Marteve Guest House Limited V Njenga & 3 Others (Civil Appeal 400 of 2018)

Marteve Guest House Limited v Njenga & 3 others (Civil Appeal 400
of 2018)
[2022] KECA 539 (KLR) (Civ) (28 April 2022) (Judgment) (with dissent - W Karanja, JA)
Neutral citation: [2022] KECA 539 (KLR)
REPUBLIC OF KENYA
IN THE COURT OF APPEAL AT NAIROBI
CIVIL APPEAL 400 OF 2018
RN NAMBUYE, HM OKWENGU & W KARANJA, JJA
APRIL 28, 2022
BETWEEN
MARTEVE GUEST HOUSE LIMITED ................................................. APPELLANT
AND
DANIEL MUIRURI NJENGA ...................................................... 1ST RESPONDENT
PAUL KAGUNDA NJENGA ........................................................ 2ND RESPONDENT
STANDARD CHARTERED BANK OF KENYA LTD .............. 3RD RESPONDENT
JOSEPH WACHIRA NJUGUNA NJENGA ................................ 4TH RESPONDENT
(An Appeal from the Judgment of the Environmental & Land Court (K. Bor,
J.) dated on 12th September, 2018 in Nairobi ELC Case No. 328 of 2013)
Service of statutory and redemption notices to persons who were not administrators of a deceased’s
chargor’s estate but later on appointed as administrators is not proper service
Reported by Kakai Toili
Land Law – charges – redemption of charges – chargee’s statutory power of sale – requirements to be met before
a chargee could exercise the statutory power of sale – claim that a bank sought to exercise its statutory power of
sale over the property of the estate of a deceased chargor – where the statutory notice and redemption notice was
served upon a person who was not an administrator of a deceased’s estate - whether service of a statutory notice
and a redemption notice upon a person who was not an administrator of a deceased’s estate but later on appointed
as an administrator was proper service - what was required of a bank, as a chargee, so as to exercise its statutory
power of sale as related to a deceased chargor’s property where letters of administration had not been issued - what
was the impact of wrongful exercise of a bank’s statutory power of sale on the purchase of property by an innocent
purchaser for value without notice - Land Act, 2012, section 99; Registered Land Act, Cap 300 (repealed), sections
74, 77(3) and 143.
Land Law – mortgages – mortgagees - obligation of mortgagees in the exercise of the statutory power of sale - what
were the guiding principles with regard to the obligation of a mortgagee in the exercise of the statutory power of sale.
Land Law – charges – redemption of charges – where a chargor passed on before a charge was settled - whether
a deceased’s right of redemption become extinct upon the death of the deceased – whether a deceased’s property
kenyalaw.org/caselaw/cases/view/233472/ 1
which was charged to a bank was free property to be inherited by the beneficiaries of the deceased’s estate - Law of
Succession Act, Cap 160, sections 45(1) and 82.
Land Law – charges – redemption of charges – chargee’s statutory power of sale - claim that there was fraud in the
process of exercising the statutory power of sale by a chargee – guiding principles on role of a court when confronted
with a claim of fraud in the process of exercising the statutory power of sale of a bank - claim that the buyer of the
property sold by a charge bank was an innocent purchaser for value without notice - whether one was an innocent
purchaser for value without notice where the title to the property had its roots in a bank’s flawed process in the
exercise of its statutory power of sale - what were the elements for qualification of a party as a bona fide purchaser
- what were the elements of unjust enrichment.
Jurisdiction – jurisdiction of courts – jurisdiction to consider issues not contained in pleadings - under what
circumstance could a court consider issues not contained in pleadings.
Evidence Law – burden and standard of proof – standard of proof in claims of fraud - what was the standard
of proof required to prove fraud.
Word and Phrases – bona fide purchaser – definition of bona fide purchaser - one who buys something for
value without notice of another claim to the property and without actual or constructive notice of any defects in or
infirmities, claim or equities against the seller’s title; one who has in good faith paid valuable consideration for
property without notice of prior adverse claims - , 8th Edition.
Words and Phrases – fraud - definition of fraud - a knowing misrepresentation of the truth or concealment of a
material fact to induce another to act on to his or her detriment - Black’s Law Dictionary, 9th Edition at page 131.
Brief facts
The deceased had charged the suit property to the 3rd respondent, Standard Chartered Bank (the bank), as
security for nancial facility advanced to the 4th respondent who defaulted in the repayment. The deceased
died on July 27, 2009 and on December 29, 2009, the bank issued a demand letter to the 4th respondent for
payment of the outstanding amount. The 4th respondent did not make any payment. Consequently, on July
22, 2010 the bank issued statutory notices of intended sale of the suit property to 1st and 2nd respondents, who
are beneciaries of the deceased’s estate. By that time, no grant had been issued to the 1st and 2nd respondents.
The 1st and 2nd respondents were issued with a grant of letters of administration on August 2, 2011. The bank
instructed an auctioneer to sell the suit property, the auctioneer served the 1st and 2nd respondent with a 45
days’ redemption notice on May 6, 2011, and on September 14, 2011 the auctioneer sold the suit property
and declared the appellant the highest bidder for the suit property. Subsequently the appellant paid the full
purchase price, a certicate of sale was issued to it, a transfer registered, and title issued in its favour. Aggrieved
the 1st and 2nd respondents led a suit in the trial court, in their capacity as administrators of the estate of the
deceased seeking an order for cancellation of the sale of the suit property to the appellant, as well as general
damages.
The 1st and 2nd respondents did not dispute that the deceased executed a charge and further charge in favour of
the bank. They however disputed the deceased’s sanctioning of the bank’s conversion of the said instruments
into overdraft facilities in favour of the 4th respondent. They further claimed that it was as a result of the 4th
respondent’s failure to pay the sums arising from the overdraft facilities that the bank set in motion the process
to realize its security in the suit property. The trial court ruled in favour of the 1st and 2nd respondents and
cancelled the appellant’s title. The appellant being aggrieved by the judgment led the instant appeal.
Issues
i. Whether service of a statutory notice and a redemption notice upon a person who was not an
administrator of a deceased’s estate but later on appointed as an administrator was proper service.
ii. What was required of a bank, as a chargee, so as to exercise its statutory power of sale as related to a
deceased chargor’s property where letters of administration had not been issued.
iii. What were the guiding principles with regard to the obligation of a mortgagee in the exercise of the
statutory power of sale?
iv. Whether a deceased’s right of redemption become extinct upon the death of the deceased?
v. What was the impact of wrongful exercise of a bank’s statutory power of sale on the purchase of
property by an innocent purchaser for value without notice?
vi. What were the guiding principles on role of a court when confronted with a claim of fraud in the
process of exercising the statutory power of sale of a bank?
vii. What was the standard of proof required to prove fraud?
viii. What were the elements for qualication of a party as a bona fide purchaser?
ix. Whether one was an innocent purchaser for value without notice where the title to the property had
its roots in a bank’s awed process in the exercise of its statutory power of sale.
x. Whether a deceased’s property which was charged to a bank was free property to be inherited by the
beneciaries of the deceased’s estate.
xi. What were the elements of unjust enrichment?
xii. Under what circumstance could a court consider issues not contained in pleadings?
Held
Per RN Nambuye, JA
1. There was no specic pleading that the appellant was a bona fide purchaser of the suit property for value
without notice of any defect either in the title or the process that led to its acquisition of title to the suit
property through sale by public auction. Both parties and the court were bound by the pleadings proered
by the parties as basis for seeking a court’s intervention in any civil litigation. The only exception arose where
there was sucient demonstration on the record that parties by their conduct at the trial raised the issue(s) and
left them to the trial court to determine.
2. There was sucient demonstration on the record that parties by their conduct invited the trial court to
interrogate and express itself on the issue as to whether the appellant was an innocent bona fide purchaser of the
suit property for value without any notice of any defect either in the title or the process under which it acquired
title to the suit property, even in the absence of any specic pleading in the appellant’s defence to that eect.
3. When a registered proprietor’s root of title was under challenge, it was not sucient to dangle the instrument
of title as proof of ownership. It was that instrument of title that was in challenge and the registered proprietor
had to go beyond the instrument and prove the legality of how he acquired the title and show that the
acquisition was legal, formal and free from any encumbrances including any and all interests which needed not
be noted on the register.
4. The contracts executed by the bank, the deceased and the 4th respondent forming the substratum of the
appeal were subject to sections 65, 69, 72, 74 and 77(3) and (4) of the repealed Registered Land Act, Cap 300,
Laws of Kenya (RLA). Cumulatively, they anchored the chargor’s right of redemption and the bank’s right
to realize the security in the event of any default on the part of the chargor to repay the indebtedness to the
bank as chargee.
5. The guiding principles with regard to the obligation of a mortgagee in the exercise of a statutory power of
sale could be summarized as follows:
a. a mortgagee had a duty to act in good faith;
b. have regard to the interests of the mortgagor;
c. obtain the best price for the property realized to pay o the debt for the benet of both the mortgagor
and the mortgagee;
d. ensure that its power of sale was not exercised fraudulently; and
e. ensure that the mortgagor’s right of redemption was only lost pursuant to a valid sale.
In sum, the mortgagee had a duty to ensure that the exercise of the statutory power of sale was not tainted by
some kind of impropriety.
6. Compliance with the prerequisites with regard to service of the notice on to the chargor was mandatory
and noncompliance with that prerequisite rendered the entire process undertaken by the chargee to realize
the security invalid. The bank did not move to exercise its statutory power of sale during the lifetime of the
deceased. That was why documents informing the process were served on the estate of the deceased, represented
by the 1st and 2nd respondents before they were appointed administrators of the estate of the deceased on August
2, 2011.
7. Pursuant to section 74(3) and (4) of the RLA which the bank exercised its statutory power of sale, there
was nothing therein to suggest that the bank was not obligated to comply with the provisions of the Law
of Succession Act, Cap 160, Laws of Kenya (LSA) in circumstances where the exercise of that power was
undertaken after the death of the chargor.
8. By free property as dened in the LSA was meant the property of which the deceased person was legally and
competent to freely dispose of the same during his/her lifetime and in respect of which his/her interest had not
been terminated by his/her death. The deceased’s right of redemption did not become extinct upon the death
of the deceased. It devolved to the personal representatives. That was why the LSA did not donate power to the
estate of a deceased person to deal with property forming that deceased person’s estate, and instead donated
that power to an administrator with a will or a personal representative to the intestate estate of a deceased
person to deal with a deceased person’s property after the death of such a deceased person.
9. Section 45(1) of the LSA was explicit that dealings with a deceased person’s property was only permissible
to the extent provided for by the provisions of that Act. Among them was provision that only persons holding
a grant of representation to a deceased person’s estate had mandate to transact any business with regard to
such property and to the extent provided for in section 82 of the LSA on powers donated to a personal
representative.
10. There was nothing in the guiding principles on invocation and application of both the doctrine of estoppel
and waiver to suggest that they overrode clear provisions of law. It therefore did not matter that the 1st and 2nd
respondents held themselves out to the bank as duly authorized administrators with mandate to act on behalf
of the estate of the deceased when they were not. That conduct on their part could not be sanctioned to oust
the operation of clear provisions of law with a view to sanitizing the awed process vitiated by the trial court.
11. Elements/ingredients for qualication of a party as a bona fide purchaser were, namely, proof that the
claimant;
a. held a certicate of title;
b. purchased the property in good faith;
c. had no knowledge of the fraud;
d. the vendors had apparent valid title;
e. purchased without notice of any fraud; and
f. he was not party to any fraud.
12. The guiding principles on role of the court when confronted with an appeal of the instant nature were:
a. No court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing
the obligations alleged to arise out of a contract or transaction which was illegal, if the illegality was
duly brought to the notice of the court.
b. Where an act was a nullity it was void and every proceeding founded on it was also in law a nullity.
c. Every act premised on a nullity could not accrue legitimacy or legality.
d. Sanctity of title was never intended or understood to be a vehicle for fraud and illegalities or an avenue
for unjust enrichment at another person’s expense.
e. A court of law could not protect title to land which had been obtained illegally or fraudulently merely
because a person was entered in the register as proprietor.
13. Proof of fraud was slightly higher than a balance of probabilities but slightly lower than proof beyond
reasonable doubt. No fraud was attributed to the appellant by the 1st and 2nd respondents in their plaint hence
its assertion that the fraud attributed to the bank and the 4th respondent should not have been applied by the
trial court to vitiate its title to the suit property. On proof of fraud, the fraud attributed to the bank and the
4th respondent were proved to the required threshold.
14. Illegalities and irregularities were proved to the required threshold based on the fact that the bank well
knowing that in law it could only invoke its statutory power of sale upon service of a demand and notication
of sale on a chargor, purported to comply with that prerequisite by purporting to serve the processes on the
estate of the deceased a process not provided for in law either under the RLA or LSA as none was pointed
out to the court by the bank. Want of compliance with the LSA provisions by the bank in the exercise of its
statutory power of sale rendered the entire process an illegality and therefore null and void. Once an act was
null and void, it amounted to nothing. No right could be founded on it.
15. Since the appellant’s title had its roots in the bank’s awed process in the exercise of its statutory power of
sale on the basis of which the appellant got title to the suit property, the title was tainted with fraud, nullity,
irregularly and illegality. The appellant’s plea of an innocent purchaser for value without notice to either title
or the process resulting in it being vested with title to the suit property was unsanctionable.
16. The 1st and 2nd respondents instructed an advocate to demand the proceeds on their behalf, the record was
silent as to whether the balance of the proceeds was ever paid out to the 1st and 2nd respondents and if so, how
much and when the same was paid out. The plea of unfair and unjust enrichment levelled against the 1st and
2nd respondents by the appellants was not founded on the facts on the record.
Per H Okwengu, JA (concurring)

17. The bank’s statutory power of sale having been exercised on September 14, 2011, the provisions of the
Land Act (No 6 of 2012) that applied to the exercise of statutory power of sale having come into eect on May
2, 2012 after the impugned sale, could not act retrospectively. Therefore, the law applicable as at September
14, 2011 was the RLA.
18. Section 74 of the RLA gave a chargee remedies which included the right to sell the charged property.
However, before that right could be exercised, the chargee was required to serve a notice on the chargor in
writing, requiring him/her to pay the money owed or perform the agreement. That notice had to be served at
least three months before the sale, and the sale could only take place if no payment was made. Section 77 of
RLA gave the chargee the power to sell the charged property at a public auction through a licensed auctioneer,
after the service of appropriate notices.
19. Copies of the petition for letters of administration that were on record showed that the 1st and 2nd
respondents had led the petition for letters of administration for the estate of the deceased on May 31, 2010.
As at May 6, 2011 when they were served by the auctioneer, they had not obtained any grant as the grant was
issued to them on August 2, 2011. The purported service of the statutory notice and the redemption notice
upon the 1st and 2nd respondents on July 22, 2010 and May 6, 2011 respectively, was thus not proper service on
the estate of the deceased, as the 1st and 2nd respondents had no authority to deal with the estate of the deceased
before August 2, 2011 when they were issued with a grant.
20. The 1st and 2nd respondents as administrators of the estate of the deceased, did not act in their own capacity
nor did they represent their own interest alone. They acted on behalf of all the beneciaries of the estate
and what they did in their personal capacity had to be distinguished from what they did in their capacity as
administrators.
21. The issue of unjust enrichment was not pleaded nor canvassed in the trial court, nor was it raised in the
defence of the bank or the 4th respondent or the appellant. The bank did not plead nor adduce any evidence
that it paid the balance of the purchase price after osetting the debt, to the 1st and 2nd respondents, nor was
there any evidence regarding the amount of surplus after the debt was paid, and to whom payment was made
or any acknowledgment for such payment. Hence, the court rejected the allegations of unjust enrichment on
the part of the 1st and 2nd respondents.
22. Any estoppel or waiver that arose from the conduct of the 1st and 2nd respondents in engaging with the
bank before they were issued with the grant, was limited to the interests of the two in the estate, and not the
interest of all the beneciaries.
23. A plain reading of section 82 of LSA showed that it referred to powers of the personal representative of the
deceased’s estate to sell the deceased’s property, and that power was only available to the personal representative
after the conrmation of the grant. That limitation did not apply in a forced sale by a chargee exercising a
statutory power of sale in regard to property charged by the deceased before death. The chargee only had to
comply with the provisions of the law in regard to the exercise of the statutory power of sale.
24. As regards section 66 of the LSA, as a chargee, the bank was not an ordinary creditor but occupied a
privileged position as it had priority over the suit property that the deceased had charged to it. However, that
privileged position did not deny the deceased or the deceased’s estate the right to pay o the debt and redeem the
suit property. Section 3 of the LSA dened free property in relation to a deceased person to mean the property
of which that person was legally competent freely to dispose during his lifetime and in respect of which his
interest had not been terminated by his death.
25. Having charged the suit property to the bank, the deceased was competent to dispose it during her lifetime
subject to the bank’s consent, or her paying o the debt. Although her right of disposal was encumbered by
the charge, her death did not automatically terminate her interest in the suit property. The property remained
part of her estate subject to the debt. It was therefore free property that could be inherited by the beneciaries
of the estate of the deceased subject to the encumbrance.
26. As chargee, the bank had the option under section 66 of LSA to apply for letters of administration for the
estate of the deceased to enable it exercise its statutory power of sale. Nevertheless, in light of the bank’s interest
in the suit property, and the rights of the deceased’s beneciaries, the bank could only exercise that option
by applying to have a person or persons entitled to a grant of letters of administration for the estate of the
deceased chargor appointed as such by the court. That would have enabled the bank to serve the estate of the
deceased with the necessary notices through the appointed administrators, to give an opportunity for the estate
to pay the debt failing which the bank would be able to pursue its statutory right of sale, the administrators
stepping into the shoes of the deceased chargor. The bank did not follow that avenue and the estate of the
deceased was not given an opportunity to redeem the suit property before the sale. To that extent the bank’s
statutory power of sale had not accrued.
27. Fraud had to be specically pleaded and particulars of the fraud alleged had to be stated on the face of the
pleadings. The acts alleged to be fraudulent had to be set out, and then it should be stated that those acts were
done fraudulently. Fraudulent conduct had to be distinctly alleged and as distinctly proved, and it was not
allowable to leave fraud to be inferred from the facts.
28. The deceased did not sign the overdraft facility documents and therefore, did not consent to the charge
and further charge being converted to an overdraft banking facility. That showed that the variation was done
contrary to section 71 of the RLA. It also provided clear evidence of the fraud perpetrated upon the deceased by
the bank and the 4th respondent. Thus, the 1st and 2nd respondents established the particulars they pleaded and
thereby discharged the burden of proving the fraud that they alleged against the bank and the 4th respondent.
29. The fraud rendered void the purported exercise of the bank’s statutory power of sale. The bank could not
therefore purport to exercise its statutory power of sale in regard to the original charge and further charge as
the same was no longer available to it. Nor could the bank anchor its statutory power of sale on the subsequent
overdraft facility as the deceased was not party to it, nor was the overdraft facility secured by the title to the
suit property.
30. The bank’s statutory power of sale did not arise as there was no evidence of any default arising from the
original charge or further charge signed by the deceased, and the purported exercise of the power of sale was
also irregular as no statutory notice was served on the deceased’s estate. The purported exercise of the statutory
power of sale by the bank was void and the bank was liable to the deceased’s estate in selling the suit property.
31. Although the valuation of the suit property was purported to have been done in October 2010, there was
no specic reference to the valuation before the sale of the suit property. The bid of Kshs 15,300,000 by the
appellant was reasonable, given the valuation by the consultants. The court rejected the allegation of sale at
an undervalue as the auction sale, being a forced sale, the highest bid was dependent on the response to the
auction, and therefore not predictable.
32. The appellant having paid the full purchase price, the suit property was transferred to it, and a title issued
in its name. There was no evidence that the appellant was complicit in or had any knowledge of any fraudulent
dealings involving the sale of the suit property or irregularities concerning the exercise of the statutory power
of sale by the bank. The appellant was therefore an innocent purchaser for value without notice.
33. The power of the court to order cancellation of a transaction that had been procured by fraud or mistake
was circumscribed by section 143 of RLA. A plain reading of section 143 revealed that the court could only
order cancellation of registration of a title where fraud was established in the case of a proprietor who was in
possession and acquired the property for valuable consideration, where it was established that the proprietor
was either complicit in the fraud or had knowledge of the fraud, and was therefore not a bona fide purchaser
for value without notice. In addition, section 77(3) of the RLA provided that once the sale was registered, a
person who was aggrieved by an irregular exercise of a chargor’s statutory power of sale was only entitled to
damages against the person exercising the power.
34. There was a distinction between an auction sale which was rendered irregular during the sale and a sale
which was void because the statutory power of sale either had not accrued or was vitiated by fraud. While an
innocent purchaser in an irregular sale could be saved by section 77(3) of the RLA, that section could not help
an innocent purchaser in the case of a void sale, particularly in a situation such as the instant case where the
bank was complicit in the fraud and had unlawfully sold the suit property.
35. Despite the court having the obligation to protect an innocent purchaser for value at an auction sale, bank
nancing was critical to the economy of Kenya and fraudulent realization of security by a large bank such as
the 3rd respondent, could not be allowed to take root by the court protecting an innocent purchaser who was
the ultimate beneciary in such a transaction. It would be inimical to justice and public interest to allow a
situation where a bank conspired to deliberately sell property belonging to a dead person, when the property
was not charged as security for the outstanding debt, and the deceased’s estate had not even been served with
any statutory notice.
36. Unlike the Land Act, where by virtue of section 99(3), an innocent purchaser for value, was protected even
where the charged property was sold when there had been no default by the chargor, or when no statutory
notice had been served on the chargor, or the sale was in some way, unnecessary, improper or irregular, the
RLA did not have a similar provision. Section 77(3) of RLA did not provide a blanket protection but only
protected in the case of an irregular auction sale, not a sale that was void and illegal. The sale of the suit property
to the appellant was void and the appellant’s remedy lay in damages against the bank and not the estate of the
deceased.
Dissenting opinion
Per W Karanja, JA
1. Section 99 of the Land Act, 2012 was clear that a purchaser of property sold in the exercise of a chargee’s
statutory power of sale was protected even in cases where the person had actual notice that the chargee had not
properly exercised that statutory power of sale in terms of procedure. There was no evidence to show that the
appellant had any notice of any irregularities in the planned sale and evidence suggested that there were none
anyway. The appellant was then inoculated by section 99 from any action to recover the suit property from it.
2. Even assuming that the auction was not properly conducted, unless it was demonstrated that the appellant
was privy to the fraud or other irregularities in the disputed auction, the sale of the suit property could
not be impugned. There was no proper basis for holding that the auction done was unlawful or irregular.
Consequently, there was no reason to nullify it and no reason to make an order that the title to the suit property
reverts to the 1st and 2nd respondents.
3. The elements of unjust enrichment required that a party who had received a benet unjustly, was required
to make restitution to the other party. It presupposed that; -
a. a party had been enriched by the receipt of a benet;
b. that he had been so enriched at the expense of the giver; and
c. that it would be unjust to allow him to retain the benet.
4. The undisputed facts in the instant case were that the 1st and 2nd respondents; informed the bank that
their mother/the guarantor had died; commenced negotiations with the bank on behalf of the estate with full
knowledge that they lacked that capacity as they did not have letters of administration at that point; accepted
the statutory notices but not in the name of the chargor and received some proceeds from the auction. In the
light of non–contestation of those facts, the scales of justice tilted in the appellant’s favour. He who came to
equity had to come with clean hands. The suit in the superior court should have failed the moment the court
found the respondents’ hands to be heavily tainted.
5. The judgment and orders of the trial court that the suit property to revert to the estate for the benet of the
1st and 2nd respondents and the other beneciaries of the estate and allowing them to retain the amount paid
to them by the bank amounted to unjust enrichment which Kenya’s justice system frowned upon.
6. The bank abdicated its duciary duty to the deceased in her death and engaged in acts that were unbecoming
of an institution of the 3rd appellant’s stature and repute. Other than serving the statutory notice on parties
with no legal capacity to receive them, thus rendering such service invalid, the bank was not an intermeddler as
prescribed under section 45 of the LSA as the property in question was not part of the deceased’s free estate,
it having been charged to the bank to secure a loan which had not been repaid in full.
7. The recourse available to the 1st and 2nd respondents lay in pursuing the bank for damages as per section 99(4)
of the Land Act. From the record of appeal, there were arguments by the 1st and 2nd respondents that the suit
property was undervalued during the sale. They had a good chance of pursuing the bank for the dierence in
value, if at all proved and for any other damages they could claim to have incurred.
8. The court would allow the appeal with costs as against all the respondents jointly and or severally. The court
would set aside the impugned judgment and all consequential orders arising therefrom and substitute therefor
an order dismissing the 1st and 2nd respondents’ claim in ELC No 328 of 2013 with costs.
Appeal dismissed with costs to the 1st and 2nd respondents.
Citations
Cases
1. 748 Air Services Limited v Theuri Munyi (Civil Appeal 310 of 2014; [2017] eKLR) — Explained
2. Captain Harry Gandy v Caspar Air Charters Limited ([1956] 23 EACA 139) — Followed
3. Captain Patrick Kanyagia & another v Damaris Wangechi & 2 others (civil app 150 of 93; [1995]eKLR)
— Explained
4. Chase International Investment Corporation v Laxman Keshra ([1978] KLR 143) — Mentioned
5. Cieni Plains Company Limited & 2 others v Ecobank Kenya Limited (Civil Case 316 of 2016; [2017]
eKLR) — Explained
6. Court in Railal Gordhanbhai Patel v Lalji Makanji ([1957] E A 314,) — Followed
7. David Katana Ngomba v Sha Grewal Kaka (Civil Appeal 43 of 2011; [2014] eKLR) — Explained
8. Elijah Kipngeno Arap Bii v Samwel Mwehia Gitau & another [2014] eKLR (Civil Appeal 155 of 2006;
[2014] eKLR) — Mentioned
9. First Choice Mega Store Limited v Ecobank Kenya Limited (Civil Case 16 of 2016; [2017] eKLR) —
Explained
10. Galaxy Paints Co Ltd v Falcon Guards Ltd ([2000] EA 885) — Followed
11. Hellen Wanjiru Kiragu & another (suing as the legal representatives of the estate of the late James
Kiragu Kigotho (deceased) v James Ndung’u Miringu (Environment and Land Case 152 of 2013;
[2014] eKLR) — Mentioned
12. Housing Finance Company of Kenya v J. N. Wafubwa (Civil Appeal 102 of 2013 [2014] eKLR) —
Explained
13. Independent Electoral and Boundaries Commission & another v Stephen Mutinda Mule & 3 others
(Civil Appeal 219 of 2013; [2014] eKLR) — Interpreted
14. In re Estate of John Gakunga Njoroge (Deceased) [2015] eKLR (Succession Cause 256 of 2007) —
Interpreted
15. John Spencer Harvey v Dunbar Assets PIC
16. Kenya Commercial Bank Limited v Pamela Akinyi Ochieng (Civil Appeal No 114 of 1991) —
Explained
17. Lawrence Mukiri v Attorney General & 4 others (Environmental & Land Case 169 of 2008;
[2013]eKLR)
18. Madhupaper International Ltd & another v Kenya Commercial Bank Ltd & 2 others (Civil Case 1263
of 1992; [2003] eKLR) — Explained
19. Maina, Munyu v Hiram Gathiha Maina (Civil Appeal 239 of 2009; [2013] eKLR)
20. Marco Munuve Kieti v Ocial Receiver and InterimLiquidator Rural Urban Credit Finance &
another ([2010] 1 KLR 96) — Interpreted
21. Mbuthia v Jimba Credit Finance Corporation & another ([1988] eKLR, [1986-1989] EA 340; [1988]
KLR 1) — Followed
22. Migore ,Daniel Otieno v South Nyanza Sugar Co Ltd (Civil Appeal 52 of 2017 ;[2018] eKLR) —
Interpreted
23. Morjaria, Vijay v Nansingh Madhusing Darbar & another (Civil Appeal No 106 of 2000; [2000]
eKLR) — Explained
24. Muriuki Musa Hassan v Rose Kanyua Musa & 4 others (Succession Cause 62 of 2012; [2014] eKLR)
— Interpreted
25. Nancy Kahoya Amadiva v Expert Credit Limited & another (Civil Appeal 133 of 2006; [2015] eKLR)
— Mentioned
26. Nyangilo Ochieng & another v Fanuel B. Ochieng & 2 others (Civil Appeal 148 of 1995; [1996] eKLR)
— Explained
27. Odd Jobs v Mubia ([1974] EA 476) — Explained
28. Ole Nganai v Arap Bor ([1983] KLR 233) — Explained
29. Omuom, v Kenya Commercial Bank Limited (Civil Appeal 148 of 1995; [1996] eKLR)
30. Ranguma, Nyanungo v Independent Electoral and Boundaries Commission & 2 others (Election
Petition 3 of 2017; [2017] eKLR) — Mentioned
31. Ruhangi Properties Limited & 2 others v Standard Chartered Bank of Kenya Ltd & 2 others (Civil
Case 1885 of 1999; [2000] eKLR) — Mentioned
32. Sammy Mwangangi & 10 others v Commissioner of Lands & 3 others (Civil Appeal 30 of 2013; [2018]
eKLR) — Explained
33. SEASCAPES LIMITED v DEVELOPMENT FINANCE COMPANY OF KENYA LIMITED
[2009] eKLR (Civil Appeal 247 of 2002) — Followed
34. Selle & Another vs Associated Motor Boat Company Ltd and Others ([1968] 1 EA 123) — Followed
35. Serah Njeri Mwobi v John Kimani Njoroge (Civil Appeal 314 of 2009; [2013] eKLR) — Explained
36. Sita Steel Rolling Mills Ltd v Jubilee Insurance Co. Limited [2007] eKLR (Civil Suit 86 of 2000) —
Explained
37. Wambui v Mwangi & 3 others (Appeal 465 of 2019) [2021] KECA 144 (KLR)) — Followed
38. Macfoy v United Africa Co Limited ([1961] 2 All ER) — Followed
Statutes
1. Constitution of Kenya, 2010 — article 27(1); article 40 — Interpreted
2. Court of Appeal Rules (cap 9 Sub Leg) — Rule 29(1) — Interpreted
3. Land Act, 2012 (Act No 6 of 2012) — section 90; section 92(2); section 99(3), (4) — Interpreted
4. Land Registration Act
5. Law of Succession Act (cap 160) — section 3; section 45(1); section 66; section 82 — Interpreted
6. Registered Land Act (Repealed) (cap 300) — section 65; section 69; section 71; section 72; section
74(1),(3), (4); section 77(1),(3),(4); section 79; section 143 — Interpreted
Texts
1. Gaener B , Price J., (Eds) (2004), Black’s Law Dictionary (Wild and Sons 8th Edn)
2. Garner, BA., (Ed) (2009), Black’s Law Dictionary (St Paul Minnesota: West Group 9th Edn p 131)
Advocates
Mr Njoroge Baiya for appellant
Simiyu Wabuge for for 1st and 2nd respondents
Hiram Nyaburi for 3rd respondent
JUDGMENT
JUDGMENT OF NAMBUYE, J.A.

1. This is a rst appeal arising from the judgment of the High Court of Kenya in Milimani Environment
and Land court (ELC) Cause No 328 of 2013 (K Bor, J) dated 12th September, 2018.
2. The substratum of the litigation resulting in this appeal is LR No Ndumberi/Ndumberi/1234 (the

suit property) originally registered in the names of Jane Wanjiru Kagunda, now deceased (the deceased).
On 19th August, 2005 and 7th July, 2006 respectively, the deceased executed a charge and further
charge in favour of Standard Chartered Bank of Kenya Ltd, the 3rd respondent, (the bank) using the
suit property as security to secure nancial facilities in favour of Joseph Wachira Njuguna Njenga, the
4th respondent (4th respondent) in the sum of KShs.1,500,000.00 and Kshs 2,520,000.00 respectively.
On 23rd July, 2007 and 20th April, 2009 the bank converted the above instruments into overdraft
facilities in favour of the 4th respondent to the total tune of KShs.5,600,000.00 for each conversion.
3. The deceased passed on, on 27th July, 2009. On 29th December, 2009 and 8th January, 2010
respectively, the bank issued a demand letter to the 4th respondent demanding payment of
KShs.5,926,309.20 and 6,050,396.45 respectively, both in respect of funds advanced to him as
overdraft facilities. He failed to meet those demands. On 22nd July, 2010, the bank through its
advocates demanded from the 1st and 2nd respondents described as administrators of the estate of
Jane Wanjiru Kagunda payment of KShs.6,944,590.20 arising from the overdraft facilities accorded
to the 4th respondent within three (3) months of the said date, in default, the bank would proceed
to realize the security. They also failed to meet the bank’s demands within the timeline stipulated
in the demand letter. On 29th April, 2011, the bank through its advocates issued instructions to
M/s Leakeys Auctioneers to issue a 45 days’ notication of sale of the suit property to the estate
of Jane Wanjiku Kagunda (deceased), on account of the amount outstanding as at 28th April,
2011 namely, KShs.7,802,931.75, together with additional charges of KShs.128,000.00 plus VAT,
auctioneers charges, and giving the reserve price as KShs.11,550,000.00.
4. On 6th May, 2011 M/s Leakeys Auctioneers simultaneously issued to the “estate of the deceased” a
forty-ve (45) days’ notice to pay KShs.7,802,931.75, in default of which the suit property would
be sold by public auction on 13th July, 2011. On 15th June, 2011, 30th June, 2011, 6th July, 2011,
7th July, 2011, 8th July, 2011 and 11th July, 2011 respectively, the 1st and 2nd respondents holding
themselves out to the bank as administrators of the estate of the deceased engaged in negotiations with
the bank resulting in the bank waiving interest of KShs.2,000,000.00 from the outstanding amount
and also to suspend the auction for thirty days eective 13th July, 2017.
5. On 2nd August, 2011, the 1st and 2nd respondents were appointed administrators of the estate of the
deceased. They however failed to pay o the debt to the bank by 13th August, 2011 as stipulated for by
the bank in the letter rescheduling the auction for thirty (30) days eective 13th July, 2011. On 29th
August, 2011, Leakey’s Auctioneers advertised the suit property for sale by public auction on 14th
September, 2011 outside General Post Oce - Kiambu Town starting at 11.00am. On 13th September,
2011, the rm of Kimani Charagu & Co. Advocates on behalf of the 1st and 2nd respondents, wrote to
the bank warning the bank against proceeding with the auction as then scheduled for 14th September,
2011, reason being that since the process initiated by the bank to realize its security in the suit property
on 6th May, 2011 was initiated after the death of the deceased on 27th July, 2009 and before the 1st
and 2nd respondents were appointed as administrators of the estate of the deceased on 2nd August,
2011, the entire process was awed, and therefore null and void. The bank was advised to call o the
auction and restart the process afresh since the 1st and 2nd respondents had of that date been duly
appointed as administrators of the deceased’s estate, with a rider that in the event the bank failed to
heed the above warning, they had instructions to sue the bank for any loss occasioned to the estate of
the deceased as a result of the bank proceeding on to conduct the then impending auction.
6. The bank did not heed the above warning and or advise and proceeded with the auction as then
scheduled for 14th September, 2011, duly conducted and Marteve Guest House, the appellant herein
emerged the highest bidder, paid the requisite deposit of KShs.6,300,000.00. On the same 14th
September, 2011 the 1st and 2nd respondents instructed the rm of Muthoga Gaturu & Co Advocates
to receive the balance of the proceeds of the auction on their behalf. The said rm requested for the
said balance of proceeds of sale on 23rd September, 2011. The record is however silent as to whether
the said amount was paid over to the 1st and 2nd respondents as requested for, and if so, how much it
was. On 3rd October, 2011, 14th October, 2011, 24th October, 2011, and 13th December, 2011, the
rm of Mucheru-Oyatta Advocates on behalf of the bank, the rm of Mumo Mutoru & Co, on behalf
of the appellant and M/s Leakeys Auctioneers exchanged correspondences with a view to nalizing the
sale in favour of the appellant. M/s Leakeys Auctioneers duly issued a Certicate of Sale, the appellant
completed payment of the purchase price as well as other attendant charges. The bank released all
the necessary documentation duly executed by its authorized Attorney to the appellant’s advocate to
facilitate the registration of title to the suit property in favour of the appellant.
7. My observations on the totality of the documentation assessed above is that although the amount
forming the demands issued by the bank to the 4th respondent on 29th December, 2009 and 8th
January, 2010 explicitly stated that the sums forming those demands arose from the 4th respondent’s
default on payment of his overdraft facilities, the statutory notice and demand notice issued by Leakeys
Auctioneers to the estate of the deceased indicated explicitly that sums forming those processes, arose
from the default to pay the debt arising from the charge and further charge. Likewise, on 26th October,
2011 and 13th December, 2011, when the advocates for the bank responded to the request from the
appellant’s advocates to forward to them title documents to complete the sale, and which the bank’s
advocates indeed forwarded to the appellant’s advocates, these did not also include documentation on
the two overdraft facilities on the basis of which the bank moved to exercise its statutory power of sale.
Neither were the overdraft facilities registered against the title to the suit property.
8. On 15th November 2012, the rm of A M. Lubulellah & Associates acting on behalf of the 1st and
2nd respondents simultaneously issued notices of intention to sue to the appellant, the bank and the
4th respondent respectively.
9. The plaint led by the 1st and 2nd respondents against the appellant, 3rd and 4th respondents in
Nairobi ELC Civil Suit No. 328 of 2013 was dated 15th February, 2013. In both their pleading and
evidence tendered through Daniel Muiruri Njenga the 1st respondent (PW1) and Martin Esakina
Papa, PW2 a forensic expert, was cumulatively that they do not dispute that the deceased executed a
charge and further charge in favour of the bank on 19th August, 2005 and 7th July, 2006 respectively
to secure nancial facilities in favour of the 4th respondent. They however disputed the deceased’s
sanctioning of the bank’s conversion of the above mentioned instruments into overdraft facilities
in favour of the 4th respondent on 23rd July, 2007 and 20th April, 2009 both in the sum of
KShs.5,600,000.00 respectively. That it was as a result of the 4th respondent’s failure to pay the sums
arising from the overdraft facilities that the bank set in motion the process to realize its security in
the suit property. PW2 a forensic expert examined alleged deceased’s endorsements on the overdraft
facilities documents and found these forgeries hence the 1st and 2nd respondents’ assertions that the
entre process undertaken by the bank to realize the security in the suit property was a fraud on the
deceased and subsequently to beneciaries of the deceased’s estate. The particulars of fraud attributed
both to the bank and the 4th respondent were as particularized in the plaint. It was also the 1st and
2nd respondents’ contention that the process initiated by the bank to realize its security in the suit
property was a nullity in so far as those processes were served on them before they were duly appointed
as administrators of the estate of the deceased.
10. On the totality of the above, the 1st and 2nd respondents sought from the court an order cancelling
title number Ndumberi/Ndumberi/1234 issued on 6th October, 2012 in the names of the appellant,
general damages, costs of the suit and interests at court rates.
11. In response to the 1st and 2nd respondents claim, the bank led a defence dated 12th April, 2013,
on the basis of which it tendered evidence through its witness Boniface Muchoki. Cumulatively
they admitted that: on 23rd July, 2007 and 20th April, 2009, respectively it converted the charge
and further charge instruments into overdraft facilities in favour of the 4th respondent to the total
tune of KShs.5,600,000.00 each; the deceased’s signatures on the impugned documents were allegedly
witnessed by an unknown bank ocial who was never tendered to court to testify; it initiated the
process to realize its security in the suit property after the death of the deceased; documents to realize
the security were served on the 1st and 2nd respondents before they were appointed as administrators
to the estate of the deceased. Denied particulars of fraud and bad faith attributed to it in the plaint.
Asserted that the 1st and 2nd respondents should not be allowed to approbate and reprobate on the
issue of want of capacity in them to be served with the banks process to realize the security in the suit
property as they engaged the bank over the issue in that capacity and reaped benets by getting a waiver
of KShs. 2,000,000.00 interest on the loan and the rescheduling of the auction for thirty days eective
13th July, 2011 all done in good faith to accord the 1st and 2nd respondents an opportunity to redeem
the suit property.
12. The 4th respondent, Joseph Wachira Njurguna both in his defence dated 4th March, 2014, and
evidence admitted that indeed the deceased guaranteed nancial facilities accorded to him by the bank
through the rst and further charge, subsequently converted into overdraft facilities on 23rd July, 2007
and 20th April, 2009 respectively. He conceded the conversion of the rst and further charge into
overdraft facilities were never sanctioned by the deceased, as according to him, this was not necessary as
these were mere extensions of the rst and further charge. He also conceded that he had not repaid the
loan as at the time the bank initiated the process to realize the security in the suit property. He however
denied particulars of fraud attributed to him in the plaint.
13. The appellant’s statement of defence dated 2nd May, 2013 and evidence tendered through Kennedy
Karume Kamithi, its Director was simply that they saw an advert for the sale of the suit property in the
Daily Nation of 29th August, 2011. He attended the public auction conducted on 14th September,
2011 by Leakeys Auctioneers, bid at the auction and emerged the highest bidder, fully paid the deposit
and subsequently the balance of the auction price. The appellant was subsequently lawfully vested
with title to the suit property.
14. At the conclusion of the trial, the learned trial Judge analyzed the record, and identied only one issue
for determination, namely, “whether a valid sale of the suit property took place.” Considering this in
light of the totality of the record as analyzed, the Judge, made ndings thereon, inter alia, that the
bank not only appreciated but also conceded that as at the time it initiated the process to realize the
security in the suit property and engaged the 1st and 2nd respondents with a view to settling the matter
amicably, the 1st and 2nd respondents had not been appointed as administrators of the estate of the
deceased. The bank however claimed that the 1st and 2nd respondents were estopped from purporting
to fault the manner in which the bank exercised its statutory power of sale of the suit property because
by their conduct they held themselves out as persons with authority to conduct business on behalf of
the estate of the deceased and reaped benets from the bank. The Judge however discounted the bank’s
explanation and ruled that the entire process as initiated by the bank went contrary to provisions of
the law as provided for in sections 45 and 82 of the Law of Succession Act Cap 160 Laws of Kenya. The
Judge therefore rendered herself as follows:
“ The court nds that the auction carried out on 14/9/2011 on the 1st Defendant’s
instructions was in contravention of Sections 45 and 82 of the Law of Succession Act, the
chargor, Jane Wanjiru Kagunda having died on 27/7/2009 and the letters of administration
over her estate not having been conrmed as at 14/9/2011 when the Suit Property was
disposed of at the auction. The Plaintis were appointed administrators of her estate vide
letters of administration issued on 2/8/2011 which were conrmed on 31/7/2012.
An order is issued cancelling the 3rd Defendant’s title over L.R. No. Ndumberi/
Ndumberi/1234. The Plainti is awarded the costs of the suit to be borne by the 1st and
2nd Defendants jointly and severally”
15. The appellant was aggrieved and lodged this appeal, raising eight grounds of appeal which may be
summarized as the learned Judge erred both in law and fact when she: sanctioned cancellation of the
appellant’s title to the suit property in the absence of evidence proving the 1st and 2nd respondents
claim against them; failed to appreciate that the appellant was a bona de purchaser for value without
notice of any defect either in the title or the process vide which it got vested with title to the suit
property; misdirected herself on the proper interpretation of sections 3, 45 and 82 of the Law of
Succession Act, Cap 160 Laws of Kenya and sections 77(3) and 77(4) of the Registered Land Act,
Cap 300 of the Laws of Kenya (repealed) as read with section 162 of the Land Act, 2012; totally
misapprehended the evidence adduced by the 1st and 2nd respondent which was directed at the 3rd
and 4th respondents and erroneously misapplied it to rule in their favour against the appellant; and,
lastly, that the decision arrived at by the trial court was in total contravention of articles 27(1) and 40
of the Constitution of Kenya, 2010.
16. The appeal came for plenary hearing on 7th June, 2021. Learned counsel, Mr. Njoroge Baiya appeared
for the appellant, Edwin Simiyu Wabuge for the 1st and 2nd respondents, and Hiram Nyaberi for
the 3rd respondent. There was no appearance for Mr. Onindo for the 4th respondent equally served
electronically with a hearing notice by the Deputy Registrar of this Court on Wednesday, June 2,
2021 at 10.30am. Neither did they le any written submissions either in compliance with the pretrial
directions given by the Deputy Registrar of this Court on 7th May, 2019 nor as directed in the hearing
notice indicated above. There being no reason proered for Mr. Ondino’s nonattendance, the court
allowed learned counsel for the other parties present to prosecute the appeal. The appeal was canvassed
virtually through written submissions and legal authorities fully adopted and relied upon by learned
counsel for the respective parties present without oral highlighting.
17. Supporting the appeal, the appellant relies on the case of Patrick Kanyagia & Another v Damaris
Wangechi & 2 Others [1995] eKLR and Marco Munuve Kieti v Official Receiver and Interim
Liquidator Rural Urban Credit Finance & Another [2010] eKLR both for the holding/proposition
that the equity of redemption becomes extinct upon the chargee realizing the security, leaving a claim
for damages as the only remedy available to the chargor, if aggrieved with the chargee’s manner of
exercise of its statutory power of sale.
18. On the strength of the above holding/proposition, the appellant faults the trial Judge for the failure to:
declare it a bona de purchaser for value without notice of any defect either in the title or the process
resulting in its acquisition of title to the suit property especially when the 1st and 2nd respondents both
in their pleading and evidence did not attribute any fraud against it; appreciate that there was sucient
demonstration on the record that they purchased the suit property through a public auction and fully
paid for it; properly appreciate that the 1st and 2nd respondents approbated the sale to the appellant
with the acquiescence of the bank when they accepted payment to them of the balance of the proceeds
of the sale and reprobated when they successfully sued for the recovery of the suit property, amounting
to the Judge conferring on the 1st and 2nd respondents an unjust enrichment; properly appreciate
that provision of sections 45 and 82 of the Law of Succession Act, Cap 80, which heavily inuenced the
conclusions reached by the Judge in the impugned judgment, had no application to the circumstances
that gave rise to this appeal as those provisions deal with free property of a deceased person.
According to them the suit property was not such free property of the deceased having been charged
to the bank and which charge had not been discharged as at the time the deceased passed on.
19. The appellant therefore urges this Court to allow the appeal in its entirety with costs to them.
20. The bank in its support of the appellant’s appeal relies on the following authorities: Mbuthia v Jimbi
Credit Finance Corporation & another [1988] eKLR; Hellen Wanjiru Kiragu & another (suing as the
legal representatives of the estate of the late James Kiragu Kigotho (deceased) v James Ndung’u Miringu
[2014] eKLR; and Ruhangi Properties Limited & 2 Others v Standard Chartered Bank of Kenya
Limited & 2 others [2000] eKLR all for holding/propositions, inter alia, that where no wrong in the
exercise of the chargee’s statutory power of sale is attributed to a bona de purchaser, the sale should not
be vitiated, once property is encumbered as security, it ceases to be free property and lastly, wrongful
exercise of a statutory power of sale by the chargee gives rise to a claim in damages in favour of the
chargor and not nullication of the sale. The bank therefore faults the Judge for failing to nd and
hold that the appellant was a bona de purchaser for value without notice of any defect either in the
title or the process resulting in the appellant acquiring title to the suit property.
21. In opposition to the appellant’s appeal, the 1st and 2nd respondents rely on the decisions in the
following cases: Daniel Otieno Migare v South Nyanza Sugar Company Ltd [2018] eKLR and
Independent Electoral and Boundaries Commission & another v Stephen Mutinda Mule & 3 others
[2014] eKLR both on the now crystallized principle of law that both parties and the court in any
civil litigation are bound by pleadings on record; and submit that since the appellant did not plead
in its defence that it is a bona de purchaser for value without notice of any defect either in the
title or the process that led to its acquisition of title to the suit property, this issue does not fall for
consideration by this Court on appeal; Jackton Nyanungo Ranguma v Independent Electoral and
Boundaries Commission & 2 others [2017] eKLR and submit that since the entire process initiated by
the bank to realize the security in the suit property was awed any public auction founded on that
process was also awed, and therefore null and void and of no consequence; Muriuki Hassan v Bose
Kinyua & 4 others [2014] eKLR and Re Estate of John Gakunga Njoroge (deceased) [2015] eKLR in
both of which the High Court vitiated a sale of a deceased person’s property by a party not vested
with a grant of representation to that deceased person’s estate, and submit that the bank’s action of
serving them with processes in the exercise of its statutory power of sale before they were appointed as
administrators of the estate of the deceased rendered the entire process null and void and was rightly
vitiated by the trial court; the case of John Spencer Harvey v Dunbar Assets PIC [2013] EWCA CIV
952 for the holding/proposition, inter alia, that any guarantee not endorsed by a guarantor is null and
void and of no consequence with no binding eect on the guarantor, in support of their submission
that the bank’s exercise of its statutory power of sale of the suit property having been founded on the
impugned overdraft facilities dated 23rd July, 2007 and 20th April, 2009 respectively, declared forgeries
by PW2, was rightly vitiated by the trial court a position this Court is urged to arm; and lastly, the
case of Marco Munuve Kieti v Official Receiver and Interim Liquidator Rural Urban Credit Finance &
another (2010) eKLR in which the court sanctioned title acquired by a purchaser through a validly and
procedurally conducted auction following a proper exercise of a statutory power of sale by a nancier
and submits that the circumstances prevailing in the above case law are distinguishable from those
prevailing in the instant appeal as already highlighted above.
22. On alleged operation of the doctrine of estoppel they contend that their conduct complained of by the
bank cannot per se be relied upon by the bank as basis for this Court to sanction the process adopted
by the bank to realize the security, as in doing so would be tantamount to the court sanctioning an
illegality, especially, when it is on record that the rm of Kimani Charagu & Co Advocates acting on
their behalf vide a letter dated 13th September, 2011 warned the bank that the entire process leading
to the then scheduled sale of the suit property by public auction on 14th September, 2011 was awed
for reasons given in the said letter and would be challenged accordingly should the same be carried out
as scheduled.
23. This is a rst appeal. Our mandate as a rst appellate court is as stipulated explicitly in Rule 29(1) of
the Court of Appeal Rules namely, to reappraise, re-evaluate and reanalyze the record consider it in light
of the rival submissions before us and draw out own conclusions thereon and give reasons either way.
Both the predecessor of this Court and as reiterated and or crystallized by this Court have delineated
the parameters for the exercise of this mandate. We take it from Selle and another v Associated Motor
Boat Company Limited & 2 others [1968] EA 123 in these terms:
“ An appeal to this Court from a trial by the High Court is by way of retrial and the principles
upon which this Court acts in such an appeal are well settled. Briey put they are that this
Court must reconsider the evidence, evaluate it itself and draw its own conclusion. Though
it should always bear in mind that it has neither seen nor heard the witnesses and should
make due allowance in this respect. In particular, this Court is not bound necessarily to
allow the trial Judge’s ndings of fact if it appears either that he has clearly failed in some
point to take account of particular circumstances or probability materially to estimate the
evidence or if the impression based on the demeanor of the witness is inconsistent with the
evidence in the case generally.”
24. I have considered the record assessed above, which I fully adopt for purposes of the determination of
this appeal. The issues that fall for my determination are whether:
1) The appellant pleaded that he was a bona de purchaser of the suit property without notice of
any defect either in the title or the process that led to its acquisition of title to the suit property.
2) If the answer to issue number 1 is in the negative, whether the appellant stands nonsuited on
his appeal.
3) In light of the totality of the record, as assessed above, the appellant should be declared a bona
de purchaser for value without notice of any defect either in the title or the process that led
to its acquisition of title to the suit property.
4) Who shuold bear the costs of appeal.
25. In response to issue number 1, I have revisited the appellant’s defence on record and nd that there is
no specic pleading that the appellant was a bona de purchaser of the suit property for value without
notice of any defect either in the title or the process that led to its acquisition of title to the suit property
through sale by public auction.
26. On issue number 2, my response thereto is that the law on the binding nature of pleadings both to the
parties and the court in civil litigation has now been crystallized by case law. I take it from the case of
Captain Harry Gandy v Caspar Air Charters Limited [1956] 23 EACA 139 wherein the predecessor
of this Court was explicit that:
“ Cases must be decided on the issues on the record; and if it is desired to raise other issues
they must be placed on the record by amendment.”
while in Odd Jobs v Mubia [1970] EA 476 the predecessor of the court added that:
“ A court may base its decision on an unpleaded issue if it appears from the cause
followed at the trial that the issue has been left to the court for decision.”
See also the position taken by this Court in Ole Nganai v Arap Bor [1983] KLR 233 wherein
the court was explicit that a court has no power to grant orders neither pleaded nor prayed
for by the parties; and the case of Galaxy Paints Co Ltd v Falcon Guards Ltd (2000) EA 885
wherein it was held, inter alia, that:
“ The issue of determination in a suit generally owed from the pleadings and a trial
court could only pronounce judgment on the issues arising from the pleadings or
such issues as the parties framed for the court’s determination. Unless pleadings
were amended, parties were conned to their pleadings. Gandy v Caspair (1956)
EACA 139 and Fernandes v People Newspapers Ltd (1972) EA 63.”
27. In light of the above crystalized principles of law, it is now trite that both parties and the court are
bound by the pleadings proered by the parties as basis for seeking a court’s intervention in any civil
litigation. The only exception to the above general rule arises where there is sucient demonstration
on the record that parties by their conduct at the trial raised the issue(s) and left these to the trial court
to determine.
28. I have revisited the record as laid before the trial court. My take thereon is that issue as to whether the
appellant was a bona de purchaser of the suit property for value without any notice of any defect either
in the title and or the process vide which it acquired title to the suit property and caused it to be vested
in its name was alive issue before the trial court notwithstanding want of a specic pleading to that
eect in the appellant’s defence. That is why the 1st an 2nd respondents maintained throughout the
entire proceedings before the trial court that the entire process vide which title was divested from the
deceased and vested in the appellant was awed and therefore unsanctionable by the trial court while
in rebuttal, both the bank’s and appellant’s positions were that the entire process was legal, regular,
lawful and therefore sanctionable.
29. In light of the above, I nd and hold that there is sucient demonstration on the record that parties
by their conduct invited the trial court to interrogate and express itself on the issue as to whether the
appellant was an innocent bona de purchaser of the suit property for value without any notice of any
defect either in the title or the process under which it acquired title to the suit property, even in the
absence of any specic pleading in the appellant’s defence to that eect.
30. The above conclusion now leads me to consider issue number 3. The approach I take in resolving this
issue is that taken by this court in the case of Munyu Maina vs. Hiram Gathiha Maina [2013] eKLR
in which this Court expressed itself, inter alia, as follows:
“ We state that when a registered proprietor’s root of title is under challenge, it is not sucient
to dangle the instrument of title as proof of ownership. It is this instrument of title that
is in challenge and the registered proprietor must go beyond the instrument and prove the
legality of how he acquired the title and show that the acquisition was legal, formal and
free from any encumbrances including any and all interests which need not be noted on the
register.”
See also the case of Sammy Mwangangi & 10 others v Commissioner of Lands & 3 others [2018] eKLR
in which this Court sanctioned title in favour of a purchase for value without notice after a scrutiny of
the supporting documents and found them in order.
31. The contracts executed by the bank, the deceased and the 4th respondent forming the substratum of
this appeal were subject to sections 65, 69, 72, 74 and 77(3) and (4) of the Registered Land Act Cap
300 Laws of Kenya (now repealed). Cumulatively, these anchor the chargor’s right of redemption and
the bank’s right to realize the security in the event of any default on the part of the chargor to repay
the indebtedness to the bank as chargee.
32. When similarly confronted this Court in the case of Elijah Kipngeno Arap Bii v Samuel Mwehia Gitau
& another [2009] eKLR, reviewed and took into consideration this Court’s own decision in the case of
Mbuthia v Jimbi Credit Finance Corporation & another [1988] KLR 1, as well as foreign jurisprudence
on the rights, obligations and duties of a chargee in the exercise of its statutory power of sale and set
out guiding principles with regard to the obligation of a mortgagee in the exercise of a statutory power
of sale. These may be summarized as follows: a mortgagee has a duty to act in good faith, have regard
to the interests of the mortgagor, obtain the best price for the property realized to pay o the debt
for the benet of both the mortgagor and the mortgagee, ensure that its power of sale is not exercised
fraudulently, ensure that the mortgagors right of redemption is only lost pursuant to a valid sale. In
sum, the mortgagee has a duty to ensure that the exercise of the statutory power of sale is not tainted
by some kind of impropriety.
33. In the case of Kenya Commercial Bank Limited v Pamela Akinyi Ochieng Civil Appeal No 114 of
1991 and Obel Omuom v Kenya Commercial Bank Limited [1996] eKLR this Court was explicit, inter
alia, that compliance with the prerequisites with regard to service of the notice on to the “chargor”
is mandatory and noncompliance with this prerequisite renders the entire process undertaken by the
chargee to realize the security invalid.
34. It is a common position on record that the bank did not move to exercise its statutory power of sale
during the lifetime of the deceased. That is why documents informing the said process were served on
the “estate of the deceased”, represented by the 1st and 2nd respondents before they were appointed
administrators of the estate of the deceased on 2nd August, 2011.
35. I have construed section 74(3) & (4) of the Registered Land Act (now repealed) pursuant to which
the bank exercised its statutory power of sale. I nd nothing therein to suggest that the bank was not
obligated to comply with the provisions of the Law of Succession Act Cap 160 Laws of Kenya (LSA)
in circumstances where the exercise of that power is undertaken after the death of the chargor. The
thread of argument running cumulatively through the bank’s defence of the 1st and 2nd respondents
claim against it is that the suit property having been charged to the bank and not discharged by the
deceased as at the time of her death, the same was not free property subject to the Law of Succession
Act Procedures.
36. By free property as dened in the LSA is meant the property of which the deceased person was legally
and competent to freely dispose of the same during his/her lifetime and in respect of which his/her
interest has not been terminated by his/her death. I have once more construed section 77(3) and (4)
of the RLA and nd nothing therein to suggest that the right of redemption became extinct upon the
death of the deceased. The above being my view, I nd and hold that the deceased’s right of redemption
in the circumstances of this appeal did not become extinct upon the death of the deceased. It therefore
devolved to the personal representatives. That is why the LSA does not donate power to the “estate of a
deceased person” to deal with property forming that deceased person’s estate, and instead donates that
power to an administrator with a will or a personal representative to the intestate estate of a deceased
person to deal with a deceased person’s property after the death of such a deceased person.
37. Section 45(1) of the Law of Succession Act is explicit that dealings with a deceased person’s property is
only permissible to the extend provided for by the provisions of the said Act. Among these is provision
that only persons holding a grant of representation to a deceased person’s estate have mandate to
transact any business with regard to such property and to the extend provided for in section 82 of the
Act on powers donated to a personal representative.
38. I am alive to the fact that the bank has however taken refuge in the invocation and application of
the doctrine of estoppel arguing that since the 1st and 2nd respondents held themselves out to the
bank as duly authorized administrators of the estate of the deceased and obtained a waiver of interest
on the amount outstanding to the tune of Kshs.2,000,000.00 and, secondly, having the auction then
scheduled for 14th July, 2011 rescheduled, they are estopped from challenging the manner in which
the bank exercised its statutory power of sale of the suit property.
39. In the case of 748 Air Services Limited v Theuri Munyi [2017] eKLR this Court when similarly
confronted, reviewed both local and foreign jurisprudence on instances in which the doctrine of
estoppel applies and set out guidelines which I nd prudent to distill, inter alia, as follows: estoppel
usually goes hand in hand with waiver. The commonest of these are estoppel by conduct and estoppel
by election or waiver; waiver is intentionally relinquishing of a right or privilege; the primary meaning
of the word waiver in legal parlance is the abandonment of a right in such a way that the other party is
entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted.
It is either express or implied from the conduct.
40. In the case of Sita Steel Rolling Mills Ltd v Jubilee Insurance Company Ltd [2007] eKLR, this Court
stated thus: “A waiver may arise where a person has pursued such a course of conduct as to evince
an intention to waive his right or where his conduct is inconsistent with any other intention than to
waive it. It may be inferred from conduct or acts putting one o one's guard and leading one to believe
that the other has waived his right.” In Seascapes Limited v Development Finance Company of Kenya
Limited [2009] eKLR, this Court was explicit that:
“ The doctrine of waiver operates to deny a party his right on the basis that he had accepted
to forego the same right having known of its existence. The doctrine of estoppel operates as
a principle of law which precludes a person from asserting something contrary to what was
implied by a previous action or statement of that person or by a previous pertinent judicial
determination.” See also Serah Njeri Mwobi v John Kimani Njoroge [2013] eKLR in which
this Court expressed itself thus:
“The doctrine of waiver operates to deny a party his right on the basis that he had
accepted to forego the same rights having known of their existence.
The doctrine of estoppel operates as a principle of law which precludes a person
from asserting something contrary to what is implied by a previous action or
statement of that person. ....”
41. I have applied the above threshold to the bank’s assertion that the doctrine of estoppel operates in its
favour to defeat the 1st and 2nd respondents claim against it. It is my position that in the absence of
the bank demonstrating that the chargor’s right of redemption became extinct upon her death, nor
existence of any other provision of law other than the LSA Procedures under which the bank could
have moved to exercise its statutory power of sale after the death of the deceased who was the chargor
coupled with lack of explanation on the part of the bank as to why it directed Leakeys Auctioneers
to serve the “estate of the deceased” leaves no doubt in my mind that in this appeal the bank was
obligated in law to invoke the process for the exercise of its statutory power of sale within the remit of
the procedures provided for in the LSA.
42. Secondly, I nd nothing in the guiding principles distilled above on invocation and application of both
the doctrine of estoppel and waiver to suggest that these override clear provisions of law. It therefore
mattered not that the 1st and 2nd respondents held themselves out to the bank as duly authorized
administrators with mandate to act on behalf of the estate of the deceased when they were not. That
conduct on their part cannot be sanctioned to oust the operation of clear provisions of law with a view
to sanitizing the awed process vitiated by the trial Judge.
43. It is against the totality of the above assessment and reasoning, that I now proceed to determine whether
the appellant’s plea that it is an innocent bona de purchaser of the suit property for value without
notice of any defect either in the title or the process that resulted in the title being vested in its name
is sustainable.
44. Black’s Law Dictionary, 8th Edition denes a bona de purchaser as
“ one who buys something for value without notice of another claim to the property and
without actual or constructive notice of any defects in or inrmities, claim or equities against
the seller’s title; one who has in good faith paid valuable consideration for property without
notice of prior adverse claims"
Elements/ingredients for qualication of a party as a bona de purchaser, and which I fully
adopt are those distilled in the case of Lawrence P Mukiri v Attorney General & 4 others
[2013 ]eKLR, namely, proof that the claimant:
a) He holds a certicate of Title;
b) He purchased the Property in good faith;
c) He had no knowledge of the fraud;
d) The vendors had apparent valid title;
e) He purchased without notice of any fraud;
f) He was not party to any fraud.
45. On the role of the court when confronted with an appeal of this nature, the position I take and which
I fully adopt is that taken by the court in the case of Wambui v Mwangi & 3 others (Civil Appeal 465
of 2019) [2021] KECA 144 (KLR) (Civ) (19 November 2021) (Judgment). In it, the court reviewed
numerous case law on the subject and variously distilled guiding principles therefrom. Those I nd
relevant in the determination of this appeal are the following:
i) No court ought to enforce an illegal contract or allow itself to be made the instrument of
enforcing the obligations alleged to arise out of a contract or transaction which is illegal, if the
illegality is duly brought to the notice of the court.
ii) It is trite law that where an act is a nullity it is void and every proceeding founded on it is also
in law a nullity.
iii) Every act premised on a nullity cannot accrue legitimacy or legality.
iv) Sanctity of title was never intended or understood to be a vehicle for fraud and illegalities or
an avenue for unjust enrichment at another person’s expense.
v) A court of law cannot protect title to land which has been obtained illegally or fraudulently
merely because a person is entered in the register as proprietor.
46. Starting with fraud, I adopt the denition of fraud as set out in Black’s Law Dictionary, 9th Edition
at page 131 as:
“ a knowing misrepresentation of the truth or concealment of a material fact to induce

another to act on to his or her detriment.”
While for the threshold for proof of fraud, I adopt the position taken by the predecessor of this Court
in the case of Railal Gordhanbhai Patel v, Lalji Makanji [1957] EA 314 for the holding/propositions,
inter alia, that proof of fraud is slightly higher than a balance of probabilities but slightly lower than
proof beyond reasonable doubt.
47. It is correctly submitted by the appellant that no fraud was attributed to it by the 1st and 2nd
respondents in their plaint hence its assertion that the fraud attributed to the bank and the 4th
respondent should not have been applied by the trial Judge to vitiate its title to the suit property.
48. On proof of fraud, starting with that attributed to the bank, I nd these were proved to the required
threshold for reasons that the bank converted the rst and further charge into overdraft facilities in
favour of the 4th respondent without the knowledge, participation, consent and or approval of the
deceased; failed to tender evidence through its sta involved in the impugned transactions or expert
evidence to controvert the 1st and 2nd respondents evidence that the impugned transactions were
not only forgeries but also a fraud on the estate of the deceased; knowingly issuing a demand, and
notication of sale notice based on an amount forming the substratum of the demand notices that
had been issued to the 4th respondent requiring him to pay up the amount arising from the overdraft
facilities purporting to be the amount due and owing to the bank by the chargor arising from the
rst and further charge; purporting to circumvent the clear provision of law requiring it to issue such
processes upon the chargor by erroneously issuing its demand and notication of sale notices on the
“estate of the deceased” (emphasis added) well knowing that it is not the “estate of the deceased” which
was the chargor and was therefore incapable in law of being served with those processes; carefully
couching and excluding from the contents of the demand notice and notication of sale to the estate
of the deceased words to the eect that the amount reected in both documents as the amount owing,
due and payable to the bank by the chargor were in fact amounts that formed demand to the 4th
respondent to meet his obligation to the bank under the overdraft facilities; factoring the amounts
forming the overdraft facilities as basis for its move to realize the security in the suit property knowing
that those overdraft facilities were never registered against the title to the suit property, and, lastly,
carefully excluding the documentation on the overdraft facilities from the documents forwarded to
the appellant ‘s advocates to facilitate the transfer of the suit property to the appellant so as to create
the false impression on the record that in fact the power of sale was exercised based on the charge and
further charge when in fact the said power of sale was exercised on the basis of the undisclosed overdraft
facilities granted to the 4th respondent without the sanctioning of the deceased.
49. Turning to those attributed to the 4th respondent, I also nd these were proved to the required
threshold through his admission that the deceased was not involved in the conversion of the charge
and further charge into overdraft facilities by the bank in his favour allegedly because in his opinion
these were mere extensions. In my view, this admission on the part of the 4th respondent was sucient
demonstration of collusion between him and the bank through its sta to convert the charge and
further charge into overdraft facilities without the consent, knowledge and participation of the
deceased to the detriment of the deceased’s interest in the suit property. Lastly, failing to pay o the
overdraft facilities accorded to him by the bank and or even demonstration of his willingness to do so.
His conduct of being indierent to the plight of the beneciaries of the estate of the deceased in the
wake of the threat of dispossession of the suit property through the awed process initiated by the bank
in its purported move to realize the security in the suit property is deplorable and therefore deserves
not only condemnation in the strongest possible terms but should also neither be countenanced nor
condoned by a court of law.
50. On illegalities and irregularities, I nd these also proved to the required threshold based on the fact
that the bank well knowing that in law it could only invoke its statutory power of sale upon service
of a demand and notication of sale on a chargor, purported to comply with that prerequisite by
purporting to serve the said processes on the estate of the deceased a process not provided for in law
either under the RLA or LSA as none was pointed out to the court by the bank.
51. Want of compliance with the Law of Succession Act provisions by the bank in the exercise of its statutory
power of sale rendered the entire process an illegality and therefore null and void. The position in law
with regard to nullities and or illegalities and which I adopt is as was crystallized by the locus classicus
decision of the privy council in the case of Macfoy v United Africa Co Limited [1961] 2 All ER for the
holding, inter alia, that once an act is null and void, it amounts to nothing. No right can be founded
on it.
52. In light of the above crystallized position, since the appellant’s title has its roots in the bank’s awed
process in the exercise of its statutory power of sale on the basis of which the appellant got title to
the suit property, the said title is tainted with fraud, nullity, irregularly and illegality. In terms of the
principles distilled in the case of Edward Ndung’u Wambui [supra] which I have adopted and applied
herein, the appellant’s plea of an innocent purchaser for value without notice to either title or the
process resulting in it being vested with title to the suit property is unsanctionable.
53. On alleged possible unfair enrichment of the 1st and 2nd respondents by reason of them allegedly
receiving the balance of the proceeds of sell of the suit property as well as cancellation of title vested
in the appellant in their favour, I nd this assertion on the part of the appellant not proved. As
already highlighted above, indeed the 1st and 2nd respondents instructed an advocate to demand those
proceeds on their behalf but as mentioned above, the record is silent as to whether the balance of the
said proceeds were ever paid out to the 1st and 2nd respondents and if so, how much and when the
same was paid out. I therefore, nd and hold that the plea of unfair and unjust enrichment levelled
against the 1st and 2nd respondents by the appellants is not founded on the facts on the record.
54. The upshot of the totality of the above assessment and reasoning, and since Okwengu, JA is in
agreement, the nal orders of the Court are that the appeal herein has no merit. It is accordingly
dismissed with costs to the 1st and 2nd respondents. The trial court’s decision is accordingly armed.
JUDGMENT OF HANNAH OKWENGU, JA.

[1] The facts relating to this case and the applicable law have been elaborately set out by my sister Judges
Nambuye & Karanja, JJA. I do not therefore nd it necessary to repeat the same, except to briey
highlight the facts so as to put the issues into proper perspective.
[2] The litigation subject of the appeal now before us concerns property known as LR No Ndumberi/
Ndumberi 1234 (suit property) which was owned by Jane Wanjiru Njenga (deceased). The material
facts are substantially not in dispute. The deceased had charged the suit property to the 3rd respondent,
Standard Chartered Bank (the Bank), as security for nancial facility advanced to the 4th respondent,
Joseph Wachira Njuguna (Njuguna) who defaulted in the repayment. The deceased died on 27th
July 2009. On 29th December 2009, the bank issued a demand letter to Njuguna for payment of the
outstanding amount. Njuguna did not make any payment.
[3] Consequently, on 22nd July 2010 the Bank issued statutory notices of intended sale of the suit property
to 1st and 2nd respondents, who are beneciaries of the deceased’s estate. By this time, no grant had
been issued to the 1st and 2nd respondents. The 1st and 2nd respondents, however, engaged the Bank
in negotiations and the Bank waived Kshs 2 million out of the outstanding amount and postponed the
sale to enable the 1st and 2nd respondents to repay the debt. However, the 1st and 2nd respondents
failed to pay the outstanding amount.
[4] In the meantime, the 1st and 2nd respondents who had applied for letters of administration, were
issued with a grant on 2nd August 2011. The Bank instructed an auctioneer to sell the suit property.
The auctioneer served the 1st and 2nd respondent with a 45 days’ redemption notice on 6th May, 2011,
and on 14th September, 2011 the Auctioneer sold the suit property and declared the appellant the
highest bidder for the suit property. Subsequently the appellant paid the full purchase price, certicate
of sale was issued to it, a transfer registered, and title issued in its favour. The grant issued to the 1st
and 2nd respondents was conrmed on 31st July, 2012.
[5] The 1st and 2nd respondents led a suit in the Environment and Land Court (ELC), in their capacity
as administrators of the estate of the deceased seeking an order for cancellation of the sale of the suit
property to the appellant, as well as general damages. In a judgment subject of the appeal before us, the
learned Judge of the ELC ruled in favour of the 1st and 2nd respondents and cancelled the appellant’s
title. The appellant being aggrieved by the judgment has faulted the judgment on 8 grounds.
[6] I have carefully considered the record of appeal and the rival submissions made by the respective parties,
which submissions have been ably set out by each of my sister Judges in their respective judgments.
In my view, the appeal turns on four main issues. First, whether the Bank had a statutory power of
sale in regard to the suit property. If so, whether the statutory power of sale was properly exercised, if
so, whether the appellant was an innocent purchaser for value without notice, and nally whether the
learned Judge erred in cancelling the sale of the suit property to the appellant. Before delving into these
issues, I wish to address a preliminary issue concerning the pleadings.
[7] The respondents pleaded in their plaint at paragraph 18, 19, 22 and 23 that the purported sale of the
suit property to the appellant in exercise of the Bank’s statutory power of sale, was fraudulent and not
bona de because no sale actually took place; that the purported sale price was an undervalue, and
the purported sale undertaken to defraud the estate of the deceased. Although the appellant did not
specically plead in his defence to the 1st and 2nd respondents’ claim, that it was an innocent purchaser
for value without notice, it denied the 1st and 2nd respondents’ claim. Therefore, the 1st and 2nd
respondents had the burden of proving their allegations including the fact that the sale was fraudulent
and not bona de.
[8] In accordance with the holding in Odd Jobs v Mubia [1970] EA 476, the issue whether the appellant
was an innocent purchaser for value without notice, was an issue that was germane to the legality of
the substantive sale of the suit property, and therefore an issue that must be considered to have been
left to the court to determine in addressing the process and legality of the statutory sale.
[9] As already stated, it is common ground that the deceased charged her property to the Bank. The dispute
concerns the exercise of the Bank’s statutory power of sale. That power of sale, having been exercised
on 14th September, 2011, the provisions of the Land Act (No 6 of 2012) that currently applies to the
exercise of statutory power of sale having come into eect on 2nd May, 2012 after the impugned sale,
could not act retrospectively. I therefore turn to the provisions of the Registered Land Act(Cap 300)
(now repealed) (RLA), that was the law applicable as at 14th September, 2011.
[10] Section 74(1) of RLA provided for the remedies of a Chargee as follows:
“ (1) If default is made in payment of the principal sum or of any interest or any
other periodical payment or of any part thereof, or in the performance or
observance of any agreement expressed or implied in any charge, and continues
for one month, the chargee may serve on the chargor notice in writing to pay
the money owing or to perform and observe the agreement, as the case may be.
(2) If the chargor does not comply, within three months of the date of service, with
a notice served on him under sub-section (1), the chargee may -
(a) appoint a receiver of the income of the charged property; or
(b) sell the charged property:

Provided that a chargee who has appointed a receiver may not exercise the
power of sale unless the chargor fails to comply, within three months of the
date of service, with a further notice served on him under that subsection.”
(Emphasis added)
[11] Section 77(1), (3) & (4) of the RLA provided as follows on the power of chargee to sell:
“ (1) A chargee exercising his power of sale shall act in good faith and have regard to
the interests of the chargor, and may sell or concur with any person in selling
the charged land, lease or charge, or any part thereof, together or in lots, by
public auction through a licensed auctioneer for a sum payable in one amount
or by instalments, subject to such reserve price and conditions of sale as the
chargee thinks t.
(3) A transfer by a chargee in exercise of his power of sale shall be made in the
prescribed form, and the Registrar may accept it as sucient evidence that the
power has been duly exercised, and any person suering damage by an irregular
exercise of the power shall have his remedy in damages only against the person
exercising the power.
(4) Upon registration of the transfer, the interest of the chargor as described therein shall pass to
and vest in the transferee freed and discharged from all liability on account of the charge, or
on account of any other encumbrance to which the charge has priority (other than a lease,
easement or prot to which the chargee has consented in writing).”__ (Emphasis added)
[12] Section 74 gives a chargee remedies which includes the right to sell the charged property. However,
before that right can be exercised, the chargee is required to serve a notice on the Chargor in writing,
requiring him/her to pay the money owed or perform the agreement. That notice must be served at
least three months before the sale, and the sale can only take place if no payment is made. Section 77
of RLA gives the chargee the power to sell the charged property at a public auction through a licensed
auctioneer, after the service of appropriate notices.
[13] It is apparent that the Bank exercised its statutory power of sale after the death of the deceased who died
on 27th July, 2009. The Bank maintained it served the statutory notice on 1st and 2nd respondents
on 22nd July, 2010 before it exercised its statutory power of sale. While the two do not deny service
of the statutory notice on them, they contend that they had no authority to receive service on behalf
of the estate of the deceased.
[14] George Njoroge Muiruri (Muiruri), an auctioneer T/A as Leakey Auctioneers swore an adavit in
which he deposed that he served the 1st and 2nd respondents on 6th May, 2011 with the redemption
notice before he carried out the sale. In his adavit of service Muiruri explained that when he went to
serve the notice at the home of the deceased, he met a young man who introduced himself as the son
of the deceased. The young man called his brother Daniel Muiruri Njenga, but when Muiruri served
the two, they declined to sign the notice, and as a precaution Muiruri posted the 45 days’ redemption
notice and notication of sale by registered mail, to the borrower and the estate of the registered owner.
He does not give the date when he posted the notice of the address used.
[15] It was after that purported service that 1st and 2nd respondents wrote a letter in which they sought
indulgence for the debt arising from the Charge to be reduced. Copies of the petition for letters of
administration that are on record show that the 1st and 2nd respondents had led the petition for
letters of administration for the estate of the deceased on 31st May, 2010. As at 6th May, 2011 when
they were served by the Auctioneer, they had not obtained any grant as the grant was issued to them
on 2nd August, 2011. The purported service of the statutory notice and the redemption notice upon
the 1st and 2nd respondents on 22nd July, 2010 and 6th May, 2011 respectively, was thus not proper
service on the estate of the deceased, as the 1st and 2nd respondents had no authority to deal with the
estate of the deceased before 2nd August, 2011 when they were issued with a grant.
[16] It was argued that the 1st and 2nd respondents having entered into discussions with the Bank, they
presented themselves as competent to deal with the estate, and should therefore be estopped from
denying their authority to receive the notice. It must be noted that the 1st and 2nd respondents as
administrators of the estate of the deceased, do not act in their own capacity nor do they represent their
own interest alone. They act on behalf of all the beneciaries of the estate and what they do in their
personal capacity must be distinguished from what they do in their capacity as administrators.
[17] In regard to unjust enrichment, the Bank submitted that at the request of the 1st and 2nd respondents,
it forwarded the balance of the purchase price for the suit property after osetting the outstanding debt
to these respondents, and that by the said respondents keeping the money and seeking cancellation of
the transfer of the suit property, it would amount to unjust enrichment. I have carefully perused the
record of appeal and do nd that the issue of unjust enrichment was not pleaded nor canvassed in the
trial court, nor was it raised in the defence of the Bank or Njuguna or the appellant. Secondly, the Bank
did not plead nor adduce any evidence that it paid the balance of the purchase price after osetting
the debt, to the 1st and 2nd respondents, nor was there any evidence regarding the amount of surplus
after the debt was paid, and to whom payment was made or any acknowledgment for such payment.
Hence, I reject the allegations of unjust enrichment on the part of the 1st and 2nd respondents.
[18] The grant of conrmation indicates that apart from the 1st and 2nd respondents, there were three
other beneciaries, one of whom was a minor. Therefore, apart from the fact that the 1st and 2nd
respondents had no authority to negotiate on behalf of the deceased’s estate before 2nd August, 2011
when they were issued with the grant, any compromise that the 1st and 2nd respondents entered
into before they were issued with the grant was made in their own personal capacity and interest as
beneciary and not made on behalf of the estate of the deceased or the other beneciaries. Any estoppel
or waiver that arises from the conduct of the 1st and 2nd respondents in engaging with the Bank before
they were issued with the grant, is limited to the interests of the two in the estate, and not the interest
of all the beneciaries.
[19] Section 82(b) of the Law of Succession Act (LSA) states:
“ Personal representatives shall, subject only to any limitation imposed by their grant, have
the following powers –
(a) to enforce, by suit or otherwise, all causes of action which, by virtue of any law,
survive the deceased or arising out of his death, for his personal representative;
(b) to sell or otherwise turn to account, so far as seems necessary or desirable in

the execution of their duties, all or any part of the assets vested in them, as they
think best:
Provided that-
(i) any purchase by them of any such assets shall be voidable at the
instance of any other person interested in the asset so purchased;
and ai. No immovable property shall be sold before conrmation
of the grant.
(c) to assent, at any time after conrmation of the grant, to the vesting of a specic
legacy in the legatee thereof;
(d) ….” (Emphasis added)
[20] A plain reading of section 82 of LSA shows that it refers to powers of the personal representative of
the deceased’s estate to sell the deceased’s property, and that power is only available to the personal
representative after the conrmation of the grant. This limitation does not apply in a forced sale by a
chargee exercising a statutory power of sale in regard to property charged by the deceased before death.
The chargee only has to comply with the provisions of the law in regard to the exercise of the statutory
power of sale.
[21] As regards section 66 of the LSA, as a Chargee, the Bank was not an ordinary creditor but occupied a
privileged position as it had priority over the suit property that the deceased had charged to it. However,
this privileged position did not deny the deceased or the deceased’s estate the right to pay o the debt
and redeem the suit property. The question whether the suit property was the deceased’s free property,
is answered in reference to section 3 of the LSA that denes free property in relation to a deceased
person to mean:
“ The property of which that person was legally competent freely to dispose during his
lifetime and in respect of which his interest has not been terminated by his death”.
[22] The deceased having charged the suit property to the Bank, she was competent to dispose it during her
lifetime subject to the Bank’s consent, or her paying o the debt. Although her right of disposal was
encumbered by the charge, her death did not automatically terminate her interest in the suit property.
The property remained part of her estate subject to the debt. It was therefore free property that could
be inherited by the beneciaries of the estate of the deceased subject to the encumbrance.
[23] As Chargee, the Bank had the option under section 66 of LSA to apply for letters of administration
for the estate of the deceased to enable it exercise its statutory power of sale. Nevertheless, in light
of the Bank’s interest in the suit property, and the rights of the deceased’s beneciaries, the Bank
could only exercise this option by applying to have a person or persons entitled to a grant of letters
of administration for the estate of the deceased Chargor appointed as such by the court. This would
have enabled the Bank to serve the estate of the deceased with the necessary notices through the
appointed administrators, to give an opportunity for the estate to pay the debt failing which the Bank
would be able to pursue its statutory right of sale, the administrators stepping into the shoes of the
deceased Chargor. The Bank did not follow this avenue and the estate of the deceased was not given
an opportunity to redeem the suit property before the sale. To that extent the Bank’s statutory power
of sale had not accrued.
[24] Of greater concern is the allegation at paragraph 10 of the plaint that the terms of the Charge were
fraudulently altered without the knowledge or consent of the Chargor, so that the Charge became an
overdraft facility and the Bank advanced further monies to Njuguna. In Vijay Morjaria v Nansingh
Madhusingh Darbar & another [2000] eKLR, Tunoi JA stated the law on fraud as follows:
“ It is well established that fraud must be specically pleaded and that particulars of the fraud
alleged must be stated on the face of the pleading. The acts alleged to be fraudulent must of
course be set out, and then it should be stated that these acts were done fraudulently. It is
also settled law that fraudulent conduct must be distinctly alleged and as distinctly proved,
and it is not allowable to leave fraud to be inferred from the facts. See Davy v Garrett (1878)
7 Ch. D 473 at 489.”
[25] The particulars of fraud pleaded by the 1st and 2nd respondents at paragraph 10 of the plaint, included
the Bank having advanced further monies to Njuguna and illegally extending the further advances to
the Charge and Further Charge; the Bank using the suit property as security for the additional funds
without the deceased’s knowledge or consent to the additional funding; the Bank and Njuguna forging
the deceased’s signature in an eort to show that the deceased had guaranteed the further advances to
Njuguna; the Bank having failed to render to the deceased or the 1st and 2nd respondents a true and
proper account of the loan; and the Bank having failed to serve any statutory notice on the deceased or
her personal representative. The issue is, were these particulars proved?
[26] Section 71 of RLA provided as follows in relation to variation of a Charge:
“ The amount secured, the method of repayment, the rate of interest or the term of the charge
may be varied by the registration of an instrument of variation executed by the parties to
the charge, but no such variation shall aect the rights of the proprietor of any subsequent
charge, unless he has consented to the variation in writing on the instrument of variation.”
[27] The Bank contended that the deceased signed the necessary documents consenting to the Charge
being converted into an overdraft facility, and that her signature was witnessed by a Bank ocial.
Nevertheless, this Bank ocial was not identied nor was he/she called to testify. I have perused the
record of appeal and do note that the Charge, Further Charge and the overdraft facility documents
reveal that the Charge dated 19th August, 2005 and Further Charge dated 7th July, 2006, were both
signed by the deceased in the presence of an identied advocate in compliance with section 79 and 74
of RLA. Both Charges are also registered in the encumbrance section of the title to the suit property.
[28] In contradistinction, the overdraft facility documents dated 23rd July, 2007 and 20th April, 2009, are
purported to have been signed by the deceased before a Bank ocial and not an advocate. The Bank
ocial is not identied, there is also no indication of compliance with section 74 and 79 of the RLA.
In addition, there is no indication of registration of the facility in the encumbrance section of the title
to the suit property.
[29] The above anomalies, coupled with the uncontroverted evidence of Martin Esakina Papa (the
document examiner), and his report that the document for the overdraft facility was not signed by
the same hand as the deceased’s standard writings, and the fact that the Bank ocial whom the Bank
claimed witnessed the deceased sign the document remained nameless and faceless, the inescapable
conclusion is that the deceased did not sign the overdraft facility documents and, therefore, did not
consent to the Charge and Further Charge being converted to an overdraft banking facility. This shows
that the variation was done contrary to section 71 of the RLA. It also provides clear evidence of the
fraud perpetrated upon the deceased by the Bank and Njuguna. Thus, the 1st and 2nd respondents
established the particulars they pleaded and thereby discharged the burden of proving the fraud that
they alleged against the Bank and Njuguna.
[30] Under section 77(1) of RLA the Bank as Chargee was required to act in good faith in exercising its
statutory power of sale and to have regard to the interests of the deceased as Chargor. The Bank did
not discharge this obligation, but was complicit in defrauding the deceased’s estate, as it maintained
that its ocer witnessed the deceased’s signature when this was not so.
[31] The fraud rendered void the purported exercise of the Bank’s statutory power of sale for three reasons.
First, there was no evidence of what was owing as at the time the Charge was converted into an overdraft
facility. Secondly, by making further advances to Njuguna on new terms without the deceased’s
knowledge or consent, the Bank waived its rights on the Charge and Further Charge, thereby releasing
the deceased from her obligation under the Charge and Further Charge. Thirdly, the security that
the deceased had oered was not a continuing security but was specically pegged on the Charge and
Further Charge that she had signed. The Bank had no statutory power of sale in regard to the additional
advances as no Further, Further Charge was executed by the deceased, or registered against the title to
the suit property, nor was the deceased’s estate served with any statutory notices.
[32] The Bank could not therefore purport to exercise its statutory power of sale in regard to the original
Charge and Further Charge as the same was no longer available to it. Nor could the Bank anchor its
statutory power of sale on the subsequent overdraft facility as the deceased was not party to it, nor was
the overdraft facility secured by the title to the suit property. In a nutshell the Bank’s statutory power
of sale did not arise as there was no evidence of any default arising from the original Charge or Further
Charge signed by the deceased, and the purported exercise of the power of sale was also irregular as
no statutory notice was served on the deceased’s estate. I come to the conclusion that the purported
exercise of the statutory power of sale by the Bank is void and the Bank is liable to the deceased’s estate
in selling the suit property.
[33] Coming to the appellant who had purchased the suit property at a public auction carried out by
the auctioneer on the instructions of the Bank, although the 1st and 2nd respondents alleged that
the no auction took place and that the suit property was sold to the appellant at an undervalue, the
auctioneer stated under oath that he carried out an auction sale on 14th September, 2011 during which
the appellant was the highest bidder at Kshs 15,300,000. There is no reason to doubt the evidence of
the Auctioneer which is consistent with the evidence of the appellant.
[34] There was evidence that Joe Musyoki Consultants carried out a valuation of the suit property before
the sale, and prepared a report dated 3rd February, 2011 placing the open market value for the suit
property at Kshs. 18,500.000 and the forced value at Kshs 12, 950,000. The 1st and 2nd respondents
produced a valuation done on 28th October, 2010 by Tysons Limited in which the open market value
is placed at Kshs. 20,000,000 and the forced sale value at Kshs 17,000,000.
[35] Although this valuation is purported to have been done in October 2010, there is no specic reference
to the valuation before the sale of the suit property. In my view, the bid of Kshs 15,300,000 by the
appellant was reasonable, given the valuation by Joe Musyoki Consultants. I reject the allegation of sale
at an undervalue as the auction sale, being a forced sale, the highest bid is dependent on the response
to the auction, and therefore not predictable.
[36] The appellant having paid the full purchase price, the suit property was transferred to it, and a title
issued in its name. There is no evidence that the appellant was complicit in or had any knowledge of
any fraudulent dealings involving the sale of the suit property or irregularities concerning the exercise
of the statutory power of sale by the Bank. The appellant was therefore an innocent purchaser for value
without notice. The question is, what is the impact of the wrongful exercise of the Bank’s statutory
power of sale on the purchase of the suit property by the appellant?
[37] The power of the Court to order cancellation of a transaction that has been procured by fraud or
mistake is circumscribed by section 143 of RLA as follows:
“ 143.
(1) Subject to subsection (2), the court may order rectication of

the register by directing that any registration be cancelled or
amended where it is satised that any registration (other than a
rst registration) has been obtained, made or omitted by fraud
or mistake.
(2) The register shall not be rectied so as to aect the title of a

proprietor who is in possession and acquired the land, lease or
charge for valuable consideration, unless such proprietor had
knowledge of the omission, fraud or mistake in consequence of
which the rectication is sought, or caused such omission, fraud
or mistake.”
[38] A plain reading of section 143 of RLA reveals that the court can only order cancellation of registration
of a title where fraud is established in the case of a proprietor who is in possession and acquired the
property for valuable consideration, where it is established that the proprietor was either complicit in
the fraud or had knowledge of the fraud, and was therefore not a bona de purchaser for value without
notice. In addition, section 77(3) of the RLA (reproduced at paragraph 10 of this judgment), provided
that once the sale is registered, a person who is aggrieved by an irregular exercise of a Chargor’s statutory
power of sale is only entitled to damages against the person exercising the power.
[39] In the plaint the 1st and 2nd respondents sought general damages in addition to cancellation of the
title issued in favour of the appellant. Was the prayer for cancellation of the appellant’s title to the suit
property available to the 1st and 2nd respondents?
[40] In Nyangilo Ochieng & another v Fanuel B Ochieng & 2 others [1996] eKLR, this Court considering
the position of an innocent purchaser in an auction sale which was void stated thus:
“ Having held that the auction sale was void we must consider the consequences. Miss Awino
argued that Section 77(3) of the Registered Land Act gives her client a good title. That sub-
section reads:
(3) A transfer by a chargee in the exercise of his power of sale shall be made in the
prescribed form, and the Registrar may accept it as sucient evidence that the
power has been duly exercised and any person suering damage by an irregular
exercise of the power shall have his remedy in damages only against the person
exercising such power".…….
In our view, a sale which is void does not entitle the purchaser at such sale to obtain proprietorship or
title to the land so sold. It is therefore clear that the second respondent did not acquire proper titles to
the suit properties. Her remedy is against the bank primarily to obtain a refund of the consideration
paid.’’
[41] I reiterate the position of the Court as above stated and take the view that there is a distinction between
an auction sale which is rendered irregular during the sale, and a sale which is void because the statutory
power of sale either had not accrued or is vitiated by fraud. While an innocent purchaser in an irregular
sale may be saved by section 77(3) of the RLA, that section cannot help an innocent purchaser in the
case of a void sale, particularly in a situation such as this where the Bank is complicit in the fraud and
has unlawfully sold the suit property.
[42] Despite the court having the obligation to protect an innocent purchaser for value at an auction sale,
Bank nancing is critical to the economy of this country and fraudulent realization of security by
a large Bank such as the 3rd respondent, cannot be allowed to take root by the court protecting an
innocent purchaser who is the ultimate beneciary in such a transaction. In the circumstances of this
case, it would be inimical to justice and public interest to allow a situation where a Bank conspires to
deliberately sell property belonging to a dead person, when the property was not charged as security
for the outstanding debt, and the deceased’s estate has not even been served with any statutory notice.
That would amount to “robbery” of a deceased person carried out in broad daylight.
[43] I nd further support in the fact that unlike the Land Act, where by virtue of section 99(3), an innocent
purchaser for value, is protected even where the charged property is sold when there has been no default
by the Chargor, or when no statutory notice has been served on the Chargor, or the sale ‘is in some
way, unnecessary, improper or irregular’ the RLA does not have a similar provision. Section 77(3) of
RLA does not provide a blanket protection but only protects in the case of an irregular auction sale,
not a sale that is void and illegal.
[44] For these reasons, I come to the conclusion that the sale of the suit property to the appellant is
void and the appellant’s remedy lies in damages against the Bank and not the estate of the deceased.
Consequently, I would uphold the judgment of the trial court and concur with my sister Nambuye,
JA that this appeal is for dismissal. The orders shall therefore be as proposed by Nambuye, JA.
JUDGMENT OF W. KARANJA, JA.

1. The 1st and 2nd respondents led ELC No 328 of 2013 before the Environment and Land Court
(ELC) at Nairobi in their capacity as the legal representatives of the estate of their mother, the late
Jane Wanjiru Njenga, (hereafter the deceased) who died on 27th July, 2009. The two were appointed
administrators of her estate vide a grant of letters of administration issued on 2nd August, 2011 and
conrmed on 31st July, 2012.
2. The main asset left by the deceased was LR No Ndumberi/ Ndumberi/1234 (“the suit property”)
which the deceased had charged to Standard Chartered Bank of Kenya Ltd (3rd respondent) on 19th
August, 2005 to secure a nancial facility to the tune of Kshs. 1.5 million together with interest
advanced to the 4th respondent by the Bank. The deceased is said to have subsequently executed a
further charge on 7th July, 2006 for Kshs. 2.52 million together with interest using the same property
as security. The said facility had not been settled in full as at the time the deceased passed on, and
subsequently, the Bank sought to realise the security for non-payment.
3. Although the 1st and 2nd respondents contest service of the statutory notice on them, it is not disputed
that the issue of the outstanding loan and consequent threat to sell the property came to their attention
prompting the two to engage the Bank in some negotiations in a bid to redeem the suit property. The
negotiations failed and ultimately, the Bank purported to exercise its statutory power of sale and sold
the suit land to Marteve Guest House (the appellant) on 14th September, 2011 for Kshs. 15.3 million
in a contested public auction.
4. The 1st and 2nd respondents challenged the Bank’s action through the aforementioned suit claiming
that the Bank had fraudulently increased the limit of the nancial facilities advanced to the 4th
respondent bringing it to Kshs. 5.6 million on 23rd July, 2007 and 20th April, 2009 as set out in the
particulars of fraud in the plaint. They also averred that the Bank purported to issue a statutory notice
of sale dated 6th May, 2011 when it knew or ought to have known that the deceased had died on 27th
July, 2009 and no grant of letters of administration to her estate had been issued.
5. The 1st and 2nd respondents maintained that no sale by public auction took place on that day and
sought cancellation of the transfer of the suit property to the appellant; they also claimed that the suit
property was sold at a gross undervalue without regard to its market value and that the Bank failed
to render a true and proper account of the 4th respondent’s indebtedness secured by the charge and
further charge. They sought general damages, costs of the suit and interest thereon.
6. The Bank admitted advancing credit facilities to the 4th respondent which was secured by the
charge and further charge over the suit property; that it oered to increase the limit of the nancial
facility advanced to Kshs. 5.6 million which oer the 4th respondent accepted. The Bank denied the
particulars of fraud set out and maintained that it duly served a statutory notice and lawfully exercised
its statutory power of sale on 14th September, 2011 whereby Kshs. 15.3 million was realized from the
sale of the suit property to the appellant.
7. In its defence, the appellant stated that it attended the auction conducted on 14th September, 2011
and purchased the suit property as the highest bidder.
8. The 1st respondent’s case was that he was the administrator of his late mother’s estate; that the Bank
fraudulently advanced further monies to the 4th respondent without security and purported to extend
this new debt to the charge and further charge without the consent of his late mother; that the Bank
and the 4th respondent forged his late mother’s signature to make it appear that she had guaranteed
the further loan facility advanced to the 4th respondent; that the 4th respondent owed his late mother
and her estate a legal duty to repay the loan so that his late mother’s title over the suit property could
be discharged but that he breached this obligation or acted indierently to the potential loss his late
mother’s estate would suer if the Bank exercised its statutory power of sale.
9. It was his evidence that they communicated to the Bank that there was no person who could validly
represent the estate of his late mother but the Bank purported to have served a statutory notice dated
6th May, 2011. He faulted the Bank for not applying for letters of administration over his late mother’s
estate as a creditor and failing to release the details of the debt for purposes of having this included in
the petition for letters of administration.
10. The 1st and 2nd respondents called Martin Esakina Papa, the document examiner who examined the
signatures of the deceased appearing on the bank documents. The expert witness produced a report
in which he concluded after examining the specimen signatures that the signatures on the charge
documents and the one appearing in the other documents were not made by the same hand.
11. On its part, the Bank called Boniface Muchoki as a witness. He produced various documents including
the charge, further charge, correspondence exchanged and a copy of the 4th respondent’s bank
statements for the loan account. It was his evidence that the Bank did not owe the 1st and 2nd
respondents the responsibility of providing a statement of account without them demonstrating an
interest in the suit property.
12. The 4th respondent on the other hand gave evidence that there was an extension of the facility as
pleaded by the 1st and 2nd respondents; he admitted that he still owed the Bank money and that he
gave the bank a plan on how he was going to repay the loan; that his late mother was present when
the overdraft facility was executed; that the deceased did not sign the extension of the overdraft facility
since it was a renewal of an existing facility; that he continued to repay the loan but denied being issued
with a notice by the Bank of its intention to sell the suit property.
13. He further testied that the Bank changed the facility from a loan to an overdraft; that he decided to
change the loan to an overdraft facility since he had many loans with other banks so that he could pay
o the interest on the loan account; he blamed the 1st and 2nd respondents for going to the Bank and
demanding the return of the title document over the suit property arguing that this is what made the
Bank refuse to renew the overdraft facility which adversely aected his business and repayment of the
loan.
14. The appellant’s witness stated that he attended the auction held at the Kiambu General Post Oce on
14th September, 2011 and bid for the suit property; he emerged the highest bidder and paid Kshs. 6.3
million on the same date; that they were given a memorandum of sale of property on 15th September,
2011 and later paid the balance of Kshs. 8.9 million; they paid the stamp duty and other fees amounting
to Kshs. 612,040 on 9th February, 2012 and title over the suit property was issued in the appellant’s
name.
15. After hearing the parties and considering the evidence placed before the court, the learned Judge found
the main issue for determination to be whether a valid sale of the suit property took place.
16. The court referred to the proviso to Section 82(b) of the Law of Succession Act which states that no
immovable property shall be sold before the conrmation of the grant and Section 66 of the same Act
which gives a guide of the order of priority of the persons to whom the court can make a grant of letters
of administration where a deceased died intestate. The court noted that creditors such as the Bank rank
fourth after the surviving spouse, other beneciaries and the Public Trustee. The court opined that
as a creditor, the Bank could have applied for grant of letters of administration over the estate of the
chargor, the late Jane Wanjiru Kagunda to enable it realize the suit property.
17. The court noted that the Bank submitted that it issued a demand on 29th December, 2009 indicating
that there was default and requiring the regularization of the account; that it also issued a statutory
notice on 22nd July, 2010 to the 1st and 2nd respondents demanding payment of Kshs. 6,944,590
while giving the 1st and 2nd respondents three months to make payment failing which it would exercise
its statutory power of sale.
18. The Bank had argued that the 1st and 2nd respondents were estopped from denying that they had
capacity to receive the statutory notice since the Bank acted on their representation when granting
them the waiver of Ksh. 2 million and deferring the public auction when they requested for time to
settle the loan. It further argued that the 1st and 2nd respondents did not dispute the fact that the loan
secured by the charge and further charge had not been repaid in full hence the exercise of its statutory
power of sale cannot be challenged.
19. The court found that the auction carried out on 14th September, 2011 on the Bank’s instructions was
in contravention of Sections 45 and 82 of the Law of Succession Act, the chargor, Jane Wanjiru Kagunda
having died on 27th July, 2009 and the letters of administration over her estate not having been
conrmed as at 14th September, 2011 when the suit land was disposed of at the auction. Consequently,
the court gave an order cancelling the appellant’s title over L.R. No. Ndumberi/Ndumberi/1234.
20. Aggrieved by the above ndings, the appellant proered the instant appeal by ling a Memorandum
of appeal premised on grounds, inter alia, that the learned Judge erred in law in granting the order
cancelling the appellant’s title; in law and in fact in failing to consider or appreciate evidence that the
appellant was a bona de purchaser for value without notice; the Judge erred in law and in fact when she
failed to evaluate and appraise the case by the 1st and 2nd respondents about undervaluation, which
was untrue and contrary to the evidence on record.
21. Further grounds were that the Judge misdirected herself on the applicability of Sections 45 and 82 of
the Law of Succession Act; the Judge erred in law and in fact in failing to appreciate that the charge to the
3rd respondent created an interest in the land securing loan repayment and was subject to Section 77(3)
and 77(4) of the RLA; sanctioned approbation and reprobation by the respondents in requesting for
and receiving the balance of the proceeds of sale from the 3rd respondent and simultaneously taking
steps to rescind the sale to the appellant by instituting the suit to cancel the appellant’s title in the suit
parcel; sanctioned unjust enrichment by the 1st and 2nd respondents in retaining part of the proceeds
of sale of the suit parcel and cancellation of the resultant transfer to the appellant.
22. The appellant has led submissions in which submits that the decision cancelling its title to the suit
premises was granted without any valid claim levelled against the appellant or tendering of credible
evidence to prove any claim against the appellant to warrant the cancellation; that no claim was
advanced, within the parameters of Section 26 of the Land Registration Act, or evidence tendered
implicating the appellant before the court, to form the basis for cancellation of the title, and the Order
made to cancel the appellant’s title was in consequence, arbitrary and made in complete disregard of
the Law.
23. The appellant sought to rely on the case of Patrick Kanyagia & another v Damaris Wangeci & Others,
Civil Appeal No 150 of 1993 [1995] eKLR for the proposition that where attempt was made to allege
fraud against the purchasers but without any particulars of fraud, it does not alter the legal position that
the mortgagee exercising its statutory power of sale extinguishes the equity of redemption when the
contract for sale is signed on the date of sale by auction; that the tenor of the judgment was a miscarriage
of justice as the suit and substance of complaint were directed against the 3rd and 4th respondents, but
the relief granted paradoxically placed the burden against the appellant, infringing its constitutionally
entrenched rights to fair hearing, due process, safeguard against arbitrary deprivation and denial of
protection of the Law.
24. It further submits that subsequent institution of the suit, by the 1st and 2nd respondents was
reprobation and amounts to a design for unjust enrichment by; retaining proceeds of sale of the suit
property; cancelling the sale to the appellant and recovery of the suit property and discharge of charge
by the 3rd respondent, all sanctioned by the High Court decision.
25. The 3rd respondent has also led submissions and urges that for the trial court to cancel the registration
of the title in the name of the appellant as it did, it was required to satisfy itself that the provisions of
Section 143 of the Registered Land Act were satised; that no evidence was adduced during the hearing
of the suit showing that the appellant had knowledge of any omission, fraud or mistake or caused such
omission, fraud, or mistake or contributed to it, and no such nding was made.
26. It further submits that by ordering cancellation of the appellant's title over the suit property, the trial
court failed to take into account the provisions of Sections 28, 39 and 143 of the Registered Land Act
(Cap 300) (repealed) which was the applicable law and/or acted contrary to the said provision of law;
that the trial court erred in not nding that the appellant was a bona de purchaser for value from the
3rd Respondent; that the appellant being a bona de purchaser for value without notice acquired a
good title from the 3rd respondent; that in the circumstances, the court erred in ordering cancellation
of the appellant's title when the appellant was not privy to any irregularity prior to the sale by public
auction.
27. Placing reliance on the case of Housing Finance Company of Kenya v J N Wafubwa [2014]; the 3rd
respondent urged that it did not act in contravention of Sections 45 and 82 of the Law of Succession Act
as the suit property was not free property of the deceased, in view of the registered charge and further
charge which had been registered against the property and had not been discharged as such.
28. The third respondent posited that the learned Judge erred in not nding that the 3rd respondent had
acted on the representation of the 1st and 2nd respondents who were acting on behalf of the deceased’s
estate, and they were estopped from complaining about the invalidity of the statutory notice issued
to them.
29. In addition, it was submitted that the doctrine of relation back applies to the circumstances of this
case; that by failing to reprimand the actions of the 1st and 2nd respondents, the trial court in essence
sanctioned their misrepresentation to the 3rd respondent, thereby allowing them to approbate and
reprobate on the issue of their authority to act for the Estate of the deceased; that the trial court
maintained a studious silence in the judgment regarding the conduct of the 1st and 2nd respondents,
the applicability of the doctrines of estoppel and relation back in the circumstances of the case thereby
resulting in a miscarriage of justice.
30. Lastly, the 3rd respondent submits that it forwarded the balance of the proceeds of sale to the 1st and
2nd respondents at their request; that while still retaining the said amount they instituted a suit seeking
cancellation of the appellant's title to the suit property; that the learned Judge fell into error in failing
to note that the 1st and 2nd respondents would be unjustly enriched through taking possession of the
suit property and also retaining the balance of the proceeds of sale following sale by public auction.
31. The appeal proceeded virtually with appearance of Counsel whereby learned counsel Mr. Njoroge
Baiya appeared for the appellant; Simiyu Wabuge for the 1st and 2nd respondents and Hiram Nyaburi
appearing for the 3rd respondent. Although duly served with the hearing notice, there was no
representation from the rm of Onindo & Co. Advocates on record for the 4th respondent. They did
not le any submissions either. Mr. Baiya and Mr. Simiyu adopted their written submissions and made
some oral highlights while Mr. Nyaburi relied on his written submissions without any oral highlights.
32. I have considered the record of appeal before the Court along with the rival submissions by learned
counsel and the relevant law. I will now re-evaluate the evidence in its entirety, as this Court is enjoined
to do by Rule 29 (1) (a) of this Court’s Rules and make my independent ndings as to whether the
appeal can be sustained or not. The relevant facts in this matter are largely uncontested and the appeal
hinges mainly on issues of Law.
33. On whether the acts of the 3rd respondent in seeking to exercise the chargees’ statutory power of sale
was unlawful, Section 90 of the Land Act states;
(1) If a chargor is in default of any obligation, fails to pay interest or any other periodic payment or
any part thereof due under any charge or in the performance or observation of any covenant,
express or implied, in any charge, and continues to be in default for one month, the chargee may
serve on the chargor a notice, in writing, to pay the money owing or to perform and observe
the agreement as the case may be.
(2) The notice required by subsection (1) shall adequately inform the recipient of the following
matters—
a) the nature and extent of the default by the chargor;
b) if the default consists of the non-payment of any money due under the charge, the
amount that must be paid to rectify the default and the time, being not less than three
months, by the end of which the payment in default must have been completed;
c) if the default consists of the failure to perform or observe any covenant, express or
implied, in the charge, the thing the chargor must do or desist from doing so as to
rectify the default and the time, being not less than two months, by the end of which
the default must have been rectied;
d) the consequence that if the default is not rectied within the time specied in the
notice, the chargee will proceed to exercise any of the remedies referred to in this section
in accordance with the procedures provided for in this sub-part; and the right of the
chargor in respect of certain remedies to apply to the court for relief against those
remedies.
Section 92(2) of the Land Act states;
2. Before exercising the power to sell the charged land, the chargee shall serve on the chargor a
notice to sell in the prescribed form and shall not proceed to complete any contract for the sale
of the charged land until at least forty days have elapsed from the date of the service of that
notice to sell. (Emphasis supplied)
34. Since the 1st and 2nd respondents denied service of the notice by the 3rd respondent, the burden was
on the Bank to show that it complied with the law by serving it. In Nyagilo Ochieng & another v Fanuel
Ochieng & 2 others [1995-1998] 2 EA 260, this Court held that the burden to show that the statutory
notice has been served does not in any way rest on the chargor. Once the chargor alleges non-receipt of
the statutory notice, it is for the chargee to prove that such notice was in fact served.
35. However, Section 90 of the Land Act must be given a purposive approach. In the case of First Choice
Mega Store Limited vs Ecobank Kenya Limited [2017] eKLR, the Court held:
“ …the general purpose of a notice to a chargor under section 90 is majorly to protect the
chargor. The law regulates the contractual relationship between the parties by ensuring that
the purpose of a charge is not defeated. The purpose is mainly for the property to act as
security and no more. The chargor must have the chance, nay right, to redeem the property.
In the absence of a notice it would be much easier for unscrupulous chargees to rid the
chargor of the equity of redemption. The borrower who pledges and charges his property
must be condent that the property will be held as security and when the lender must then
act and start the process of selling the same, the borrower will have both notication of such
action and an opportunity to redeem his property.”
36. In Cieni Plains Company Limited & 2 others v Ecobank Kenya Limited
[2017] eKLR, the Court held:
“ Thus, even though section 90 appears couched in mandatory terms, its object and purpose
can never be ignored. Where there is substantial compliance with the section, enough to put
the chargor on notice of the chargee’s ultimate intentions if the notice is not heeded, then
such substantial compliance will be deemed to have countenanced any alleged deviation,
especially at an interlocutory stage. This is however not to suggest that even where there is
patent non-compliance, the court will ignore that fact. Every case ought to be considered on
its own merits and unique circumstances …” (Emphasis added).
37. In my view, this is not a typical run o the mill case where the Bank is being accused of not serving
the statutory notice as required in law. The circumstances are unique in the sense that the Bank did
communicate the default to the 1st, 2nd and 4th respondents prompting the 1st and 2nd respondents
to approach the Bank and seek more time to settle the debt. Indeed, the 1st respondent in his witness
statement before the trial court said that the statutory notice was served on him on 6th May, 2011 but
he disputes validity of such service because he was not by then an administrator of the deceased’s estate.
These facts are not disputed by the 3rd respondent.
38. This did not, nonetheless, exonerate the Bank from its responsibility to serve the statutory notice as
prescribed by Law. Service was done but it was irregular and contrary to the law as the notice was served
on the wrong parties with full knowledge on the part of the Bank that the chargor was deceased. What
then is the appellant’s recourse?
39. Section 99 of the Land Act, Number 6 of 2012 provides;
1. This Section applies to -
(a) a person who purchases charged land from the chargee or receiver, except where the
chargee is the purchaser; or
(b) a person claiming the charged land through the person who purchases charged land
from the chargee or receiver, including a person claiming through the chargee if the
chargee and the person so claiming obtained the charged land in good faith and for
value.
2. A person to whom this section applies—
(a) is not answerable for the loss, misapplication or non-application of the purchase
money paid for the charged land;
(b) is not obliged to see to the application of the purchase price;
(c) is not obliged to inquire whether there has been a default by the chargor or whether
any notice required to be given in connection with the exercise of the power of sale has
been duly given or whether the sale is otherwise necessary, proper or regular.
3. A person to whom this section applies is protected even if at any time before the completion of
the sale, the person has actual notice that there has not been a default by the chargor, or that a
notice has been duly served or that the sale is in some way, unnecessary, improper or irregular,
except in the case of fraud, misrepresentation or other dishonest conduct on the part of the
chargee, of which that person has actual or constructive notice.
4. A person prejudiced by an unauthorized, improper or irregular exercise of the power of sale

shall have a remedy in damages against the person exercising that power. (Emphasis supplied)
See also this Court’s decision in Nancy Kahoya Amadiva v Expert Credit Limited & another [2015]
eKLR.
40. This section seems quite clear that a purchaser of property sold in the exercise of a chargee’s statutory
power of sale is protected even in cases where the person had actual notice that the chargee had not
properly exercised that statutory power of sale in terms of procedure. In this case, there is no evidence
to show that the appellant had any notice of any irregularities in the planned sale and evidence suggests
that there were none anyway. The point is that the appellant is then inoculated by Section 99 (supra)
from any action to recover the suit property from it.
41. Even assuming that the auction was not properly conducted as alleged by the 1st and 2nd respondents,
unless it is demonstrated that the appellant was privy to the fraud or other irregularities in the disputed
auction, the sale of the suit property cannot be impugned. This Court in Captain Patrick Kanyagia
and Another v Damaris Wangeci and thers, (supra) held that there is no duty cast, in law, on an
intending purchaser at an auction sale, properly advertised, to inquire into the rights of the mortgagee
to sell. This position was also reiterated by this court more recently in David Katana Ngomba v Shafi
Grewal Kaka [2014] eKLR. From the foregoing, it follows that there was no proper basis for holding
that the auction done was unlawful or irregular. Consequently, there was no reason to nullify it, and
no reason to make an order that the title to the suit property reverts to the 1st and 2nd respondents.
42. Given this conclusion, it follows that the orders granted by the learned Judge nullifying the sale
conducted through public auction cannot stand. There are two reasons why those orders were and
remain problematic. First, the appellant herein remains immunized against the actions of the Bank
during and after the public auction. Indeed, given the eect of Section 99 of the Land Act, the logical
position would have been not to nullify the sale. Second, it is tantamount to unjust enrichment on
part of the 1st and 2nd respondents since they get to make away with both the suit property and the
surplus of the sale proceeds that the Bank handed over to them.
43. The elements of unjust enrichment require that a party who has received a benet unjustly, is required
to make restitution to the other party. It presupposes that:-
a) A party has been enriched by the receipt of a benet;
b) That he has been so enriched at the expense of the giver; and
c) That it would be unjust to allow him to retain the benet.
44. This principle was applied in the case of Madhupaper International Ltd and Another v Kenya
Commercial Bank Ltd and 2 others (2003) eKLR where the Court stated:
“ --- the idea of unjust enrichment or unjust benet is intended to prevent a person from
retaining money or some benet derived from another which it is against conscience that he
should keep it, and he should in justice, restore it to the plainti.”
See also Civil Appeal No 8 of 1987, Chase International Investment Corporation and another v Laxman
Keshra and 3 others [1978] eKLR,
45. The undisputed facts in this case are that the 1st and 2nd respondents;
a. Informed the Bank that their mother/the guarantor had died;
b. Commenced negotiations with the Bank on behalf of the Estate with full knowledge that they
lacked that capacity as they did not have Letters of Administration at that point;
c. Accepted the statutory notices but not in the name of the Chargor.
d. Received some proceeds from the auction.
46. In the light of non–contestation of the above facts, the scales of justice, in my view, tilt in the appellant’s
favour. It is a truism that he who comes to equity must come with clean hands. The suit in the superior
court should have failed the moment the court found the respondents’ hands to be heavily tainted.
47. The judgment and Orders of the ELC that the suit property to reverts to the estate for the obvious
benet of the 1st and 2nd respondents and the other beneciaries of the estate and allowing them to
retain the amount paid to them by the Bank amounted to unjust enrichment which our justice system
frowns upon.
48. The Bank too is at fault. They were and still are well endowed with a panel of lawyers to advise them,
internal lawyers on stand by and the experience and expertise that comes with having dealt with similar
situations in the past. But that notwithstanding, the Bank proceeded to;
a. Deal with the 1st and 2nd respondents despite not having seen a Grant of Letters of
Administration to conrm that they were the legally appointed administrators of the estate
of the deceased, capable of negotiating with the Bank on behalf of the Estate having full
knowledge of the death of the owner of the suit property;
b. Having the option of applying for the Grant of letters of administration themselves as creditors
but opting not to.
c. There is also that damning report produced by the document’s examiner who conrmed
that the signatures on the further charge documents which were purported to belong to the
deceased were actually dierent from the ones appended by the deceased in the original charge.
How this could have happened, only the Bank can tell.
To say the least, the Bank in this case abdicated its duciary duty to the deceased in her death and
engaged in acts that were clearly unbecoming of an institution of the 3rd appellant’s stature and repute.
49. I nonetheless wish to clarify that other than serving the Statutory Notice on parties with no legal
capacity to receive them, thus rendering such service invalid, the Bank was not an intermeddler as
prescribed under Section 45 of the Law of Succession Act as the property in question was not part of the
deceased’s “free estate”, it having been charged to the Bank to secure a loan which had still not been
repaid in full.
50. The recourse available to the 1st and 2nd respondents, in my view, lies in pursuing the bank for damages
as per Section 99(4) of the Land Act. From the record of appeal, there were arguments by the 1st and
2nd respondents that the suit property was undervalued during the sale. They have a good chance of
pursuing the Bank for the dierence in value, if at all proved and for any other damages they may claim
to have incurred.
Considering all the above, I am convinced that this appeal ought to be allowed. I would therefore
allow it with costs as against all the respondents jointly and or severally. I would set aside the impugned
judgment and all consequential orders arising therefrom and substitute therefor an order dismissing
the 1st and 2nd respondents’ claim in ELC No 328 of 2013 with costs.
DATED AND DELIVERED AT NAIROBI THIS 28TH DAY OF APRIL, 2022.
R N NAMBUYE
......................................
JUDGE OF APPEAL
HANNAH OKWENGU
......................................
JUDGE OF APPEAL
W. KARANJA
......................................
JUDGE OF APPEAL
I certify that this is a true copy of the original
Signed
DEPUTY REGISTRAR

Marteve Guest House Limited V Njenga & 3 Others (Civil Appeal 400 of 2018)

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Marteve Guest House Limited V Njenga & 3 Others (Civil Appeal 400 of 2018)

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Marteve Guest House Limited v Njenga & 3 others (Civil Appeal 400

Per H Okwengu, JA (concurring)

JUDGMENT OF NAMBUYE, J.A.

2. The substratum of the litigation resulting in this appeal is LR No Ndumberi/Ndumberi/1234 (the

4) Who shuold bear the costs of appeal.

a) He holds a certicate of Title;

b) He purchased the Property in good faith;

c) He had no knowledge of the fraud;

d) The vendors had apparent valid title;

e) He purchased without notice of any fraud;

f) He was not party to any fraud.

iii) Every act premised on a nullity cannot accrue legitimacy or legality.

“ a knowing misrepresentation of the truth or concealment of a material fact to induce

JUDGMENT OF HANNAH OKWENGU, JA.

(a) appoint a receiver of the income of the charged property; or

(b) sell the charged property:

[19] Section 82(b) of the Law of Succession Act (LSA) states:

(b) to sell or otherwise turn to account, so far as seems necessary or desirable in

(d) ….” (Emphasis added)

[26] Section 71 of RLA provided as follows in relation to variation of a Charge:

(1) Subject to subsection (2), the court may order rectication of

(2) The register shall not be rectied so as to aect the title of a

JUDGMENT OF W. KARANJA, JA.

a) the nature and extent of the default by the chargor;

39. Section 99 of the Land Act, Number 6 of 2012 provides;

1. This Section applies to -

2. A person to whom this section applies—

(b) is not obliged to see to the application of the purchase price;

4. A person prejudiced by an unauthorized, improper or irregular exercise of the power of sale

a) A party has been enriched by the receipt of a benet;

b) That he has been so enriched at the expense of the giver; and

c) That it would be unjust to allow him to retain the benet.

a. Informed the Bank that their mother/the guarantor had died;

d. Received some proceeds from the auction.

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