The Supreme Court in Dina Management Limited vs. County Government of Mombasa & 5 Others [SC Petition No.8 (E010) of 2021], considered the question of the level of due diligence that should be undertaken to support a claim that one is a bona fide purchaser of land. 

A bona fide purchaser is one who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in or infirmities, claims, or equities against the seller’s title.

The Land Registration Act (LRA)

Section 26 of the LRA provides that a certificate of title shall be taken by all courts as prima facie evidence that the person named as a proprietor of land is the absolute and indefeasible owner of such land, except in the following circumstances: 

• if the proprietor was party to the fraud or misrepresentation leading to issuance of the certificate of title; or 
• where the certificate of title has been acquired illegally, unprocedurally or through a corrupt scheme.

The facts

The County Government of Mombasa challenged the validity of the title for the property, known as MN/1/6053 belonging to Dina Management Limited situated in Nyali Beach (the Property), on the grounds that the first owner of the Property had obtained the title in 1989 through unprocedural means and that the Property was public land reserved for a public road. As such, the County entered the Property and demolished the perimeter wall facing the beachfront to create a public right of way to the beach.

Dina Management Limited, being the third owner of the Property, challenged the actions of the County Government claiming that it was a bona fide purchaser for value, having paid KES.18 million to acquire the Property. In its defence, Dina Management Limited indicated that it was not party to the unprocedural process of acquiring the title and had undertaken its due diligence before acquiring the said title. 

The Court’s decision

The Supreme Court affirmed the decisions of the High Court and the Court of Appeal that the Property was a public utility incapable of giving rise to a private proprietary interest capable of being protected by a court of law.

The Supreme Court additionally noted that the title to the Property was:

• freehold title contrary to the provisions of the Government Land Act (Repealed) which provided that the leases of town plots should only be granted for any term not exceeding one hundred years; and
• the Property was an open space which had been set aside for “public purpose” and therefore, could not be considered as “unalienated land” meaning its ownership could not be transferred. 

The Court also highlighted the decision of the Court of Appeal in Samuel Kamere v. Lands Registrar, [Kajiado Civil Appeal No. 28 of 2005 [2015] eKLR] which stated as follows:

“…in order to be considered a bona fide purchaser for value, they must prove; that they acquired a VALID and LEGAL title, secondly, they carried out the necessary due diligence to determine the lawful owner from whom they acquired a legitimate title and thirdly that they paid valuable consideration for the purchase of the suit property…”

The Supreme Court concluded that Dina Management Limited could not benefit from the defence that it was a bona fide purchaser as it ought to have “been more cautious in undertaking its due diligence” noting that the Property, “by its very nature being a beach property, was always bound to be attractive and lucrative” and therefore its right to property as per Article 40(6) of the Constitution of Kenya and the land therefore automatically vests in the Mombasa County pursuant to Article 62(2) of the Constitution.

Conclusion

To benefit from the defence of that one is a bona fide purchaser of land, a purchaser shall now be required to take such steps as necessary to investigate the history of the land and “go to the root of the title” as opposed to simply concluding that the title held by the seller is evidence of the seller’s absolute and indefeasible title.

Such steps could include:

• requesting allotment letters and similar documents in certain cases where a question on whether the land could be public land could arise;
• undertaking customary searches at the Lands Office and requesting for an inspection of the files in respect of the Property at the Lands Office; 
• engaging a surveyor to undertake appropriate searches at the Survey of Kenya; and
• checking whether the Property is listed in the Ndungu Report on Illegal/Irregular Allocation of Public Land in Kenya). 

The requirements set out above raise doubts on the Torrens System of Land Registration adopted in Kenya which is premised on the fact that the register maintained by the Government is conclusive evidence of the title of the person who is registered as the owner of land and that one does not need to “go to the root of the title” to establish such title. 

It is also unclear how the judgment will affect titles taken as security by financiers and the obligations and costs to purchasers of land in seeking to undertake due diligence that would meet the criteria set by the Supreme Court in this matter. 

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