Introduction
1. This suit was instituted by way of a Plaint dated 27th January 2016 in which the Plaintiff sought special damages of Kshs 124,475,694/-, general and exemplary damages for breach of contract and fraudulent misrepresentation, damages for loss of business opportunities as well as costs of the suit. A consent judgment was recorded between the Plaintiff and the 1st Defendant, disposing of the substance of the claim as between them.
2. What survives for determination, and what this judgment is confined to, is a narrow but consequential question as between the Plaintiff and the 2nd Defendant, which is whether the Plaintiff is entitled to a refund of stamp duty in the sum of Kshs 1,320,080/- paid in respect of the transfer that never materialised, and, if so, whether that relief can be granted against the 2nd Defendant. The 2nd Defendant filed a Statement of Defence dated 17th March 2016, denying liability for fraud and pleading, in the alternative, indemnity as against the Plaintiff.
Background Facts
3. The genesis of the dispute is that the Plaintiff entered into a sale agreement with the 1st Defendant for the purchase of the property known as L.R. No. 7149/111, I.R. No. 114436 (formerly L.R. No. 7149/10), at a purchase price of Kshs 66,000,000/-. In anticipation of the transfer, the Plaintiff paid stamp duty of Kshs 1,320,080/-. The intended transfer aborted because it emerged that at the date of the sale agreement, the suit property was the subject of a court order issued on 8th July 2010 in Machakos High Court Civil Case No. 127 of 2010, Monica Wanjiru Kiragu V Arthi Highway Development Co. Ltd, prohibiting any dealing in or transfer of the property.
4. The underlying title was also the subject of litigation in Environment and Land Court Civil Suit No. 167 of 2007, West End Butchery Limited V Arthi Highway Developers Limited & 6 Others, Nyamweya, J (as she then was), a suit to which all the present parties were privy. In that suit, the court found that there had been fraudulent dealings with the suit property, which involved officials in the Ministry of Lands (sued through the Hon. Attorney General, who was the 4th Defendant). The Plaintiff herein was the 6th Defendant in the ELC suit. It was decreed, among other things, that:
“2. ... judgment be and is hereby entered for the 5th, 6th and 7th Defendants as follows:
i. That the 1st and 4th Defendants are hereby ordered to jointly and severally indemnify the 5th and 6th Defendants with respect to any damage and costs incurred arising from the orders made herein, pursuant to the provisions of Section 24 of the Registration of Titles Act …..
ii. That the 5th and 6th Defendants are at liberty to bring legal proceedings for the recovery of such damages and costs pursuant to the indemnities ordered herein against the 1st and 4th Defendants. …”
5. Confronted with a transaction that could never be completed because of the court order and a title already unwound by a competent court, the Plaintiff sought, in this suit, among other reliefs, a refund of the stamp duty it had paid in anticipation. The 2nd Defendant contended that the underlying agreement was void ab initio such that stamp duty was in any event not refundable, that any claim for refund was time-barred under section 102 of the Stamp Duty Act and that KRA, not the Attorney General, was the proper party to answer for any refund of stamp duty, and that its non-joinder was fatal to the claim.
6. At the hearing, the Plaintiff called one witness, Mohamed Sheikh Abdulkadir, a director of the Plaintiff company ("PW1"). The Defendant did not call any witness. I have considered PW1's testimony in full. I do not intend to reproduce it verbatim but will refer to it where relevant in the analysis below, together with the pleadings and written submissions filed.
Analysis and Determination
7. The first issue that arises for determination is whether indeed stamp duty was paid to the government by the Plaintiff. This is the least contentious of the issues. The Stamp Duty Declaration, Assessment and Pay-in Slip produced by the Plaintiff, taken together with PW1's uncontroverted testimony, establish on a balance of probabilities that Kshs 1,320,080/- was assessed and paid in respect of the intended transfer. The 2nd Defendant did not challenge this evidence, did not call any witness to rebut it, and did not dispute the fact of payment in submissions. I therefore find that payment of stamp duty in that sum is proved.
8. The 2nd Defendant's contention that the sale agreement was void ab initio having been concluded while a court order barring it was still in force and that stamp duty is consequently non-refundable, cannot be sustained at this stage. PW1 maintained in cross-examination that he was unaware of the injunction and had not been served with the order. Either way, the point had already been settled by the court whose decree unwound the very title the Plaintiff sought to acquire.
9. The court made it clear that its determination did not turn on whether the restraining order was known to, served upon, or observed by any party — that question was expressly treated as immaterial to the outcome. In this regard the court observed as follows:
“I will not belabour with the issue of the court orders granted in this case which are clearly on the court record, save to state that the Defendants who were present and /or represented at the time of granting such orders and directions with respect to the suit property were under an obligation to observe them. The effect of non-observance of the court orders is nevertheless rendered immaterial in light of the findings in the foregoing.” (emphasis added).
10. Having stood by while that title was cancelled through a process to which the 2nd Defendant was itself privy, the 2nd Defendant cannot now be heard, in these proceedings, to reopen the validity of the transaction as a basis for retaining duty paid on a transfer that never lawfully could have proceeded. To hold otherwise would permit the Government to retain public revenue collected in respect of a dealing subsequently invalidated by its own courts, which is precisely the unjust enrichment that equity and the law of restitution exist to prevent.
11. Equally, I do not believe that section 102 of the Stamp Duty Act, which imposes a time limit of 180 days for claiming a refund, avails a defense to the 2nd Defendant here. The delay in seeking the refund was occasioned not by the Plaintiff's inaction but by the fact that the entitlement to a refund only crystallised once the underlying transaction was authoritatively cancelled by a court order and even thereafter, upon a court order issued to the 2nd Defendant to pay, considering the circumstances of this dispute.
12. The question as to whether the claim could proceed against the 2nd Defendant without enjoining KRA is the central question in the case and I dealt with it at some length because it was the principal plank of the 2nd Defendant's resistance to the refund.
13. The starting point is section 3(2)(a) of the Kenya Revenue Authority Act, which confers on KRA capacity to sue and be sued in its own corporate name, but subject to an express proviso:
“Provided that any legal proceedings against the Authority arising from the performance of the functions or the exercise of any of the powers of the Authority under section 5 shall be deemed to be legal proceedings against the Government within the meaning of the Government Proceedings Act (Cap. 40).”
14. Section 5 of the Kenya Revenue Authority Act sets out KRA's principal functions, chief among them the assessment, collection and accounting of revenue on behalf of the Government, including duty payable under the Stamp Duty Act. The assessment and receipt of the Plaintiff's stamp duty, and any consequent obligation to refund it, is squarely a function performed by KRA under section 5. It follows, as a matter of the plain and unambiguous language of the proviso, that proceedings touching on that function are, by statutory deeming, not proceedings against KRA as a distinct juristic person at all, but proceedings against the Government even though the same be in the name of KRA.
15. Proceedings against the Government are, in turn, governed by Article 156(4) of the Constitution and by sections 12 and 13 of the Government Proceedings Act (Cap. 40), under which the Attorney General is the person against whom civil proceedings by or against the Government are properly instituted, and through whom the Government is represented in court. The 2nd Defendant herein is sued precisely in that representative capacity.
16. This statutory position is, in any case, buttressed by the ordinary law on non-joinder of parties. Order 1 rule 9 of the Civil Procedure Rules provides that no suit shall be defeated by reason of the misjoinder or non-joinder of parties, and that the court may deal with the matter in controversy so far as regards the rights of the parties actually before it. Non-joinder is fatal only where the absent person is a necessary party in the sense explained in Departed Asians Property Custodian Board V Jaffer Brothers Ltd, [1999] 1 EA 55. That is, where an order the court is asked to make would legally affect that person's own interest, such that complete and effectual adjudication is impossible without them.
17. I am of the view that KRA has no interest of its own to protect in this refund claim distinct from the Government's. It holds and administers the disputed sum purely in its statutory capacity as the Government's revenue collector, and any order directing a refund binds the Government, of which KRA is simply the administrative instrument. There is, in short, no separate interest belonging to KRA that could be prejudiced by its absence, and no question in this suit that cannot be effectually and completely settled between the Plaintiff and the Attorney General alone.
18. This conclusion is also the only one consistent with Article 159(2)(d) of the Constitution, which requires courts to administer justice without undue regard to procedural technicalities. It would elevate form over substance to require a citizen who has already been put to the expense and delay of protracted litigation, arising from a title defect entirely of the Government's and the 1st Defendant's making, to commence yet further proceedings against KRA merely to recover money that the Government itself, through its own courts, has already effectively acknowledged was wrongly retained. For these reasons, I find and hold that the claim for refund of stamp duty was properly and sufficiently brought against the 2nd Defendant, in line with the leave granted by the court in ELC No. 167 of 2007.
Disposition
19. Accordingly, Judgment is hereby entered against the 2nd Defendant in favour of the Plaintiff for the sum of Kshs 1,320,080/- being a refund of stamp duty paid in respect of the transfer of L.R. No. 7149/111, I.R. No. 114436 (formerly L.R. No. 7149/10). The Plaintiff shall also have the costs of this suit to be borne by the 2nd Defendant.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 18TH DAY OF SEPTEMBER 2026.
F. MUGAMBI
JUDGE
Delivered in presence of:
Munyi for Githinji for plaintiff
Court Assistants: Lillian & Gloria
1. This suit was instituted by way of a Plaint dated 27th January 2016 in which the Plaintiff sought special damages of Kshs 124,475,694/-, general and exemplary damages for breach of contract and fraudulent misrepresentation, damages for loss of business opportunities as well as costs of the suit. A consent judgment was recorded between the Plaintiff and the 1st Defendant, disposing of the substance of the claim as between them.
2. What survives for determination, and what this judgment is confined to, is a narrow but consequential question as between the Plaintiff and the 2nd Defendant, which is whether the Plaintiff is entitled to a refund of stamp duty in the sum of Kshs 1,320,080/- paid in respect of the transfer that never materialised, and, if so, whether that relief can be granted against the 2nd Defendant. The 2nd Defendant filed a Statement of Defence dated 17th March 2016, denying liability for fraud and pleading, in the alternative, indemnity as against the Plaintiff.
Background Facts
3. The genesis of the dispute is that the Plaintiff entered into a sale agreement with the 1st Defendant for the purchase of the property known as L.R. No. 7149/111, I.R. No. 114436 (formerly L.R. No. 7149/10), at a purchase price of Kshs 66,000,000/-. In anticipation of the transfer, the Plaintiff paid stamp duty of Kshs 1,320,080/-. The intended transfer aborted because it emerged that at the date of the sale agreement, the suit property was the subject of a court order issued on 8th July 2010 in Machakos High Court Civil Case No. 127 of 2010, Monica Wanjiru Kiragu V Arthi Highway Development Co. Ltd, prohibiting any dealing in or transfer of the property.
4. The underlying title was also the subject of litigation in Environment and Land Court Civil Suit No. 167 of 2007, West End Butchery Limited V Arthi Highway Developers Limited & 6 Others, Nyamweya, J (as she then was), a suit to which all the present parties were privy. In that suit, the court found that there had been fraudulent dealings with the suit property, which involved officials in the Ministry of Lands (sued through the Hon. Attorney General, who was the 4th Defendant). The Plaintiff herein was the 6th Defendant in the ELC suit. It was decreed, among other things, that:
“2. ... judgment be and is hereby entered for the 5th, 6th and 7th Defendants as follows:
i. That the 1st and 4th Defendants are hereby ordered to jointly and severally indemnify the 5th and 6th Defendants with respect to any damage and costs incurred arising from the orders made herein, pursuant to the provisions of Section 24 of the Registration of Titles Act …..
ii. That the 5th and 6th Defendants are at liberty to bring legal proceedings for the recovery of such damages and costs pursuant to the indemnities ordered herein against the 1st and 4th Defendants. …”
5. Confronted with a transaction that could never be completed because of the court order and a title already unwound by a competent court, the Plaintiff sought, in this suit, among other reliefs, a refund of the stamp duty it had paid in anticipation. The 2nd Defendant contended that the underlying agreement was void ab initio such that stamp duty was in any event not refundable, that any claim for refund was time-barred under section 102 of the Stamp Duty Act and that KRA, not the Attorney General, was the proper party to answer for any refund of stamp duty, and that its non-joinder was fatal to the claim.
6. At the hearing, the Plaintiff called one witness, Mohamed Sheikh Abdulkadir, a director of the Plaintiff company ("PW1"). The Defendant did not call any witness. I have considered PW1's testimony in full. I do not intend to reproduce it verbatim but will refer to it where relevant in the analysis below, together with the pleadings and written submissions filed.
Analysis and Determination
7. The first issue that arises for determination is whether indeed stamp duty was paid to the government by the Plaintiff. This is the least contentious of the issues. The Stamp Duty Declaration, Assessment and Pay-in Slip produced by the Plaintiff, taken together with PW1's uncontroverted testimony, establish on a balance of probabilities that Kshs 1,320,080/- was assessed and paid in respect of the intended transfer. The 2nd Defendant did not challenge this evidence, did not call any witness to rebut it, and did not dispute the fact of payment in submissions. I therefore find that payment of stamp duty in that sum is proved.
8. The 2nd Defendant's contention that the sale agreement was void ab initio having been concluded while a court order barring it was still in force and that stamp duty is consequently non-refundable, cannot be sustained at this stage. PW1 maintained in cross-examination that he was unaware of the injunction and had not been served with the order. Either way, the point had already been settled by the court whose decree unwound the very title the Plaintiff sought to acquire.
9. The court made it clear that its determination did not turn on whether the restraining order was known to, served upon, or observed by any party — that question was expressly treated as immaterial to the outcome. In this regard the court observed as follows:
“I will not belabour with the issue of the court orders granted in this case which are clearly on the court record, save to state that the Defendants who were present and /or represented at the time of granting such orders and directions with respect to the suit property were under an obligation to observe them. The effect of non-observance of the court orders is nevertheless rendered immaterial in light of the findings in the foregoing.” (emphasis added).
10. Having stood by while that title was cancelled through a process to which the 2nd Defendant was itself privy, the 2nd Defendant cannot now be heard, in these proceedings, to reopen the validity of the transaction as a basis for retaining duty paid on a transfer that never lawfully could have proceeded. To hold otherwise would permit the Government to retain public revenue collected in respect of a dealing subsequently invalidated by its own courts, which is precisely the unjust enrichment that equity and the law of restitution exist to prevent.
11. Equally, I do not believe that section 102 of the Stamp Duty Act, which imposes a time limit of 180 days for claiming a refund, avails a defense to the 2nd Defendant here. The delay in seeking the refund was occasioned not by the Plaintiff's inaction but by the fact that the entitlement to a refund only crystallised once the underlying transaction was authoritatively cancelled by a court order and even thereafter, upon a court order issued to the 2nd Defendant to pay, considering the circumstances of this dispute.
12. The question as to whether the claim could proceed against the 2nd Defendant without enjoining KRA is the central question in the case and I dealt with it at some length because it was the principal plank of the 2nd Defendant's resistance to the refund.
13. The starting point is section 3(2)(a) of the Kenya Revenue Authority Act, which confers on KRA capacity to sue and be sued in its own corporate name, but subject to an express proviso:
“Provided that any legal proceedings against the Authority arising from the performance of the functions or the exercise of any of the powers of the Authority under section 5 shall be deemed to be legal proceedings against the Government within the meaning of the Government Proceedings Act (Cap. 40).”
14. Section 5 of the Kenya Revenue Authority Act sets out KRA's principal functions, chief among them the assessment, collection and accounting of revenue on behalf of the Government, including duty payable under the Stamp Duty Act. The assessment and receipt of the Plaintiff's stamp duty, and any consequent obligation to refund it, is squarely a function performed by KRA under section 5. It follows, as a matter of the plain and unambiguous language of the proviso, that proceedings touching on that function are, by statutory deeming, not proceedings against KRA as a distinct juristic person at all, but proceedings against the Government even though the same be in the name of KRA.
15. Proceedings against the Government are, in turn, governed by Article 156(4) of the Constitution and by sections 12 and 13 of the Government Proceedings Act (Cap. 40), under which the Attorney General is the person against whom civil proceedings by or against the Government are properly instituted, and through whom the Government is represented in court. The 2nd Defendant herein is sued precisely in that representative capacity.
16. This statutory position is, in any case, buttressed by the ordinary law on non-joinder of parties. Order 1 rule 9 of the Civil Procedure Rules provides that no suit shall be defeated by reason of the misjoinder or non-joinder of parties, and that the court may deal with the matter in controversy so far as regards the rights of the parties actually before it. Non-joinder is fatal only where the absent person is a necessary party in the sense explained in Departed Asians Property Custodian Board V Jaffer Brothers Ltd, [1999] 1 EA 55. That is, where an order the court is asked to make would legally affect that person's own interest, such that complete and effectual adjudication is impossible without them.
17. I am of the view that KRA has no interest of its own to protect in this refund claim distinct from the Government's. It holds and administers the disputed sum purely in its statutory capacity as the Government's revenue collector, and any order directing a refund binds the Government, of which KRA is simply the administrative instrument. There is, in short, no separate interest belonging to KRA that could be prejudiced by its absence, and no question in this suit that cannot be effectually and completely settled between the Plaintiff and the Attorney General alone.
18. This conclusion is also the only one consistent with Article 159(2)(d) of the Constitution, which requires courts to administer justice without undue regard to procedural technicalities. It would elevate form over substance to require a citizen who has already been put to the expense and delay of protracted litigation, arising from a title defect entirely of the Government's and the 1st Defendant's making, to commence yet further proceedings against KRA merely to recover money that the Government itself, through its own courts, has already effectively acknowledged was wrongly retained. For these reasons, I find and hold that the claim for refund of stamp duty was properly and sufficiently brought against the 2nd Defendant, in line with the leave granted by the court in ELC No. 167 of 2007.
Disposition
19. Accordingly, Judgment is hereby entered against the 2nd Defendant in favour of the Plaintiff for the sum of Kshs 1,320,080/- being a refund of stamp duty paid in respect of the transfer of L.R. No. 7149/111, I.R. No. 114436 (formerly L.R. No. 7149/10). The Plaintiff shall also have the costs of this suit to be borne by the 2nd Defendant.
DATED, SIGNED AND DELIVERED IN NAIROBI
THIS 18TH DAY OF SEPTEMBER 2026.
F. MUGAMBI
JUDGE
Delivered in presence of:
Munyi for Githinji for plaintiff
Court Assistants: Lillian & Gloria