Environment & Land Case 642 of 2013

Case Metadata
Case Number:	Environment & Land Case 642 of 2013
Parties:	Gitukui v Njuguna & 3 others; Njoroge & 5 others (Interested Parties)
Date Delivered:	10 Nov 2022
Case Class:
Court:	Environment and Land Court at Nairobi
Case Action:	Judgment
Judge(s):	Samson Odhiambo Okong'o
Citation:	Gitukui v Njuguna & 3 others; Njoroge & 5 others (Interested Parties) (Environment & Land Case 642 of 2013) [2022] KEELC 14743 (KLR) (10 November 2022) (Judgment)
Court Division:	Environment and Land
County:	Nairobi
Disclaimer:	The information contained in the above segment is not part of the judicial opinion delivered by the Court. The metadata has been prepared by Kenya Law as a guide in understanding the subject of the judicial opinion. Kenya Law makes no warranties as to the comprehensiveness or accuracy of the information

Gitukui v Njuguna & 3 others; Njoroge & 5 others (Interested Parties) (Environment & Land Case 642 of 2013) [2022] KEELC 14743 (KLR) (10 November 2022) (Judgment)

Neutral citation: [2022] KEELC 14743 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Environment & Land Case 642 of 2013

SO Okong'o, J

November 10, 2022

Between

Grace Mugure Gitukui

Plaintiff

and

Margaret Njoki Njuguna

1^st Defendant

Julius Kiarie Muigai

2^nd Defendant

Kamiti Farmers Company Limited

3^rd Defendant

Commissioner of Lands

4^th Defendant

and

Simon Njuguna Njoroge

Interested Party

Peter Munene Ndegwa

Interested Party

Patricia Wanjiku Kihura

Interested Party

Wanjiku Kiarie

Interested Party

Ibrahim Kamau Njenga

Interested Party

Daniel Nderitu Gethenji

Interested Party

Judgment

1.The Plaintiff brought this suit by way of a plaint dated 27^th May 2013. The Plaintiff sought the following reliefs;1.Cancellation of the title held by 1^st and 2^nd Defendant in respect of all that parcel of land known as Nairobi/Block 117/513 (hereinafter referred to as “the suit property”) and the registration of the property in the name of the Plaintiff.2.A permanent injunction against all the Defendants restraining them from interfering with the suit property.3.General damages for trespass.4.Any other reliefs the Court may deem fit to grant.

2.The Interested Parties were added to the suit on 20^th March 2014 and granted leave to respond to the Plaintiff’s suit. The 1^st and 2^nd Defendants filed a joint statement of defence on 25^th July 2013 in which they denied the Plaintiff’s claim in its entirety. The 3^rd Defendant filed a statement of defence and counter-claim on 19^th June 2018. In its counter-claim, the 3^rd Defendant sought the following reliefs against the 1^st, 2^nd and 4^th defendants and the 1^st and 6^th Interested Parties (hereinafter referred to together as “the Defendants’ to the Counter-claim”);1.A declaration that the conduct of the Defendants to the counter-claim and in particular the purported sale/transfer of the suit property and the resultant Certificate of Title are tainted with fraud, illegality, impropriety, irregularity and corrupt scheme for which the 1^st to 4^th Defendants in the counter-claim are parties.2.An order for the Rectification of the title to the suit property and/or the register thereof by cancellation of the name of the 1^st and 2^nd Defendants in the counter-claim, if at all and the restoration of the 3^rd Defendant as the duly registered owner of the suit property.3.A permanent injunction restraining the 1^st to 4^th Defendants in the counter-claim whether by themselves, their agents, officers, nominees and /or whosoever from entering, encroaching, selling, advertising, transferring, alienating and/or otherwise dealing with the suit property.4.General damages for fraud, deceit, illegality and obtaining registration of the suit property by false pretences.5.Any other order the court may deem fit to grant.6.Costs of the suit and counter-claim.

3.The 1^st and 2^nd Defendants filed a defence to the 3^rd Defendant’s counter-claim on 9^th July 2018. The Interested Parties did not respond to the claim by the Plaintiff neither did they file a defence to the 3^rd Defendant’s counter-claim against them.

The Plaintiff’s case:

4.The Plaintiff averred that she was allocated the suit property by the 3^rd Defendant on 29^th September 2001 after paying a sum of Kshs. 250,000/- and being issued with a receipt for the same. The Plaintiff averred that sometime in April 2013, officers from the provincial administration threatened to evict her from the suit property claiming that the property was registered in the name of the 1^st and 2^nd Defendants who held a Certificate of Lease dated 17^th September 2012 in respect thereof. The Plaintiff averred that she had never transferred the suit property to anyone and that any transfer relating to the suit property was fraudulent and illegal. The Plaintiff pleaded several particulars of fraud against the Defendants. At the trial, the Plaintiff gave evidence as PW1. The Plaintiff adopted her witness statement dated 12^th June 2018 as her evidence in chief and produced her bundle of documents as exhibits.

5.In her witness statement, the Plaintiff stated as follows: She was a bona fide shareholder of the 3^rd Defendant. Sometime in September 2001, she purchased the suit property from the 3^rd Defendant after being informed about the availability of plots for sale by the 3^rd Defendant. She paid Kshs. 250,000/- to the 3^rd Defendant and was issued with a receipt. In addition, she was issued with a certificate of ownership of the property and an introduction letter by the 3^rd Defendant. She enjoyed quiet possession of the suit property until April 2013 when provincial administration sought to evict her therefrom.

6.She was informed by those who sought to evict her from the suit property that the property belonged to the 1^st and 2^nd Defendants who had a Certificate of Lease in respect of thereof. She was further informed that the suit property was allocated to the 1^st and 2^nd Defendants at the 3^rd Defendant’s Annual General Meeting held in 2005. The Plaintiff stated that as a member of the 3^rd Defendant, she had no knowledge of the said meeting. The Plaintiff stated that the suit property could not have been sold or allocated to the 1^st and 2^nd Defendants in 2005 as it already belonged to the Plaintiff. She stated that the people who signed the purported transfer in favour of the 1^st and 2^nd Defendants on behalf of the 3^rd Defendant were not bona fide directors of the 3^rd Defendant. She stated that the issue of directorship of the 3^rd Defendant was settled in ELC No. 300 of 2013. The Plaintiff stated further that the 1^st and 2^nd Defendants were not bona fide shareholders of the 3^rd Defendant. She stated that the purported transfer of the suit property to the 1^st and 2^nd Defendants and the resultant title issued to them were fraudulent and unlawful.

7.On cross-examination by the 1^st and 2^nd Defendant’s advocates, the Plaintiff stated that she did not follow up on the transfer of the suit property to her name due to lack money and the stroke that she had suffered. The Plaintiff stated further that she was also a director of the 3^rd Defendant.

8.On cross-examination by the 3^rd Defendant’s advocate, she stated that she paid for the suit property at the 3^rd Defendant’s offices which were located behind Kenyatta University. She stated that she got to know of the sale during a meeting of the 3^rd Defendant. She stated further that she paid for the property in cash and was issued with a receipt. The original receipt was shown to the court. She reiterated that she did not effect the transfer of the property to her name because of financial constraints. When shown the transfer that was executed in favour of the 1^st and 2^nd Defendants, she stated that the people who executed the transfer on behalf of the 3^rd Defendant were Simon Njuguna and Gethenji, the 1^st and 6^th Interested Parties who were fraudsters and had never been directors of the 3^rd Defendant. She stated that the 1^st Defendant who was one of the transferees was the wife of Simon Njuguna, the 1^st Interested Party while the other was the 2^nd Defendant who was not a shareholder of the 3^rd Defendant.

9.On cross-examination by advocate for the Interested Parties, the Plaintiff stated that she was a director of the 3^rd Defendant but was not one during the purchase of the suit property. She stated that when she bought the suit property, those who were present were; Mbugua Kariuki, Chege, Alice Ndichu, Kimani, Esther Njeri and Wairimu. She stated that she would not have been issued with a receipt if she had not paid for the suit property. In conclusion she stated that the people who signed the transfer in favour of the 1^st and 2^nd Defendants were fraudsters and not directors of the 3^rd Defendant.

The 1^st and 2^nd Defendants’ case:

10.In their statement of defence, the 1^st and 2^nd Defendants averred that they were members/shareholders of the 3^rd Defendant and that they were lawfully allotted the suit property in an open and transparent process and eventually issued with a title on 17^th September 2012. They have averred that they were not aware of any allocation of the same property to the Plaintiff. The 1^st and 2^nd Defendants averred further that the plots owned by the 3^rd Defendant were not for sale to third parties. They contended that the Plaintiff was not a member of the 3^rd Defendant and her name did not appear in the list of allottees dated 4^th January 2005.

11.The 1^st and 2^nd Defendants stated that the Plaintiff lived on a neighbouring plot and had put up a makeshift structure on the suit property to support her claim in this suit. At the trial, the 2^nd Defendant, Julius Kiarie Muigai testified as DW2 on his own behalf and on behalf of the 1^st Defendant. He adopted his witness statement as his evidence in chief and produced the 1^st and 2^nd Defendants’ bundle of documents as exhibits. In his witness statement, he stated as follows: The 1^st and 2^nd Defendants were allocated the suit property at a meeting of the 3^rd Defendant that was held in 2005. Since there were fewer plots compared to the number of shareholders, the plots were allocated to groups rather than individual shareholders. Their group agreed that the 1^st and 2^nd Defendants should be issued with the title deed. They got the title and sought to develop the suit property but they faced opposition from the Plaintiff. He stated that the plots could not have been put up for sale as the shareholders had not passed a resolution to that effect.

12.On cross-examination by the Plaintiff’s advocate, he stated that he had a share certificate but it was neither in his bundle of documents nor did he carry it to Court. He stated that he attended the 3^rd Defendant’s Annual General Meeting of 2005 although he was not a shareholder. He stated that he attended the meeting on behalf of his mother who was a shareholder. He admitted that the name in the minutes of those who attended the meeting was that of his wife and not his. He also admitted that although he was allegedly allotted the suit property in 2005, the receipts for the payments that he made were issued to him in 2012. He stated that the suit property was transferred to them by the 1^st and 6^th Interested Parties on behalf of the 3^rd Defendant. He stated that the Plaintiff found them on the suit property but prevented them from developing it. He stated that the Plaintiff had put up a temporary structure on the property which was eaten away by termites leaving the suit property vacant.

13.On cross-examination by the 3^rd Defendant’s advocate, he stated as follows: The Plaintiff and 1^st Defendant were his neighbours and co-shareholders in the 3^rd Defendant. The 1^st Interested Party was the husband of the 1^st Defendant and the chairman of the 3^rd Defendant. He (2^nd Defendant) became a shareholder of the 3^rd Defendant after the death of his mother. His mother transferred her shares to him in 2010 just before her death. He attended the 2005 meeting on behalf of his mother. The meeting was called by the 1^st Interested Party and a notice for the same was issued. He was allocated the suit property on behalf of his mother who was very old. The minutes of the 2005 Annual General Meeting were taken by the 6^th Interested Party. He conceded however that neither his name nor that of the 6^th Interested Party were on the list of attendees of the said meeting.

14.He stated that the allocation of the plots by the 3^rd Defendant was done at the discretion of the directors. He stated that they did not pay for the allocation. When asked about the sum of Kshs. 850,000/- indicated in the transfer as consideration, he stated that it was not paid by them. He conceded further that the transfer dated 20^th April 2012 did not contain the 3^rd Defendant’s seal although it was signed by the 1^st and 6^th Interested Parties. He also conceded that he had no evidence that the 1^st and 6^th Interested Parties were directors of the 3^rd Defendant.

15.On cross-examination by the advocate for the Interested Parties, he stated that the 1^st Interested Party signed a number of documents as a director of the 3^rd Defendant. He clarified that there was indication that he replaced his mother as a shareholder of the 3^rd Defendant. He stated that his mother who died in 2015 had already made payment to be a shareholder of the 3^rd Defendant and that explained why they did not make any payment for the suit property. The 2^nd Defendant reiterated that since the commercial plots were few, they were allocated to groups and that the other members of their group agreed that the suit property be registered in his and the 1^st Defendant’s name to hold in trust.

The 3^rd Defendant’s case:

16.In its statement of defence and counter-claim dated 14^th June 2018, the 3^rd Defendant averred as follows: The Plaintiff was a bona fide shareholder of the 3^rd Defendant and the lawful owner of the suit property having bought the same from the 3^rd Defendant for valuable consideration. The purported transfer of the suit property to the 1^st and 2^nd Defendants was fraudulent and illegal as the persons who were claimed to have executed the transfer on behalf of the 3^rd Defendant were not bona fide directors of the 3^rd Defendant. The 3^rd Defendant recognized only the Plaintiff as the owner of the suit property. The 3^rd Defendant contended that the purported transfer of the suit property to the 1^st and 2^nd Defendants was of no legal consequence.

17.It its counter-claim, the 3^rd Defendant averred that it was a public land buying and selling company. It was the owner of the original parcel of land that gave rise to the suit property upon subdivision. It sold the suit property to the Plaintiff in 2001 for Kshs. 250,000/-. It never sold the suit property to the 1^st and 2^nd Defendants. The people who witnessed the purported transfer to the 1^st and 2^nd Defendants were impostors with no authority to act on behalf of the 3^rd Defendant. The transaction was illegal and fraudulent.

18.At the trial, Michael Chege Mwangi testified as DW1 on behalf of the 3^rd Defendant. He adopted his witness statement as his evidence in chief. In his witness statement, DW1 stated as follows: He was the duly elected vice chairman of the 3^rd Defendant which was a public land buying and selling company. The 3^rd Defendant was the original owner of the parent title of the suit property. As per the 3^rd Defendant’s records, the suit property was sold to the Plaintiff in 2001. The 3^rd Defendant never sold the suit property to the 1^st and 2^nd Defendants. DW1 stated further that the people who witnessed the execution of the purported transfer of the suit property to the 1^st and 2^nd Defendants were not directors of the 3^rd Defendant as per the records held by the Registrar of Companies. He stated that the purported transfer of the suit property to the 1^st and 2^nd Defendants was fraudulent and illegal and the Certificate of Lease held by them should be cancelled.

19.On cross-examination by the Plaintiff’s advocate, DW1 confirmed that the Plaintiff was a shareholder of the 3^rd Defendant and that she held a share certificate. On being shown the list dated 4^th January 2005 through which the 1^st and 2^nd Defendants were purportedly allocated the suit property, he stated that he was a stranger to it. He stated that the list was not signed by directors of the 3^rd Defendant. On being shown share certificate No. 0468 dated 11^th July 2012 that was allegedly issued by the 3^rd Defendant to the 1^st and 2^nd Defendants and others, he stated that it was neither issued by the 3^rd Defendant nor signed by it. On being shown a letter dated 26^th August 2012 through which the 3^rd Defendant allegedly acknowledged the 1^st and 2^nd Defendants as the owners of the suit property, he stated that the letter head was not that of the 3^rd Defendant and the letter was signed by Simon Njoroge, the 1^st Interested party who was not the chairman of the 3^rd Defendant at the material time.

20.On cross-examination by advocate for the 1^st and 2^nd Defendants, DW1 stated that the dispute over the leadership of the 3^rd Defendant was resolved by the Court. He stated that he was a director of the 3^rd Defendant in 2001 but had no proof of the same. He confirmed that the receipt dated 29^th September 2001 in the name of the Plaintiff was signed by the chairman of the 3^rd Defendant the same as the Plaintiff’s share certificate. DW1 stated further that the transfer in favour of the 1^st and 2^nd Defendants was signed by the 1^st and 6^th Interested Parties who were shareholders and not officials of the 3^rd Defendant.

21.On cross-examination by advocate for the Interested Parties, DW1 stated as follows: He had been a shareholder and a director of the 3^rd Defendant since the 1990s albeit with breaks in between. He stated that he was last elected on 23^rd March 2011 in an election that was conducted by the Registrar of Companies. He stated that he did not see the court order that sought to stop the elections. He stated that the Registrar must have left the office by the time the Attorney General was served with the order.

The Interested Parties’ case:

22.The 1^st Interested Party testified as I.PW1. He adopted his witness statement as his evidence in chief. In his witness statement, he stated that:

23.He was a former director of the 3^rd Defendant who was forcefully removed from office. During his tenure, the 1^st and 2^nd Defendants and other shareholders of the 3^rd Defendant were allocated the suit property which was free and registered in the name of the 3^rd Defendant. He and another director of the 3^rd Defendant signed the transfer form in favour of the 1^st and 2^nd Defendants in their capacity as chairman and secretary respectively of the 3^rd Defendant. He stated that the transfer in favour of the 1^st and 2^nd Defendants was legal.

24.On cross-examination by the 1^st and 2^nd Defendant’s advocate, he stated that by 2013, the allocation of the suit property had been done and the 1^st and 2^nd Defendants issued with a title. On cross-examination by the 3^rd Defendant’s advocate, he stated that: He was a director of the 3^rd Defendant but had no evidence of it. With reference to ELC No. 300 of 2013 which was a case involving the 3^rd Defendant, he admitted that the Court recognized Mbugua Kariuki as the chairman of the 3^rd Defendant. He also noted that there was no official record recognizing him as a chairman of the 3^rd Defendant. He admitted that the 6^th Interested Party and he were not in the list of officials of the 3^rd Defendant as at 2011/2012 that was issued by the Registrar of Companies.

25.On his position as chairman of the 3^rd Defendant, I.PW1 stated that there was a Court order that allowed him to be chairman of the 3^rd Defendant. When questioned further, he stated that the order restrained some members from holding an AGM but it did not state that he was the chairman. He stated that he was not aware that Mbugua Kariuki had been declared the valid chairman of the 3^rd Defendant through a court order that was given in CMCC No. 622 of 2011.

26.On cross-examination by the Plaintiff’s advocate, he stated that the chairman of the 3^rd Defendant in 2001 was Mbugua Kariuki. He stated that he was not the chairman of the 3^rd Defendant in 2001 and was therefore not aware of the allocation of the suit property to the Plaintiff. He stated that that was why he allocated the same to the 1^st and 2^nd Defendants in 2005.

Submissions:

27.The Plaintiff filed her submissions on 9^th February 2022. The Plaintiff framed a number of issues for determination by the court. The first issue concerned the ownership of the suit property. The Plaintiff cited Sections 24 and 25 of the Land Registration Act and the cases of Kenya National Highway Authority v Shalien Masood Mughal & 5 others [2017] eKLR, Republic v City Council of Nairobi & 2 others [2014] eKLR and Tsuma Mwangala & 5 others v Julius Karisa Deche [2021] eKLR and submitted that she was the rightful owner of the suit property. The Plaintiff submitted that once she was issued with a certificate of ownership of the suit property by the 3^rd Defendant, the property could not to be sold to another party. The Plaintiff submitted that in ELC No. 300 of 2013, Justice Gacheru had affirmed that Mbugua Kariuki and not the people who purported to transfer the suit property to the 1^st and 2^nd Defendants was the rightful chairman of the 3^rd Defendant.

28.On the issue whether the Certificate of Lease issued by the 4^th Defendant to the 1^st and 2^nd Defendants was proper/regular or the same was procured through fraud/illegally, the Plaintiff cited the cases of Hubert L. Martin & 2 Others v Margaret J. Kamar & 5 Others [2016] eKLR and Magdalene Wanjiku Ndung'u v Jane Njoki Njuguna [2020] eKLR and submitted that a title can be impeached if its root is investigated and it is found to have been illegally acquired. The Plaintiff argued that the title in this suit was illegally acquired as the transfer form was signed by people who had no authority to act for the 3^rd Defendant in the transaction.

29.On whether the Certificate of Lease issued by the 4^th Defendant to the 1^st and 2^nd Defendants should be cancelled and the suit property registered in the Plaintiff’s name, the Plaintiff cited Magdalene Wanjiku Ndung'u (Supra) and submitted that the title should be cancelled since; the transfer was signed by people who did not have authority to act for the 3^rd Defendant, there were no evidence that the 1^st and 2^nd Defendants gave any consideration for the suit property, and there was no evidence that the meeting of 4^th January 2005 (the allotment meeting) ever happened.

30.The 3^rd Defendant filed its submissions on 17^th February 2022. It also framed several issues for determination. The first issue framed by the 3^rd Defendant was whether the Interested Parties together with the 1^st and 2^nd Defendants devised a corrupt and stealthy scheme to acquire the suit property by falsifying documents and instruments of the 3^rd Defendant. Relying on the cases of Merit Development Limited v Lenana Investment Limited & 2 others [2018] eKLR, Elijah Makeri Nyangwara v Stephen Mungai Njuguna & another [2013] eKLR and Rajendra Sanghani & another (Both Suing in their Capacities as Administrators of the Estate of Ratilal Gordhandas Sanghani) v Fairmile Investments Limited & another [2021] eKLR, the 3^rd Defendant submitted that a title acquired through fraud should be cancelled. The 3^rd Defendant submitted that the 1^st and 2^nd Defendant’s title was acquired through a transfer executed by people who had no authority to execute it. Furthermore, the meeting where the purported allocation was done was not attended by the bona fide chairman of the 3^rd Defendant, Mbugua Kariuki. It was also submitted that the 1^st and 2^nd Defendants did not challenge the directions given in ELC No. 300 of 2013 by Gacheru J. where the issue of directorship of the 3^rd Defendant was dealt with.

31.The second issue framed by the 3^rd Defendant was whether the 1^st and 2^nd Defendants together with the Interested parties obtained registration of the suit property in the names of the 1^st and 2^nd Defendants by falsely pretending that they were bona-fide purchasers/directors of the 3^rd Defendant with full authority to transfer the suit property. Relying on the Rajendra Sanghani Case (supra) and the directions given in ELC No. 300 of 2013, the 3^rd Defendant submitted that the Plaintiff had purchased the suit property in 2001. The 3^rd Defendant submitted that it had written to the 4^th Defendant in 2002 stating that the Plaintiff should be issued with a title. The 3^rd Defendant submitted that the Interested Parties and the 1^st and 2^nd Defendants therefore pretended to have authority to transfer the suit property to the 1^st and 2^nd Defendants.

32.The third issue framed by the 3^rd Defendant was whether the Certificate of Lease allegedly issued to the 1^st and 2^nd Defendants was crafted by the Interested Parties in unscrupulous ways. Relying on Section 24 of the Land Registration Act and the cases of Rajendra Sanghani (supra) and Daudi Kiptugen v Commissioner of Lands, Nairobi & 4 others [2015] eKLR, the 3^rd Defendant submitted that there was no evidence that the Certificate of Ownership that had been issued to the Plaintiff had been cancelled or was invalid. The Certificate of Lease issued to the 1^st and 2^nd Defendant was therefore illegal and should be cancelled.

33.The 1^st and 2^nd Defendants filed their submissions on 20^th April 2022. They submitted that the evidence of the Plaintiff and 3^rd Defendant had not disproved the fact that the 1^st and 2^nd Defendants were the registered owners of the suit property. They submitted that the Plaintiff and 3^rd Defendant only raised doubt on the validity of the process of acquisition. The 1^st and 2^nd Defendants submitted that such doubt was not enough to impeach a title. The 1^st and 2^nd Defendants submitted further that the directions issued in ELC No. 300 of 2013 were not relevant to this suit as by the time they were given, the Interested Parties had already made the transfer as the then rightful officials of the 3^rd Defendant. Their actions could not therefore be reversed by subsequent officials.

34.The Interested Parties filed their submissions on 21^st April 2022. The first issue that was framed by them for determination was whether the 1^st and 2^nd Defendants were the bona fide owners of the suit property. The Interested Parties submitted that the 1^st and 2^nd Defendants were allocated the suit property as shareholders and members of the 3^rd Defendant following a meeting that was held on 25^th September 2005. The Interested Parties submitted that the 1^st and 2^nd Defendants were in group 13 and group 2 in the list of allottees. The Interested Parties submitted that the Plaintiff was neither listed as a shareholder nor member of the 3^rd Defendant. The Interested Parties submitted that the 1^st and 2^nd Defendants were issued with a share certificate and thereafter with a Certificate of Lease. The Interested parties casted doubt on the documents produced by the Plaintiff in proof of her claim. They submitted that; the receipt produced by the Plaintiff did not have a certified stamp of the 3^rd Defendant, the plot ownership certificate did not have a date of issue and the Plaintiff did not produce a sale agreement.

35.The second issue framed for determination by the Interested Parties was whether the Interested Parties were duly elected officials of the 3^rd Defendant authorized to transact business on behalf of the 3^rd Defendant. The Interested Parties submitted that, firstly, the directions issued in ELC No. 300 of 2013 were not conclusive on the issue of directorship of the 3^rd Defendant and were relevant to that suit only. Secondly, the said directions were issued eight years after the Interested Parties had allotted the suit property to the 1^st and 2^nd Defendants. Thirdly, the CR12 form relied upon by the Plaintiff was issued illegally in that it was issued on 31^st May 2011 against the orders issued on 23^rd March 2011 in CMCC No. 622 of 2011. Fourthly, a letter issued by the Registrar of Companies dated 14^th January 2011 recognized the Interested Parties as the directors of the 3^rd Defendant.

36.The third issue framed for determination by the Interested Parties was whether the 1^st and 2^nd Defendants obtained the Certificate of Lease in respect of the suit property legally. Relying on Sections 24 and 25 of the Land Registration Act and the cases of Charles Karathe Kiarie & 2 others v Administrators of the Estate of John Wallace Mathare (Deceased) & 5 others [2013] eKLR, Daudi Kiptugen (Supra), Gichinga Kibutha v Caroline Nduku [2018] eKLR, Munyu Maina v Hiram Gathiha Maina [2013] eKLR and John Muchiri Mbuthia v Rebecca Were Mutanda & another [2015] eKLR, the Interested Parties submitted that the Plaintiff had not conducted due diligence before purchasing the suit property. The Interested Parties submitted that the Plaintiff was not issued with a letter of allotment by the Commissioner of Lands and that she had colluded with the 3^rd Defendant to fraudulently acquire the 1^st and 2^nd Defendants’ property.

Determination:

37.I have considered the pleadings, the evidence tendered by the parties and the closing submissions by the advocates for the parties. From the pleadings, I am of the view that the issues arising for determination in this suit are the following;1.Who is the rightful owner of the Suit Property as between the Plaintiff and the 1^st and 2^nd Defendants?2.Whether the 1^st and 2^nd Defendants’ title to the suit property should be cancelled.3.Whether the Plaintiff is entitled to the reliefs sought in the plaint.4.Whether the 3^rd Defendant is entitled to the reliefs sought in its counter-claim.5.Who is liable for the costs of the suit and the counter-claim.

Who is the rightful owner of the Suit Property as between the Plaintiff and the 1^st and 2^nd Defendants?

38.There are two competing claims of ownership of the suit property. The 1^st and 2^nd Defendants have claimed ownership of the suit property through a Certificate of Lease dated 17^th September 2012. They have claimed that they were issued with a share certificate following an allotment process conducted by the 3^rd Defendant before proceeding to process the title. The said allotment and title have been challenged by the Plaintiff and the 3^rd Defendant who have averred that the same were acquired fraudulently as the suit property had already been allocated to the Plaintiff by the 3^rd Defendant.

39.The Plaintiff’s case is that she purchased the suit property in 2001 from the 3^rd Defendant. She paid Kshs. 250,000 for it and was issued with a receipt, certificate of ownership and a letter of introduction addressed to the Commissioner of Lands. She produced these documents in evidence. The Interested Parties tried to cast doubt on the validity of these documents but I find that the veracity of the same was not shaken in cross-examination or through the evidence that was adduced by the 1^st and 2^nd Defendants and the Interested Parties. Firstly, while they have claimed that the receipt did not bear the stamp of the 3^rd Defendant, the 1^st and 2^nd Defendants did not convince me that stamping of receipts was a mandatory requirement of the 3^rd Defendant. Secondly, while it is true that the Plaintiff did not produced a sale agreement in evidence, she produced minutes of the 3^rd Defendant’s Board of Directors meeting that was held on 7^th September 2001 showing that the board of directors of the 3^rd Defendant agreed to put up some plots including the suit property for sale. She also testified that she would not have been issued with a receipt if she had not purchased and paid for the suit property. Thirdly, while the Interested Parties have contended that the Plaintiff’s ownership certificate did not have a date of issue, they have not persuaded me that the said date was a material part of the document so as to cast doubt on the validity of the certificate. No evidence was produced before the court showing that dates were required in such certificates.

40.The 1^st and 2^nd Defendants have also contended that the Plaintiff’s evidence did not disprove their status as the registered owners of the suit property and that it only casted doubt on the validity of the process of acquisition of the property. In Munyu Maina v Hiram Gathiha Maina(supra), the Court of Appeal stated as follows:“We state that 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. It is this instrument of title that is in challenge and the registered proprietor must go beyond the instrument and prove the legality of how he acquired the title and show that the acquisition was legal, formal and free from any encumbrances including any and all interests which need not be noted on the register.”In Daudi Kiptugen v Commissioner of Lands & 4 Others (supra), the court stated that:“…the acquisition of title cannot be construed only in the end result; the process of acquisition is material. It follows that if a document of title was not acquired through a proper process, the title itself cannot be a good title. If this were not the position then all one would need to do is to manufacture a Lease or a Certificate of title at a backyard or the corner of a dingy street, and by virtue thereof, claim to be the rightful proprietor of the land indicated therein.”

41.In Hubert L. Martin & 2 Others v Margaret J. Kamar & 5 Others(supra), the court stated as follows:“A court when faced with a case of two or more titles over the same land has to make an investigation so that it can be discovered which of the two titles should be upheld. This investigation must start at the root of the title and follow all processes and procedures that brought forth the two titles at hand. It follows that the title that is to be upheld is that which conformed to procedure and can properly trace its root without a break in the chain… Every party must show that their title has a good foundation and passed properly to the current title holder. With the nature of case at hand, I will need to embark on investigating the chain of processes that gave rise to the two titles in issue as it is the only way I can determine which of the two titles should be upheld.”

42.In view of the foregoing, having considered how the Plaintiff acquired the suit property, it is necessary to consider how the 1^st and 2^nd Defendants acquired title to the suit property. The 1^st and 2^nd Defendants have contended that the suit property was allocated to them as shareholders of the 3^rd Defendant in a meeting of the 3^rd Defendant held in 2005. However, their own evidence and that of the Interested Parties cast doubt on this claim. Firstly, the names of the 2^nd Defendant and the 6^th Interested Party who was said to have taken the minutes of the said meeting do not appear on the list of attendees. The 2^nd Defendant claimed that he attended the meeting on behalf of his old mother but his name was not on the list of those who attended the meeting as proxies. I.PW1 testified that the list of shareholders was corrected to include the 2^nd Defendant. However, while the annexure containing the list is dated 24^th September 2005, the stamp of the 3^rd Defendant therein was put on 4^th July 2013 which casts serious doubt on the genuineness of the document. This is clearly an afterthought as the suit herein was filed on 30^th May 2013. Secondly, the 1^st and 2^nd Defendants claimed that the plots were allocated to groups because there were a few of them. However, they could not satisfactorily explain why the Plaintiff was not in any group although they admitted that she was a shareholder of the 3^rd Defendant. While in their pleadings and submissions the 1^st and 2^nd Defendants stated that the Plaintiff was not a shareholder of the 3^rd Defendant, during the hearing they admitted that she was one of the shareholders of the 3^rd Defendant. The foregoing casts doubt on the allocation process they have sought to rely on.

43.The 1^st and 2^nd Defendant also contended that by the time they were being allocated the suit property in 2005, they did not know that it had been allocated to the Plaintiff in 2001. The status of allotted plots was discussed in Kamau James Njendu v Serah Wanjiru & another [2018] eKLR as follows:“In the case of M’Ikiara M’Rinkanya & Another –v- Gilbert Kabeere M’Mbijiwe, (1982-1988) 1KAR 196, the court held that where there was a double allocation of land, the first allotment would prevail. That therefore there was no power to allot the same property again.”

44.In Republic v City Council of Nairobi & 3 others [2014] eKLR, the court stated as follows:“From the case as presented by the Applicant they no doubt had beneficial interest in the suit plot. As was held by Warsame, J (as he then was) in Rukaya Ali Mohamed vs. David Gikonyo Nambacha & Another Kisumu HCCA No. 9 of 2004 once an allotment letter is issued and the allottee meets the conditions therein, the land in question is no longer available for allotment since a letter of allotment confers absolute right of ownership or proprietorship unless it is challenged by the allotting authority or is acquired through fraud, mistake or misrepresentation or that the allotment was out rightly illegal or it was against public interest. In other words, where land has been allocated, the same land cannot be reallocated unless the first allocation is validly and lawfully cancelled.”

45.The 1^st and 2^nd Defendants and the Interested Parties have not proved that the sale and allocation of the suit property to the Plaintiff was fraudulent or was in any way illegal or against public interest or that it was lawfully cancelled by the 3^rd Defendant. While the Interested Parties have claimed to have been the directors of the 3^rd Defendant, I.PW1 admitted that he was not a director of the 3^rd Defendant in 2001 when the suit property was sold to the Plaintiff and that Mbugua Kariuki was the chairman of the 3^rd Defendant at the material time.

46.Based on the foregoing, I find that the sale and allocation of the suit property to the Plaintiff was lawful. Consequently, the suit property having been sold and allocated to the Plaintiff by the 3^rd Defendant in 2001 and the Plaintiff having accepted the allotment, paid for the same and taken possession of the property, the property was not available for allocation to the 1^st and 2^nd Defendants in 2005. The 1^st and 2^nd Defendants’ alleged lack of knowledge of the Plaintiff’s purchase of the property is immaterial.

47.In addition to the foregoing, the 1^st and 2^nd Defendants did not satisfactorily explain why the ownership/share certificate for land they were supposedly allocated in 2005 is dated 11^th July 2012 while the transfer of the suit property to them is dated 20^th April 2012. This means that the suit property was transferred to the 1^st and 2^nd Defendants even before they became shareholders of the 3^rd Defendant. The 1^st and 2^nd Defendants also claimed that the suit property was allocated to a group and that the group agreed that the property be registered in their names. They did not produce evidence of this agreement. They also failed to satisfactorily explain the sum of Kshs. 850,000 that is stated as consideration in the transfer of lease. The 3^rd Defendant’s witness stated that the 3^rd Defendant did not receive the said sum of Kshs. 850,000/-. The 1^st and 2^nd Defendants themselves denied paying it to the 3^rd Defendant. They stated that they did not pay any money for the suit property. I.PW1 who testified on behalf of the Interested Parties also stated that no payment was needed to be made for the suit property as the 1^st and 2^nd Defendants were shareholders of the 3^rd Defendant. The 2^nd Defendant stated on re-examination that the said sum of Kshs. 850,000/- was for stamp duty. This is not correct because the transfer of lease being relied upon by the 1^st and 2^nd Defendants clearly states that the amount was paid as a consideration for the transfer of the suit property from the 3^rd Defendant to the 1^st and 2^nd Defendants.

48.There is also the issue of directorship of the 3^rd Defendant. While I agree with the 1^st and 2^nd Defendants and the Interested Parties that the directions on directorship of the 3^rd Defendant that was given in ELC No. 300 of 2013 may not have been final as the court did not render a final judgment on the issue, it cannot be disputed that the issue of who the directors of the 3^rd Defendant were when the suit property was allocated and transferred to the 1^st and 2^nd Defendants is material to this case.

47.The suit property is alleged to have been allocated to the 1^st and 2^nd Defendants in 2005. The transfer on record in favour of the 1^st and 2^nd Defendants is dated 20^th April 2012 and was signed by the 1^st and 6^th Interested Parties. The Interested Parties have claimed that the 1^st and 6^th Interested Parties were bona fide directors of the 3^rd Defendant at the material time and that the 1^st Interested Party was the chairman of the 3^rd Defendant. The 1^st and 2^nd Defendants and the Interested Parties have not convinced me that the 1^st and 6^th Interested Parties were directors of the 3^rd Defendant on 4^th January 2005 when the suit property was allegedly allocated to the 1^st and 2^nd Defendants and on 20^th April 2012 when the property was transferred to them.

48.I.PW1 sought to rely on the order given in CMCC No. 622 of 2011 (page 47 DEX2) as having allowed him to act as the chairman of the 3^rd Defendant. On further questioning, I.PW1 admitted that the order only restrained the Defendants in that suit from holding an Annual General Meeting. The 1^st and 2^nd Defendants also sought to rely on the affidavits filed in the same suit stating that they were sworn by the 1^st Interested Party in his capacity as the chairman of the 3^rd Defendant. I however do not find that this proves that the 1^st and 6^th Interested Parties were officials of the 3^rd Defendant. The Interested Parties also contended that they had been in office since 2004 and that they had never been removed and that there was a letter from the Registrar of Companies and a Court order to that effect. However, no evidence was produced to support these assertions. The Plaintiff on the other hand testified that the 1^st and 6^th Interested Parties were not officials of the 3^rd Defendant during the transfer period. A letter from the office of the Registrar General to the 3^rd Defendant dated 31^st May 2011 was produced by the Plaintiff and the 3^rd Defendant in evidence in proof of that fact. It identified the directors of the 3^rd Defendant. The 1^st and 6^th Interested Parties were not among them. The letter stated that the said officials were elected in a meeting conducted by the Registrar General on 23^rd March 2011. There is no evidence on record that another election was held after 23^rd March 2011 and that the Interested Parties were elected as officials of the 3^rd Defendant. There is also no evidence on record that the elections that were held on 23^rd March 2011 were cancelled by the court. I therefore find on a balance of probabilities that the Interested Parties were not officials of the 3^rd Defendant on 20^th April 2012 when they purported to transfer the suit property to the 1^st and 2^nd Defendants. Since the 1^st and 6^th Interested Parties were not officials of the 3^rd Defendant when they purported to transfer the suit property to the 1^st and 2^nd Defendants, they had no legal capacity to effect the said transfer. The transfer was in the circumstances, illegal, null and void and could not confer any interest in the suit property upon the 1^st and 2^nd Defendants.

49.Having investigated the roots of the conflicting ownership claims to the suit property, I find that the Plaintiff has proved on a balance of probabilities that she is the lawful owner of the suit property. She has proved that she purchased the suit property from the 3^rd Defendant in 2001, she took possession and remained in possession until 2015 when the 1^st and 2^nd Defendants attempted to evict her from the property using the provincial administration officers. On the other hand, I find the 1^st and 2^nd Defendants’ claim of ownership of the property fraught with illegalities and nullities. The Plaintiff is therefore the bona fide owner of the suit property.

Whether the 1^st and 2^nd Defendants’ title should be cancelled.

50.The suit property is registered under the Registered Land Act, Chapter 300 Laws of Kenya(RLA) (now repealed). Sections 27 and 28 of the Registered Land Act provides as follows:“27.Subject to this Act -(a)the registration of a person as the proprietor of land shall vest in that person the absolute ownership of that land together with all rights and privileges belonging or appurtenant thereto;(b)the registration of a person as the proprietor of a lease shall vest in that person the leasehold interest described in the lease, together with all implied and expressed rights and privileges belonging or appurtenant thereto and subject to all implied and expressed agreements, liabilities and incidents of the lease.28.The rights of a proprietor, whether acquired on first registration or whether acquired subsequently for valuable consideration or by an order of court, shall not be liable to be defeated except as provided in this Act, and shall be held by the proprietor, together with all privileges and appurtenances belonging thereto, free from all other interests and claims whatsoever, but subject -(a)to the leases, charges and other encumbrances and to the conditions and restrictions, if any, shown in the register; and(b)unless the contrary is expressed in the register, to such liabilities, rights and interests as affect the same and are declared by section 30 not to require noting on the register:Provided that nothing in this section shall be taken to relieve a proprietor from any duty or obligation to which he is subject as a trustee.”Section 143(1) and (2) of the Registered Land Act provides as follows:“(1)Subject to subsection (2), the court may order rectification of the register by directing that any registration be cancelled or amended where it is satisfied that any registration (other than a first registration) has been obtained, made or omitted by fraud or mistake.(2)The register shall not be rectified so as to affect the title of a proprietor who is in possession and acquired the land, lease or charge for valuable consideration, unless such proprietor had knowledge of the omission, fraud or mistake in consequence of which the rectification is sought, or caused such omission, fraud or mistake or substantially contributed to it by his act, neglect or default.”Sections 24, 25 and 26 of the Land Registration Act, 2012 provides as follows:“24.Subject to this Act—(a)the registration of a person as the proprietor of land shall vest in that person the absolute ownership of that land together with all rights and privileges belonging or appurtenant thereto; and(b)the registration of a person as the proprietor of a lease shall vest in that person the leasehold interest described in the lease, together with all implied and expressed rights and privileges belonging or appurtenant thereto and subject to all implied or expressed agreements, liabilities or incidents of the lease.25. (1)The rights of a proprietor, whether acquired on first registration or subsequently for valuable consideration or by an order of court, shall not be liable to be defeated except as provided in this Act, and shall be held by the proprietor, together with all privileges and appurtenances belonging thereto, free from all other interests and claims whatsoever, but subject—(a)to the leases, charges and other encumbrances and to the conditions and restrictions, if any, shown in the register; and(b)to such liabilities, rights and interests as affect the same and are declared by section 28 not to require noting on the register, unless the contrary is expressed in the register.(2)Nothing in this section shall be taken to relieve a proprietor from any duty or obligation to which the person is subject to as a trustee.26. (1)The certificate of title issued by the Registrar upon registration, or to a purchaser of land upon a transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence that the person named as proprietor of the land is the absolute and indefeasible owner, subject to the encumbrances, easements, restrictions and conditions contained or endorsed in the certificate, and the title of that proprietor shall not be subject to challenge, except—(a)on the ground of fraud or misrepresentation to which the person is proved to be a party; or(b)where the certificate of title has been acquired illegally, unprocedurally or through a corrupt scheme.”

51.Both under the Registered Land Act and the Land Registration Act, 2012, the registration of a person as a proprietor of land or lease confers upon that person the absolute ownership of the land and in the case of a lease, the leasehold interest in the land. Under the Registered Land Act which is the statute under which the suit property was registered, a register of land can be rectified by the cancellation of any entry therein where such registration has been obtained by fraud or mistake.

52.I have held that the suit property had already been purchased and allocated to the Plaintiff by the 3^rd Defendant and as such the same was not available for allocation to the 1^st and 2^nd Defendants. I have also held that the 1^st and 6^th Interested Parties who purported to transfer the suit property to the 1^st and 2^nd Defendants had no capacity to do so and as such the transfer was illegal, null and void. The Plaintiff has proved fraud in the acquisition of the suit property by the 1^st and 2^nd Defendants. The Plaintiff has proved that the 2^nd Defendant was the wife of the 1^st Interested Party and that the 1^st Defendant’s mother was a shareholder of the 3^rd Defendant. The 1^st and 2^nd Defendants were therefore aware through association that the 1^st and 6^th Interested Parties were not officials of the 3^rd Defendant. In purporting to accept a transfer of the suit property from the 1^st and 6^th Interested Parties whom they knew not to be officials of the 3^rd Defendant who owned the property, the 1^st and 2^nd Defendants aided and abetted the fraudulent activities of the 1^st and 6^th Interested Parties and as such were parties to the fraud. In the circumstances, the 1^st and 2^nd Defendants acquired the suit property fraudulently. In any event, even if fraud was not proved by the Plaintiff, the transfer to the 1^st and 2^nd Defendants was void ab initio the same having been effected by persons who were not officials of the 3^rd Defendant and as such had no legal capacity to do so. Since the transfer was void, it was a nullity. It could not therefore confer any interest in the suit property upon the 1^st and 2^nd Defendants. In Macfoy v United Africa Co Ltd [1961] 3 All ER 1169 it was stated as follows concerning an act that is void:“If an act is void, then it is in law a nullity. It is not only bad, but incurably bad. There is no need for an order of the court to set it aside. It is automatically null and void without much ado, though it is sometimes convenient to have the court declare it to be so. And every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse...”

53.Due to the foregoing, it is my finding that the title held by the 1^st and 2^nd Defendants is a candidate for cancellation on account of being void and for having been acquired illegally and fraudulently.

Whether the Plaintiff is entitled to the reliefs sought in the plaint.

54.I have set out herein earlier the reliefs sought by the Plaintiff. I am satisfied that the Plaintiff has established her claim against the 1^st and 2^nd Defendants on a balance of probabilities. The Plaintiff is therefore entitled to an order for the cancellation of the title held by the 1^st and 2^nd Defendants. The Plaintiff is also entitled to the injunction sought to restrain the 1^st and 2^nd Defendants from interfering with the suit property. The Plaintiff did not prove that any of the Defendants trespassed into the suit property. The Plaintiff is therefore not entitled to general damages for trespass. The Plaintiff is also not entitled to an order for the registration of the suit property in her name. The property was sold to be Plaintiff by the 3^rd Defendant. The 3^rd Defendant has not denied that sale and has not refused to transfer the property to the Plaintiff. The Plaintiff will have to pursue the transfer from the 3^rd Defendant once the property is restored to its name.

Whether the 3^rd Defendant is entitled to the reliefs sought in its counter-claim against the Defendants in the counter-claim.

55.From the findings that I have made above, I am satisfied that the 3^rd Defendant has proved its counter-claim against the 1^st to 4^th Defendants in the counter-claim and that it is entitled to prayers (a) to (c) in the counter-claim. The 3^rd Defendant has however not proved that it suffered any damage or loss as a result of the fraud, deceit and illegality on the part of the Defendants in the counter-claim. A case has therefore not been made out for the award of general damages sought.

Who is liable for the costs of the suit and the counter-claim?

56.Under Section 27 of the Civil Procedure Act, cost is at the discretion of the court. As a general rule, costs follow the event unless for good reason, the court orders otherwise. In this case, the Plaintiff and the 3^rd Defendant have succeeded in their claims. In the absence of any valid reason to warrant denying the Plaintiff and the 3^rd Defendant the costs of the suit and the counter-claim, costs shall be awarded accordingly.

Conclusion:

57.In conclusion, I hereby make the following orders;1.Judgment is hereby entered for the Plaintiff in the main suit against the 1^st and 2^nd defendants in the main suit as follows;a.The title held by the 1^st and 2^nd Defendants in respect of all that parcel of land known as Nairobi/Block 117/513 (hereinafter referred to as “the suit property”) is hereby cancelled.b.The 3^rd Defendant shall make arrangement to transfer the suit property to the Plaintiff in accordance with the agreement between them once the property is restored to the name of the 3^rd Defendant.c.A permanent injunction is issued restraining the 1^st and 2^nd Defendants from interfering with the suit property.d.Costs of the suit.2.Judgment is entered for the 3^rd Defendant in its counter-claim against the 1^st, 2^nd, 3^rd and 4^th Defendants in the counter-claim as follows;a.A declaration is issued that the conduct of the 1^st, 2^nd, 3^rd and 4^th Defendants in the counter-claim and in particular the purported sale/transfer of all that parcel of land known as Nairobi/Block 117/513 (“the suit property”) to the 1^st and 2^nd Defendants in the counter-claim and the resultant Certificate of Title issued to them are tainted with fraud, illegality, impropriety, irregularity and corrupt scheme.b.The register of all that parcel of land known as Nairobi/Block 117/513 (the suit property) is hereby rectified by the cancellation of entries numbers 3 and 4 therein through which the 1^st and 2^nd Defendants in the counter-claim were registered as the owners of the suit property and certificate of lease issued to them.c.The 3^rd Defendant is restored in the register of the suit property as the duly registered owner of the suit property subject to order 1(b) above.d.A permanent injunction is issued restraining the 1^st to 4^th Defendants in the counter-claim whether by themselves, their agents, officers, nominees and /or whosoever from entering, encroaching, selling, advertising, transferring, alienating and/or otherwise dealing with the suit property.e.Costs of the counter-claim.

DELIVERED AND DATED AT KISUMU THIS 10^TH DAY OF NOVEMBER 2022S.OKONG’OJUDGEJudgment delivered virtually through Microsoft Teams Video Conferencing Platform in the presence of;Mr. Musyoka for the PlaintiffN/A for the DefendantsN/A for the Interested PartiesMs. J. Omondi-Court Assistant

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Environment & Land Case 642 of 2013

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