Introduction

“Indeed, the title or lease is an end product of a process. If the process that was followed prior to issuance of the title did not comply with the law, then such a title cannot be held as indefeasible. The first allocation having been irregularly obtained, HE Daniel Arap Moi had no valid legal interest which he could pass.” This finding was affirmed by the Supreme Court in the instant case, being Sehmi & another v Tarabana Company Limited & 5 others [2025] KESC 21 (KLR) (the Tarabana Case) having been borrowed from the Supreme Court’s earlier decision in Dina Management Limited vs. County Government of Mombasa & 5 Others [2023] KESC 30 (KLR) (the Dina Management Case).

The observations of the Supreme Court gave authoritative clarity on the doctrine of an innocent purchaser for value without notice. In doing so, the Supreme Court conclusively resolved any lingering uncertainty surrounding the application of the doctrine which has frequently been used as a defense by unscrupulous land grabbers who are intent on circumventing the provisions of Article 40 of the Constitution of Kenya, 2010.

It is now settled that no valid title can pass and no legal estate is acquired if the process leading up to the said acquisition is marred with procedural illegalities. The defence of an innocent purchaser for value without notice thus falls by the wayside.

Exploring the Limits and Applicability of the Innocent Purchaser Doctrine

In the Tarabana Case, the Supreme Court undertook a comprehensive analysis of the legal doctrine of the bona fide/innocent purchaser for value without notice. The Court was invited to consider whether, and under what circumstances, a purchaser may be deemed to have acquired a valid and indefeasible interest in land notwithstanding underlying irregularities or illegality in the allocation process.

In its determination, the Supreme Court laid out the test made up of three (3) ingredients that a person claiming to be a bona fide purchaser must meet. These ingredients entail the following:-

i.  Element of Innocence

This means that the purchaser must act in good faith. His conduct must not raise any doubt as to whether indeed, he did not have any notice or knowledge as to the existence of a rival interest in the suit land. The element of innocence also connotes the exercise of due diligence expected of any reasonable purchaser. The claimant must demonstrate that he acted diligently and conducted a reasonable inquiry into the status of the estate or land that he sought to purchase.

ii.  Purchase for Value

This means that consideration in money or money’s worth was paid by the claimant in return for the land. The purchaser must actually pay all the money due before receiving notice of the existence of the equitable interest over the suit land. Mere execution of the instrument of conveyance of the legal estate before notice is received without payment of the money due, will not avail to the claimant the defence of innocent purchaser.

iii.  Legal Estate

An innocent purchaser of a legal estate in land without notice of an equitable interest in the said land, takes it free from the encumbrance of the latter interest. This is because legal rights are good against all the world; equitable rights are good against all persons except a bona fide purchaser of a legal estate for value without notice.

Having outlined the ingredients that must be met, the Supreme Court then proceeded to interrogate whether these ingredients were met in the Tarabana Case as detailed below.

Analysis of Legitimacy

The Supreme Court was confronted with a dispute involving two (2) sides, the Appellants on the one hand, and the 1st and 2nd Respondents on the other. Each of these sites claimed to be holding title to the suit property they deemed legitimate. At the centre of the matter was the question of competing claims to land ownership, where legality and equity seemed to be at odds.

In finding that the Appellants neither had a legal nor equitable interest in the suit property, the Supreme Court found as follows:

“By the time the suit land was allocated to the 2nd Respondent, the Appellants’ lease had long expired. We are therefore in agreement with the Court of Appeal’s conclusion that the lease having expired, the land had reverted to the Government. It was no longer a leasehold estate, but government land within the meaning of the Government Lands Act (now repealed). Where did this cruel reality leave the Appellants? What rights, if any did the Appellants have over the suit land? It was submitted without contestation at the trial court, that after the expiry of the lease, the Appellants continued in possession of the land, while paying the applicable land rates and rent. What then was the legal status of the appellants with regard to the land? Can the appellants be considered as having acquired an equitable interest in the land by virtue of their continued stay upon the same? We think not, since through effluxion of time, and reversion to the Government, the lease had become extinguished for all purposes. No equitable interest over the land could survive such extinction. Whatever remained in favour of the appellants over the land, could at worst be regarded as “a tenancy at will” or at best “a mere equity”.

The Supreme Court then proceeded to address the illegality of the 1st and 2nd Respondents’ title as below:

“ … it is our finding that the allotment of the suit land to the 2nd Respondent can neither be regarded as legal nor regular. The allocation was made by a person other than the holder of the office of Commissioner of Lands. Neither was the allotment preceded by the requisite advertisements and biddings assuming that it was being allotted for a public purpose. Consequently, the 2nd Respondent could not pass valid title to the 1st Respondent given the incurable procedural irregularities that had characterized the allotment.”

Consequently, the Supreme Court proceeded to nullify the allotment of the suit property to the 2nd Respondent, and found that the 1st Respondent was not a bonafide purchaser of the suit property without notice on account of failing to meet the three (3) ingredients as follows:

• The element of innocence: The allotment to the 1st Respondent was unprocedural as it was not done by the Commissioner of Lands. The allotment was also not preceded by the requisite advertisements and biddings. There was nothing on record to show how, and for what purpose the suit land came to be allocated to the 2nd Respondent who promptly sold it to the 1st Respondent.
• Purchase for value: No explanation was given for the discrepancy in the purchase price which was KES 12.5 Million in the transfer documents despite the sale agreement indicating KES 24 Million. This was interpreted as a deliberate attempt to evade paying the higher stamp duty applicable to the transfer.
• A legal estate: The 2nd Respondent was incapable of passing a valid title to the 1st Respondent as it had acquired the same un- procedurally.

The Appellants’ Saving Grace – Legitimate Expectation

It was on record that three (3) months before the expiry of the lease, the Appellants had made an application for its extension. The Commissioner of Lands, the Director of Physical Planning, and the Director of Survey all acknowledged receipt of the application for extension of lease by the Appellants and indicated that there were no objections to the renewal. This was never communicated to the Appellants. However, inexplicably, the application for extension of lease remained pending and unacted upon for eight (8) years, when the suit land was allocated to the 2nd Respondent. The Supreme Court observed that the application for renewal gave rise to the legitimate expectation for the renewal of the Appellants’ lease and stated thus:

“More often than not, public leases contain an option for renewal. However, such renewal must be activated by an application by the lessee to the government agency having authority to renew the lease. It follows therefore that where the lessee makes an application for renewal of his/ her lease, his/her application would be considered either way and that, the applicant would be furnished with reasons should the application be declined. It would also be expected that the application would be clear and unambiguous. It is the application for renewal that ignites the legitimate expectation, given the fact that it is addressed to an authority that has the competence to renew the lease.”

The Supreme Court found it logical to conclude that the Appellants had a legitimate expectation that their lease would be extended. Such an expectation was not only reasonable, but was expressed to a competent authority, who at different times, had exercised the powers conferred upon him by the law, to extend the leases of other applicants in a similar position as the appellants. To this end, it was the Supreme Court’s final order that the Appellants were entitled to an extension of lease over the suit property.

Disposition

The clarity provided by this decision settles an issue that has been bedevilling the question of acquisition of titles in Kenya and it is now hoped that moving forward, alleged ‘innocent purchasers’ have been put on notice that their alleged innocence may not meet the requisite legal threshold for granting them titles to land. In essence, the Supreme Court has emphatically underscored the need for absolute propriety and regularity in every step of the process leading up to the acquisition of land, signifying a clear position that Courts will henceforth not shy away from striking down as illegitimate any tittle acquired through a flawed process.