VB v VB (As Trustee of CADP) [2019] KEHC 6125 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT MALINDI

CIVIL SUIT NO. 2 OF 2019 (O.S.)

IN THE MATTER OF:  SECTION 56 57 AND 65 OF THE TRUSTEE ACT (CAP. 167) LAWS OF KENYA

AND

IN THE MATTER OF:  UNIT NO. X AND GARAGE NO. X SITUATED ON LAND PORTION NUMBER XXX (ORIGINAL NO. XXX/X)

BETWEEN

VB................................................. PLAINTIFF

VERSUS

VB (As Trustee of CADP).....DEFENDANT

RULING

This application was made by Originating Summons dated 28th February, 2019 filed in terms of Sections 56, 57 and 65 of the Trustee Act (Cap. 167) Laws of Kenya, Rules 2, 3, and 4 of the Trustee Rules, Order 37 Rule 1 Civil Procedure Rules, 2010 and brought by the applicant as the mother VB on behalf of the minor C.A.D.P. The application sought for orders that:

a) Spent

b) The Honourable Court be pleased to authorize the subletting or sale of the Unit No. x and Garage No. x situated on land portion No. xxx(Original No. xxx/x) Malindi and the proceed realized from the sub-letting or sale of the same be applied in the settlement of the following :

a. The costs of and incidental to the valuation of the said unit

b. The costs of and incidental to the transfer.

c. The payment of school fees.

d. The investment of the balance of the sub-lease or sale in a call account for the purpose of future application in the education of the minor.

c) The Honorable Court be pleased to issue directions on the service of the Originating Summon herein.

d) The costs of and incidental to this application be provided for.

The application was based on the grounds set out therein and supported by the affidavit of VB dated 28th February 2019.

Factual Background

CADP is a minor and daughter to the applicant currently attending and receiving instructions at [Particulars Withheld] Preparatory School Malindi. The applicant has applied to have her transfer to [Particulars Withheld] School as she feel it is in best interest of the child to be at a school capable of providing her with appropriate education by September, 2019. That the new school requires a deposit of fees on admission of about Ksh. 2,000,000/- hence the need to grant the orders sought. That the Plaintiff acquired Unit No. x and Garage No. x situated on land portion No. [Particulars Withheld] (Original No. [Particulars Withheld]) Malindi as an investment for the benefit of the minor. That the purpose for which the investment was made has now materialized and it is in the best interest of the child that the Court does authorize the sub-letting or sale.

Analysis and Determinations

The issue for determination is whether this court should approve the sale or subletting of the property known as Unit No. x and Garage No. x situated on land portion No. [Particulars Withheld] (Original No. [Particulars Withheld]). The procedure for the authorization of such sale is well outlined by various legal provisions as I shall endeavor to discuss presently.

Order 37 Rule 1 of the Civil Procedure Rules, 2010 provides as follows:

“1.  The executors or administrators of a deceased person, or any of them, and the trustees under any deed or instrument, or any of them, and any person claiming to be interested in the relief sought as creditor, devisee, legatee, heir, or legal representative of a deceased person, or as cestui que trust under the terms of any deed or instrument, or as claiming by assignment, or otherwise, under any such creditor or other person as aforesaid, may take out as of course, an originating summons, returnable before a judge sitting in chambers for such relief of the nature or kind following, as may by the summons be specified, and as circumstances of the case may require, that is to say, the determination, without the administration of the estate or trust, of any of the following questions.

(a) any question affecting the rights or interest of the person claiming to be creditor, devisee, legatee, heir or cestui que trust;

(b)  the ascertainment of any class of creditors, devisees, legatees, heirs, or others;

(c)  the furnishing of any particular accounts by the executors, administrators or trustees, and the vouching, when necessary, of such accounts;

(d)  the payment into court of any money in the hands of the executors, administrators or trustees;

(e)  directing the executors, administrators or trustees to do, or abstain from doing, any particular act in their character as executors, administrators or trustees;

(f)  the approval of a sale, purchase, compromise or other transaction;

(g)  the determination of any question arising directly out of the administration of the estate or trust.”

The power to sell trust property is conferred upon an Applicant as a trustee by Section 13 of the Trustee Actwhich provides as follows:

“(1) Where a trust for sale or a power of sale of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property, either subject to prior charges or not, and either together or in lots, by public auction or by private contract, subject to any such conditions respecting title or evidence of title or other matter as the trustee thinks fit, with power to vary any contract for sale, and to buy in at any auction, or to rescind any contract for sale and to resell, without being answerable for any loss.

(2) A trust or power to sell or dispose of land includes a trust or power to sell or dispose of part thereof.”

Going further, Section 17 of the Act empowers the court with the power to raise money by sale, mortgage, etc. in the following terms:

“(1)Where trustees are authorized by the instrument, if any, creating the trust or by law to pay or apply capital money subject to the trust for any purpose or in any manner, they shall have and shall be deemed always to have had power to raise the money required by sale, conversion, calling in or mortgage of all or any part of the trust property for the time being in possession.

(2) This section applies notwithstanding anything to the contrary contained in the instrument, if any, creating the trust, but does not apply to trustees of property held for charitable purposes.”

Section 56 of the Trustee Act,grants the court with the jurisdiction to make appropriate orders in the following terms:

“56. Power of court to authorize dealings with trust property.

(1) Where, in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, expenditure or other transaction, is in the opinion of the court expedient, but cannot be effected by reason of the absence of a power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees either generally or in any particular instance the necessary power for the purpose, on such terms, and subject to such provisions and conditions, if any, as the court may think fit, and may direct in what manner any money authorized to be expended, and the costs of any transaction, are to be paid or borne as between capital and income.

(2) The court may, from time to time, rescind or vary an order made under this section, or may make any new or further order.

(3) An application to the court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.”

In the present application the Applicant produced the Lease Agreement for the trust property dated 10th April 2013 as evidence of her trusteeship in this regard.  As outlined above, Section 17 (1) of the Trustee Act allows trustees to raise the money required to pay or apply capital money subject to the trust by the sale, conversion, calling in or mortgage of all or any part of the trust property for the time being in possession. From where I stand, the Applicant has properly brought this application before the court and I find that the same is meritorious. The Applicant had averred that she intends to use the proceeds of the sale or subletting of the trust property to pay the minor’s school fees and the balance be invested for the purposes of the minor’s future education. It is my view that this would be in the best interest of the child. The Constitution of Kenya underArticle 53(2) and Section 4(1) (2) of the Children's Act enjoins the court to consider the best interests of the child as a factor in decisions affecting minors.

My position is buttressed by the finding in In Re Eunice Wanjeri Njenga ELC Miscellaneous Civil Suit 62 of 2013 [2013] eKLRwhere it was stated:

“In summary the general duties of trustees in relation to the trust property are to safeguard the assets of the trust, to invest any trust money in his or her hands, and to distribute the assets to the beneficiaries and satisfy any claims of the beneficiaries. With relation to the beneficiaries, trustees are under a duty to maintain equality between beneficiaries and to provide accounts and information to the beneficiaries. Section 56 of the Trustees Act cited in the foregoing also gives this court power to authorize specific investments upon application by a trustee, and together with section 59 permits this court to order that costs of a sale and application to the court be met from the proceeds of sale of a trust property.

The Applicant has averred that she intends to use the proceeds of the sale to invest in the remaining portion of the trust property, to pay for the beneficiaries’ school fees and to buy a larger portion of land. Section 4(1) of the Trustees Act allows a trustee to invest any trust funds in the purchase of immoveable property in Kenya and provides for certain conditions as to the tenure of the land to be purchased.

It is my view that the proposed investments by the Applicant are prudent and in the interests of the beneficiaries. I have also noted that Applicant has duly informed the beneficiaries of the same, who have no objection. I therefore see no reason why the approval and orders sought by the Applicant should not be granted by the court, subject to such conditions as may be necessary.”

A similar position was enunciated by the judge in In the Matter of GW & another (Minors) Environment and Land Miscellaneous Case 197 of 2015 [2016] eKLR

The Applicant further urged the court to give orders that the costs of and incidental to the valuation, transfer and the instant application be realized from the sale of the trust property in question. Section 59of the Act empowers the Court to grant such orders. It provides:

“59. Power to charge costs on trust estate

The court may order the costs and expenses of and incidental to an application for an order appointing a new trustee, or for a vesting order, or of and incidental to any such order, or any conveyance or transfer in pursuance thereof, to be raised and paid out of the property in respect whereof it is made, or out of the income thereof, or to be borne and paid in such manner and by such persons as to the court may seem just.”

In the premises therefore, I find that the Applicants Originating Summons dated 28th February 2019 is merited and I hereby allow it in the following terms:

a. That the Applicant be and is hereby permitted and empowered by the Court to sell or sublet the property known as parcel of land known as Unit No. x and Garage No. x situated on land portion No.[Particulars Withheld] (Original No.[Particulars Withheld]) Malindi.

b. That the Applicant shall apply the balance of the sale proceeds thereof in an investment scheme or call account for the minor for the benefit of her future education.

c. That the costs of and incidental to the valuation of the said unit, the costs of and incidental to the transfer and the costs of and incidental to this application be realized from the proceeds of the sale thereof

It is so ordered.

DATED, SIGNED AND DELIVERED AT MALINDI THIS 27TH DAY OF JUNE, 2019.

.........................

R NYAKUNDI

JUDGE

Representation:

Ms. Lughanje h/b for Mr. Ole Kina for the plaintiff.