Warning! Warning! That title could be a fruit of a poisonous tree

Introduction

Failure to carry out proper due diligence could cost you dearly. The reason is that, by law, a land title is an end-product of a process. If the process, from the root of the title, did not comply with the law, then such a title cannot not be protected by the Constitution. ?This is what the Supreme Court (the “Court”) held in a recent landmark decision delivered on 21st April, 2023[1]. The Court affirmed that Article 40 of the Constitution entitles every person to the right to property, subject to Article 40(6) that limits the right as against any property that has been found to have been unlawfully acquired. Where the 1st registered owner did not acquire the title regularly, the ownership of the suit property by the purchaser thereafter cannot be protected under Article 40 of the Constitution. Put differently, it would be a fruit of a poisonous tree.

Brief Background of the case

The Appellant, Dina Management Limited (‘Dina’), in an Appeal to the Court dated 15th July, 2021, challenged the decision of the Court of Appeal which affirmed the judgment of the Environment and Land Court in a Constitutional Petition.

Dina’s grievance was that on various dates in September, 2017, County Government of Mombasa (the County Government), the 1st respondent, without prior notice forcefully entered the property known as MN/1/6053 situated in Nyali Beach, Mombasa County, registered to the appellant (‘the suit property’), demolished the entire perimeter wall facing the beachfront and flattened the whole property to be at the same level as the beach.

Aggrieved by the County Government ’s actions, Dina filed a suit at the Environment and Land Court asserting its ownership to the suit property. Among the orders sought were declarations that the County Government’s actions were in violation of its rights under Article 40, 27(1) & (2), 29, 47(1) & (2) of the Constitution and a permanent injunction against the County Government to restrain it from interfering with the suit property.

The County Government filed a separate petition against Dina and the Chief Land Registrar, The Land Registrar Mombasa, the Director of Surveys, the Director Physical Planning and the Attorney General, seeking ?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; an order that the Chief Land Registrar be compelled to revoke the title over the suit property and an order for the eviction of the appellant from the suit property.

Dina opposed the County Government’s petition on the grounds that the suit property was previously unalienated government land which was lawfully alienated as private property in 1989. The Chief Land Registrar, The Land Registrar Mombasa, the Director of Surveys, the Director Physical Planning and the Attorney General on the other hand urged that the suit property was initially an open space and the alienation of the suit property in 1989 to H.E. Daniel T. Arap Moi was lawful and all procedures followed, however the letter of application to the Commissioner of Lands seeking to be allocated the suit land and the Part Development Plan (PDP) showing the suit property in relation to the neighbouring parcels of land were missing.

The Environment and Land Court determined that: the alienation of the suit property was unprocedural and unlawful for lack of an approved PDP from the Director of Physical Planning and Central/Regional Authority in compliance with the provisions of the Land Planning Act, Cap. 303 (repealed by the Physical Planning Act Cap 286); 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; the appellant’s rights were not violated and it was not entitled to the reliefs sought.

Dina’s appeal was dismissed by the Court of Appeal. Dina appealed to the Supreme Court. The Supreme Court unanimously dismissed the appeal. It held that the Dina’s title is not protected under Article 40 of the Constitution and the land automatically vests to the County Government of Mombasa pursuant to Article 62(2) of the Constitution.

The Court reasoned that Article 40 of the Constitution 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 Daniel Arap Moi, the 1st registered owner did not acquire title regularly, the ownership of the suit property by Dina thereafter cannot therefore be protected under Article 40 of the Constitution. The root of the title having been challenged, Dina could not benefit from the doctrine of bona fide purchaser.

The Court affirmed that it could not, on the basis of indefeasibility of title, sanction irregularities and illegalities in the allocation of public land. That it is not enough for a party to state that they have a lease or title to the property.

It cited the case of Funzi Development Ltd & Others v County Council of Kwale,[2] where the Court of Appeal stated that:

“...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 title sanction an illegality or gives its seal of approval to an illegal or irregularly obtained title.”

On the procedure for the allocation of unalienated land, the Court affirmed that a Part Development Plan must be drawn and approved by the Commissioner of Lands or the Minister for lands before any un-alienated Government land could be allocated. After a Part Development Plan (PDP) has been drawn, a letter of allotment based on the approved PDP is then issued to the allotees. It is only after the issuance of the letter of allotment, and the compliance of the terms therein, that a cadastral survey can be conducted for the purpose of issuance of a certificate of lease.

The Court agreed with the Environment and Land Court and the Court of Appeal that as it was not disputed that indeed there was no evidence produced of the letter to the Commissioner of Lands seeking allocation of the suit property by the first registered owner, and there was no PDP before the survey was done. Therefore, the allocation of the suit property to H.E. Daniel T. Arap Moi was irregular. It therefore concluded that 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 Dina.

Conclusion

The decision by the court reinforces our earlier article, Damsel in Distress, in which we?observed that, since the dawn of the Constitution of Kenya 2010, particularly Article 40 and Section 26 (1) (b) of the Land Registration Act, courts have been less sympathetic with the equitable principle of bona fide purchaser for value without notice. The same can be accessed through https://www.dhirubhai.net/feed/update/urn:li:activity:7056148470583205888. Therefore, the duty to do due diligence requires the intending purchaser or anyone acquiring interest in land, to do more than merely looking at the certificate of title but also to investigate the validity of the title and the genuineness of the seller. In fact, the court noted:

“….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.”

Due diligence obliges a purchaser or a bank before it agrees to take land as security for financial accommodation, to investigate the root of the title and not just conduct a perfunctory search on the current ownership. If they do so, they will risk being left holding a piece of paper.

In the immortal words of Abraham Tucker, an English Country gentleman1705-1774, “to be forewarned is to be forearmed”.

Authors: Daniel Musyoka and Solomon Opole ?

Disclaimer:

Kindly note that the information contained in this article is only intended for general knowledge. It therefore should not be construed as legal advice and does not create an advocate-client relationship between the firm and the reader. If require legal advice in relation ?to the ?information, our legal experts?will be delighted to do so.

[1] Dina Management Limited v County Government of Mombasa?& 5 others (Petition No 8 (E010) of 2021.

[2] Mombasa Civil Appeal No. 252 of 2005 [2014] eKLR