Karani & another v Kabibi & another (Environment and Land Appeal E040 of 2023) [2026] KEELC 3031 (KLR) (20 May 2026) (Judgment)

**REPUBLIC OF KENYA** **IN THE ENVIRONMENT AND LAND COURT AT KERUGOYA** **ELCA NO. E040 OF 2023** **ESTHER WARUGURU KARANI …………………............. 1ST APPELLANT** **JUDY MUTHONI MWANGI …………………………….. 2ND APPELLANT** **VERSUS** **DAVID MWAI KABIBI ………….………………............... 1ST RESPONDENT** **ATTORNEY GENERAL ………………………………….. 2ND RESPONDENT** **JUDGMENT** **(Being an appeal against the judgment of Hon. A.K. Ithuku, CM, delivered on 16th November 2023 in Kerugoya MCELC No. 118 of 2018)** 1. This is an appeal arising from the judgment of **Hon. A.K. Ithuku, CM,** as he then was, delivered on **16th November 2023** in **Kerugoya MCELC No. 118 of 2018**. In the impugned judgment, the learned trial magistrate found that the plaintiffs had failed to prove their case to the required standard and consequently dismissed the suit with costs to the 1st respondent. Aggrieved and dissatisfied with the said judgment, the appellants herein preferred the present appeal vide the Memorandum of Appeal dated 14th December 2023, raising the following six (6) grounds: 1. That the learned magistrate erred in law and fact in failing to consider that the process of transfer of **Land Parcel No. Kiine/Kiangai/2896** to the 1st respondent was marred with irregularities, illegality, unlawfulness and was intended to defraud the appellants. 2. That the learned magistrate erred in law and fact in failing to consider that the 1st respondent did not hold a money lending licence at the time of transacting with the appellants. 3. That the learned magistrate erred in law and fact in failing to consider the evidence adduced by the appellants establishing and proving fraud. 4. That the learned magistrate erred in law and fact in failing to consider the evidence adduced and the law relating to charges, thereby arriving at the wrong conclusion. 5. That the learned magistrate erred in law and fact by misdirecting himself on both the law and the facts and by failing to consider the issues for determination altogether. 6. That in view of the foregoing circumstances, the learned magistrate wholly misdirected himself in delivering judgment in favour of the respondents by failing to consider and appreciate the evidence tendered on behalf of the appellants. The appellants prays for the appeal to be allowed; the judgment delivered on 16th November 2023 be set aside; and that the costs of the appeal be awarded to them. 1. The background to this appeal is that the appellants, as the plaintiffs, instituted the suit before the subordinate court vide a plaint dated 3rd September 2018 seeking for inter alia, a permanent injunction restraining the respondents from disposing of, alienating, charging, transferring, or in any other manner dealing with **Land Parcel No. Kiine/Kiangai/2896**; an order directing the Land Registrar to register a prohibitory order against the said title pending further orders of the court; and costs of the suit. 2. The appellants’ case before the trial court was that they were, together with their mother Jane Wanjiku Karani (now deceased), the registered proprietors of the suit property in equal shares. They contended that the 1st respondent in collusion with the 2nd respondent, and without any colour of right, unlawfully caused the suit property to be transferred into his name and procured issuance of a title deed in his favour. They pleaded fraud and illegality against the respondents and particularised the same to include illegally transferring the suit property without the consent of the relevant authorities, conspiring to disinherit the appellants of their land, forging transfer documents, unlawfully holding title documents to the suit property, and causing false entries and registration in the green card relating to **Land Parcel No. Kiine/Kiangai/2896.** Further, it was their case that as a result of the impugned transfer, they stood to be unlawfully deprived of the suit property and faced the risk of eviction and/or further transfer of the land to third parties by the 1st respondent. 1. The 1st respondent resisted the suit through a statement of defence filed on 13th December 2022. While admitting that the appellants, together with their late mother, Jane Wanjiku Karani, had been joint proprietors of the suit property, he denied that the subsequent transfer in his favour was fraudulent, illegal, or undertaken in collusion with the 2nd respondent as alleged. His case was that the transfer of **Land Parcel No. Kiine/Kiangai/2896** was voluntarily undertaken by the appellants and their late mother as security for a friendly loan advanced to them, upon the mutual understanding that the property would be re-transferred upon repayment of the monies due. According to the 1st respondent, the dispute surrounding the transaction was neither new nor unexplored, the same having formed the subject of **Kerugoya CMCC No. 48 of 2014** which had been determined in his favour. 1. The 1st respondent further pleaded that following the judgment in the said suit, the parties recorded a consent compromising the decretal sum of **Kshs. 5,833,330/=** to **Kshs. 1,042,000/=** payable by the appellants and their late mother in full and final settlement, a concession he stated was extended out of compassion. He however contended that the appellants and their deceased mother failed to honour the terms of the said consent, hence the institution of the present proceedings. It was therefore his position that the suit before the subordinate court was devoid of merit, amounted to an abuse of the court process, and was only intended to defeat his lawful interest over the suit property. 2. On 19th February 2025, this court directed that the appeal be canvassed by way of written submissions. Pursuant thereto, the learned counsel for the appellants filed their written submissions dated 4th June 2025 in which they condensed the appeal into two broad issues for determination, namely, whether the transfer of **Land Parcel No. Kiine/Kiangai/2896** was illegal and fraudulent, and whether the appellants were entitled to the reliefs sought. On the first issue, counsel for the appellants anchored his submissions on **Sections 24 and 37(1) of the Land Registration Act, 2012**. Counsel submitted that the appellants, together with their deceased mother, were the joint registered proprietors of the suit property and were therefore entitled to the rights and privileges conferred upon registered proprietors under the law. It was contended that under **Section 37(1) of the Act**, any transfer of land could only be effected by the proprietors through an instrument executed in the prescribed form, with or without consideration. Counsel argued that the transfer of the suit property to the 1st respondent did not comply with the requirements of the law and was therefore illegal and unprocedural. 1. In advancing that argument, counsel relied on the decision in ***Pius Kimaiyo Langat versus Co-operative Bank of Kenya Ltd (2017) eKLR*** and submitted that although the existence of the friendly loan agreement dated 16th June 2012 was not disputed, the dispute lay in the manner in which the terms thereof were implemented. Counsel pointed out that whereas the agreement contemplated a four-month default period before enforcement could arise, the application for Land Control Board consent, the consent itself, and the transfer instruments were all processed within barely one month of execution of the agreement. In particular, counsel submitted that the application for consent was dated 16th July 2012, the consent issued on 19th July 2012, the transfer documents executed on 26th July 2012, and the title deed subsequently issued in the name of the 1st respondent on 31st July 2012. 1. It was therefore submitted that the transfer of the suit property was undertaken prematurely and in direct breach of the terms of the parties’ agreement. Counsel maintained that the process through which the 1st respondent acquired title was tainted by fraud, illegality, and want of consent from the appellants as the registered proprietors of the suit property. In support of that position, reliance was further placed on the decisions in ***Daudi Kiptugen versus Commissioner of Lands & 4 Others (2015) EKLR*** and ***Hubert L. Martin & 2 Others versus Margaret J. Kamar & 5 Others (2016) eKLR*** for the proposition that a title obtained through an unlawful or unprocedural process is incapable of protection under the law. 1. On the second issue, counsel submitted that ***Section 80 of the Land Registration Act*** delegates to the court the power to rectify the register where it is established that a registration was procured through fraud, illegality, mistake, or an unprocedural process. Reliance was placed on the decision in ***Mary Ruguru Njoroge versus John Samuel Gachuma Mbugua & 4 Others (2014) eKLR*** in support of the argument that a title obtained irregularly is liable to cancellation. Counsel further submitted that the transfer of the suit property by the respondents before the lapse of the agreed default period, and allegedly without the appellants’ consent, constituted acts of fraud and illegality. In that regard, reliance was also placed on the decisions in ***Arthi Highway Developers Limited versus West End Butchery Limited & 6 Others (2015)EKLR*** and ***William Kabogo Gitau versus George Thuo & 2 Others (2010) 1 KLR 526***. Counsel ultimately urged the court to find that the transfer of the suit property was undertaken contrary to the parties’ agreement and the law, and consequently allow the appeal with costs. 1. The learned counsel for the 1st respondent filed written submissions dated 30th July 2025 urging the court to dismiss the appeal and uphold the judgment of the subordinate court. Counsel submitted inter alia that the learned trial magistrate properly evaluated both the oral and documentary evidence on record and correctly found that the transfer of **Land Parcel No. Kiine/Kiangai/2896** to the 1st respondent was lawful and devoid of fraud or illegality. Counsel submitted that the evidence tendered before the trial court demonstrated that the appellants and their late mother voluntarily participated in the transaction and executed all the requisite documents necessary to facilitate the transfer of the suit property. According to counsel, the application for Land Control Board consent was duly signed, consent to the transaction granted, and the prescribed transfer instruments thereafter executed and registered culminating in issuance of a title deed in favour of the 1st respondent. 1. It was further submitted that the transfer arose from a friendly loan agreement entered into between the parties under which the appellants and their late mother obtained financial accommodation from the 1st respondent and, as security for repayment, agreed to transfer the suit property to him. Counsel pointed out that under the terms of the agreement, the appellants were required to repay the loan within four months, on or before 16th December 2012, failing which interest would accrue on the outstanding amount until payment in full. Counsel submitted that the agreement expressly required the appellants and their late mother to execute all the necessary transfer documents and attend the Land Control Board forthwith to facilitate transfer of the suit property to the 1st respondent, who would thereafter hold the same as security pending repayment of the debt. It was therefore argued that the fact that the transfer documents and Land Control Board consent were processed shortly after execution of the agreement did not amount to breach of the agreement as alleged by the appellants, but rather constituted implementation of the parties’ express contractual obligations. 1. Counsel maintained that despite benefiting from the loan advanced to them, the appellants had failed to repay the same to date and could not now impeach a transaction in which they had voluntarily participated. On the complaint that the 1st respondent lacked a money lending licence, counsel submitted that the argument was misconceived as the transaction in issue was not a commercial money lending enterprise but a private friendly loan arrangement entered into between parties acting in their individual capacities and exercising their freedom to contract. Regarding the allegation of fraud, counsel submitted that no evidence was placed before the trial court capable of meeting the threshold required to prove fraud. On the contrary, counsel argued that the evidence demonstrated active participation by the appellants in the transfer process through execution of the relevant documents in fulfilment of obligations they had voluntarily assumed under the agreement. It was therefore submitted that the trial court properly found that fraud had not been established. 1. Counsel further submitted that the dispute before the trial court did not concern a statutory charge governed by the law relating to charges, but rather a private contractual arrangement between parties dealing at arm’s length. Consequently, it was argued, the appellants’ reliance on the law relating to charges was misplaced and inapplicable to the circumstances of the case. In conclusion, counsel submitted that the appellants had failed to demonstrate any error either in law or fact on the part of the learned trial magistrate and urged the court to uphold the judgment of the subordinate court and dismiss the appeal with costs. 1. The following are the issues arising in this appeal for the court’s determinations: 1. *Whether the transfer and registration of* ***Land Parcel No. Kiine/Kiangai/2896*** *in favour of the 1st respondent was lawful and valid in the circumstances of this case.* 2. *Whether the appellants proved fraud, illegality, or any basis warranting interference with the title held by the 1st respondent.* 3. *Who pays the costs?* 2. The court has considered the grounds on the memorandum of appeal, record of appeal, submissions by the learned counsel, superior court decisions cited thereon, and come to the following conclusions: 1. This being a first appeal, this Court is under a duty to reconsider and re-evaluate the evidence on record and draw its own conclusions, while bearing in mind that it neither saw nor heard the witnesses testify and must make due allowance for that fact. This principle was settled in ***Selle & Another versus Associated Motor Boat Co. Ltd & Others [1968] EA 123*,** where the Court of Appeal held that: ***“An appeal to this Court is by way of retrial… this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses…”*** * 1. There is no dispute that prior to registration of the 1st respondent as proprietor on 26th July 2012, the appellants, together with their late mother, Jane Wanjiku Karani, were the registered proprietors of **Land Parcel No. Kiine/Kiangai/2896**, having been registered as such on 6th December 2010. Equally undisputed is the fact that the parties entered into a friendly loan agreement dated 16th June 2012 pursuant to which the 1st respondent advanced a sum of **Kshs. 762,000/=** to the appellants and their late mother. The terms of that agreement are central to the present dispute. The agreement provided that the loan was repayable on or before 16th December 2012, and in default, interest would accrue at the rate of 40% per month until payment in full. More importantly, the agreement further provided that the borrowers would execute all necessary documents and attend the relevant Land Control Board for purposes of transfer of the suit property to the lender as security, and that in the event of complete failure to repay the loan, the lender would be at liberty to immediately take possession of the land. The agreement further contemplated that upon repayment of the loan together with interest, the 1st respondent would transfer the property back to the borrowers. * 1. Although the parties processed and effected an outright transfer of the suit property in favour of the 1st respondent, the underlying intention disclosed in the agreement was not that of an absolute sale of land. Indeed, both the appellants and the 1st respondent were in agreement before the trial court that there was no sale of the property. The learned trial magistrate himself expressly found that *“there was not”* a sale, and that what had been agreed was that the land be transferred to the 1st respondent until repayment of the loan. The question that therefore arises is whether, in those circumstances, the transfer and registration of the suit property in favour of the 1st respondent can properly be viewed as lawful and valid merely because the appellants signed the transfer documents and participated in the Land Control Board process. * 1. The starting point must be that parties are ordinarily bound by the terms of contracts that they voluntarily entered into. This principle was restated by the ***Court of Appeal in National Bank of Kenya Ltd versus Pipeplastic Samkolit (K) Ltd & Another, CA No. 95 of 1999***, where the Court held that: ***“A court of law cannot rewrite a contract between the parties. The parties are bound by the terms of their contract unless coercion, fraud, or undue influence are pleaded and proved.”*** Similarly, in ***Pius Kimaiyo Langat versus Co-operative Bank of Kenya Ltd,CA No. 48 of 2015***, the Court of Appeal reiterated that parties are bound by the bargains they freely enter into. * 1. However, while courts do not rewrite contracts for parties, courts are equally obligated to examine the true legal character and effect of transactions placed before them. The nomenclature employed by parties or the form adopted in documentation cannot, by itself, defeat the court’s duty to interrogate the substance of the transaction. In the present case, the evidence reveals that the transaction was, in substance, a loan transaction secured by land. The agreement itself repeatedly referred to the transfer of the suit property *“as security.”* It expressly contemplated repayment of the loan and eventual re-transfer of the property to the borrowers. The agreement did not contemplate permanent alienation of the land to the 1st respondent upon execution of the transfer documents. Indeed, the right of the 1st respondent to *“immediately take possession”* was expressly tied to failure by the borrowers to repay the loan. * 1. What complicates the matter however, is that despite the transaction being framed in substance as a security arrangement, the parties proceeded to process instruments characteristic of an outright sale and transfer. The application for Land Control Board consent dated 16th July 2012 described the transaction as a *“transfer of whole share by way of sale,”* and the consent issued on 19th July 2012 similarly referred to consideration as *“sale.”* Thereafter, transfer instruments were executed culminating in registration of the 1st respondent as proprietor on 26th July 2012 and issuance of title on 31st July 2012. Notably, the abstract of title produced before court discloses no registered charge or other encumbrance in favour of the 1st respondent. The transaction was therefore not structured as a statutory charge within the contemplation of the land statutes. Instead, the parties adopted an outright transfer arrangement while privately agreeing that the transfer was merely intended as security for repayment of the loan. * 1. The appellants contend that the transfer was premature and contrary to the agreement because the loan repayment period had not lapsed by the time the transfer was effected. The court has carefully considered that argument. The agreement indeed gave the borrowers until 16th December 2012 to repay the loan. However, the same agreement simultaneously obligated the borrowers to immediately execute all documents necessary to facilitate transfer of the property to the lender as security. In the court’s view, the agreement distinguished between the act of transfer itself and the lender’s right to permanently retain or take possession of the land upon default. Consequently, the mere fact that the transfer documents and Land Control Board consent were processed before the expiry of the repayment period cannot standing alone, be said to have been contrary to the agreement since the agreement itself contemplated immediate facilitation of transfer as security. * 1. That said, the court must equally observe that the arrangement adopted by the parties was legally precarious. Whereas the parties intended the land to operate merely as security for a debt, they nonetheless effected an absolute transfer in favour of the lender without creating a formal charge recognized under the law. The effect of such an arrangement was to vest legal proprietorship in the 1st respondent, notwithstanding the underlying understanding that the property would revert to the appellants upon repayment of the loan. Ultimately, however, the issue before this court is not whether the parties adopted the most prudent legal mechanism for securing the debt, but whether the transfer as effected was shown to be unlawful or invalid. On the evidence on record, the appellants admitted signing the transfer documents, participating in the Land Control Board process and voluntarily entering into the loan agreement. No evidence was tendered demonstrating that the signatures appearing on the documents were forged, or that the appellants were misled as to the nature of the documents they executed, or that the transfer instruments were procured without their participation. In those circumstances, and despite the evident informality and legal risk inherent in the arrangement adopted by the parties, this court is unable to conclude that the learned trial magistrate erred in finding that the transfer and subsequent registration of the 1st respondent as proprietor of the suit property was procedurally effected with the participation and consent of the appellants and their late mother. * 1. The appellants’ case before both the trial court and this court was substantially anchored on allegations of fraud and illegality. In their plaint, they accused the respondents of illegally transferring the suit property without the requisite consent, conspiring to disinherit them of their land, forging transfer documents, unlawfully holding title documents, and causing false entries to be made in the land register relating to **Land Parcel No. Kiine/Kiangai/2896**. The law regarding allegations of fraud in civil proceedings is now settled. Fraud is a serious allegation which must not only be specifically pleaded, but must also be strictly proved. Although the standard of proof is not beyond a reasonable doubt as in criminal cases, it is certainly higher than a balance of probabilities. See ***Kinyanjui Kamau versus George Kamau (2015) eKLR*** and ***Vijay Morjaria versus Nansingh Madhusingh Darbar & Another (2000) eKLR.*** * 1. This court has carefully reconsidered the evidence tendered before the subordinate court in light of the foregoing principles. The difficulty confronting the appellants’ case is that the evidence on record does not support the pleaded allegations of fraudulent acquisition of title. Firstly, the appellants admitted that they signed and thumb-printed the application for Land Control Board consent. They further admitted execution of the transfer documents that facilitated registration of the 1st respondent as proprietor of the suit property. The evidence further shows that the Land Control Board consent was duly obtained and that the transfer instruments were subsequently registered, culminating in the issuance of title in favour of the 1st respondent. * 1. Secondly, although the appellants pleaded forgery of transfer documents, no evidence whatsoever was tendered to prove that allegation. No handwriting expert was called. No evidence was led to demonstrate that the signatures or thumbprints appearing on the impugned documents were not theirs. Indeed, the evidence instead points to active participation by the appellants and their late mother in the transaction process. Thirdly, the appellants also alleged that the transfer was undertaken without their consent and without consent from the relevant authorities. Yet the documentary evidence tendered before the trial court demonstrated that consent from the Land Control Board was obtained on 19th July 2012, following an application executed by the parties. Equally, the evidence does not disclose any false entry in the register made without the appellants’ knowledge or participation. * 1. The appellants nevertheless urged this court to find fraud and illegality on the basis that the transaction was effected before lapse of the four-month repayment period stipulated in the friendly loan agreement. The court has already addressed that aspect under the preceding issue and found that the agreement itself obligated the borrowers to immediately execute all documents necessary to facilitate the transfer of the property to the lender as security. In the circumstances, the processing of the transfer documents before 16th December 2012 cannot, without more, amount to fraud. The appellants further argued that the arrangement was illegal because the 1st respondent did not possess a money-lending licence. The court is, however, unable to agree with that proposition on the evidence presented. The material before the court demonstrates a private friendly loan transaction between individuals, and not a commercial money lending enterprise that would require licensing under the relevant statutory framework. No evidence was tendered demonstrating that the 1st respondent was engaged in the business of money lending in a manner requiring regulatory licensing. The mere advancement of a private loan to the appellants and their late mother did not without more, render the transaction illegal. * 1. The court must, however, make one important observation, that although fraud was not proved, the transaction adopted by the parties was undoubtedly unconventional. The parties effectively used an outright transfer of land as security for a debt while privately agreeing that the land would be transferred back upon repayment. Such arrangements invariably expose parties to considerable legal uncertainty and risk, particularly where no formal charge is created and registered. Nevertheless, imprudence, informality, or poor legal structuring of a transaction is not synonymous with fraud. 2. The appellants also invoked **Section 80 of the Land Registration Act**, which empowers the court to order rectification of the register where registration has been obtained through fraud, mistake, illegality, or an unprocedural process. However, rectification under that provision cannot be issued merely because a party later becomes dissatisfied with a transaction voluntarily entered into. A proper evidential foundation must first be laid, demonstrating fraud, illegality, mistake, or procedural impropriety in the acquisition of title. In the present case, the evidence on record establishes that the appellants voluntarily entered into the friendly loan agreement, executed the requisite transfer documents, participated in the Land Control Board process, and facilitated registration of the 1st respondent as proprietor of the suit property. While the arrangement may have been inelegantly structured, the appellants failed to place before the court evidence capable of establishing fraud, forgery, illegality, or procedural impropriety to the standard required in law. Accordingly, this court finds no basis upon which to interfere with the finding by the learned trial magistrate that fraud was not proved against the 1st respondent. * 1. The reliefs sought by the appellants before the trial court and in this appeal were predicated on the assertion that the transfer and registration of **Land Parcel No. Kiine/Kiangai/2896** in favour of the 1st respondent was fraudulent, illegal and liable to cancellation. However, having found that the appellants voluntarily executed the transfer documents, participated in the Land Control Board process, and failed to prove fraud, or illegality or procedural impropriety in the acquisition of title by the 1st respondent, no basis has been laid for interference with the title held by the 1st respondent. Further, the friendly loan agreement expressly provided that the suit property would be transferred back to the appellants upon repayment of the loan together with interest. The learned trial magistrate found that no evidence had been tendered to demonstrate repayment of the loan, and this finding was not displaced on appeal. In the absence of proof of repayment, the obligation to re-transfer the suit property did not arise. Consequently, this court finds no basis upon which to disturb the findings of the trial court or grant the relief sought by the appellants. The appeal therefore fails. * 1. Under **Section 27 of Civil Procedure Act chapter 21 of Laws of Kenya**, costs follow the event unless where the court directs differently on reasonable cause being presented. I find no good reasons to depart from that edict on costs. 1. From the foregoing determinations on the various issues discussed in this appeal, the court finds and orders as follows: 1. **That the appeal is devoid of merit and is dismissed in its entirety.** 2. **That the judgment of the trial court delivered on 16th November 2023 in Kerugoya MCELC No. 118 of 2018, is hereby affirmed.** 3. **That the appellants will pay the 1st respondent’s costs***.* Orders accordingly. **DATED, SIGNED AND VIRTUALLY DELIVERED ON THIS 20TH DAY OF MAY 2026**. **S. M. Kibunja** **ELC JUDGE** **In the presence of:** Appellants – M/s Wandia 1st Respondent – Mr. Muchiri Kinyua/Charles - Court Assistant **S. M. Kibunja** **ELC JUDGE**