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Archer & another v Archer & 2 others (Civil Appeal 39 of 2020) [2023] KECA 298 (KLR) (17 March 2023) (Judgment)
Neutral citation:
[2023] KECA 298 (KLR)
Republic of Kenya
Civil Appeal 39 of 2020
SG Kairu, P Nyamweya & JW Lessit, JJA
March 17, 2023
Between
James Archer
1st Appellant
Joanna Trent
2nd Appellant
and
Inger Christine Archer
1st Respondent
Annalise Archer Clark
2nd Respondent
Hellen Kay Hartley
3rd Respondent
(An appeal against the judgment of the Environment and Land Court at Mombasa (Yano J.) dated on 26th November 2019 in Mombasa ELC Suit 345 of 2017)
Judgment
1.James Archer and Joanna Trent, the Appellants herein, have appealed a judgment delivered on 26th November 2019 by the Environment and Land Court (Yano J.), which dismissed a suit they had filed by way of an Originating Summons dated 5th June 2012. The Appellants had in the said suit, sought beneficial interests in the properties known as Kwale/Diani Beach Block/806, 807 and 808 (hereinafter “the suit properties”), which were registered in the names of Inger Christine Archer, Annalise Archer Clark and Hellen Kay Hartley, the Respondents herein. The Appellants claimed that the said properties were held by the said Respondents in trust for the 1st Appellant, 2nd Appellant and one Robert D. Archer. According to the Appellants, the 1st, 2nd and 3rd Respondents jointly held one undivided share in the suit properties, while the 1st Appellant, 2nd Appellant and Robert D. Archer each held one undivided share. The Appellants also sought a further order that the Respondents do execute transfers to effect registration of the 1st and 2nd Appellants and two nominees of the Respondents as joint proprietors of the leasehold interest in the suit properties, and in default therefore, the Registrar of the High Court be authorised to execute the transfer under section 98 of the Civil Procedure Act.
2.The Appellants’ case is that they are entitled to a beneficial interest in the suit properties held by the Respondents under a constructive trust. Their case is set out in detail in an affidavit sworn on 5th June 2012 by the 1st Appellant in support of the Originating Summons, and further affidavits sworn on 2th October 2014 by the 2nd Appellant, and on 19th November 2014 by one Jean Hartley, a bookkeeper by profession and one Ushwin R. Patel a Certified Public Accountant. In summary, the Appellants’ asserted that the 1st Appellant, 2nd Appellant, one Robert D. Archer, and Christopher John Archer who is since deceased (hereinafter referred to as “the siblings”), are the children of Howard Archer, also deceased. That in 1967, the siblings verbally agreed as a family to collectively purchase premises known as Diani House which was located on the suit properties, and that with their father Howard Archer, agreed to provide the capital of £5,000 for the purchase of the premises on the understanding and agreement that the siblings would repay him back over a period of time.
3.Reference was made to various correspondence and documents annexed by the Appellants, to demonstrate that the siblings did make payments in accordance with the verbal agreement, and that between 1967 and 1982, Christopher John Archer circulated the annual accounts on the suit properties and correspondence regarding costs and expenditures on improvements of the properties, on the basis that the Appellants had a beneficial interest in the properties, and in which they were shown as being long term creditors.
4.Further, that at the time of purchase of the premises, the siblings received legal advice that the suit properties, being beach property, was required be held in the name of a Kenyan citizen, and the properties were therefore registered in the name of Christopher John Archer, who at the time was the only sibling who was a Kenyan citizen, and on the understanding that he would hold them in trust for the other siblings. However, that misunderstandings started to arise in 1976 when Christopher John Archer sought to sub-divide the suit properties without the knowledge or consent of the other siblings, and later on in 1982 when the 1st Appellant questioned the annual accounts, and Christopher John Archer thereafter stopped circulating the said accounts. The Appellants referred to various legal and expert advice that they received on a trust arising over the suit properties in the circumstances.
5.The Appellants also made reference to various documents and emails which showed that Christopher John Archer and the Respondents had all along acknowledged the existence of the trust, and that the Appellants hoped that they would do the right thing, hence their reluctance to proceed by legal action and given that they had misgivings about the judicial system at the time. The 1st Appellant gave a description of his personal history and career as an architect and in community work, and the correlation thereof to his interest in the suit properties.
6.The Respondents, who are the children of Christopher John Archer, responded to the claim by way of a replying affidavit sworn on 23rd October 2012 and a further replying affidavit sworn on 26th March 2013, both by the 3rd Respondent. Their case is that in 1966 their father identified agricultural land in Diani that he wished to purchase, and asked his father, late Howard D. Archer, for a loan of £ 5000 for the purchase, and the property, being Diani/MS//227, was subsequently registered in the Respondents’ father’s name and he obtained a lease in his favour. According to the Respondents, the intention of their grandfather and father was that the house on the property would be available to the entire family to use on holiday, and that the family did use the property after its purchase. Further, that Howard D. Archer was not the purchaser of the suit properties, and the said properties were therefore not available for him to gift or will to the Appellants.
7.On the allegations of the repayment of the loan to purchase the suit properties and other contributions made by the siblings, the Respondents’ averred that the siblings granted loans to Christopher John Archer to assist him to pay off the loan from Howard D. Archer and thereby became his creditors, which status was demonstrated by the financial statements annexed by the Appellants, and that these payments were not contributions to the purchase price and did not entitle the Appellants to any equitable interest in the suit properties. Furthermore, that even though the siblings contributed sums towards the maintenance and upkeep of the house in the early 70s, they thereafter stopped doing so, and the Respondent’s father continued to meet the costs of repair and running of the house.
8.The Respondents referred to correspondence between the 1st Appellant’s advocates and their father’s advocates on the different legal opinions as to whether the property was held in trust by their father, and stated that the relationship between their father and Appellants deteriorated, with their father contemplating refunding the monies that the Appellants had paid towards the upkeep up the house to avoid bad blood between the siblings. The Respondent’s stated that this was evidenced by their father’s letter dated 29th January 1977 which they annexed, together with a letter dated 24th January 1977 from their father’s lawyer with legal advice to this effect. Lastly, the Respondent’s confirmed that they are now registered as proprietors of the remainder portions of the suit properties following its subdivision.
9.After hearing the parties, the learned trial Judge found that from the evidence adduced, the late Howard D. Archer made available a loan to the late Christopher John Archer to purchase the suit properties, and did not acquire any beneficial interest in the properties considering that the loan was subsequently settled, nor were the Appellants entitled to any beneficial interest in the suit property solely on the basis that the loan funds were made available by their father. In addition, that the Appellant’s claim of trust based on the fact of certain loan repayment instalments to Howard D. Archer, the financial statements of Diani House business, the letters by the late Christopher John Archer, his accountant and advocates was insufficient evidence to demonstrate that the late Christopher John Archer held the suit property in trust for the Appellants. Lastly, that the issue whether the late Christopher John Archer held the suit property in trust for the plaintiffs was a long running dispute which commenced on 8th December, 1976, and the Appellants were guilty of laches, as claims of entitlement to a share of property under the doctrine of constructive trust and resulting trust are claims of equitable relief which may not be brought after the end of 6 years as per the provisions of Section 4(1) (e) of the Limitation of Actions Act.
10.The Appellants, being dissatisfied with this outcome, lodged an appeal in this Court and have raised ten grounds of appeal in their Memorandum of appeal dated 18th March 2020, on three main areas, namely that the trial Court misadvised itself on the facts and issues arising in the suit, misinterpreted and misapplied the law on trusts, and misinterpreted and misapplied the law on laches. During the pendency of the appeal this Court allowed an application by the Appellants to addduce additional evidence to show that the suit properties have since been sub-divided into eight parcels of land, and to file a supplementary record of appeal consisting of the absolute and leasehold cards for the said subdivisions, being land parcels Kwale/Diani Beach Blocks/1745, 1746, 1747, 1748, 1749, 1750, 1751, and 1752.
11.We heard the appeal virtually on 22nd March 2022, and learned counsel Mr. Bryant appeared for the Appellants, while learned counsel Mr. Muthama appeared for Respondents. Mr. Bryant relied on and highlighted two sets of submissions, dated 5th July 2021 and 25th February 2022. Mr. Muthama also relied on two sets of written submissions dated 30th July 2021 and 15th March 2022. Our duty as the first appellate Court in this respect, as set out in Selle and Another vs Associated Motor Boat Co. Ltd & Others (1968) EA 123, is to reconsider the evidence, evaluate it and draw our own conclusions of facts and law. We will only depart from the findings by the trial Court if they were not based on the evidence on record; where the said court is shown to have acted on wrong principles of law as held in Jabane vs Olenja [1986] KLR 661; or if its discretion was exercised injudiciously as held in Mbogo & Another vs Shah (1968) E.A.
12.The three issues arising for determination in this appeal are whether the Respondents hold the suit properties in trust for the Appellants, and if so, whether the Appellants’ suit was time barred. If the suit is found to have been brought within time, we will then proceed with the third issue of the reliefs if any, that are available to the Appellants. On the first issue, Mr. Bryant submitted that there was a common intention between the siblings to own the suit property with the beneficial interest being held jointly, and that the legal interest was split from the beneficial interest because at the time it was wrongly understood that only Kenyan citizens could own beach-front houses. Therefore, that the Respondents' father, Christopher John Archer holding a Kenyan passport, was consequently registered as the legal proprietor.
13.The counsel submitted that the trial Court misinterpreted and misdirected itself on the evidence by finding that the late Howard D. Archer made available to the late Christopher John Archer a loan of £5,000 towards the purchase of the suit property, as no evidence exists to support this finding. According to the Appellants the evidence on record was that the siblings purchased the suit properties with a loan from Howard D. Archer, and the properties were purchased for the siblings’ purposes with the purchase price being paid directly by their father to the vendor. Further, that Howard D. Archer required that his children repay the loan back to him, which the siblings duly did and completed in 1966. In addition, that there was no evidence of a vendor known as Johannes Theodorus Oberholzer, or of negotiations or of a sale agreement between Mr. Oberholzer and Christopher John Archer as found by the trial Court.
14.Other findings and omissions by the trial Court that were faulted by the Appellants’ counsel as not being supported by the evidence or law, were that the Appellants have never claimed nor averred in their pleadings that Howard D. Archer sought or acquired any such beneficial interest as found by the trial Court, that the contents of the accounting records which set out the financial contribution made by the Appellants and Christopher John Archer to the purchase of the suit properties and demonstrated the detrimental reliance the Appellants placed upon the words and conduct of Christopher John Archer were not considered by the trial Court, as was the letter penned by Christopher John Archer dated 14th April 1982 addressing among others the Appellants, which clearly sets out a discussion among the siblings as to the future of the property, the money spent upon the property and the money needed to maintain/develop the property.
15.Reliance was placed on the decisions in Lloyds Bank vs Rosset [1991] 1 AC 107 that where there is no evidence to support a finding of an agreement or arrangement to share the Court will rely on the conduct of the parties as the basis from which to infer a common intention to share the property beneficially and that direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. The Appellant’s counsel in this regard made reference to the decision of this Court in Gideon Mwangi Chege vs Joseph Gachanja Gituto [2015] eKLR that applied the decision in Lloyds Bank vs Rosset [supra].
16.Also cited were the holdings in Oxley vs Hiscock [2004] EWCA Civ 546, that the whole course of dealing in relation to the property including the arrangements made in order to meet the outgoings such as mortgage contributions, council tax and utilities, repairs, insurance and housekeeping will also be considered; in Stokes vs Anderson (1991) 1 FLR 391 that the court can look to an agreement, arrangement or understanding subsequent to the acquisition of title to the property; in Stack vs Dowden [2007] UKHL 17 that mortgage repayments are the equivalent of payment of the purchase price, and for the submission that repayment of the loan was tantamount to a mortgage repayment; in Zipporah Wanjiru Mwangi vs Zipporah Wanjiru Njoroge (2017) eKLR and Mbothu & 8 Others vs Waitimu & 11 Others (1986) KLR 171 that the courts only imply a trust in order to give effect to the intentions of the parties which must be clearly determined.
17.Further, that the learned trial judge erred in his judgment by intimating that a constructive trust cannot be found where familial relationships make financial contributions to a business such as an investment property and reliance was placed on the English decisions in Pallant vs Morgan [1953] Ch. 43 and Banner Homes Group Pic vs Luff Developments Ltd [2000] Ch. 372 to submit that the Appellants and Christopher John Archer discussed the acquisition of the suit property and the manner in which the legal and beneficial interest shall be held prior to the purchase. Further, that the Appellants acted to their detriment by repaying not just the loan but also the interest to their father and making financial contributions to the suit properties for their maintenance, upkeep and development.
18.In addition, that the commercial usage of the suit properties did not prevent the Court from inferring a common intention constructive trust, and the Appellants’ counsel cited the Australian decision in Muschinski vs Dodds (1985) 160 CLR 583 for the proposition that evidence of a common intention can lead to the finding of a constructive trust in circumstances where there is collapse of the commercial venture and failure of personal relationships. Also relied on was the decision in Paragon Finance Pic vs Thakerer & Co [1999] 1 All E.R. 400 that a constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the property owner (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another.
19.The Respondents’ counsel on his part reiterated that Christopher John Archer obtained a loan from his father, the late Howard D. Archer, and thereafter entered into an agreement for the sale and purchase of the suit properties which he paid for using the said loan. The Respondents contested the allegation that there was an intention, whether express, constructive, or otherwise, between Christopher John Archer and the Appellants to create a trust interest in respect of the said property, and their case is that the Appellants agreed to assist Christopher John Archer in repaying the loan in exchange for an equity interest in the share of profits from the holiday home rental business operated and run by Christopher John Archer in the residential development erected on the suit properties. Further, that the Appellants on one hand claim that the alleged trust arose from their father, the late Howard D. Archer who as the settlor, intended that the suit properties would be held in trust by Christopher John Archer for himself and the rest of the family which includes the Appellants. On the other hand, that there was a common intention trust between Christopher John Archer and the Appellants that Christopher John Archer would hold the suit properties in trust for all of them as siblings. However, that it is either one position or the other because the two assertions cannot co-exist simultaneously.
20.The counsel further submitted that where a person grants a loan to another for the purchase of a property, as was the case between Howard D. Archer and Christopher John Archer, the lender does not become a settlor in respect of the property purchased from the loan facility more so when the loan is repaid, and placed reliance on the decision in Re Sharpe [1980) 1 WLR 219 where it was held that where money is advanced on intention that it be repaid, then the lender does not acquire an interest in the property purchased by the borrower by virtue of such advancement. That in this case the Appellants did plead that the loan by Howard D. Archer was repaid by the Appellants and Christopher John Archer. In addition, that there is no evidence demonstrating any prior agreement between Christopher John Archer and the Appellants to purchase the property in question without putting up any money or on the understanding that Howard D. Archer would provide the purchase price, and the counsel cited the case of Curley vs Parkes [2004] EWCA Civ 1515 for the proposition that the subsequent payment by way of instalments toward the repayment of the loan given by Howard D. Archer to Christopher John Archer which was utilized as the purchase price for the suit properties did not entitle the contributors to an equitable share over the property purchased by way of trust as has been claimed or at all.
21.Lastly, it was submitted that the Diani House Accounts merely demonstrate the existence of a business relationship as between Christopher John Archer and the Appellants and do not support the existence of the claimed trust over the suit properties for two reasons. First, that the Appellants have not demonstrated the time within which they started making the said contribution payments toward assisting Christopher John Archer clear the loan debt due to Howard D Archer. That this is critical because if the contributions were made after the purchase, then as contributors, they cannot lay any claim over the property that was purchased their contribution notwithstanding, and that the authorities of Banner Homes PLC and Paragon Finance PLC cited by the Appellants are therefore irrelevant to the circumstances prevailing in this appeal. Second, that though the Respondents do not contest the fact that the Accounts of the Diani House show the Appellants as financial contributors to the Diani House Business, those contributions are made specifically in respect of the Diani House business as a going concern and are in no way a demonstration of an equity share in the property in question. In addition, that the letter dated 14th April, 1982 written by Christopher John Archer does not support the existence of a trust over the suit property as contended by the Appellants. And merely demonstrated how the proceeds of sale of the business would settle the Appellants’ liabilities as creditors of the business.
22.In conclusion, the Respondents submitted that the Appellants have not tendered any evidence at all to demonstrate the existence of a pre- acquisition agreement between Christopher John Archer and the Appellants or even between Christopher John Archer and Howard D. Archer for the purchase of the suit property; that the contributions that were made by the Appellants were made for the running of the Diani House business, and were made after the suit property had been purchased by Christopher John Archer and were made only as repayments of the loan from Howard D. Archer to Christopher John Archer; and that the case of Pallant Morgan relied upon by the Appellants was therefore also not relevant.
23.Black’s Law Dictionary, 9th Edition; defines a trust as “The right, enforceable solely in equity, to the beneficial enjoyment of property to which another holds legal title; a property interest held by one person (trustee) at the request of another (settlor) for the benefit of a third party (beneficiary).” There are three types of trusts that can arise with respect to land, as explained in Elements of Land Law, 5th Edition by Kevin Gray and Susan Francis Gray at page 824 paragraph 7.1.11:
24.This position was confirmed by this Court (Makhandia, Ouko & M’inoti, JJ.A.) in Twalib Hatayan & Another vs. Said Saggar Ahmed Al-Heidy & 5 Others [2015] eKLR as follows:
25.It is not contested that there was no express trust created with respect to the suit properties in this appeal, and no evidence of such an express trust was provided by the Appellants. The Appellants’ case therefore turns on whether a trust can be implied from the facts of the appeal. The authors of Elements of Land Law (supra) explain when a resulting trust arises as follows at page 825 in paragraphs 7.1.12:
26.The two main requirements for a resulting trust to arise are firstly, the intention and contribution to the purchase of the property must be contemporaneous with the taking of legal title, as was held in Pettit vs Pettit (1970) AC 777 and in Gissing vs Gissing (1971) AC 886. The relevant time frame for the existence of the required intention and contribution is therefore at the point of purchase of the land, which is the time the beneficial entitlement crystallises, and resulting trusts cannot in principle be founded on intentions, events or circumstances which arise after the date of purchase. Secondly, the clearest instances of resulting trust emerge from direct cash or other forms of financial contributions to the purchase of property at the point of purchase.
27.This Court has also held in Twalib Hatayan & Another vs. Said Saggar Ahmed Al-Heidy & 5 Others (supra) and in Juletabi African Adventure Limited & another vs. Christopher Michael Lockley [2017] eKLR that the general rule here is that a resulting trust will automatically arise in favour of the person who advances the purchase money, whether or not the property is registered in his or her name. Therefore, many of the cases cited and relied upon by the Appellants and Respondents turn on the question of whether there were quantifiable contributions of money directly channelled towards the point of purchase for a resulting trust to arise, or whether there were other kinds of contributory activity, whether before or after the acquisition of title, which are assessed in terms of a constructive trust. For example, in Curley vs Parkes, (supra) it was held that there was no resulting trust because the money paid by the Appellant therein to compensate the Respondent was paid after the purchase, and is authority for the principle that only payments to the purchase price, or equivalent contributions made at the time of the purchase are relevant to the presumption of resulting trust.
28.On the other hand, there has been a pragmatic shift in English law towards recognising constructive trusts as the primary phenomenon in the area of implied trusts, as illustrated by the decisions in Lloyds Bank PlC vs Rosset (supra), Stokes vs Anderson (supra), Oxley v Hiscock (supra) and Stack vs Dowden (supra) which were relied on by the Appellants. There may however be instances when the two forms of implied trusts overlap arising from their common feature of the existence of demonstrated intention as regards the beneficial ownership of property which may exist from the time of purchase and thereafter, and as a result both forms of implied trusts are often simultaneously pleaded for this reason.
29.Coming to the present appeal, it is not in contest that the subject suit properties were registered in the name of Christopher John Archer in 1966. It appears from the title documents provided in the record of appeal that initially the suit property was initially registered as Mombasa/Mainland South/Diani Beach Block/ 55 and transferred to Christopher John Archer on 30th August 1966, and the Certificate of Lease later issued to him on 8th June 1990 where the title of the property was renamed as Kwale/Diane Beach Block/227. On 16th December 1996, the property was then subdivided into the three parcels of land known as Kwale/Diani Beach Block/806, 807 and 808, and their certificate of leases issued to Christopher John Archer. This was the description of the suit properties obtaining at the time the Appellants filed suit in the trial Court. It is also not in dispute that the purchase money for the suit properties was provided by a loan advanced by Howard D. Archer, the father of Christopher John Archer and the Appellants. What is in dispute is the manner of repayment of the said loan.
30.No evidence was adduced in this respect by the Appellants as to the intention of Howard D. Archer at the time of purchase, and even if such an intention had been demonstrated by the Appellants, under the applicable principles of law a resulting trust would only have arisen in favour by Howard D. Archer. The trial Judge noted as follows:
31.The trial Court was therefore not in error in its finding that Howard D. Archer did not acquire any beneficial interest, and that there was no evidence of the creation of a resulting trust in his favour, or of a resulting trust in favour of the Appellants, in the absence of an express trust to this effect by Howard D. Archer. That having been said, it is nevertheless notable that the question posed and answered by the trial Court, as regards whether or not Howard D. Archer acquired a beneficial interest in the suit properties, was not specifically pleaded by the Appellants. The specific questions that were pleaded were regarding the facts of payment of the loan and its repayments; the intentions of Howard D. Archer thereby; and the implications and knowledge of the said actions and intention on the part of the Respondents; and were as follows:1.Did Howard D. Archer (HDA) provide the purchase monies of Kenya Pounds 5000.00 for the purchase of the mother title to Diani House under a loan arrangement under which his four children (James, Joanna, Robert and Christopher (hereinafter ‘the siblings’)) would pay the principal plus interest back to him while Christopher John Archer (CJA) would be registered as proprietor of the mother title?2.Did the 1st Plaintiff and Robert D. Archer (RDA) as part of a common intention agreed to between the four siblings and Howard D. Archer, pay back to Howard D. Archer certain instalments of principal and interest?...5.Does documentary evidence exist that shows that the 1st, 2nd and 3rd Defendants admitted, prior to the death of Christopher John Archer to having knowledge that Howard D. Archer has intentions that the Diani House was to be for the use of his four children and that the plot was left in trust to Christopher John Archer by Howard D. Archer (the father of the 1st, 2nd, and 3rd Defendants)? …”
32.We however find that it may have been necessary and did not prejudice any party if the preliminary question of whether a resulting trust was created in favour of Howard D. Archer was resolved, even though not specifically pleaded, for purposes of clarity. What however concerns us is that the question asked and pleaded as regards the Appellants’ entitlement to, and beneficial interest in the suit properties arising from the existence of a constructive trust as opposed to a resulting trust, was neither captured nor addressed in the judgment by the learned trial Judge. This question was as follows:
33.The Appellants consequently sought various orders in their favour as regards the beneficial interest held by the Respondents in the said properties specifically arising from the constructive trust. A reading of the judgment by the learned trial judge reveals that there was no analysis of the principles that apply and regulate the manner that beneficial interests arise and are implied under a constructive trust, their manner of creation, and it is not evident how and whether the said principles were applied to the facts of the case. It therefore behoves us to consider these principles, as the existence of a constructive trust was specifically pleaded by the Appellants.
34.In this regard, it is explained in Elements of Land Law (supra) as follows at page 825 in paragraph 7.1.13:
35.A constructive trust is therefore generated by circumstances where through some prior agreement or bargain, a trustee takes a fiduciary role which he or she cannot be allowed to disavow, and where the assertion of absolute beneficial ownership thereby becomes unconscionable as a result of his or her previous dealings and actions. This Court upheld this view in Twalib Hatayan & another vs. Said Saggar Ahmed Al-Heidy & 5 others (supra) as follows:
36.Therefore, while the resulting trust focuses on monetary contribution towards purchase of a property, a constructive trust is concerned with the bargain or common intention of the parties relating to ownership of the subject property. It is also notable that the focus in resulting trusts is on the unilateral intention of the provider of the purchase money, while constructive trusts are rooted on the bilateral intentions of the relevant actors. The House of Lords in Stack vs Dowden (supra) held that a common intention is recognised as relevant, only if one party alters his or her position in detrimental reliance upon some form of bargain that would confer upon them a sufficiently defined beneficial interest in the subject property, and an unconscionable denial of rights would result if the legal estate owner tries to evade the bargain. As regards the timing of the bargain, this can precede, be contemporaneous with, or occur after the acquisition of title.
37.The common intention may be proved by direct evidence, that is by way of an agreement or express words and communication between the parties that they are to have beneficial interests in the subject property, or may be inferred by the Court from the parties actions and conduct. The types of evidence from which the courts are most often asked to infer such intention include contributions (direct and indirect) to the deposit, the mortgage instalments or general housekeeping expenses. In Oxley vs Hiscock (supra) , LJ Chadwick of the English Court of Appeal, after analysing the decisions on how a constructive trust arises when property is purchased in the sole name of one of the parties and there was no express declaration of trust, held as follows:
38.The Supreme Court of Kenya has recently upheld this position in MNK vs POM; Initiative for Strategic Litigation in Africa (ISLA) (Amicus Curiae) (Petition 9 of 2021) [2023] KESC 2 (KLR) and reiterated that in the context of the cohabiting parties in that case, the common intention of the parties at the time of purchase of the suit property gave rise to a constructive trust. Even though this decision was delivered after we heard this appeal, it is notable that the Supreme Court approved of the holding in the English decision in Oxley vs A Hiscock (supra) that has been cited in this appeal.
39.The question therefore before us is whether there was evidence tendered of a common intention between the siblings, and between the Appellants and Respondents that the suit properties were to be held in trust. The learned trial Judge, when interrogating and analysing the evidence, focused on the accounts and evidence of financial contribution, and after analysing the various account documents found that the Appellants had presented insufficient evidence for the following reasons:
40.It is our view that had the learned Judge applied his mind to the elements and requirements for proof of a constructive trust, he would have examined if there was evidence of the common intention of the parties not only in light of the account and financial statements but also in light of the evidence in other documents and correspondence on the dealings between the parties that was provided by the Appellants. It is also notable in this respect that the financial statements relied upon by the trial Judge emanated from a third party and not from the siblings. We in this respect ascribe to the holding by in Baroness Hale in Stack vs Dowden [supra] as follows:
41.We will commence with an examination of the evidence on the parties’ intentions as regards the payments made by the siblings whether in repayment of the loan, or for the upkeep of the suit properties. The Appellants did provide evidence of a document titled “Diani House Accounts” at pages 672 to 673 of the Record of Appeal, which showed the credits made in 1966 and 1967 by all the siblings including CJA (Christopher John Archer), and including payments made by RDA (Robert D. Archer) and JHA (James Archer –the 1st Appellant herein) to HAD (Howard D. Archer) of 521 pounds each. The debits from the account included for the maintenance, electricity, wages and insurance for the premises on the suit properties. There is no mention of the Appellants being creditors in the said document, which also clearly controverts the argument made by the Respondents that the Appellants were repaying the loan to Christopher John Archer, as it evidenced direct payments by the siblings both to the account of Diani House and to Howard D. Archer, and therefore an implied intention that the payments were being made both for the purchase and common running and managements of the suit properties.
42.This intention is more clearly manifested in a letter by Christopher John Archer dated 25th June 1969, which was addressed to the 1st Appellant and the other siblings, and which also clearly acknowledges the financial contributions to and beneficial interests of the other siblings in the suit properties. Given the requirement to proof of common intention either by way of express agreement or conduct, it is necessary to reproduce the contents of the entire letter, which were as follows:
43.Over ten years later, another letter dated 14th April 1982 was written to the siblings by Christopher John Archer, whose contents we will also reproduce verbatim for effect, as they clearly manifest the same intention as follows:
44.The Appellants also provided copies of various emails exchanged with the 1st and 2nd Respondents (“Christine” and “Lulu”), in which the two Respondents expressly acknowledge that they were aware of the intentions that the suit properties were to be held in trust by their father, and of note are two emails of 10th July 2007 as follows:
45.There is also evidence that the 1st Respondent intended to formalise the trust arrangement in her letter of 9th January 2008 as follows:
46.As regards the intention on the part of the Appellants, there was evidence on record of various letters from their lawyers to Christopher John Archer, dated 8th December 1976, 27th August 1991 and 30th September 1991 which we shall reproduce and analyse later on in this judgment, and which consistently reiterated that the suit properties were held in trust by Christopher John Archer on behalf of his siblings. Our conclusion therefore, from our analysis and revaluation of the evidence, is that it is evident that it was the common intention of Christopher John Archer and his siblings including the Appellants from the time of purchase of the suit properties and at least until 1982, that they all had beneficial interests in the suit properties, and that up until 2008, it was the common intention of the Appellants and Respondents that the suit properties were trust property. It is also our conclusion that the Appellants have provided evidence that shows that the siblings did pay instalments to Howard D. Archer in repayment of the loan advanced for the purchase of the suit properties, and did make financial contributions to the maintenance and upkeep of the suit properties to their detriment arising from this understanding. We therefore find that contrary to the holding by the trial Judge, there was sufficient evidence of a common intention that the suit properties were to be held in trust by Christopher John Archer, and after his death, by the Respondents for the benefit of the other siblings. The trial Judge erred in failing to find that there was a constructive trust thereby created in favour of the Appellants.
47.This finding leads us to the second issue, as to whether the Appellants’ claim is defeated by laches and is time barred, which was the response by the Respondents to the existence of any beneficial interests in the suit properties by the Appellants. While making reference to the various letters written by the 1st Appellants’ lawyers on 8th December 1976, 7th August, 1991, 27th August 1991. and 30th September 1991, the Respondents’ counsel submitted that the Appellants were indeed aware of the fact that the Respondents' father was inclined to act in violation, breach, or in defiance of their alleged trust interest in the suit properties, and that it was evident that as far back as the year 1991, both the Appellants and Christopher John Archer had already taken strong positions in the dispute with Christopher John Archer asserting exclusive ownership rights through subdivision of the suit properties and advertisement for sale, and the Appellants contending that Christopher John Archer held the property in trust for all of the siblings.
48.Therefore, that as at 5th June 2012 when the Appellants’ Originating Summons was filed in the trial Court, over thirty - six (36) years had lapsed from the date of the Appellants' demand letter dated 8th December 1976. In addition, that over twenty-one (21) years had lapsed since the subsequent letters dated 7th August, 1991, 27th August 1991. and 30th September 1991 were written by or to the Appellants. In addition, that the Appellants elected to take no action to enforce their alleged trust interest in the suit property but instead waited until long after the demise of their own father, the late Howard D. Archer on 27th August 1967, long after the demise of the Christopher John Archer on 2nd April 2008, and well after the succession proceedings in respect of his Estate, which expressly included the suit properties herein had been conducted and the beneficiaries named in his Will who are the Respondents herein registered as the proprietors of their respective shares of the suit properties by way of transmission. Further, that the suit was prejudicial to the Respondents because the evidence of the persons would have been vital in establishing their claimed intentions over the suit properties could not be procured.
49.Reliance was placed on the decision of this Court in Benjoh Amalgamated Limited & Another versus Kenya Commercial Bank Limited (2014] eKLR that a claimant in equity is bound to prosecute his claim without undue delay, since equity aids the vigilant, not the indolent and delay defeats equities, to submit that the Appellants' claim was defeated by unreasonable and unconscionable laches. On the question of limitation, the Respondents’ counsel submitted that the suit was equally also barred by the provisions of section 4 (1) (e) of the Limitation of Actions Act, which is clear that actions seeking an equitable relief, such as the Appellants' action before the trial Court, may not be brought after a period of six years from the date when the cause of action arose and that the learned trial Judge could not be faulted in finding so.
50.The Appellants’ counsel submitted that the Appellants’ claim sought to enforce their beneficial rights in which the cause of action arose when the Respondents’ transferred the suit property to their own name acting as executors, which was a threat to the Appellants’ interests in the suit property. Further, that this was done after the Respondents admitted knowledge of the existence of the trust, and that the Respondent's claim as to the Appellants’ delay failed because there were no prior transactions adverse to the Appellants interest on the suit land. According to the counsel, the Appellants had diligently prosecuted their claim since the cause of action arose, they brought the claim before the end of the six years, and there was no unreasonable delay. Reliance was placed on the case of Diana Kathumbi Kiio vs Reuben Musyoki (2018) eKLR, where this court referred to Lord Diplock's definition of a cause of action in the case of Letang v Cooper [1964] 2 ALL ER 929.
51.The learned trial Judge found as follows in this regard:
52.Laches is defined in Black’s Law Dictionary Ninth Edition at page 953 as “ the equitable doctrine by which a court denies relief to a claimant who has unreasonably delayed in asserting the claim, when that delay has prejudiced the party against whom relief is sought.” Limitation of actions is on the other hand defined at page 1012 as “a statutory period after which a lawsuit for prosecution cannot be brought in court”. Section 4 (1)(e) of the Limitation of Action Act in this respect provides that in cases of breach of trust, there is a limitation period of six years from the date on which the cause of action accrued. As regards equitable claims to land, the Act provides as follows in section 18:
53.Under section 7 of the Act an action to recover land may not be brought after the end of twelve years from the date on which the right of action accrued. In this respect, it is also notable that section 18 is made subject to section 20(1) of the Act, which contains a unique exception to limitation of time when it comes to actions for recovery of land by a beneficiary of a trust, and provides as follows :The import of these provisions was determined by the Victoria Court of Appeal in the Australian case of McNab vs Graham [2017] VSCA 352 and Supreme Court of the United Kingdom in the case of Burnden Holdings (UK) Ltd vs Fielding & Another [2018] UKSC 14 which is that where a constructive trustee misappropriates or converts trust property for their own use, then an action by a beneficiary for the recovery of trust property will be a cause of action within the meaning of section 21(1)(b) and, will not be time barred. In effect this section creates a permanent liability for trustees with respect to trust property in the circumstances set out in those provisions.
54.On the distinction and relationship between laches and limitation of actions it is explained as follows by John F. O’Connell in Remedies in a Nutshell, 2nd Edition at page 16:
55.The doctrine of laches will therefore apply whether or not a suit is time barred, except that where the suit is not time barred, the delay needs to be demonstrated to have been unreasonable and prejudicial to the other parties. As regards when time starts to run, time typically starts to run from the point when the breach of trust has been committed, that is when a trustee fails to comply with the duties imposed upon him or her by equity, and the key applicable obligation and duty in the case of a constructive trustee is the duty to safeguard the trust assets. It was held in Paragon Finance Plc vs D B Thakerar and Others (supra), that a constructive trustee does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and his possession of the property is coloured from the first by the trust and confidence by means of which he obtained it. Therefore, that any subsequent appropriation of the property to his own use is a breach of that trust.
56.Applying the applicable law to the facts of this case, no question of limitation of actions can arise, since the suit by the Appellants was an action by beneficiaries to recover trust property which was initially held by Christopher John Archer, and was later converted to the Respondents’ personal use, and therefore fell within the exception provided for in section 20(1)(b) of the Limitation of Action Act. Be that as it may, we will proceed to address the claim as regards the application of the doctrine of laches.
57.The Respondents in this respect allege that the cause of action arose on 8th December 1976, by a letter written by the 1st Appellant’s lawyer to Christopher John Archer, which they term a demand letter and which stated as follows
58.It is notable that firstly, the said letter is a response to previous letter by Christopher Archer dated 29 November 1976 which the Respondents annexed to their replying affidavit and in which Christopher John Archer had made an offer to pay the siblings their share of the suit property which was being contested by the letter of 8th December 1976, and secondly, that it seeks a confirmation from Christopher John Archer as regards the position of the suit properties as trust properties. More significantly though, is that after this letter was received, Christopher John Archer subsequently wrote the letter dated 14th April 1982 which we have reproduced in the foregoing, expressly confirming the beneficial interests of the siblings in the suit properties. It cannot therefore be said that the Appellants acted unreasonably in proceedings with the state of affairs, or that time started to ran with respect to any cause of action in light of this acknowledgement, and as expressly provided in section 23 to 25 of the Limitation of Action Act as follows:23.(1)Where - (a) a right of action (including a foreclosure action) to recover land; or (b) a right of a mortgagee of movable property to bring a foreclosure action in respect of the property, has accrued, and- (i) the person in possession of the land or movable property acknowledges the title of the person to whom the right of action has accrued; the right accrues on and not before the date of the acknowledgement or payment.
24.(1)Every acknowledgment of the kind mentioned in section 23 must be in writing and signed by the person making it. (2) The acknowledgment or payment mentioned in section 23 is one made to the person, or to an agent of the person, whose title or claim is being acknowledged, or in respect of whose claim the payment is being made, as the case may be, and it may be made by the agent of the person by whom it is required by that section to be made.
25.(1)An acknowledgment of the title to any land or mortgaged movable property, by any person in possession thereof, binds all other persons in possession during the ensuing period of limitation.
59.As regards the letters of 7th August, 1991 and 27th August 1991, these were correspondence between the 1st Appellant and his lawyer regarding advice as regards sub-division of the suit properties and planned advertising of the subdivided plots for sale by Christopher John Archer. It is however important to reproduce the contents of the letter of 30th September 1991, which was thereafter written to Christopher John Archer by the Appellants’ lawyer, which read as follows:
60.The letter requested confirmation of the planned sale, which was not forthcoming, and in any event it is evident that the sale did not take place in Christopher John Archer’s lifetime as he bequeathed the suit properties to the Respondents in his will. This fact is also important in determining when the causes of action in this matter accrued, which could only be when Christopher John Archer acted inconsistently with the other siblings’ beneficial interests in the suit properties by bequeathing the properties to the Respondents by a will dated 24th July 2007. The cause of action against the Respondents accrued when they, with the demonstrated knowledge that the suit properties was held by their father in trust for the other siblings, purported to convert the properties to their own use and dispose of them during the pendency of the Appellants’ suit in the trial Court and during the pendency of this appeal, as shown later on in this judgment. There was thus no unreasonable delay by the Appellants in bringing his claim, and the learned trial Judge also erred in applying the wrong provisions of the law as regards limitation of action to the facts of this case, and in finding that the Appellants’ suit was time barred.
61.What then are the remedies, if any, available to the Appellants, which is the last issue before us for determination. The Appellant’s counsel submitted that the Appellants contributed approximately 25% each of the purchase price and maintenance of the suit property, and while applying the principles set out by the Supreme Court of the United Kingdom in Jones vs Kernott [2011] UKSC 53, stated that the starting point is that in 1966, all four siblings had a 25% share each, and that in 2022, after the dispositions carried out by the Respondents, the plots that are remaining fall under the 50% share that the Appellants were entitled to in equity in 1966. Therefore, that it is only fair, just and equitable that they be awarded the remaining plot being Kwale/Diani Beach Block 1752 measuring 6.5058 acres. The counsel therefore sought orders that the judgment delivered by the trial Court on 26th November 2019 be set aside, that judgment be entered in favour of the Appellants on the terms of their Originating Summons dated 5th June 2012, but amended to state that Title Number: Kwale/Diani Beach Block/1752 be registered in the names of the two Appellants as prayed in the Appellants' Supplementary Memorandum of Appeal, and for costs of the trial and this appeal.
62.The Respondents’ counsel in response submitted that the appeal has been irredeemably overtaken by events and this Court should not act in vain, and referred us to the record of this Court in Mombasa Civil Application No. E078 of 2021- James Archer and Joanna Trent vs Inger Christine Archer, Annelise Archer-Clark and Helen Kay Hartley, which was application by the Appellants for an injunction pending appeal. and the Replying Affidavit sworn therein by Helen Kay Hartley on 8th November 2021 and annexures thereto that demonstrate that all of the suit properties have been dealt with by way of transfers to third parties who are not before this Court, and who shall definitely be affected by any orders which may be issued in this Appeal in respect of the suit properties.
63.The prevailing position in respect of the suit properties, which now comprise of the eight (8) subdivision plots known as Kwale/Diani Beach Blocks 1745, 1746, 1747, 1748, 1749, 1750, 1751 and 1752, was stated by the Respondents to be as follows:-a.The plots known as Kwale/Diani Beach Blocks 1745 and 1747 were vide a Transfer Instrument dated 5.03.2019 which was registered on 2.12.2019 transferred for valuable consideration to one Anne Vaughan who is not a party to this appeal and a Certificate of Lease issued .b.The plots known as Kwale/Diani Beach Blocks 1746, 1748, 1749, 1750 and 1751 were vide an Transfer Instrument dated 5.05.2021 which was registered on 19.05.2021 also transferred for valuable consideration to a company known as Snapdragon Enterprises Limited and a Certificate of Lease issued to the said company which is also not a party to this appeal.c.The plot known as Kwale/Diani Beach Block/1752 was also vide a Transfer Instrument dated 5.05.2021 which was registered on 19.05.2021 also transferred for valuable consideration to a company known as Kama Kawaida Property Limited and a Certificate of Lease issued to the said company which is also not a party to this appeal.
64.It is evident that the Respondents have disposed of the suit properties, and thereby dissipated the Appellants’ beneficial interests in the suit property. In our view this action by the Respondents were not only unconscionable but also resulted in unjust enrichment of the Respondents, who we have found were aware and had also intended that the suit property was to be held in trust. In this regard, even if the suit property was transmitted by will to the Respondents, it was subject to the trust and Christopher John Archer could only bequeath his share of the beneficial interest in the suit properties. In essence the Respondents were firstly, constructive trustees arising from their knowledge and common intention that the suit property was held in trust by their father for his siblings; and secondly, being the successor in titles of the suit properties, held the Appellants’ share of the beneficial interest in trust.
65.The Respondents therefore had a duty of care and to account with respect to the Appellants’ share of the beneficial interest in the suit properties. It is notable in this respect that the initial intention and pattern of contributions were premised on each sibling having an equal share and responsibility for the suit properties. However, in the course of the dealings between the siblings, Robert D. Archer indicated by an affidavit he swore on 1st November 2007 that while he was of the view that the suit properties were held in trust for the siblings, he had no interest in seeking redress.
66.We are of the view that whereas we may not be able to restore to the Appellants the suit properties which they have been wrongly deprived of, the Appellants are not without remedy, as this is a Court of justice and equity, which is expressly mandated under Article 159(2) of the Constitution and section 3B of the Appellate Jurisdiction Act to dispense substantive and expeditious justice. Under Rule 33 of the Court of Appeal Rules of 2022 (then Rule 30 of the 2010 Rules,) we also have the power, upon hearing an appeal, to confirm, reverse or vary the decision of the trial court, to remit the proceedings to the trial court with such directions as may be appropriate, or to order a new trial, and to make any necessary incidental or consequential orders, including orders as to costs.
67.We accordingly find merit in this appeal, and set aside the judgment of the Environment and Land Court at Mombasa (Yano J.) delivered in Mombasa ELC Suit 345 of 2017 on 26th November 2019 in its entirety. We in addition grant the following orders:I.A declaration that the 1st Appellant, 2nd Appellant and one Robert D. Archer held a beneficial interest in the properties previously known as Kwale/Diani Beach Block/806, 807 and 808 and later sub-divided into the eight (8) parcels of land known as Kwale/Diani Beach Blocks 1745, 1746, 1747, 1748, 1749, 1750, 1751 and 1752 , that were registered in the names of Inger Christine Archer, Annalise Archer Clark and Hellen Kay Hartley, the 1st, 2nd and 3rd Respondents herein.II.A declaration that the properties previously known as Kwale/Diani Beach Block/806, 807 and 808 and later sub-divided into the eight (8) parcels of land known as Kwale/Diani Beach Blocks 1745, 1746, 1747, 1748, 1749, 1750, 1751 and 1752, were held in trust by Inger Christine Archer, Annalise Archer Clark and Hellen Kay Hartley, the 1st, 2nd and 3rd Respondents herein, as constructive trustees for the 1st Appellant, 2nd Appellant and one Robert D. Archer.III.The parties’ respective shares of the beneficial interest in the properties previously known as Kwale/Diani Beach Block/806, 807 and 808, and later sub-divided into the eight (8) parcels of land known as Kwale/Diani Beach Blocks 1745, 1746, 1747, 1748, 1749, 1750, 1751 and 1752 that were registered in the names of Inger Christine Archer, Annalise Archer Clark and Hellen Kay Hartley, the 1st, 2nd and 3rd Respondents herein are hereby apportioned and quantified as follows:a.The 1st, 2nd and 3rd Respondents’ joint share was 25%b.The 1st Appellant’s share was 25%,c.The 2nd Appellant’s share was 25%,d.Robert D. Archer’s share was 25%.IV.This matter shall be remitted back to the Environment and Land Court before a Judge other than Yano J., for appropriate directions and to take evidence on the consequential issue arising from this judgment, namely the furnishing of accounts by the 1st, 2ndand 3rd Respondents on the sale and transfer of the properties previously known as Kwale/Diani Beach Block/806, 807 and 808 and later sub- divided into the eight (8) parcels of land known as Kwale/Diani Beach Blocks 1745, 1746, 1747, 1748, 1749, 1750, 1751 and 1752; and to subsequently enter judgment on the quantum due to the 1st and 2nd Appellants and payable by the 1st, 2nd and 3rd Respondents from the proceeds of sale of the said properties, in line with parties’ respective shares as found and ordered by this Court in Order III hereinabove.V.The 1st and 2nd Appellants shall have the costs of the suit of the trial in the Environment and Land Court and of this appeal.
68.It is so ordered.
DATED AND DELIVERED AT MOMBASA THIS 17TH DAY OF MARCH 2023.S. GATEMBU KAIRU, FCIArb…………………………….JUDGE OF APPEALP. NYAMWEYA…….……….………….JUDGE OF APPEALJ. LESIIT……….….….………….JUDGE OF APPEALI certify that this is a true copy of the original SignedDEPUTY REGISTRAR
