Nyakundi & another v Embakasi Ranching Company Limited & another [2023] KEELC 20322 (KLR)

Nyakundi & another v Embakasi Ranching Company Limited & another (Environment and Land Case Civil Suit E117 of 2021) [2023] KEELC 20322 (KLR) (26 September 2023) (Judgment)

Neutral citation: [2023] KEELC 20322 (KLR)

Republic of Kenya

In the Environment and Land Court at Nairobi

Environment and Land Case Civil Suit E117 of 2021

MD Mwangi, J

September 26, 2023

Between

Assa Kibagendi Nyakundi

1st Plaintiff

Lydia Nyakundi

2nd Plaintiff

and

Embakasi Ranching Company Limited

1st Defendant

Wairimu Nganga

2nd Defendant

Judgment

1. By an Originating Summons amended on the 6th May, 2021, the Plaintiffs herein who claim to be shareholders of the 1st Defendant and purchasers of all that parcel of land now known as Nairobi Block 105/8443 seek determination of the following questions: -a.Whether the Plaintiffs are entitled to the possession, occupation and/or ownership of parcel number Nairobi Block 105/8443. b.Whether any title or certificate of lease issued to the 2nd Defendant should be revoked and instead the Chief Land Registrar issue a Certificate of Lease to the Plaintiffs Assa Kibagendi Nyakundi And Lydia Nyakundi.c.Who pays the costs of this Originating Summons.d.Since the 1st Defendant is yet to allocate the Plaintiffs bonus what damages would be accorded to the Plaintiffs against the 1st Defendant.e.In lieu of damages, what order commends itself against the 1st Defendant.

2. The summons is premised on the Supporting Affidavit of Assa Kibagendi M. Nyakundi, the 1st Plaintiff herein deponed on the March 29, 2021. It is the Plaintiffs’ contention that they entered into a sale agreement on the June 24, 2002 for the purchase of the parcel of land now known as Nairobi/Block 105/8443, the suit property herein for a consideration of Kshs. 610,000/= with one Samson Kihara. That the said Vendor, who was a shareholder of the 1st Defendant also sold his Share Certificate Number 1461 to the Plaintiffs. That upon payment of the requisite fees, the Plaintiffs took possession and made developments therein with the knowledge of the 1st Defendant.

3. He avers that being shareholders of the 1st Defendant, the 1st Defendant was under the obligation to facilitate the processing of the Certificate of Lease or any such document of title in favour of the Plaintiffs by the Chief Land Registrar. The efforts by the Plaintiffs to obtain the said Certificate of Lease were unsuccessful.

4. That upon the directive by the Former President, Uhuru Kenyatta that all shareholders of the 1st Defendant to be issued with Certificates of Lease, the Plaintiffs submitted their details and necessary documents to the 1st Defendant. They have however established that the suit property was fraudulently registered on March 27, 2019 in the name of the 2nd Defendant. It therefore in the interest of justice that the orders sought be grant be granted.

5. Despite being served, the Defendants did not enter appearance nor file any document to defend the suit. The matter therefore proceeded as an undefended suit.

Evidence adduced 6. At the hearing of the case, the 1st Plaintiff testified as PW1 in support of the Plaintiffs’ case and on behalf of the 2nd Plaintiff. He stated that in the year 2002, they entered into an agreement with one Samson Kihara who was a shareholder of the 1st Defendant Company. That they purchased a piece of land the subject –matter of this suit equivalent of 1 share. The consideration was Kshs. 610,000/=. The one share also includes a “bonus” plot to be allocated at Ruai Shopping Centre. He produced the Banker’s Cheque No. 034750 and the Sale Agreement as PE 1 & 2 respectively.

7. PW 1 avers that the Vendor transferred the share to them. They signed the share transfer form which was duly stamped by the collector of stamp duties on June 26, 2002. The 1st Defendant endorsed the transfer and recorded it in its register. The Share Transfer document was produced as PE 3. The 1st Defendant confirmed the transfer vide the confirmation of site dated June 26, 2002 produced as PE 4.

8. It was PW 1’s evidence that they immediately after payment of the consideration took possession of the parcel of land and developed it. That following the directive by the Former President, Uhuru Kenyatta that Shareholders of the 1st Defendant be issued with titles, the 1st Defendant issued a notice dated July 16, 2020 urging it members to present documents to their offices for verification. That the Plaintiffs presented their documents as required only to later discover that their land had been registered as LR No. Nairobi/ Block 105/8443 in the name of the 2nd Defendant.

9. It was his testimony that the suit property is Plot No. 8443 measuring 0. 126 ha, a leasehold for 99 years from 1988. The search is dated February 17, 2021. He produced the notice by the 1st Defendant company and a copy of the Official Search Certificate marked as PE 5 and 6 respectively.

10. He restated the prayers sought in the Amended Originating Summons and that in regard to the bonus plot, their prayer was for damages to be quantified at the current market value of the plots at the Ruai Centre. The witness produced a Valuation Report marked as PE 7 showing Kshs. 16. 5 Million as the current market price for plots at the Ruai Centre.

11. The witness further produced the document on the Plaintiffs’ Supplementary List of Documents dated March 23, 2023. The documents confirm payment of rates and includes a Surveyor’s report in respect of the suit property. The documents were marked as PE 8 (a), (b) and 9.

Court’s directions 12. The court directed the Plaintiffs to file written submissions. The submissions are dated May 31, 2023. The court has had the occasion to read them.

Plaintiffs’ submissions 13. The Plaintiffs restated the five (5) questions for determination; the first is whether the Plaintiffs are entitled to the possession, occupation and/or ownership of parcel Number Nairobi Block 105/ 8443. The Plaintiffs submit that they have the right to occupy, possess and/or own plot parcel No. Nairobi Block 105/8443 which they purchased from one Samson Kihara who owned a share in the 1st Defendant Company. They have had exclusive possession of the suit property for over 12 years and have developed the same.

14. The second issue according to the Plaintiffs is whether any title or certificate of lease issued to the 2nd Defendant should be revoked and instead the Chief Land Registrar issues a Certificate of Lease to the Plaintiffs. The Plaintiffs submit that the Certificate of Lease issued to the 2nd Defendant herein should be revoked and a fresh one issued to the Plaintiffs. They affirm that they are the lawful proprietors of the suit property and their rights should be protected under Article 40 of theConstitution.

15. The Plaintiff’s submit that though Section 26 of the Land Registration Act is categorical that a Certificate of title is prima facie evidence that the person named therein is the proprietor of the land, the same can be challenged where the Certificate of title has been acquired fraudulently, unprocedurally or through corrupt scheme. The Court has powers to rectify the register by directing that any registration be cancelled or amended if satisfied that any registration was obtained or made fraudulently under Section 80 (1) of the Land Registration Act, 2012.

16. The third issue is whether the Plaintiffs are entitled to damages having been not allocated the bonus plot. The Plaintiffs submit that since the 1 st Defendant is yet to allocate them the bonus plot as stated in the agreement, they are entitled to damages. The Plaintiffs aver that the current market value of land at the locality where the bonus plot was to be is Kshs. 15, 500,000/=. They rely on the Valuation Report produced in their evidence. That the said figure is to help the court in determining the damages payable under this heading.

17. On the issue as to whether the Plaintiffs are entitled to general damages against the 1st Defendant, it is trite law that trespass to land is actionable per se.

18. Finally, on the issue of costs, the Plaintiffs submit that costs follow the event. The Plaintiffs being the rightful owners of the suit property, are entitled to costs of this suit.

Issues for determination 19. I have considered the pleadings, submissions and the applicable law. The issues which in my opinion arise for determination are as follows:i.Whether the Plaintiffs acquired valid title to land parcel Number Nairobi Block 105/ 8443ii.Whether the Plaintiffs are entitled to the bonus plot, and if in the affirmative, what damages are payable?iii.Whether title deeds issued should be cancelled/revokediv.Which reliefs should the court issue?

Analysis and determination A. Whether the Plaintiffs acquired valid title to land parcel Number Nairobi Block 105/ 8443

20. Before delving on the issues, it is important to note that although the Plaintiffs’ case is undefended, the duty imposed on them of proving the issues of fact pleaded in their case is not taken away by the fact that the suit is undefended. Section 107 (1) of the Evidence Act, Cap 80 Laws of Kenya provides that:“Whoever desires any court to give judgment as to any legal right or liability dependant on the existence of facts which he asserts must prove that those facts exist.”

21. Sections 109 and 112 of the Evidence Act are also relevant in that regard. They provide that:109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of the fact shall lie on any particular person.112. in civil proceedings, when any fact is especially within the knowledge of any party to those proceedings, the burden of proving or disproving the fact is upon him.”

22. It is clear from the evidence that the Plaintiffs entered into an agreement with one Samson Kihara who was a shareholder with the 1st Defendant Company. They purchased a piece of land the subject –matter of this suit equivalent of 1 share. The consideration was Kshs. 610,000/=. The Plaintiffs allege that the one share also included a “bonus” plot that was to be allocated at Ruai Shopping Centre.

23. The signed share transfer form was duly stamped by the collector of stamp duties on June 26, 2002. The 1st Defendant Company endorsed the transfer and recorded it in its register. The Share Transfer document was produced as PE 3. The 1st Defendant Company confirmed the transfer in favour of the Plaintiffs vide the confirmation of site dated June 26, 2002 produced as PE 4. It was PW 1’s evidence that they immediately after payment of the consideration took possession of the parcel of land and have since developed it.

24. Validity of a contract is provided for in law. Section 3(3) of the Law of Contract Act read together with section 38 of the Land Act, 2012 provide that no suit shall be brought upon a contract for the disposition of an interest in land unless; the contract upon which the suit is founded is in writing, signed by all the parties, and the signature of each party signing has been attested by a witness who is present when the contract was signed.

25. The Court has carefully perused the sale agreement produced as an Exhibit by the Plaintiffs and noted that the same is in writing and is signed by the parties. It thus meets the requirements of Section 3(3) of the Contract Act. Further the agreement for sale contains the names of the parties, the description of the property, the purchase price and the conditions thereto.

26. From the evidence adduced in court, the Vendor, Samson Kihara, was a shareholder of the 1st Defendant Company. He transferred his share to the Plaintiffs as shown on the Share Transfer Form adduced as PE 3. The transfer was endorsed by the 1st Defendant Company. The property passed to the Plaintiffs. The Plaintiffs thereafter took possession of the suit property and developed it. They have since been in possession of the suit property.

27. In the absence of any evidence on the contrary, it is the court’s finding that the Plaintiffs acquired valid title to land parcel Number Nairobi Block 105/8443. The title should have been registered in their favour.

B. Whether the Plaintiffs are entitled to the bonus plot, if in the affirmative, which damages are payable

28. The Plaintiffs argue that they are entitled to another plot from the 1st Defendant Company as a bonus on top of the suit property. They make reference to the sale agreement. At this point, it is important to reproduce the terms of the agreement here.

29. In the description clause, it was agreed that the Vendor was the owner of one share of Embakasi Ranching Company Limited under Share Certificate Number 1461.

30. The purchase of the said one share would constitute the purchase by the Purchasers of the Vendor’s Plot Number 172 (now registered as land parcel Number Nairobi Block 105/ 8443) situate at Ruai together with another plot to be identified that the Vendor is entitled to by virtue of the said share from Embakasi Ranching Company Limited.

31. Though the court has upheld the agreement between the Plaintiffs and Samson Kihara as valid; it cannot be binding upon the 1st Defendant Company who was not a party to it.

32. Under the common law doctrine of privity of contract, rights and obligations under a contract are only conferred or imposed on the parties to the contract. Halsbury’s Laws of England, 4thEdn. Vol. 9 (1) Para. 749 quoted in the Court of Appeal decision in Aineah Liluyani Njirah vs. Aga Khan Health Services [2013] Civil Application No. 194 of 2009 states as follows:-“The general rule: the doctrine of privity of contract is that, as a general rule, at common law a contract cannot confer rights or impose strangers to it. That is, persons who are not parties to it. The parties to a contract are those persons who reach agreement and, whilst it may be clear in a simple case who those parties are, it may not be so obvious where there are several contracts, or several parties, or both, for example in the case of multilateral contracts; collateral contracts, irrevocable credits contracts made on the basis of the memorandum and articles of a company; collective agreements, contracts with unincorporated association; and mortgage surveys and valuation.”

33. The 1st Defendant Company was not a party to the Sale Agreement. It is therefore not bound by the terms of the said Agreement. None of the documents presented in court support the Plaintiffs’ claim of entitlement to a bonus plot.

34. In any case, Clause 3 of the Sale Agreement produced by the Plaintiffs constituted an undertaking by the vendor that he would procure for completeness of the agreement. It is the Vendor who was under the obligation to procure the said plot.

35. It is this court’s finding therefore that the Plaintiffs’ claim for a bonus plot is only enforceable as against the Vendor and not the 1st Defendant Company.

Whether the title issue in the name of the 2nd Defendant should be revoked and and/or cancelled.

36. It was PW 1’s evidence that they immediately after payment of the consideration they took possession of the parcel of land and developed it. However, when the 1st Defendant issued a notice dated July 16, 2020 urging it members to present documents to their offices for verification, the Plaintiffs discovered that the 2nd Defendant had been registered as the owner of LR No. Nairobi/ Block 105/8443. This is evident by the official search conducted on the February 17, 2021. From the Official Search Certificate, the 2nd Defendant was issued with Certificate of Lease on the March 27, 2019.

37. From the record, the 1st Defendant Company endorsed the transfer of the parcel of land to the Plaintiffs. The Plaintiffs became the rightful owners of the suit property. Any subsequent transfer of the suit property without the consent of the Plaintiffs was therefore not only illegal but irregular.

38. Section 80 of the Registration of Land Act provides that:(1)Subject to subsection (2), the court may order the rectification of the register by directing that any registration be cancelled or amended if it is satisfied that any registration was obtained, made or omitted by fraud or mistake.(2)The register shall not be rectified to affect the title of a proprietor who is in possession and had acquired the land, lease or charge for valuable consideration, unless the 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 any act, neglect or default.”

39. From the above provisions it is clear that the court has powers to order rectification of a register by directing that the registration be cancelled or amended if it is satisfied that any registration was obtained, made or omitted by fraud or mistake.

40. Having found that the 2nd Defendant’s title was acquired through a fraudulent or irregular means, the same is amenable to revocation and/or cancellation.

41. The Plaintiffs have been in possession of the suit property since they purchased it. The claim for general damages for trespass therefore has no basis.

C. Which reliefs should the court issue? 42. Based on the foregoing I find that the Plaintiffs have proved their case on a balance of probabilities and I hereby enter judgment for the Plaintiffs against the Defendants in the following terms:

a.The Plaintiffs are entitled to the possession, occupation and/or ownership of parcel number Nairobi Block 105/8443. b.Any title or certificate of lease issued to the 2nd Defendant be and is hereby revoked and/ cancelled.c.The Chief Land Registrar is hereby directed to issue a Certificate of Lease to the Plaintiffs herein.d.Costs are awarded to the Plaintiffs as against the 2nd Defendant only.It is so ordered

Dated, Signed and delivered virtually at Nairobi this 26thday of September, 2023. M.D. MWANGIJUDGEIn the virtual presence of:Ayora for the Plaintiffs/Applicants.No appearance for the Defendants/RespondentYvette: Court Assistant.M.D. MWANGIJUDGEELC CASE NO. E117 OF 2021 JUDGMENT Page 8 of 8