Section 23 of the Registration of Titles Act – Did it really protect the bona fide purchaser?

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The Registration of Titles Act(Cap. 281) now stands repealed. Nonetheless, disputes in respect of land registered under the repealed Act, particularly those centered on the protection proffered by section 23 of the Act to bona fide purchasers for value without notice, will continue to rage on as we slowly transit into a new era of land laws.

The Registration  of  Titles Act was a product of the Torrens system of registration – a system which places emphasis on the accuracy of the land register and insists that the register must mirror all currently active registrable interests affecting a particular parcel of land.

The Government, as the keeper of the master record of all land and its respective owners, guarantees the indefeasibility of all rights and interests shown in the land register against the entire world; and in case of loss arising from an error in registration, the person affected is guaranteed Government compensation.

The statutory presumption of indefeasibility and conclusiveness of title under the Torrens system is rebuttable only by proof of fraud or misrepresentation, in which the buyer is involved. The object of the Torrens system was summarized in the Privy Council decision in Gibbs v Messer as follows:

“The main object of the Act and the legislative scheme for the attainment of that object are equally plain. The object is to save a person dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history of their author’s title and to satisfy themselves of its validity. That end is accomplished by providing that everyone who purchases, in bona fide and for value, from a registered proprietor and enters his deed of transfer or mortgage on the register, shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author’s title.”

Back home in Kenya, the indefeasibility of title has received lip service from the Kenyan Courts including our own Court of Appeal. A case in point is the Appellate Court’s decision in Dr. Joseph Arap Ngok v Justice Moijo ole Keiwua, where the Court pronounced itself as follows:-

“Section 23 (1) of the Act gives an absolute and indefeasible title to the owner of the property. The title of such an owner  can  only  be  subject to challenge on grounds of fraud or misrepresentation to which the owner is proved to be a party; such is the sanctity of title bestowed upon the title holder under the Act.  It  is  our law and law takes  precedence  over all other alleged equitable rights of title. In fact, the Act is meant to give sanctity of title, otherwise the whole process of registration of title and the entire system in relation to ownership of property in Kenya, would be placed in  jeopardy.”

It would therefore appear that a plain reading of section 23 suggests that a bona fide purchaser is assured of protection, notwithstanding that previous dealings might be shown to have been mired in fraud. However, following a recent decision of the Court of Appeal in the case of Arthi Highway Developers Ltd v West End Butchery Ltd & Others, it seems that the protection offered by section 23 is not quite as indubitable as first thought. In this decision, the Court struck down as invalid titles transferred to bona fide purchasers, after having found that there was fraud in the initial transfer from the first owner. In applying the nemo dat quod non habet (no one gives who possesses not) principle (which principle has no application to immovable properties), the Court found that the fraudsters did not obtain good title to pass on to the bona fide purchasers.

Yet the Court of Appeal’s decision in the Arthi Highway Developers case is at glaring odds with an earlier decision by the same Court in Permanent Markets Society & Others v Salima Enterprises & Others, where it was held that even where it is shown that previous registrations were obtained illegally, the title of the last bona fide purchaser for value was indefeasible under section 23.

In view of the conflicting decisions emanating from the Court of Appeal as to the extent of protection offered by section 23 of the Registration of Titles Act, all eyes now turn to the Supreme Court to pronounce itself on the matter and hopefully lay to rest the spectre of section 23.

This follows the Supreme Court’s granting of leave to appeal to the said Court (the Court of Appeal having refused to grant leave to appeal on the basis that there was no controversy as to the application of section 23) in the case of Charles Karathe Kiarie & Others v The Administrators of the Estate of John  Wallace  Mathare  (Deceased) & Others. We shall keep our  clients and readers updated on the Supreme Court’s decision in the matter.