On the scope of due diligence required in property transactions: The Case of Dina Management Limited v County Government of Mombasa & 5 Others

LEGAL BRIEF

 

IN THE SUPREME COURT OF KENYA

Case Title: Dina Management Limited v County Government of Mombasa & 5 Others
Petition No.: 8 (E010) of 2021
Decision Date: 21 April 2023

 

I. INTRODUCTION

This legal brief analyzes the Supreme Court of Kenya’s landmark decision in Dina Management Limited v County Government of Mombasa & 5 Others, which redefined the scope of due diligence required in property transactions and reaffirmed the constitutional and statutory principles governing public land. The ruling underscores that ownership of a title deed is not conclusive evidence of good title when the root of the title is defective or unlawfully obtained. This case has far-reaching implications for property investors, legal practitioners, and land registries in Kenya.

II. STATEMENT OF FACTS

In 2017, the County Government of Mombasa initiated enforcement action against Dina Management Limited (hereinafter “Dina”), asserting that a parcel of beachfront property registered in Dina’s name constituted public land. The County Government alleged that the property had been improperly alienated and remained part of the coastal reserve designated for public utility. Subsequently, the County Government forcefully entered the property, demolished the perimeter wall, and cleared the land.

Dina contended that it was the legal proprietor, having acquired the title from a chain of registered transfers traceable to a grant initially allocated to the former President of the Republic, H.E. Daniel T. Arap Moi. Dina claimed protection under the doctrine of a bona fide purchaser for value without notice.

Litigation ensued, progressing through the Environment and Land Court, the Court of Appeal, and ultimately culminating in the Supreme Court.

III. ISSUES PRESENTED

1.         Whether the initial allocation of public beachfront land to private individuals, including H.E. Daniel T. Arap Moi, was procedurally and legally valid.

2.         Whether subsequent purchasers, including Dina, acquired valid legal or equitable interests in the property.

3.         To what extent the doctrine of bona fide purchaser for value without notice applies where the root of title is contested or defective.

4.         What constitutes a valid root of title in property transactions under Kenyan law.

IV. HOLDING AND RATIO DECIDENDI

The Supreme Court upheld the judgments of the Environment and Land Court and the Court of Appeal, declaring that:

• The subject parcel of land formed part of the public land reserved for public access and use. Its alienation to private persons, including the initial grantee, was unlawful and contravened Article 62 of the Constitution of Kenya.
• The allocation and issuance of title to H.E. Daniel T. Arap Moi lacked procedural and legal validity. As such, no lawful or equitable interest could flow from that transaction to subsequent transferees, including Dina.
• The doctrine of bona fide purchaser cannot shield a purchaser who fails to interrogate the root of title, especially when the original allocation is irregular or unlawful.
• A title document alone does not confer indefeasible ownership if the process of issuance was contrary to law.

V. LEGAL ANALYSIS

A. Invalid Root of Title Nullifies Subsequent Transfers

The Court emphasized that a chain of title built upon an illegal or unprocedural grant is inherently defective. The sanctity of title does not extend to titles that originate from unlawful allocations, particularly of public land. Therefore, all derivative titles stemming from such root are null and void ab initio.

B. Limitations of the Bona Fide Purchaser Doctrine

The decision significantly narrows the protection previously accorded to innocent purchasers under the doctrine of bona fide purchaser for value. The Court ruled that this doctrine is inapplicable where the root of title is impugned, thus placing a heightened burden on purchasers to verify the legality of the title beyond registry searches.

C. Due Diligence Requirements in Property Transactions

The ruling mandates a more rigorous standard of due diligence in land transactions. Purchasers must conduct thorough investigations into the origin, procedure, and legality of title grants. Reliance solely on official land registry searches, which may not reflect the historical legitimacy of the title, is insufficient.

 

VI. IMPLICATIONS FOR PROPERTY LAW IN KENYA

This case sets a binding precedent that will inform all future disputes involving public land and contested title deeds. Key takeaways include:

• Legal and Equitable Interest: No legal or equitable interest passes if the original grant is unlawful.
• Expanded Due Diligence: Buyers must examine historical allocations, compliance with planning and environmental laws, and conformity with constitutional provisions on land.
• Land Registry Modernization: The case exposes systemic weaknesses in the land registration process and underscores the need for digitization and transparency in land records to mitigate future risks.

 

VII. CONCLUSION

The Supreme Court’s decision in Dina Management Limited serves as a cautionary tale for property investors and legal practitioners. It reaffirms that a title deed is not conclusive proof of ownership where the genesis of the title is illegal. Purchasers must now conduct exhaustive investigations into the root of title, and failure to do so could result in significant financial and legal exposure. This case is poised to fundamentally reshape land acquisition practices in Kenya, promoting accountability, transparency, and respect for public land.