By Terry Ombati*
"Indeed, the title or lease is an end product of a process. If the process that was followed prior to issuance of the title did not comply with the law, then such a title cannot be held as indefeasible.…"[i]
The Supreme Court of Kenya has resolved the contradicting position of a bona fide purchaser. It emphasised, in Dina Management Limited v County Government of Mombasa & 5 others that one must go to the root of the title to satisfy oneself as to its validity.[ii] The decision, although debatably controversial, as it defeats the Torrens System which is founded upon sanctity of the register, resolves earlier inconsistent decisions by the Court of Appeal. Previous decisions dragged in different routes regarding a bona fide purchaser.
In Arthi Highway Developers Limited v West End Butchery Limited & 6 others (2015), the Court of Appeal held that the appellant was not a bona fide purchaser. It reasoned that the appellant's documents of share transfer were marred with forgeries and never bound the respondents in any way. These documents were subsequently used by fraudsters to sell the suit property to the appellant who then sub-divided it into different parcels. The Court held that no valid title passed to the appellant since it was irredeemably fake, noting that titles acquired by subsequent purchasers of the subdivisions were also null and void.[iii] Conversely, in Tarabana Company Limited v Sehmi & 7 others (2021), the Court determined the appellant to be a bona fide purchaser as the title to the property, however acquired illegally, was indefeasible and acquired before the appellant came into the picture.[iv]
Dina Management Limited v County Government of Mombasa & 5 others (2023)
Brief background
Dina Management's (Dina) contention was that on different dates in September 2017, the County Government of Mombasa, without prior notice, forcefully occupied its suit property (MN/1/6053) located in Nyali Beach. The County Government demolished the perimeter wall to create a road to the beach. Dina, aggrieved, filed a suit at the Environment and Land Court claiming ownership to the suit property. The County Government also filed a separate petition seeking a declaration that the suit property is public land forming part of the beach property. They claimed the first owner had obtained the title to the property in 1989 without conforming to procedure. It asserted nullity in subsequent acquisition by Dina and sought the Court to compel the Chief Land Registrar to revoke the title. Dina opposed this petition claiming that the suit property was previously unalienated government land which was, in 1989, lawfully alienated as private property. The Environment and Land Court determined that the alienation did not follow due process therefore Dina could not be protected as an innocent purchaser without notice.[v]
Dina appealed to the Court of Appeal. The Court of Appeal held that Dina could not enjoy protection under the doctrine of an innocent purchaser where property is acquired through an unlawful procedure.[vi] It is important to note that the court's reasoning here is synonymous to the case of Arthi Highway Developers Limited v West End Butchery Limited & 6 others.
At the Supreme Court
Aggrieved with the Court of Appeal's decision, Dina appealed to the Supreme Court maintaining that it was a bona fide purchaser. The Supreme Court affirmed the decisions of the High Court and Court of Appeal noting that Article 40 of the Constitution entitles every person to the right to property, which is conditional on Article 40(6) which limits the right as against any property unlawfully acquired.
Having found that the first registered owner did not acquire the title legally and procedurally, ownership of the suit property could not be protected under Article 40. Neither was a good title capable of transfer acquired either by the first or subsequent purchasers nor were documents adduced to show that the suit property was lawfully allocated to the first owner. The suit property at the time was rendered a public utility and could not be described as unalienated public land. The root of the title having been challenged, Dina could not benefit from the doctrine of bona fide purchaser.[vii] The Court cited, with approval, Funzi Development Ltd & Others v County Council of Kwale:
"…a registered proprietor acquires an absolute and indefeasible title if and only if the allocation was legal, proper and regular. A court of law cannot on the basis of indefeasibility of sanction on illegality or gives its seal of approval to an illegal or irregularly obtained title."[viii]
The onus fell on Dina to conduct due diligence before purchase. The Court had this to say:
"…the suit property was always bound to be attractive and lucrative. The appellant ought to have been more cautious in undertaking its due diligence."[ix]
In conclusion, the Supreme Court held that a title document is not sufficient proof of ownership where origin of that title has been challenged. The holder of the title must go beyond the title and demonstrate that the process of acquisition, from inception, was legal.
[x] Following this landmark judgement, all purchasers should investigate the root of the title and not conduct a hasty search. This can be done by checking whether the land in question was named in the Ndung'u Report, requesting for allotment letters, doing customary searches at the land office and so on. In the immortal words of Abraham Tucker, an English country gentleman, "
forewarned is forearmed." If you are not careful, you risk being left holding a pie.
* The author is a fourth year undergraduate student at Kabarak University School of Law
[i] Dina Management Limited v County Government of Mombasa & 5 others, Petition 8(E010) of 2021, Judgement of the Supreme Court, 21 April 2023, [eKLR], para 110.
[ii] Dina Management Limited v County Government of Mombasa & 5 others, Petition 8(E010) of 2021, Judgement of the Supreme Court, 21 April 2023, [eKLR], para 111.
[iii] Arthi Highway Developers Limited v West End Butchery Limited & 6 others, Civil Appeal 246 of 2013, Judgement of the Court of Appeal, 15 April 2015, [eKLR].
[iv] Tarabana Company Limited v Sehmi & 7 others, Civil Appeal 263 of 2019, Judgement of the Court of Appeal, 8 October 2021, [eKLR].
[v] Dina Management Limited v County Government of Mombasa & 5 others, Civil Appeal 150 of 2019, Judgement of the Court of Appeal, 4 June 2021, [eKLR], para 1-5.
[vi] Dina Management Limited v County Government of Mombasa & 5 others, Civil Appeal 150 of 2019, Judgement of the Court of Appeal, 4 June 2021, [eKLR].
[vii] Dina Management Limited v County Government of Mombasa & 5 others, Petition 8(E010) of 2021, Judgement of the Supreme Court, 21 April 2023, [eKLR], para 87-112.
[viii] Funzi Development Ltd & 2 Others v County Council of Kwale, Civil Appeal 252 of 2005, Judgement of the Court of Appeal, 27 February 2014, [eKLR].
[ix] Dina Management Limited v County Government of Mombasa & 5 others, Petition 8(E010) of 2021, Judgement of the Supreme Court, 21 April 2023, [eKLR], para 112.
[x] Dina Management Limited v County Government of Mombasa & 5 others, Petition 8(E010) of 2021, Judgement of the Supreme Court, 21 April 2023, [eKLR], para 108, 111.
