Summary of the supreme court of kenya judgement in petition no 5 of 2022: torino enterprises limited vs hon. Attorney general
Facts in issue
On 21st February 1964, a freehold title of 5639 acres was alienated and granted to Kayole Estates Limited, who then sold it to the Nairobi County Council (NCC) and a transfer was duly effected. The land was then divided into 8 parcels one of which (the suit property) the NCC through the Commissioner of Lands allotted to Renton Company Limited on 19th December, 1999. During this time, the DoD occupied another of the 7 portions of the land and a part of the suit property. Renton Ltd then leased the land to the Appellant; Torino Enterprises Ltd for a period of 99 years for a consideration Kshs. 12,000,000. Torino Enterprises was issued with a title deed under the Registration of Titles Act Cap 281 on 26th April 2001. They then contended that in 2005, the Department of Defence encroached on the property and fenced off 99 acres and despite demands and requests to desist the, DoD proceeded to construct a demining college and auxiliary building on the property.
Proceedings at the high court
The Appellant proceeded to file Constitutional Petition No. 38 of 2011 on the basis that the DoD had compulsorily acquired a section of their property while failing to communicate its intention to do so or complying with the compulsory acquisition procedures provided for under the Land Acquisition Act (Cap 295). The Petitioners sought declarations that: The Respondents actions violated the Constitutional right to property under article 40(3), that the occupation amounted to compulsory acquisition, and that continued occupation without compensation was unconstitutional. Additionally, they sought the restoration of their land to its state before acquisition or, alternatively, an order for the payment of Kshs. 1, 530,000,000 being the [then] current value of the said 90 acres, with interest thereon at the [then] prevailing central bank rates. They also sought mesne profits from the time of government occupation and sought reimbursement for costs of the suit.
The Department of Defense (DoD) countered by stating that in 1984, they initiated discussions with the Ministry of Defense to acquire a portion of the property for their Embakasi Garrison expansion. They claimed that extensive consultations took place in 1986, during which the Ministry of Defense had surveyed and secured the area, with assurance from the Commissioner of Lands that it would be registered in DoD’s name. Additionally, DoD argued that the appellant’s title was obtained improperly and that the property was public land not meant for private allocation. They emphasized that the letter of allotment, upon which the appellant’s title is premised, was silent on whose behalf the Commissioner of Lands was making the allotment. They further emphasized the presence of important military facilities on the property and concluded that the appellant’s title couldn’t be protected under Article 40 (6) of the Constitution as it went against the public interest.
The High court ruled in favor of the appellant, affirming that the disputed property was private freehold land and not public, as argued by the Department of Defense (DoD). The court found the DoD in violation of the Constitution, deeming their occupation of the property an unlawful compulsory acquisition without compensation. Consequently, the court issued orders declaring the acquisition as unconstitutional, instructing the government to return possession of the property to the appellant in its original condition within 30 days, or alternatively to pay Kshs. 1,530,000,000.00 with interest as per the adduced valuation report.
Proceedings at the court of appeal
Aggrieved by the determination the Honorable Attorney General appealed to the Court of Appeal which set the following issues for determination:
- Whether some of the documents that were relied upon by the respondent offended the provisions of Sections 68 (2) (c) and 80 of the Evidence Act;
- Whether the suit land was available for alienation and/or allocation;
- Whether the registration of the suit land in the respondent’s name was legally done;
- Whether the respondent was illegally dispossessed of the suit land and therefore entitled to compensation.
The Court of Appeal, overturned the High Court’s decision. In regards to admissibility of evidence, the appellate court excluded the evidence in contention due to lack of proper certification as required by the Evidence Act. In regards to the second issue, the Court of Appeal ruled that the disputed land was private property, not “unalienated government land,” as per the definition in the Government Lands Act(repealed). The court insisted that in fact, the suit property was private land while still owned by the Kayole Estates Limited, long before NCC bought it in 1971. Therefore, the Commissioner of Lands lacked the power to alienate or allocate it to a third party.
In regards to the third and fourth issues, the court noted that at the time of allocation, purchase and transfer to the Appellant, the Department of Defense (DoD) was already in actual occupation of part of the land and had developed it with facilities, implying that all affected parties should have been informed and heard before any alienation. The Court of Appeal therefore raised concerns about the expedited registration of the suit property, which was hastily registered just a day after Renton Company Limited’s application to transfer the same to the appellant. As a result, the court concluded that Renton Company Limited and subsequently the appellant had no valid interest in the property. They declared the Certificate of Title issued to the appellant illegal, and the concept of indefeasibility of title under Section 26 of the Land Registration Act was deemed inapplicable under Article 40 (6) of the Constitution.
Proccedings at the supreme court
Aggrieved by the decision of the appellate court, the appellants filed an appealed to the supreme court. The court highlighted 5 issues for determination with 2 being Key:
- Whether the appellant has a valid title to the suit property;
- Whether DoD acquired a good title to the suit property;
The Court stated that when the Suit Property was transferred to Kayole Estates Limited, it changed from unallocated government land to private freehold land. The court determined that this transfer was legally conducted and removed the property from the jurisdiction of the repealed Government Lands Act. Consequently, the Commissioner of Lands had no authority to allocate the Suit Property to any other person. It was also found that the Nairobi City Council had acquired valid title to the property through purchase from Kayole Estates Ltd. Therefore, Renton Company Ltd could only have obtained a valid title from the Nairobi City Council.
The respondent had contested the validity of the Allotment Letter on the grounds that it had exceeded the 30-day acceptance period, and that it did not specify on whose behalf the Commissioner of Lands had made the Allotment. The appellant’s claim to ownership was based on this Allotment Letter, and the sale agreement even though the property was later registered under the Registration of Titles Act in April 2001.
The court clarified that an Allotment Letter serves as an offer pending the fulfillment of conditions and cannot grant an interest in land. To obtain valid title, an allottee must meet the stipulated conditions and then register the land in order for a transfer to be conducted. Registration is a crucial step for conferring transferable title to the registered owner. In this case, the Allotment Letter obligated Renton to satisfy various conditions, with a 30-day acceptance deadline. However, Renton made the required payments 127 days after the offer date. Consequently, they failed to comply with the Allotment Letter’s terms which had already lapsed, rendering it invalid when it was being used to in the transaction to transfer proprietary interests to the appellant.
In regards to the argument that the appellant was an innocent purchaser for value, the court noted that there was ample evidence on record, including correspondence from the Commissioner of Lands and minutes of meetings, confirming that the Department of Defense (DoD) had occupied and erected public infrastructure on the suit property before the purported purchase. Additionally, there was evidence that the Ministry of Lands and Settlement had been monitoring activities to protect DoD’s interests on the property well before the disputed transfer. The court emphasized that had the appellant been a diligent purchaser, it should have been aware of these circumstances. An innocent purchaser for value would typically inspect the property and take notice of any existing military installations. The court concluded that the appellant was not an innocent purchaser for value, and therefore, it was not entitled to orders for restoration or compensation.
Finally, in regards to validity of title of the DoD, the court determined that it also did not have a valid title to the Suit Property, despite its exclusive occupation and use since 1986 with the knowledge and authority of the Nairobi City Council (NCC) and the Commissioner of Lands. The court stated that there was no evidence on record to establish that DoD had acquired valid title to the property. Just as the Commissioner of Lands could not allocate the land to Renton Ltd, the same limitation applied to DoD. The court therefore concluded that as it stands, the title to the Suit Property remains vested in Nairobi County, the legal successor to the defunct Nairobi City Council.
This judgement shed more light on the doctrine of bonafide purchaser for value further supports the position in Dina Management International vs the Count Government of Mombasa. The two judgements when read in tandem raise the bar on the due diligence that a purchaser ought to conduct in order to be considered a bonafide purchaser. Purchasers must do more conducting searches, they must get to the root of the title and ensure that good title has been passed down from the original holder to the current vendor. It also shed light on the stance of letters of allotment as being merely offers and that the allottee must strictly meet the conditions of the allotment letter and have the title registered in order for them to gain proprietary interests. The judgement highlights the importance of due diligence and meeting regulatory requirements in conveyancing processes to ensure passing of good title and security for purchasers within the republic.
Date: October 5, 2023 By: Anne Gathirwa
For more insights pertaining to this matter, you can reach the writer at annegathirwalaw@gmail.com. You can also contact us at MMS Advocates, Lower Duplex Apartments, LOWER HILL ROAD, or email us at info@mmsadvocates.co.ke