Trans National Bank Ltd v Kenya Anti-Corruption Commission & 3 others

2. The 1st respondent alleged that in or about 1990, the 2nd respondent fraudulently and unlawfully procured a lease over the suit property from the 4th respondent for private purposes without the knowledge or consent of the Kenya Railways Corporation. It averred that the alienation was illegal as the suit property was public land vested in the Corporation, no lawful allotment had been made, the requisite Part Development Plan (PDP) was not circulated, no public auction or tendering process was undertaken, and the Commissioner of Lands acted without legal authority in issuing the said lease. The 1st respondent further pleaded that there was no resolution by the Kenya Railways Corporation surrendering the land, nor approval from the responsible Minister or the Treasury to alienate it from public to private land. 3. The 1st respondent further pleaded that in 1991, the 2nd respondent charged the suit property to the appellant to secure a loan of Kshs. 3,000,000/=. Following the 2nd respondent's default in servicing the loan, the appellant exercised its statutory power of sale and, in or about 1996, sold and transferred the suit property to the 3rd respondent. The 1st respondent contended that the 2nd respondent's registration as a lessee was procured through fraud and illegality, rendering the certicate of lease that was subsequently issued null and void ab initio. Consequently, the charge created in favour of the appellant and the subsequent sale and transfer of the suit property by the appellant to the 3rd respondent following the 2nd respondent's default, was equally null and void and incapable of conferring valid title. It maintained that all the parties were aware, or ought to have been aware, that the suit property belonged to the Kenya Railways Corporation by virtue of the relevant Legal Notices and publicly available survey records. 4. Accordingly, the 1st respondent sought declarations that the lease issued to the 2nd respondent, the charge in favour of the appellant, and the subsequent transfer to the 3rd respondent were null and void; rectication of the land register through cancellation of the lease in respect of the suit property and certicate of lease issued to the 3rd respondent; a permanent injunction against the 3rd respondent restraining further dealings with the suit property; general damages for fraud against the 2nd and 4th respondents; costs of the suit; and any other appropriate relief. 5. Through a statement of defence dated 7th August, 2009, the 2nd respondent denied in general the allegations contained in the plaint. He denied that the suit property formed part of public land set apart as a railway reserve and put the 1st respondent to strict proof of those assertions. He further denied having fraudulently or unlawfully procured the lease over the suit property or that the Commissioner of Lands acted without authority in issuing the said lease. He specically denied all the pleaded particulars of fraud and illegality, maintaining that if a certicate of lease had been issued, it was lawfully granted pursuant to the executive powers of the President after due allocation of the land, payment of the requisite stand premium and other charges, and was therefore valid and indefeasible. 6. The 2nd respondent denied knowledge of the charge created in favour of the appellant, the default in repayment of the loan, and the subsequent transfer of the suit property to the 3rd respondent. Without prejudice, he averred that if the property had been charged, it constituted good title capable of being charged and sold upon default. He also denied that the defendants had knowledge of any prior interest of the Kenya Railways Corporation in the suit property. Lastly, the 2nd respondent contended that the suit was bad in law, unconstitutional, null and void ab initio, and statute-barred. 7. The appellant, in their statement of defence dated 6th August, 2009, denied that the suit property formed part of land vested in the East African Railways and Harbours Administration or its successor entities and put the 1st respondent to strict proof thereof. It also denied that the 2nd respondent's registration as proprietor was unlawful, fraudulent, null and void or incapable of conferring a valid https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 2

page 2 of 10

interest in land. While admitting that the property had been charged to it, the appellant maintained that before accepting the title as security it conducted the requisite search at the Lands Registry and, having found the title to be regular under the Registered Land Act (now repealed), had no obligation to investigate documents outside the land register. It further denied having actual or constructive notice of any competing interest by the Kenya Railways Corporation or its predecessors in title. 8. The appellant pleaded that it lawfully registered the charge after complying with all legal requirements and, upon the chargor's default, validly exercised its statutory power of sale and transferred the property to the 3rd respondent. It maintained that it was a holder of a valid legal charge without notice of any illegality and that, having already passed title to a subsequent purchaser, the orders sought could not issue against it. The appellant further denied that the 1st respondent was entitled to the orders sought, contending that the 1st respondent lacked locus standi, had failed to prove any fraud or illegality on the appellant's part, and that the allegations were speculative and unsupported by evidence. It also averred that the remedies sought were inconsistent with the provisions of the Registered Land Act. 9. The 3rd respondent led a statement of defence dated 5th August, 2009. It averred that the suit property was lawfully sold to it by public auction after being advertised in the Daily Nation, where it successfully bid for the property at Kshs. 3,340,000. It subsequently entered into a sale agreement with the appellant, paid the full purchase price through the appointed auctioneers, and acquired the property following the appellant's exercise of its statutory power of sale. The 3rd respondent further contended that the Kenya Railways Corporation had acknowledged private ownership of the suit property by seeking a refund of rates previously paid on the property. It also maintained that it had consistently paid the requisite land rent and rates to the Government in respect of the suit property. It denied any illegality on its part and maintained that it was a bona de purchaser for value whose title was protected and indefeasible under the Registered Land Act. It contended that the suit against it was malicious, misconceived, bad in law, and an abuse of the court process. 10. By a statement of defence dated 11th December, 2009, the 4th respondent admitted that he had served as Commissioner of Lands until 1999. He contended that the suit against him was fatally defective as it disclosed no cause of action against him in his personal capacity, and further asserted that the allegations were false, malicious, and injurious to his reputation. The 4th respondent denied personal knowledge of the suit property or its historical ownership and maintained that he was not engaged in the business of buying, selling or allotting land in his private capacity. He averred that, during his tenure as Commissioner of Lands, he faithfully discharged his statutory duties under the Government Lands Act and explained that public land vested in the Government, with radical title held by the President in trust for the people. He further stated that the Commissioner of Lands merely implemented the President's delegated authority in the allocation and administration of public land and did not independently confer proprietary interests. 11. The 4th respondent outlined the statutory process for alienation of unalienated Government land, including preparation and circulation of a Part Development Plan, physical planning, survey, title preparation and approval by the relevant authorities. He maintained that the Commissioner of Lands merely facilitated the process and that leases issued over Government land did not divest the Government of the parent title. He denied any knowledge of fraud or illegality in relation to the suit property or its conveyance. Lastly, the 4th respondent contended that the suit was brought in bad faith, accusing the 1st respondent of failing to join the Kenya Railways Corporation, which it claimed to be the true owner of the property, as a party to the proceedings. 12. The case was heard by way of viva voce evidence. PW1, Wilson Francis Ojonjo, a land surveyor with the Survey of Kenya, testied that his duties included verifying the technical correctness of survey work https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 3

page 3 of 10

undertaken by both public and private surveyors before it is used in processing land titles. In 2012, he was requested by the Ethics and Anti-Corruption Commission (EACC) to examine records relating to parcel No. Kisumu Municipality/Block 7/411 (suit property). He testied that the suit property had been excised from Kisumu Municipality/Block 7/365, which formed part of Kenya Railways Corporation land. He produced the original survey map, F.R. No. 43/53, showing the railway land, and a Registry Index Map (RIM) depicting the subdivisions created from parcel No.365. He further stated that following instructions from the Commissioner of Lands, the Survey of Kenya removed all parcels that had been carved out of Block 7/365 and restored them to the title of the mother parcel of land. According to him, the land remained Kenya Railways property, and all subdivisions created from it had been removed. 13. PW2, Judith Akinyi Olewe, a Senior Plans Records Ocer at the Ministry of Lands, adopted her written statement as her evidence. She testied that she was responsible for the custody and management of map and plan records, which are used to ascertain the status of land by reference to development plans, PDPs, Registry Index Maps (RIMs), topo-cadastral maps and survey plans. Following inquiries by the Ethics and Anti- Corruption Commission, she examined the records relating to various parcels of land within Kisumu Municipality Block 7, including the suit property Block 7/411. She conrmed that, according to the ocial worksheet, formerly a Registry Index Map, all the listed parcels of land, including Block 7/411, fell within land belonging to Kenya Railways Corporation. 14. PW3, Victor Wahome, the Survey Manager at Kenya Railways Corporation, testied that he was responsible for survey work, land registration, enquiries, and management of land records belonging to the Corporation. He stated that the suit property formed part of Kenya Railways Corporation land originally reserved for railway purposes and whose ownership successively vested in the East African Railways and Harbours Administration, the East African Railways Corporation, and ultimately the Kenya Railways Corporation, pursuant to Legal Notice No. 440 of 1963, Legal Notice No. 20 of 1969, and Legal Notice No. 24 of 1986, respectively, which he produced in evidence. 15. PW3 testied that parcel No. Kisumu Municipality/Block 7/365 was the mother title from which the suit property was excised. Upon discovering that titles had been issued over Kenya Railways land without its consent, Kenya Railways Corporation wrote to the Commissioner of Lands seeking revocation of those titles. He stated that the Commissioner subsequently informed Kenya Railways Corporation that the titles had been cancelled, and Gazette Notice No. 15577 of 26th November, 2011, revoked the titles. Thereafter, Kenya Railways undertook a resurvey to consolidate the parcels of land into Kisumu Municipality/Block 7/567, paid the requisite fees, and was issued with a certicate of lease on 24th February, 2014. He produced, among other documents, the legal notices, a green card for the mother title, correspondence with the Commissioner of Lands, the block plan, and the certicate of lease. PW3 further testied that the suit property had always remained in the occupation and possession of Kenya Railways notwithstanding the issuance of titles to private individuals. 16. PW4, Joseph Kirago Kariuki, a Land Administration Ocer with the National Land Commission and formerly with the Commissioner of Lands, testied that his duties included land allocation, processing leases, and other land administration functions. He stated that, following investigations by the EACC, his oce established that parcel No. Kisumu Municipality/Block 7/411 had been carved out of land reserved for Kenya Railways and allocated to a private individual. PW4 explained the procedure for allocation of public land, namely receipt of an application, verication that the land is available for allocation, recommendation by the relevant land ocer, approval by the Commissioner of Lands, and subsequent allocation. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 4

page 4 of 10

17. He testied that, although the procedural steps for allocation were generally followed in respect of the suit property, the land ocer overlooked the fact that the suit property had already vested in Kenya Railways Corporation, and that the Corporation had neither surrendered nor consented to its allocation. Consequently, it was resolved that all allocations made over Block 7 be cancelled, the land resurveyed, and consolidated and registered in the name of Kenya Railways as Kisumu Municipality/Block 7/567. He produced documents relating to the consolidation, letter of allotment, survey instructions, and the certicate of lease issued to Kenya Railways. PW4 further testied that a review of the records conrmed that the suit property had been reserved for Kenya Railways and had been allocated by mistake. 18. The appellant called, Paul Ndegwa (DW1), the Branch Manager of Transnational Bank's Eldoret branch, who testied on behalf of the bank. He stated that in November 1990, the 2nd respondent obtained a loan of Kshs. 3,000,000/= from the bank's predecessor, Transnational Finance Company Ltd, secured by a charge over parcel No. Kisumu Municipality/Block 7/411 (suit property). According to the bank's records, the 2nd respondent held a valid Certicate of Lease issued on 23rd March, 1990, and before registering the charge, the appellant conducted all necessary due diligence and conrmed that he was the registered proprietor. He maintained that under the Registered Land Act, the appellant was not required to investigate how the title had been acquired or examine records outside the land register, and it was entitled to rely on the ocial land records and lease executed by the 2nd and 4th respondents, believing them to be genuine government documents. 19. DW1 further testied that all subsequent transactions concerning the suit property, including the registration and discharge of the charge, the transfer to the 3rd respondent, and the issuance of a Certicate of Lease to the 3rd respondent, were duly processed and registered by the Kisumu Land Registry without objection, thereby giving them legal validity. He asserted that the 1st respondent had failed to prove that the land was vested in the General Manager of East African Railways or that the impugned transactions were fraudulent, noting that the Land Registrar had not even been joined to the suit to explain the alleged irregularities. He added that the President and the Commissioner of Lands had statutory authority under the Government Lands Act to issue grants and execute conveyances on behalf of the Government. He therefore maintained that the Commissioner acted within the law, that all transactions relating to the suit property were lawful, and that the 1st respondent’s suit was without merit. 20. DW2, Navinchandra Lalji Shah, a director of the 3rd respondent, adopted his replying adavit dated 17th July, 2009, as his evidence-in-chief. He testied that the suit property was advertised for sale by public auction in the Daily Nation on 25th October, 1995, and sold at a public auction held on 21st November, 1995. The 3rd respondent successfully bid for the property at Kshs. 3,340,000/=, entered into a sale agreement with the appellant, paid the full purchase price, and was thereafter issued with a Certicate of Lease. He averred that since acquiring the property in 1996, the 3rd respondent had continuously paid land rent and rates to the Government. 21. At the conclusion of the trial, Ombwayo J. in a judgment dated 28th February, 2020, found that the suit property formed part of land reserved for Kenya Railways Corporation. The learned Judge held that the Commissioner of Lands lacked authority to alienate or allocate land already reserved for Kenya Railways. Consequently, the learned Judge found that the initial grant and lease issued by the 4th respondent to the 1st respondent were unlawful and void ab initio. He further held that the subsequent charge in favour of the 2nd respondent, the exercise of the statutory power of sale, the transfer to the 3rd respondent, and the issuance of a certicate of lease to the 3rd respondent were equally invalid because they were founded on an illegal title. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 5

page 5 of 10

22. Accordingly, the trial court ordered rectication of the land register by cancelling the lease and certicate of lease issued to the 3rd respondent so as to restore the property to Kenya Railways Corporation. It further ordered the appellant to refund the 3rd respondent KShs. 3,300,000/=, being the purchase price paid at the auction, together with interest from the date of ling the suit. 23. Dissatised with this decision, the appellant lodged the instant appeal before us. It challenged the impugned decision on grounds that the learned judge erred: by determining unpleaded issues and awarding the 3rd respondent a refund of the purchase price that had neither been pleaded nor sought; by granting reliefs that were not prayed for and awarding Kshs.3,300,000/= to the 3rd respondent despite the absence of a notice of claim under Order 1 Rule 24 of the Civil Procedure Rules; by failing to nd that the 3rd respondent had actual and/or constructive notice that the suit property was public land at the time of purchase, thereby rendering the doctrine of caveat emptor applicable; by taking into account irrelevant and extraneous considerations while failing to consider relevant factors in ordering the refund of the purchase price. In the premises, the appellant urged us to allow the appeal and vary the impugned judgment by setting aside the order directing the appellant to refund Kshs. 3,300,000 to the 3rd respondent. 24. When the appeal came up for hearing, it was brought to the Court's attention that the 2nd and 4th respondents had since died. The appellant accordingly elected to withdraw the appeal against the said respondents. 25. The appeal was heard by way of written submissions with brief highlights made during the plenary hearing. The rm of M/s Kalya and Co. Advocates was on record for the appellant. Ms Chesoo, counsel for the appellant submitted that the trial court erred in directing the appellant to refund the 3rd respondent the purchase price of Kshs. 3,300,000/= because the issue had neither been pleaded nor proved. She argued that the suit before the Environment and Land Court (ELC) concerned the legality of the alienation of the suit property and rectication of the register, and that none of the defendants, including the 3rd respondent, had pleaded or sought a refund from the appellant. By granting a refund, the court determined an unpleaded issue, thereby denying the appellant an opportunity to respond and violating the principles of fair hearing and natural justice. 26. Counsel for the appellant further contended that the evidence on record did not justify the order of refund. She submitted that the 3rd respondent neither adduced evidence nor pleaded a claim for reimbursement against the appellant, but merely defended its title as a bona de purchaser. She argued that the 3rd respondent purchased the property through a public auction after conducting due diligence, was aware that the property had been reserved for Kenya Railways Corporation, continued to assert ownership despite the dispute, and therefore could not invoke the doctrines of innocence or bona de purchase to recover the purchase price. She maintained that the trial court improperly ignored evidence demonstrating the 3rd respondent's knowledge of the property's status and failed to consider the doctrines of caveat emptor, estoppel and accountability. 27. Counsel for the appellant also argued that, if any public authority bore responsibility for the unlawful allocation, it was the Kenya Railways Corporation and the Government ocials involved in the initial alienation, not the appellant. It maintained that Kenya Railways had, over the years, acknowledged and acquiesced in the private ownership of the suit property, failed to take timely corrective action despite knowledge of the allocation, and thereby contributed to the chain of events culminating in the auction and subsequent transfer of the suit property. In those circumstances, it was inequitable to hold the appellant solely liable while absolving the parties whose omissions facilitated the impugned transactions. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 6

page 6 of 10

28. In rebuttal, counsel for the 3rd respondent, Mr. Maganga, submitted that the appeal merely challenged the trial court's exercise of judicial discretion in ordering the appellant to refund the purchase price of the suit property. He argued that an appellate court should not interfere with that discretion unless it was shown that the trial judge misdirected himself in law, misapprehended the facts, took into account irrelevant considerations, failed to consider relevant matters, or reached a plainly wrong decision. 29. Counsel contended that it was undisputed that the 3rd respondent purchased the suit property from the appellant at a public auction conducted pursuant to the appellant's statutory power of sale. Since the trial court found that the appellant had unlawfully charged and sold land reserved for Kenya Railways Corporation, it correctly held the appellant liable to refund the purchase price of Kshs. 3,300,000/= together with interest. He urged that although unjust enrichment had not been expressly pleaded, the trial court was entitled to apply that equitable principle to prevent the appellant from retaining the purchase price after the sale had been declared illegal and the title cancelled. 30. Counsel for the 3rd respondent further submitted that the trial court correctly found that the suit property was public land reserved for Kenya Railways and was therefore unavailable for alienation without prior degazettement. Consequently, the appellant could not rely on the illegality of the transaction to avoid refunding the purchase price, as this would amount to asking the Court to enforce an illegal transaction contrary to the legal maxim of ex turpi non oritur actio. 31. Counsel further argued that the appellant's contention that the 3rd respondent had actual or constructive notice that the suit property was public land was unsupported by evidence. He maintained that the 3rd respondent was a bona de purchaser for value without notice, having acquired the property through a public auction conducted by the appellant in exercise of its statutory power of sale. It submitted that the appellant had warranted the validity of the title oered as security and could not now rely on the illegality of its own title to defeat the 3rd respondent's entitlement to a refund. He invited us to dismiss the appeal for lack of merit. 32. The 1st respondent did not appear in Court during the plenary hearing of the appeal though served. 33. We are alive to our mandate as a rst appellate court, which was well stated in Selle and Another v. Associated Motor Boat Co. Ltd [1968] E.A. 123, where the Court observed as follows: “ An appeal to this Court from a trial by the High Court is by way of a retrial and the principles upon which this Court acts in such an appeal are well settled. Briey put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions, though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this Court is not bound necessarily to follow the trial judge’s ndings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mhamed Sholan, (1955) E.A.C.A. 270)”. 34. Having re-evaluated the grounds of appeal, record of appeal, as well as submissions by the parties, the principal issue that falls for determination by this Court is whether the learned Judge erred in directing the appellant to refund the purchase price to the 3rd respondent after declaring the auction sale and the resulting title with respect to the suit property null and void. 35. The appellant’s main bone of contention is that the refund was founded on an unpleaded issue and amounted to a relief that had not been sought by the 3rd respondent. The appellant further faulted the https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 7

page 7 of 10

learned Judge of the ELC for granting the relief in the absence of a notice under Order 1 Rule 24 of the Civil Procedure Rules, and maintained that, in any event, the 3rd respondent purchased the suit property with actual or constructive notice that it formed part of Kenya Railways Corporation land. 36. It is trite law that parties are bound by their pleadings and that a court should ordinarily determine only those issues that arise therefrom. The purpose of pleadings is to dene the issues in controversy and to aord each party fair notice of the case it is required to meet. This Court in Independent Electoral and Boundaries Commission & another v Mule & 3 others [2014] KECA 890 (KLR) observed that: “ …parties are bound by their pleadings which in turn limits the issues upon which a trial court may pronounce.” See also the decision of the Supreme Court in Obado v Oyugi & 2 others [2014] KESC 22 (KLR). 37. There is, however, exception to this general rule. Courts have long recognized that where an issue, though not expressly pleaded, is left to the court for determination, and has been fully canvassed by the parties without objection from any of the parties, the court is entitled to consider and determine it in the interest of justice. In Odd Jobs v Mubia [1970] EA 476, the former East African Court of Appeal stated that a court may base its decision on an unpleaded issue if it appears from the course followed at the trial that the issue was left to the court for decision. The said court held thus: “ … a trial court may frame issues on a point that is not covered by the pleadings but arises from the facts stated by the parties or their advocates, and on which a decision is necessary in order to determine the dispute between the parties.” 38. This Court in Kivungi v Mangenge [2024] KECA 1755 (KLR) expressed itself as follows: “ We adopt the approach taken in Kinyanjui Kamau vs. George Kamau Njoroge [2015] eKLR, where this Court expressed as follows: “ Parties are indeed bound by their own pleadings…Of course if an issue arises in the course of hearing, and the same is fully canvassed by the parties, then even if that issue was not pleaded, then the court will make a determination on the matter. As was held in Odd Jobs v Mubia [1970] EA 476, “a court may base its decision on an unpleaded issue if it appears from the course followed at the trial that the issue has been left to the court for decision.” In the circumstances of this case, and because the matter of payment of the deposit of Kshs.540,000.00 was referred to in the pleadings and in the witness statements; and considering the respondent admitted receiving that deposit; and since the parties alluded to the matter in their submissions; and bearing in mind that the respondent stated that following default by the appellant in tendering the balance of the purchase price, she sold the property to a third party, we take the view that the matter of refund of the deposit was a matter before the trial court under the Odd Jobs principle and the learned Judge should have granted that relief.” 39. Applying the principle to the present appeal, we are unable to agree with the appellant that the learned Judge determined a wholly foreign unpleaded issue. The evidence before the trial court unequivocally established that the appellant exercised its statutory power of sale over the suit property, sold it to the 3rd respondent at a public auction, received the purchase price of Kshs.3,300,000/=, and transferred the suit property to the 3rd respondent. Those facts were not merely incidental; they formed the very https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 8

page 8 of 10

foundation of the respective defences advanced by both the appellant and the 3rd respondent. Indeed, the appellant's own witness testied that the sale was lawfully conducted pursuant to a valid statutory power of sale, while the 3rd respondent's witness produced evidence of the public auction, the sale agreement, payment of the purchase price and the issuance of a certicate of lease. The legality and consequences of that sale were therefore central issues throughout the trial. 40. The learned Judge ultimately found that the original allocation of the suit property was void ab initio because the said property had at all material times remained reserved for Kenya Railways Corporation. Having so found, he further held that the charge created in favour of the appellant, the exercise of the statutory power of sale, and the subsequent transfer to the 3rd respondent were equally invalid. Those ndings have not been challenged on appeal before us. 41. Once those ndings were made, the question naturally arose as to the legal consequences of declaring the sale void. The learned Judge could not ignore the uncontroverted fact that the appellant had received Kshs. 3,300,000/= from the 3rd respondent under a transaction that the court had declared incapable of conferring any title. The order directing a refund was therefore not the determination of a new cause of action but a natural consequential remedy owing directly from the court's ndings on the validity of the said transaction. 42. We are equally unpersuaded by the appellant's contention that the absence of a notice under Order 1 Rule 24 of the Civil Procedure Rules precluded the learned Judge from making the impugned order. That provision governs claims for contribution or indemnity between defendants. The order made by the trial court was neither one for contribution nor indemnity. Rather, it was a direct consequence of the nding that the appellant had sold property over which no valid title existed, and had received the purchase price under a transaction that had been declared null and void. The rule therefore has no application in the circumstances of this case. 43. We also nd no merit in the appellant's reliance on the doctrine of caveat emptor. The trial court made a denitive nding that the suit property was public land reserved for Kenya Railways Corporation, and that every transaction founded upon the initial grant was null and void. Having accepted and retained the purchase price arising from a sale subsequently declared invalid, the appellant cannot invoke the doctrine of caveat emptor to defeat the purchaser's entitlement to restitution. 44. The appellant further contended that the 3rd respondent had actual or constructive notice that the suit property was public land. We are also alive to the learned Judge's observation that the defendants in suit before him ought to have known that the suit property was reserved for Kenya Railways Corporation. That nding, however, did not necessarily disentitle the 3rd respondent to restitution. It is common ground that the appellant exercised the statutory power of sale, received the purchase price from the 3rd respondent, and conveyed a title which the court ultimately found to be incapable of passing any interest in the suit land. In those circumstances, the learned Judge cannot be faulted for directing the appellant to restore the purchase price to the purchaser. To hold otherwise would permit the appellant to retain the benet of a transaction which the court had itself declared null and void. That would oend the equitable principle that no person should be unjustly enriched himself at another's expense. 45. In our view, the impugned judgment did not leave the appellant without recourse. The decision of the learned Judge merely restored to the 3rd respondent the purchase price paid under a sale declared void. It did not extinguish any contractual or other remedies that the appellant may have against the 2nd respondent arising from the loan transaction or the covenants contained in the charge instrument. However, since the appellant withdrew the appeal against the 2nd respondent following his demise, any issue concerning the appellant's rights or remedies against him is now not before us, and we refrain from expressing any concluded view thereon. https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 9

page 9 of 10

46. Finally, the refund order made by the learned Judge was an exercise of judicial discretion. It is settled that an appellate court will not interfere with the exercise of such discretion unless it is shown that the trial court misdirected itself in law, misapprehended the facts, took into account irrelevant considerations, failed to consider relevant matters, or that its decision is plainly wrong. In Chatur v Habib & 6 others [2025] KECA 1463 (KLR), this Court held thus: “ The latitude of an appellate court to upset a lower court’s exercise of discretion is circumscribed. On this, the Supreme Court in Sirma v Independent Electoral and Boundaries Commission & 2 others [2019] KESC 64 (KLR), reiterated: “ …. we arm that we would only interfere with the appellate court’s exercise of discretion if we reach the conclusion that in exercise of such discretion, the appellate court acted arbitrary or capriciously or ignored relevant facts or completely disregarded the principles of the governing law leading to an unjust order. Conversely, if we nd that the discretion has been exercised reasonably and judiciously, then the fact that we would have arrived at a dierent conclusion than the Court of Appeal is not a reason to interfere with the court’s exercise of discretion…” 47. We are not persuaded that any of those grounds have been established. The order of refund was a logical and equitable consequence of the court's declaration that the appellant's sale transferred no valid title, and that the 3rd respondent had consequently lost both the property and the purchase price. 48. We therefore nd no merit in any of the appellant's grounds of appeal. The learned Judge neither determined an issue outside the scope of the proceedings nor granted an impermissible remedy. Rather, he fashioned an appropriate consequential order to ensure that justice was done between the parties after declaring the impugned transaction null and void. We accordingly decline the invitation to interfere with the exercise of his discretion. The appeal is devoid of merit and is hereby dismissed with costs to the 3rd respondent. DATED AND DELIVERED AT KISUMU THIS 25TH DAY OF SEPTEMBER, 2026. H. A. OMONDI ............................. JUDGE OF APPEAL L. KIMARU ............................... JUDGE OF APPEAL L.A. ACHODE ............................. JUDGE OF APPEAL I certify that this is a true copy of original. Signed DEPUTY REGISTRAR https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1981/eng@2026-09-25 10

page 10 of 10