The Supreme Court of Kenya has recently delivered a landmark judgment in the case of Dina Management Limited v County Government of Mombasa & 5 others (Petition 8 (E010) of 2021) [2023] KESC 30 (KLR) (21 April 2023) (Judgment) (available here), which has significant implications on the doctrine of indefeasibility of title and bona-fide purchasers for value.
Brief facts of the case
The facts of this case were that on various dates in September 2017, the County Government of Mombasa (the 1st Respondent), without prior notice forcefully entered the property known as MN/1/6053 situated in Nyali Beach, Mombasa County (the Suit Property), registered to Dina Management Limited (the Appellant), demolished the entire perimeter wall facing the beachfront and flattened the whole property to be at the same level as the beach.
It was urged by the 1st Respondent that the entry and demolition was an enforcement action to create a thoroughfare to the beach as the Suit Property was public land and not private.
Aggrieved by the 1st Respondent’s actions, the Appellant filed Environment and Land Court Petition No. 8 of 2017 against the 1st Respondent seeking orders asserting its ownership of the Suit Property. Other orders that were sought include:
declarations that the 1st Respondent’s actions were in violation of its rights under Article 40, 27(1) & (2), 29, 47(1) & (2) of the Constitution of Kenya 2010 (the CoK);
a permanent injunction against the 1st Respondent to restrain it from interfering with the Suit Property;
the 1st Respondent be compelled to meet the costs of its actions; and
compensation for malicious damage to property; damages for trespass, interest and costs of the petition.
The 1st Respondent filed a separate petition, ELC Petition No. 12 of 2017 against:
the Appellant;
The Chief Land Registrar (the 2nd Respondent);
The Land Registrar, Mombasa (the 3rd Respondent);
The Director of Surveys (the 4th Respondent);
The Director Physical Planning (the 5th Respondent); and
The Hon. Attorney General (the 6th Respondent).
The 1st Respondent sought:
declarations that the Suit Property is public land forming part of the beach property within the high and low water marks of the Indian Ocean;
that the subsequent acquisition by the appellant was from inception null and void ab initio;
an order that the Chief Land Registrar be compelled to revoke the title over the Suit Property and the Director Surveys to cancel and expunge all survey plans, computations, field notes, deed plans and survey records over the Suit Property;
an order for the eviction of the Appellant from the Suit Property; and
general damages for trespass and costs.
The two petitions were consolidated, and the trial court went on to determine that the alienation of the Suit Property was unprocedural and unlawful for lack of the requisite plans as stipulated under statutes in application at the time. The Court also held that the Appellant could not be protected as an innocent purchaser without notice as it failed to demonstrate that it was diligent before purchasing the Suit Property, and that the Appellant’s rights were not violated, and it was not entitled to the reliefs sought.
Aggrieved by the judgment, the Appellant moved to the Court of Appeal vide Civil Appeal No. 150 of 2019. The appellate court however agreed with the trial court, holding that the Appellant cannot enjoy protection under the doctrine of innocent purchaser and that where property is acquired through a procedure against the law, the title cannot qualify for indefeasibility. It held that the title subsequently issued was invalid having been acquired illegally and irregularly.
The appellate court also found that the Suit Property was public land reserved for a public utility and that there was a road leading to the beach through the open space that was the Suit Property. The Suit Property thus remained a public utility incapable of giving rise to a private proprietary interest capable of being protected by a court of law. The appellate court thus dismissed the appeal.
Further aggrieved, the Appellant filed the current petition at the Supreme Court of Kenya seeking the judgments by the Court of Appeal and by the Environment and Land Court to be set aside.
Arguments by the Parties
The Applicant’s case
The Appellant contends that it is a bona fide purchaser of the Suit Property, having purchased it from Messrs. Bawazir & Co. for Kenya Shillings Eighteen Million (KES.18,000,000.00), who had in turn purchased it from H.E. Daniel T. Arap Moi. That it was a second purchaser and acquired a valid and legal title, having carried out all the necessary due diligence and paid valuable consideration for the purchase of the Suit Property. That for these reasons, its title was indefeasible and protected under Article 40 of the Constitution, contrary to the superior courts’ findings.
The Appellant averred that in carrying out due diligence, it sought confirmation from the relevant government registry that a valid title capable of transmission to it existed. It is its case that the consent to transfer was sought and obtained from the Ministry of Lands who also confirmed the validity of the title to the Appellant vide the letter dated 9th October 2006 stating that “the above plot is the genuine plot”.
It asserted that neither the national government nor the local government (the 1st Respondent’s predecessor) questioned the Appellant’s title but confirmed the validity or legality of the Appellant’s title, making the Appellant a bona fide purchaser and its title remains indefeasible.
The Appellant also stated that it periodically made payments of rates to the then local government and its successor, the 1st Respondent.
The 1st Respondent’s case
The 2nd to 6th Respondents averred that the prevailing legal and regulatory regime was adhered to in the allocation of the property to its first registered owner. It is their contention that H.E. Daniel T. Arap Moi, as the first registered owner, obtained good title protected under Section 26 of the Land Registration Act (Number 3 of 2012 of the Laws of Kenya) and section 23 of the Registration of Titles Act (Chapter 281 of the Laws of Kenya) (now repealed), and it is not public land.
According to the 1st Respondent, there were pertinent requirements which ought to have been followed before the allocation of public land. They urged that the procedure was not followed. The 1st Respondent also averred that a survey plan of the area drawn in the year 1971 showed that the Suit Property was in that year designated as an open space and not private land, and which open space was reserved for a public road.
Findings of the Court
The Supreme Court agreed with the Environment and Land Court and the Court of Appeal and went on to dismiss the Appellant’s appeal opining that:
“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. The first allocation having been irregularly obtained, H.E. Daniel Arap Moi had no valid legal interest which he could pass to Bawazir & Co. (1993) Ltd, who in turn could pass to the Appellant.”
The Court also went on to state that Article 40 of the CoK entitles every person to the right to property, subject to the limitations set out therein. Article 40(6) limits the rights as not extending them to any property that has been found to have been unlawfully acquired.
Having found that the first registered owner did not acquire title regularly, the ownership of the Suit Property by the Appellant thereafter could not therefore be protected under Article 40 of the CoK.
The Court also added that the Suit Property, by its very nature being a beach property, was always bound to be attractive and lucrative. The Appellant ought to have been more cautious in undertaking its due diligence.
Our Commentary
The Supreme Court has confirmed that registered title to a property can be invalidated if the process followed prior to the issuance of the title did not comply with the law. This therefore means that innocent buyers cannot rely on the principle of indefeasibility of title if the initial allocation of the land was illegal or unprocedural.
The burden now falls on prospective property buyers or anyone acquiring an interest in land, as well as other stakeholders to conduct thorough due diligence, which would now involve investigating the root of the title above just conducting a mere search of the current ownership of the property.
This will however prove to be particularly challenging given historical land injustices in Kenya as well as the poor state in which land records are maintained. This is further exacerbated by the ongoing digitisation process, which albeit intended to address some of these challenges, has made it surprisingly difficult to access historical property records.
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