JOB OKUNA OYUGI VS BLUE WATERS HOTEL LIMITED

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The Plaintiffs in their capacity as the administrators of the estate of Hezekiah Nelson Oyugi first brought this suit against the 1^st and 2^nd Defendants vide the plaint dated 1^st February, 2022. The plaint was later amended and replaced with the amended plaint dated 25^th September, 2024 vide which the Plaintiffs added the 3^rd Defendant to the suit and sought the following relief against the Defendants: -

1. An order to the Chief Land Registrar, the 3^rd Respondent herein to rectify the registry in reference to KISUMU/MUNICIPALITY 13/16 transferring the property from the 1^st Defendant to the Plaintiffs.
2. An order to the 3^rd Defendant to discharge in favour of the 2^nd Defendant in reference to KISUMU/MUNICIPALITY 13/16.
3. A permanent injunction, injuncting the 1^st and 2^nd Defendants from dealing in KISUMU/MUNICIPALITY 13/16.
4. General damages
5. Interest on (d) from the date of the judgement until payment in full.
6. Such orders and/or directions as shall be issued by this Honourable court under the circumstances of the suit herein; and;
7. Costs of the suit.

In response to the claim, the 2^nd Defendant filed Statement of Defence on 31^st January, 2023 and the 3^rd Defendant filed Statement of Defence dated 18^th December, 2025 denying the plaintiffs’ claim. The 1^st Defendant filed no defence.

The evidence

On behalf of the Plaintiffs the 2^nd Plaintiff testified as PW1. He adopted the contents of his witness statement dated 25^th September, 2023 as his evidence in chief. He had stated in his witness statement that the claim arises from an illegal transfer of the estate of Hezekiah Nelson Oyugi’s property registered as KISUMU/MUNICIPALITY 13/16 situated at Kisumu. That pursuant to Succession Cause No.1581 of 1993 the Plaintiffs were appointed administrators of the estate and received Letters of Letter of Administrator dated 1^st February, 1994.

That in 2021 he came across a newspaper article claiming that the 2^nd Defendant was in the process of disposing of the suit property by auction. That the process was halted by the court. That he further discovered that the property had been transferred from the estate of the deceased to the 1^st Defendant and charged to the 2^nd Defendant. That the transfer was done without a confirmed grant as confirmation is yet to be obtained.

That orders obtained permitting the sale of the estate property did not include the suit property as one of the properties to be sold for the upkeep and maintenance of the estate’s beneficiaries. That any signature or transactional document transferring the suit property from the estate was procured fraudulently.

He produced 4 documents as exhibits namely; a court order in Misc. Application No.1129 of 1993, a copy of certificate of lease for land parcel No. KISUMU/MUNICIPALITY 13/16 and a copy of register (green card) for the same parcel of land.

On cross-examination, PW1 stated that according to the certificate of lease, the property was registered in the name of the 1^st Defendant and that he was aware that the property was charged to the 2^nd Defendant.

That the land was registered in his name and the names of the other administrators on 25^th January, 1995. That later proprietorship changed to Dudu Investments for Kshs.300,000/- and later to Amalo Company Ltd for Kshs.1,900,000/-. That there have been many owners of the property. That currently there is a multi-storey building on the property.

That there have been irregular dealings on the suit property although the plaintiffs did not put up any notice or caveat on the physical property as they thought the restriction sufficed.

That when he learnt of the auction of the property, he instructed his lawyer to move the court and protect the interests of the estate of the deceased.

That although the land belonged to the deceased Hezekiah Nelson Oyugi, he (PW1) did not know whether the deceased had a certificate of lease. And that when the land was transmitted to the personal representatives of the deceased, he also did not know whether certificate of lease or title deed was issued to them.

On behalf of the 2^nd Defendant one witness testified as DW1. She adopted the contents of her witness statement dated 20^th December, 2024 as her evidence in chief. She had stated in the witness statement that by a series of Offer Letters of diverse dates, the 2^nd Defendant advanced and restructured various loan facilities to the 1^st Defendant for various purposes.

That in the year 2014 after execution of the first Offer Letter, the 1st Defendant executed a legal charge dated 24^th July, 2014 over the 1^st Defendant’s property known as Title number KISUMU/MUNICIPALITY BLOCK 13/16 in favour of the 2^nd Defendant the particulars of which were that the Chargor/Borrower was the 1^st Defendant, the Chargee/Lender was the 2^nd Defendant, the sum secured (principle sum) was Kshs.220,000,000/- plus interest, costs and expenses and the nature of the security was the charge to secure the principal amount and interest plus all financial facilities to be granted to the borrower from time to time.

That the charge was duly entered on the title as an encumbrance on 6^th August, 2014. That thereafter the loan was disbursed to the 1^st Defendant and the terms subsequently restructured.

That as at the time of creation of the charge, the property was registered in the name of Blue Waters Hotel Limited under a certificate of Lease issued on 9^th August, 2010 and that the title is presently encumbrance in favour of the 2^nd Defendant.

That the 2^nd Defendant undertook extensive due diligence on Title No. KISUMU/MUNICIPALITY BOLCK 13/16 to confirm that the 1^st Defendant was indeed the bonafide owner before accepting it as part of the collateral for the loan facilities advanced to the 1^st Defendant. That nothing existed on the register or physically on the property to indicate that the property was part of the estate of Hezekiah Nelson Oyugi as contended.

That the 1^st Defendant in breach of the terms of the Offer Letters and the Charge, defaulted in repaying the loan and the 2^nd Defendant served a 40 days’ Notice to sell dated 17^th May, 2018.

That the 1^st Defendant moved to court to stop the sale vide KISUMU H.C. COMMERCIAL SUIT NO.79 OF 2018 Blue Waters Ltd & 2 Others -vs- Guaranty Trust Bank Kenya Ltd seeking injunctive relief. That together with the suit, the 1^st Defendant filed an application for temporary injunction which application was dismissed on 28^th July, 2020. That an application for stay of the ruling was also dismissed.

That when the 1^st Defendant failed to redeem the property, the property was advertised for sale by public auction in the Daily Nation of 16^th August, 2021.

That the Plaintiffs never lodged any claim for the property even when the recovery process commenced in 2018.

That again the property was advertised in the Daily Nation of 30^th August, 2021 and the Plaintiffs did not challenge the planned auction nor did they lay any claim to the property.

That the filing of this suit when the 1^st Defendant’s applications for injunction were dismissed by the two courts of competent jurisdiction and just when the 2^nd Defendant was about to sell the property shows that the Plaintiffs are working in cahoots with the 1^st Defendant.

That the 1^st Defendant is still indebted to the 2^nd Defendant to the tune of Kshs.391,297,348.70 which sum continues to accrue interest at contractual rates until settlement in full.

DW1 produced a total of 18 documents as exhibits. She stated that the bank conducted search on the title and instructed a valuer who did a report as part of due diligence. That the green card shows that there is a charge for sum of Kshs.220,000,000/-.

On cross-examination, DW1 stated that the bank was not aware of any disputes involving the suit land before the charge was done. That they did not obtain a green card as part of the due diligence. That the title held by Blue Waters Hotel Limited was not in question.

Submissions

Written submissions dated 28^th March 2025 were filed on behalf of the Plaintiffs by the firm of CNK Advocates. While written submissions dated 21^st May, 2025 were filed on behalf of the 2^nd Defendant by the firm of KOMM adocates.

No submissions were filed by the 1^st and 3^rd Defendants.

Issues for determination

The Plaintiff vide their submissions framed two issues for this court’s determination namely;

1. Whether the transfer of title to the suit property from the estate of the late Hezekiah Nelson Oyugi was illegal and irregular, and
2. Whether the land Registrar’s decision to remove the restriction on the property was ultra vires.

The 2^nd Defendant framed the following as the issues for determination;

1. Whether the 2^nd Defendant undertook due diligence before charging the property
2. Whether the Plaintiffs have a claim to the suit property
3. Whether the title in the name of the 1^st Defendant and the charge to the 2^nd Defendant should be cancelled.
4. Whether the reliefs sought in the amended plaint should be granted.

From these proposed issue by the parties, the court frames the issues for determination as:

1. Whether or not the suit land formed part of the estate of the deceased.
2. Whether or not transfer of the suit land in favour of the 1^st Defendant was obtained illegally.
3. Whether or not the 2^nd Defendant undertook due diligence before charging the suit property.
4. Whether or not the charge in favour of the 2^nd Defendant was valid
5. Whether or not the Plaintiffs are entitled to the relief sought in the amended plaint.
6. Costs of the suit.

Analysis and determination.

The first issue for determination is whether or not the suit land formed part of the estate of the deceased.

The Plaintiffs brought the suit in their capacity as the administrators of the estate of the deceased. They pleaded in paragraph 5 of the amended plaint that their claim arises from a transfer from the estate of Hezekiah Nelson Oyugi property registered as KISUMU/MUNICIPALITY/13/16 situate in Kisumu County.

That the suit property was registered in the name of the deceased as of 1^st November, 1987 and that it was subsequently transferred after the death of the deceased.

That the property was transferred without the approval of the Plaintiffs. That the transfer in favour of the 1^st Defendant and the charge in favour of the 2^nd Defendant were done without confirmation of the grant of letters of Administration in respect of the estate of the deceased.

The 2^nd Plaintiff who testified as PW1 rehashed the averments in the plaint as his evidence.

The 2^nd Defendant’s response as contained in the Statement of Defence dated 30^th March, 2022 was that the Plaintiffs had not led any evidence that the suit land was at any time the free property of Hezekiah Nelson Oyugi – deceased, available for distribution to the beneficiaries.

That there is no list of assets comprising the estate of Hezekiah Nelson Oyugi – deceased where the suit property is listed as one of the assets and that even if there was to be such a list, the listing is not ipso facto evidence of ownership of the property by the deceased.

It was submitted on behalf of the Plaintiffs that the deceased’s estate is undergoing succession vide SUCCESSION CASUE NO.1581 OF 1992 in the matter of the estate of Hezekiah Nelson Oyugi. That the estate of the deceased included the contested property. That the green card produced by the Plaintiffs paints a clear picture leading to the circumstances of the transaction.

That the deceased passed on in 1992 that the entries on the green card which were made on 25^th and 26^th January, 1995 were all made illegally.

On behalf of the 2^nd Defendant, it was submitted that under section 26 of the Land Registration Act a certificate title issued by the Registrar upon registration or to a purchase of land upon transfer or transmission by the proprietor shall be taken by all courts as prima facie evidence that the person named as proprietor of the land is the absolute and indefeasible owner. That the starting point when proving ownership of land is the title.

I have keenly perused the copy of register and the copy of certificate of lease is respect of the suit land which were produced by the Plaintiffs as exhibits. The Certificate of Lease dated 9^th August, 2010 is in the name of the 1^st Defendant. The green card (copy of register) shows that the suit land was on 19^th May, 1988 registered in the name of Hezekiah Nelson Oyugi as the 1^st registered owner, and that it was on the same date that the register in respect of the suit land was opened.

No death certificate in respect of the deceased was produced to show the date of his death. However, from the Grant of Letters of Administration dated 1^st February, 1994 the deceased is stated to have died on 7^th August, 1992. This was not contested.

The green card shows that the suit land had remained in the name of the deceased till 25^th January, 1995 when it was transmitted in favour of Job Okuna Oyugi, Joshua Onyango Oyugi and Douglas Odhiambo.

Under section 3 of the Law of Succession Act “estate” of a deceased person in defined as;

  “the free property of a deceased person”.

and free property as in the relation to a deceased person as

“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”

There is nothing on the green card to shows that the property was encumbered in any way while it was in the name of the deceased.

Issue one is therefore determined in the affirmative that the suit land indeed deed formed part of the estate of the deceased because the green card shows that the deceased left the suit land in his name as at the time he died.

The next issue for determination is whether or not the transfer of the suit land in favour of the 1^st Defendant was obtained illegally.

The Plaintiffs pleaded in paragraphs 13 and 9 of the amended plaint that any signature or transactional document from the Plaintiffs was illegally procured, that the property was transferred without the approval of the Plaintiffs, that the transfer was done without a confirmation of Grant and that the transfer was procured vide an illegal court order.

PW1 testified that the Grant is yet to be confirmation todate as the succession is still on going.

The 1^st Defendant filed no defence and adduced no evidence. This however does not relief the Plaintiffs of the burden of proof to prove the assertion that transfer of the suit land in favour of the 1^st Defendant and the charging of the property in favour of the 2^nd Defendant was illegal.

It was submitted on behalf of the Plaintiffs that the entries which were made on the green card/register on 25^th and 26^th January 1995 are not known to the estate of the deceased. That the same violate the sanctity of the title in respect of the suit land as they were made without a confirmed grant. That the sole intent of the said entries was to swindle the estate of the deceased and that the names of the Plaintiffs were entered onto the register to justify the illegal process that ensued.

Counsel submitted that it is trite law that property of a deceased person cannot be dealt with except through a court order or confirmed grant of Probate or Letters of Administration. That therefore the transfer of the suit property from the estate of the deceased and eventually to the 1^st Defendant was illegal and irregular.

Counsel relied on the provisions of sections 45, 3 and 82 of the Law of Succession Act.

Counsel also relied on the cases of Re Estate of Lerionka Ole Ntutu (Deceased) 2008)eKLR and Re Estate of James Ngengi Muigai (Deceased) (2016)eKLR where it was held that a transfer of property from an intestate without confirmation of Grant is illegal and cannot confer valid title.

On behalf of the 2^nd Defendant, it was submitted that the 1^st Defendant had a certificate of lease and under section 26 of the Land Registration Act, the certificate of lease was prima facie evidence of ownership.

Perusal of the green card shows that the suit land was removed from the name of the deceased on 25^th January, 1995 by way of transmission into the names of Job Okuna Oyugi, Joshua Onyango and Douglas Odhiambo.

The Grant of Letters of Administration shows that these were the joint administrators appointed by court in respect of the estate of the deceased vide the Grant dated 1^st February, 1994. They are also the Plaintiff’s herein save for Joshua Onyango. There was no denial that the Plaintiffs as administrators caused the land to be transmitted in their favour. There is no evidence that the Plaintiffs complained to any investigative authority more particularly the police that land which was in the name of their father had been transmitted into the names of the administrators of the estate unlawfully. The green card shows that certificate of lease was surrendered.

The green card shows further that thereafter the land was transferred on the same date on 25^th January, 1995 in favour of Dudu Investments Ltd and certificate of lease issued. Further, that the land was subsequently transferred to Amalo Company Ltd and certificate of lease issued. That there was a restriction registered on 5^th October, 1998 and removed on 29^th November, 2006 when the land was registered in the name of Ronalo Foods Limited. That on 16^th July, 2010, the land was transferred to the 1^st Defendant.

From the information or history as captured in the green card, it is the Plaintiffs who caused the transfer of the suit land from the deceased to themselves as personal representatives of the deceased and consequently transferred it to a 3^rd party.

It is instructive to note that PW1 testified and confirmed that he did not have the certificate of lease which had been issued to his father, the deceased. The green card shows that the same was surrendered upon transmission of the land to the administrators.

Secondly, the Plaintiffs did not demonstrate to this court that the grant of Letters of Administration to the estate of the deceased has not been confirmed. It was claimed on behalf of the Plaintiffs that the succession caused commenced in the year 1992 and Grant in respect thereof issued in 1994 was still ongoing. No documents were availed from the Succession Cause court file to show that the Succession Cause was still ongoing 33 years later and the current status thereof.

The burden of proof under the provisions of section 107 to 109 and section 112 of the Evidence Act rests with the Plaintiffs who assert that the transfer was illegal and irregular to prove the illegality and irregularity on a balance of probabilities.

It is noteworthy that in spite of the Plaintiffs having been appointed administrators of the estate of the deceased in the year 1994, they took no steps to stop developments by third parties on the suit land, if indeed they had not transferred the land to the third parties, until the year 2022 when the present suit was filed which was about 28 years after appointment as administrators of the estate. And further that the persons who held title before the 1^st Defendant herein namely; Dudu Investments Ltd, Amalo Company Ltd and Ronalo Foods Ltd were not sued herein.

The court finds that no evidence was placed before it to demonstrate any irregularity in the transfer and registration of the suit land in favour of the 1^st Defendant.

The next issue is whether or not the 2^nd Defendant undertook due diligence before charging the property.

It was submitted on behalf of the Plaintiff that the documents produced by the 2^nd Defendant fall short of due diligence standards.

That the late Hezekiah Oyugi’s death in 1992 was a matter of public record and therefore had the 2^nd Defendant conducted due diligence in accordance with the law, it could have established that indeed the deceased died intestate. That the 1^st and 2^nd Defendants ought to have been aware that the suit property was part of an estate and that any transfer without confirmation of grant would be or have been illegal.

That the 2^nd Defendant failed to meet its heightened duty of care of conducting due diligence on the suit property. Counsel relied on the cases of Dina Management Limited vs County Government of Mombasa & 5 Others (2021)eKLR where the Supreme Court held that Banks and other financial institutions must exercise a higher standard of due diligence especially when dealing in the higher value properties, and Equity Bank Limited -vs- Bruce Mutie Mutuku t/a Diani Tour & Travel (2016)eKLR where the court held that a bank’s due diligence must go beyond a mere title search. It must investigate the history of the property and any potential claims or disputes.

That the 2^nd Defendant failed to investigate the history of the suit property and to ascertain that the suit property was previously owned by the late Hezekiah Nelson Oyugi and the fact that it was part of an intestate estate.

Counsel further relied on the case of Njeri Wangari -vs- Kenya Commercial Bank Limited and Another where it was held that “a bank cannot claim to be an innocent Chargee if it fails to act on obvious red flags during its due diligence process.”

Counsel submitted further that the death of the previous owner, the intestate status of the estate, the lack of confirmation of grant and the restriction on the suit property were all red flags that should have prompted further investigations by the 2^nd Defendant. That the failure to act on the red flags amounts to negligence.

Counsel relied on the case of KCB Bank Kenya Limited -vs- Muiri Coffee Estate & Another (2016)eKLR to support this submission.

That from the evidence of DW1 the due diligence done by the 2^nd Defendant was to the extent of conducting a basic search of the suit property. That financial institutions entrusted with millions of shillings in their custody and carrying business that has impact on the Kenyan economy cannot purport to limit its level of due diligence to that of “Wanjiku”.

For the 2^nd Defendant, it was pleaded in the its Statement of Defence that the 2^nd Defendant undertook intensive due diligence to confirm that the 1^st Defendant was indeed the bona fide owner before accepting the suit land as part of the collateral for the loan facilities advanced to the 1^st Defendant.

That first the 2^nd Defendant requested and obtained a copy of the title document which confirmed that the property was registered in the name of the 1^st Defendant. That then a search was conducted at the Land Registry at Kisumu and the Land Registrar confirmed that the land was indeed registered in the name of the 1^st Defendant. That the 2^nd Defendant commissioned a valuation of the property to ascertain the location, occupation, development status and the value of the property. That the valuer reported that the property was situated at Milimani Area Kisumu City, 130 metres from the shores of Lake Victoria and that it was being developed with a multi-storey building which was underway. That the 2^nd Defendant in compliance with the terms of the certificate of lease sought and obtained consent of the Lessor to charge the property vide a letter dated 28^th July, 2014.

That nothing existed on the register or physically on the property to indicate that the property was part of the estate of Hezekiah Nelson Oyugi.

DW1 reiterated the contents of the Statement of Defence in her testimony. She produced as exhibit certificate of official search dated 10^th June, 2014. It shows that the suit land was registered in the name of the 1^st Defendant on 16^th July, 2010 and that certificate of lease was issued to the 1^st Defendant on 9^th August, 2010.

She also produced a valuation report dated 12^th June, 2014 by Real Appraisal Valuers, Estate Agents & Consultants. The report provided/contained both the title search details and physical inspection information. DW1 also produced consent to charge dated 28^th July, 2014.

It was submitted on behalf of the 2^nd Defendant that from the exhibits produced, sufficient evidence exists to confirm that the 2^nd Defendant undertook due diligence. That nothing existed in the register or on the property that could alert the 2^nd Defendant about the Plaintiffs’ claim on the property.

Due diligence in land law is the process of investigating various aspects of a piece of land so as to ascertain any legal issue or risks before entry into a binding commitment/agreement/contract.

The Plaintiffs fault the 2^nd Defendant for not extending the due diligence to doing historical search by purchasing copy of register that had the full history of the land.

However, perusal of the green card produced by the Plaintiffs shows that the Plaintiffs and Joshua Onyango transmitted the suit land from the deceased to themselves in their capacity as the personal representative of the deceased. This entry removed the land from being part of the estate of the deceased and availed the land for disposition and or alienation to other parties. Hence the fact that the land was once property of a deceased person was no longer a red flag to a person interested in transacting in the land.

The court finds that the information gathered by the 2^nd Defendant by way of certificate of official search, the valuation report, the certificate of lease held by the 1^st Defendant and the consent to charge given by the Lessor was sufficient due diligence for purposes of accepting the title in respect of the suit land as part of the security for the financial facilities advanced to the 1^st Defendant.

The next issue for determination is whether or not the charge in favour of the 2^nd Defendant was invalid.

On the strength of the foregoing determinations that the 1^st Defendant had good title, that the 2^nd Defendant did sufficient due diligence, the court finds that the charge in favour of the 2^nd Defendant over the suit property was valid.

The 2^nd Defendant produced evidence that it together with the 1^st Defendant followed due process in creating the charge.

Further, the 2^nd Defendant produced pleadings in an earlier case namely Kisumu H.C. Commercial & Tax Division Case No.79 of 2018 where the 1^st Defendant herein who was the Plaintiff therein pleaded that he was the registered proprietor of the suit land. He acknowledged the existence of the charge and did not question the propriety of the Charge. The 1^st Defendant only challenged the way the 2^nd Defendant herein was trying to recover the loan.

The next issue for determination is whether the Plaintiffs are entitled to the relief sought in the amended plaint.

The plaintiffs seek for an order to be issued to the 3^rd Defendant to rectify the register in respect of the suit land transferring the property.

The prayer as framed is not clear but assuming that the Plaintiffs are seeking for an order that the Land Registrar rectifies the register, the grounds for rectification of register as set out in sections 80 and 26 of the Land Registration Act are that the claimant must demonstrate that there was fraud or misrepresentation to which the person is proved to be a party, or that the certificate was acquired illegally, unprocedurally or through a corrupt scheme or where the entry in the register was obtained, made or omitted by fraud or mistake.

Section 80(2) provides that;

“The register shall not be rectified to affect the title of a proprietor  unless the proprietor had knowledge of the omission, fraud or mistake or substantially contributed to it by any act, neglect or  default”.

Having analyzed the entire evidence placed before the court by both parties, I find no evidence of fraud, or illegality on the part of the 1^st or 2^nd Defendant. There is no evidence that the 1^st and 2^nd Defendants had knowledge of or contributed to any omission or any fraud or mistake. There was no evidence that confirmation of Grant to the estate of the deceased had not taken place. The Plaintiffs did not explain how the lease certificate issued to their father the deceased was accessed and surrendered and the land transmitted to their names as the personal representatives. They had no evidence or any report made of any fraud or illegality.

No evidence was adduced that title to the suit land was obtained by the 1^st Defendant illegally.

The next relief sought is an order to the 3^rd Defendant to discharge the charge in favour of the 2^nd Defendant.

Having found that the charge was valid, there is no basis for the court to award this relief.

Other relief sought are a permanent injunction injuncting the 1^st and 2^nd Defendant from dealing in KISUMU/MUNICIPALITY 13/16 and general and exemplary damages. The grounds for grant of these reliefs have not been demonstrated.

I find that the Plaintiff is not entitled to the relief sought.

Regarding costs of the suit, section 27 of the Civil Procedure Act provides that costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order. No reason has been given to the court to otherwise order.

Conclusion

On the basis of the foregoing determinations, the court finds that the Plaintiffs have not proved their claim on a balance of probabilities. The suit is therefore hereby dismissed.

Costs to the 2^nd Defendant who defended the suit.

Orders accordingly.

Judgment dated and signed at Kisumu, read virtually this 23^rd day of October 2025 through Microsoft Teams Online Application.

E. ASATI

JUDGE.

In the presence of:

Maureen: Court Assistant.

Torotwa for the Plaintiffs.

Kiplangat for the 2^nd Defendant.

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