Skip to content
JudgmentNATIONAL BANK OF KENYA VS THE HON ATTORNEY GENERAL AND THE CITY COUNCIL OF NAIROBI13 min read

NATIONAL BANK OF KENYA VS THE HON ATTORNEY GENERAL AND THE CITY COUNCIL OF NAIROBI

High Court at Milimani High Court · · Njoki Mwangi

1. The plaintiff instituted this suit against the defendants vide a plaint dated 13th February 2012 which was subsequently amended on 22nd May 2023 seeking judgment against them for -
i) Kshs.35,000,000/=;
ii) Interest; and
iii) Costs.
2. The plaintiff’s case is that it had a banker-customer relationship with Press Trust Printers Limited and had extended to it banking facilities of Kshs.8,000,000/=  secured by a legal charge over all that parcel of land known as LR No. 209/6227. The plaintiff claimed that Press Trust Printers Limited defaulted in its loan repayment obligations and as at January 1997, the debt had accrued to Kshs.415,067,462.40. The plaintiff alleged that in September 2008, it learned that the suit property had been fraudulently transferred to a third party, Mohamed Rashid Hussein, by the Registrar of Titles and the 2nd defendant, through proceedings in Nairobi City Court RMCC No. 10A of 2006. It averred that its attempt to challenge the said transfer in Court was dismissed due to lack of jurisdiction. The plaintiff asserted that as a result of the foregoing, it suffered financial loss and sought compensation based on the suit property's last market value.
3. In opposition to the suit, the 1st defendant filed a statement of defence dated 8th August 2012 denying all the averments in the plaintiff’s plaint.
4. The 2nd defendant did not file a statement of defence and/or any pleadings in opposition to the plaintiff’s suit.
5. The case proceeded to hearing where the plaintiff called one witness in support of its case. The defendants on the other hand despite service of a hearing notice did not attend Court on the hearing date. The suit proceeded for hearing in their absence.
PLAINTIFF’S CASE.
6. Mr. Paul Chelang’a testified as PW1. He adopted his witness statement dated 13th February 2012 as his evidence in chief and produced the documents in the plaintiffs’ list and bundle of documents dated 13th February 2012. He also produced the documents in the supplementary bundle of documents dated 28th November 2013. All the plaintiff exhibits were produced as Nos. 1 to 19. PW1 testified that in the year 1982, the plaintiff advanced a loan of Kshs.8,000,000/= to Press Trust Printers Limited, secured by a charge over the suit property. He stated that the loan remained non-performing, and by January 1997, the outstanding debt had escalated to Kshs.415,067,462.40.
7. Mr. Chelang’a testified that the plaintiff continued to hold the charge over the suit property but was informed on 1st September 2008 by Nchogu, Omwanza & Nyasimi Advocates that the suit property had been sold through a Court order due to unpaid land rates at the instance of the 2nd defendant. He stated that the plaintiff and Press Trust Printers Limited attempted to join the lower Court case to nullify the sale but their application was disallowed on jurisdictional grounds. He further stated that the plaintiff was never asked to surrender the original Title, but instead, the 2nd defendant issued an indemnity to the Government due to a missing deed file.
8. He contended that neither the plaintiff nor Press Trust Printers Limited was notified of the sale, the missing deed file, the indemnity, or its reconstruction. Mr. Chelang’a testified that the suit property was transferred to the new owner on 4th July 2007. That while the entry for the missing deed file was made on 24th July 2007, subsequent entries were made in the same deed file, indicating that the deed of indemnity facilitated the fraudulent transfer of the suit property. He stated that the Valuation Report dated 11th October 2010, valued the suit property at Kshs.35,000,000/=. Mr. Chelang’a contended that the plaintiff lost a valuable security and cannot recover the suit property from the third party. He urged this Court to award the plaintiff damages of Kshs.35,000,000/= plus interest.
9. Upon close of the plaintiff’s case, the defendants’ cases were also closed on an oral application made by the plaintiff, and in view of the fact that the defendants did not attend Court to defend their cases. Thereafter, directions were given for filing of written submissions. The plaintiff’s submissions were filed by the law firm of Murugu, Rigoro & Company Advocates on 26th October 2023, while the 1st defendant’s submissions were filed by the Honourable Attorney General. It is evident from the CTS and the Court record that the 2nd defendant neither filed written submissions nor made any oral submissions before this Court.
10. Mr. Liech, learned Counsel for the plaintiff referred to the definition of fraud under Section 2 of the Registration of Titles Act (repealed) and the Black’s Law Dictionary 9th Edition, and submitted that the sale and transfer of the suit property were fraudulent due to several irregularities, including disregard of Section 35(1) of the Registration of Titles Act which mandates production of the original Title Deed to the Registrar of Titles, reliance on void Court proceedings, failure to consider the contents of the Land Register, and lack of proper notification under Section 19 of the Rating Act. He asserted that the defendants facilitated the said transfer based on an invalid indemnity as the plaintiff still held its original Title. He contended that they failed to exercise due diligence which would have revealed that the suit property was charged to the plaintiff, that they concealed the plaintiff’s interest, and conducted Court proceedings without proper notice. To buttress these submissions, Counsel relied on the case of Githinga Kibutha v Caroline Nduku [2018] eKLR.
11. Counsel argued that the transfer was conducted without compliance with Order 21 Rule 6 of the Civil Procedure Rules, 2010 which mandates the production of a certified copy of the Title before judgment thereby altering land ownership. Mr. Liech contended that the transfer violated the Rating Act because the 2nd defendant failed to notify the Registrar of Titles (Registrar) of outstanding rates on the suit property, thus preventing the plaintiff from being aware of the risk of losing its security.
12. Mr. Liech submitted that the said Registrar also violated Section 65 of the Registration of Titles Act by failing to notify or request the plaintiff to produce its charge instrument before approving the transfer and failed to comply with the legal requirement to publish a 14-day notice in the Gazette before dispensing with the production of the Title. It was stated by Mr. Liech that the auction process was irregular because the sale notice failed to disclose the encumbrances on the property, which violated Order 22 Rule 57 of the Civil Procedure Rules, 2010.
13. Counsel relied on the case of Manso Enterprises Ltd v Kenya Commercial Bank Limited & another [1989] eKLR, and submitted that if the encumbrance on the suit property herein was not omitted, it would have voided the sale. He submitted that the proceedings in Nairobi RMCC No. 10A of 2006 were irregular due to procedural defects thus invalidating the entire process leading to the loss of the suit property. He gave instances of how the plaintiff was never notified of the proceedings, and attempts to set aside the judgment were dismissed on jurisdictional grounds. He argued that since Mr. Rowlands Omondi Achieng, who effected service in the said suit was not a registered Process Server, any service effected by him was null and void. He contended that the Process Server allegedly served one Mr. Ezekiel Opumbi, an agent of the purchaser, who was not authorized to receive documents on behalf of the plaintiff.
14. Mr. Liech relied on the case of Electrical Marketing (Wholesale) Ltd v Nairobi City County & 2 others [2019] eKLR, and argued that the Process Server's affidavits indicate that the suit property was deserted on multiple occasions when service attempts were made, but despite the said facts, the Process Server failed to notify the 2nd defendant’s Legal Officers of the situation resulting in the concealment of Court proceedings from Press Trust Printers Ltd and the plaintiff. He stated that as a result, an ex parte judgment was issued, leading to the sale and transfer of the suit property, causing the plaintiff to lose its interest in the property. Mr. Liech cited the provisions of Section 24 of the repealed Registration of Titles Act, and stated that the plaintiff is entitled to seek damages due to the fraudulent and irregular sale of the suit property. He further stated that since the plaintiff was not a party to the contract of sale or the original Court case, it lacks the requisite locus standi to seek title cancellation but can claim damages.
15. Ms Kerubo, learned Counsel for the 1st defendant submitted that the 1st Class Magistrate Court issued a Vesting Order on 6th June 2007 in favour of Mohammed Rashid Hussein, and later, on 3rd October 2007, the said Court directed the Registrar of Titles to register the suit property in the name of the purchaser upon payment of the requisite statutory charges. Counsel relied on the case of Trusted Society of Human Rights Alliance v Cabinet Secretary for Devolution and Planning & 3 others [2017] eKLR, and further submitted that the plaintiff applied to set aside the sale of the suit property by the 2nd defendant but its application was dismissed on 26th June 2009 and no appeal was filed. She submitted that since the Order of 3rd October 2007 remained valid and binding, the Registrar of Titles was under a mandatory obligation to comply with it and cannot be faulted for doing so.
16. She cited the case of Gichinga Kibutha v Caroline Nduku (supra), and the provisions of Sections 107 and 109 of the Evidence Act and argued that the plaintiff failed to prove fraud by the 1st defendant in the transfer of the suit property to Mohammed Rashid Hussein. She referred to the case of Margaret Wanjiru Ndirangu & 4 others v Attorney General [2020] eKLR, and submitted that the legal burden of proof rests with the plaintiff, and that the lack of evidence from the defendants is immaterial. She argued that since the plaintiff did not establish fraud, the 1st defendant was not required to prove its innocence. Counsel maintained that the plaintiff is not entitled to the reliefs sought against the 1st defendant.
ANALYSIS AND DETERMINATION.
17. I have considered and analyzed the evidence adduced in line with the pleadings filed and the written submissions by Counsel for the plaintiff and the 1st defendant. The issue that arises for determination is whether the plaintiff’s suit is merited.
18. The plaintiff’s claim to the suit property stems for the fact that it advanced a loan facility of Kshs.8,000,000/= to Press Trust Printers Limited, secured by a charge over the suit property sometime in the year 1982. The loan however, remained non-performing, and by January 1997, the outstanding debt had escalated to Kshs.415,067,462.40. The plaintiff contends that the suit property was fraudulently transferred to a third party, Mohamed Rashid Hussein, by the Registrar of Titles and the 2nd defendant, through proceedings in Nairobi City Court RMCC No. 10A of 2006, as a result of which the plaintiff claims to have suffered financial loss.
19. It is not in contestation that the 2nd defendant filed Civil Suit No. 10 ‘A’ of 2006 against Press Trust Printers Limited in the 1st Class Magistrate’s Court at Nairobi – City Court for payment of outstanding land rates plus interest. Upon perusal of plaintiff exhibit No. 5, it is evident that Press Trust Printers Limited neither entered appearance nor participated in the proceedings in Civil Suit No. 10 ‘A’ of 2006. Judgment was therefore entered for the 2nd defendant as sought in the plaint. Subsequently, the 2nd defendant applied for an order to sell the suit property by way of public auction, for a valuation to be carried out on it and for the sale to be advertised in the local dailies, which application was allowed. It is evident that the suit property was then sold to Mohamed Rashid Hussein at an auction conducted on 11th May 2007. The 2nd defendant then applied to Court for a certificate specifying the property and the name of the purchaser.
20. In a ruling delivered by the said Court in Civil Suit No. 10 ‘A’ of 2006 on 4th June 2007, it found that the sale of the suit property was done in conformity with the terms and conditions imposed by it. In the absence of an application to set aside the sale, it allowed the 2nd defendant’s application. This was followed by the issuance of a Vesting Order on 6th June 2007 produced as plaintiff exhibit No. 10, which vested the suit property to Mohammed Rashid Hussein absolutely and free from any encumbrances registered therein. The 2nd defendant then filed an application seeking the Court in Civil Suit No. 10 ‘A’ of 2006 to direct the Registrar of Titles to register the suit property in the name of Mohammed Rashid Hussein, which application was allowed. As a result, the said Court issued an Order on 3rd October 2007, directing the Registrar of Titles to register the suit property in the name of Mohammed Rashid Hussein upon payment of the requisite statutory charges.
21. On further perusal of plaintiff exhibit No. 5, it is evident that Press Trust Printers Limited vide an application dated 3rd July 2008 attempted to set aside the ex parte judgment issued by the Court in Civil Suit No. 10 ‘A’ of 2006 on the ground that service was not effected. A ruling for the said application and the plaintiff’s application dated 21st November 2008 was delivered on 26th June 2008, dismissing the said applications on account of lack of jurisdiction. The Court held that since the suit property had already been transferred and registered in the name of a third party, the orders sought therein would have the effect of cancelling a title, which jurisdiction is the preserve of the High Court. Neither the plaintiff nor Press Trust Printers Limited has ever appealed against the said ruling.
22. The plaintiff herein challenges the transfer of the suit property to Mohammed Rashid Hussein on account of fraud. In view of the foregoing it is my considered view that the plaintiff’s argument and by extension the plaintiff’s case herein is an appeal in disguise, against the proceedings and the Court’s findings in Civil Suit No. 10 ‘A’ of 2006. For instance, in as much as Section 35(1) of the Registration of Titles Act mandates production of the original title deed to the Registrar of Titles, in this case the transfer of the suit property was pursuant to a Court Order, thus the said Registrar had no choice but to comply. Further, since Civil Suit No. 10 ‘A’ of 2006 was against Press Trust Printers Limited due to non-payment of outstanding land rates plus interest, there was no reason for the 2nd defendant to notify the plaintiff of the said proceedings.
23. In addition, the order to sell the suit property resulted from an application during execution proceedings, and the registered owner of the suit property at that time was duly served with the said application. It is my finding that Press Trust Printers Limited was better placed to inform the Court if at all there were any encumbrances on the title of the suit property. The compliance and/or non-compliance with the provisions of Order 21 Rule 6 of the Civil Procedure Rules, 2010 was an issue that ought to have been dealt with on appeal since it goes to the legality and/or validity of the lower Court’s findings.
24. As stated here before, the transfer of the suit property was pursuant to a Court Order, thus the plaintiff’s claim that the Registrar of Titles violated Section 65 of the Registration of Titles Act have little to no probative value in this case. It is my finding that the question of whether or not the auction process that led to the sale of the suit property was regular or irregular, and the issues in relation to service of documents in the lower Court, are questions that were to be answered by an appellate Court. This is especially so because of the fact that the Court in Civil Suit No. 10 ‘A’ of 2006 in a ruling delivered on 4th June 2007 found that the sale of the suit property was done in conformity with the terms and conditions imposed by it.
25. In the circumstances, it is my finding that the issues that the plaintiff wishes this Court to address were already addressed by the Court in Civil Suit No. 10 ‘A’ of 2006 and the findings by the Court therein have neither been varied and/or set aside by a Court of competent jurisdiction by way of an appeal.
26. In order for this Court to aptly determine whether or not the suit property was fraudulently transferred to Mohammed Rashid Hussein and whether the plaintiff is entitled to the reliefs sought, I would have to look into the findings by the Court in Civil Suit No. 10 ‘A’ of 2006 and determine whether they are legally and factually correct, by ascertaining whether the lower Court misapprehended the evidence and/or misapplied the law to the facts presented before it. That can only be done by way of an appeal, which is not what is before me.
27. In the end, I find that the plaintiff’s suit is not merited. It is hereby dismissed with costs to the defendants. None of the defendants attended Court to defend their cases. The 2nd defendant never even bothered to file its statement of defence several years after the case was filed. Due to their conduct, the defendants are not entitled to costs. Each party shall bear its own costs of this suit.
It is so ordered.
DATED, SIGNED and DELIVERED at NAIROBI on this 21st day of March 2025. Judgment delivered through Microsoft Teams Online Platform.
NJOKI MWANGI
JUDGE
In the presence of:
Mr. Liech for the plaintiff
No appearance for the 1st defendant
No appearance for the 2nd defendant
Ms. B. Wokabi - Court Assistant.