by the bank in the exercise of its statutory power of sale rendered the entire process an illegality and therefore null and void.
In our view, a sale which is void does not entitle the purchaser at such sale to obtain proprietorship or title to the land so sold.
the appeal herein has no merit. It is accordingly dismissed with costs to the 1st and 2nd respondents. The trial court's decision is accordingly affirmed.
proof of fraud is slightly higher than a balance of probabilities but slightly lower than proof beyond reasonable doubt.
Issues in the judgment
#Coram lists 'HM OKWENGU' but the signature block and judgment heading read 'Hannah Okwengu' - same judge, inconsistent rendering
The 4th respondent's counsel is referred to as both 'Mr Onindo' and 'Mr. Ondino' and 'Onindo & Co Advocates'
Typographical date error: auction suspension stated as 'effective July 13, 2017' where 2011 is meant
Statute citation contains typographical errors, e.g. '74(1)(3)94)' and 'Law of Succession Act Procedures'
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Alice Acuii Nguthari & another v Joseph Kobia Nguthari & 2 others24 Sept 2026applied
- Maikuma Wekesa Buchunju (Suing for and on Behalf of the Estate of the Late Buchunju Kapchanga - Deceased) v Donald Wekesa Muyundo & 7 others[2023] KEELC 20567 (KLR)5 Oct 2023
Cite this brief
#Cite this brief
Caselaw, "Marteve Guest House Limited v Njenga & 3 others", Case Analysis (2022). Civil Appeal 400 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/539/eng@2022-04-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.