https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/5276

**REPUBLIC OF KENYA** **IN THE ENVIRONMENT AND LAND COURT OF KENYA AT MILIMANI** **ENVIRONMENT AND LAND CASE** **APPEAL NUMBER E088 OF 2021** **KASARANI JUAKALI RESETTLEMENT PROJECT LIMITED…………APPELLANT** **VERSUS** **LUCY WACEKE KINUTHIA ……………………………………………1ST RESPONDENT** **PETER NJUGUNA KIMWAKI…………………………………………..2ND RESPONDENT** **JUDGMENT** **(*An Appeal from the Judgment of the Learned Chief Magistrate, Milimani Commercial Courts in CMCC No. 6751 of 2013)*** **Introduction:** 1.Before this Court is an appeal arising from the Judgment of Honourable Chief Magistrate, Milimani Commercial Courts (Hon. Gicheha) dated and delivered on 29th October 2021 (“the trial court”). In that Judgment, the trial court held: “I find that the 2nd Defendant is liable to compensate the plaintiff for the value of the plot as assessed by PW2, the valuer. I enter Judgment for the plaintiff against the defendant as follows: 1. The suit against the 1st Defendant is dismissed. 2. The 2nd Defendant do compensate the plaintiff by paying an equivalent value of Plot No. 054, which is the sum of Kshs. 2.8 million. 3. Costs of the suit to the plaintiff. 2.The Appellant being aggrieved with the said decision filed the appeal vide a Memorandum of Appeal dated 12th November 2021 enumerating ten (10) grounds in the Appeal as follows: “1. The Learned Chief Magistrate erred in law and in fact by granting the 1st Respondent an award equivalent to the current value of the property when it was a case of breach of contract between the 1st and 2nd Respondents. 2. The Learned Chief Magistrate erred in law and in fact by failing to find that the 2nd Respondent was liable as he was the one in contractual relationship with the 1st Respondent and not the Appellant. 3. The Learned Chief Magistrate erred in law and fact by finding the Appellant liable for fraud when there was no evidence tendered to justify such a finding. 4. The Learned Chief Magistrate erred in law and in fact by failing to consider and apply the law of contracts and the well-known maxim of privity of contract and by so doing arrived at a wrong decision. 5. The Learned Chief Magistrate erred in law and in fact by disregarding the Appellant's recognition that the suit property belongs to the 1st Respondent. 6. The Learned Chief Magistrate erred in law and in fact by failing to find that the Appellant was not the owner of the suit property at any time. 7. The Learned Chief Magistrate erred in law and in fact by failing to hold that the Appellant accomplished its duty when it issued the title to the 1st Respondent. 8. The Learned Chief Magistrate erred in law and fact by exonerating the 2nd Respondent without any just cause as the 2nd Respondent had neither appeared nor filed his defence. 9. The Learned Chief Magistrate erred in law and in fact by failing to consider and apply the authorities cited by the Appellant which authorities were binding on her and in so doing arrived at a wrong decision. 10. The Learned Chief Magistrate erred in law by misinterpreting and misapplying the authorities cited by the 1st Respondent and by so doing arrived at a wrong decision.” 3.The Appellant sought the following reliefs: “that the Learned Principal Magistrate's judgment and subsequent orders be set aside and the Respondent's suit be dismissed with costs and appeal be allowed with cost.” **Background/Litigation History:** 4.The dispute before the trial court arose from a sale agreement executed between the 1st and 2nd Respondents on 24.8.2011 concerning Plot No. 54, situated within the Appellant’s Kasarani Jua Kali Resettlement Project (off Kasarani -mwiki road) at a consideration of kshs 400000/= which was fully paid by the 1st Respondent to 2nd Respondent on day of execution of the agreement after having paid kshs 22,500/= to Appellant (2nd Defendant) on 12.8.2011 being service charge/ fees that resulted to certificate of ownership of plot no 054 so to payment receipt dated 12.8.2011 being issued to 1st respondent by Appellant upon confirmation that 2nd respondent was their member and beneficial owner of plot 054 as per their records. 5.Subsequently, the 1st Respondent reported to Appellant that the plot initially pointed out to her by 2nd Respondent was occupied by a third party, Isaiah Kaigera. Following a site visit, the Appellant established that the 2nd Respondent had erroneously identified Plot No. 53 instead of Plot No. 54 to 1st Respondent. The Appellant identified Plot No. 54 on the ground and an agreement was reached, in the Appellant’s and 2nd respondent’s presence, that Isaiah Kaigera would reimburse the 1st Respondent for the developments she had undertaken on plot No 053. 6.The 1st Respondent nevertheless instituted proceedings before the trial court against the Appellant and the 2nd Respondent, alleging fraud that they misrepresented availability and identity of Plot No. 54 and induced her to purchase a plot that was unavailable for her occupation and development. 7.By an Amended Plaint dated 8th September 2020, the 1st Respondent sought, jointly and severally against the Appellant and the 2nd Respondent, special damages of Kshs. 260,595.00, a refund of the purchase price of Kshs. 422,500.00, mesne profits or, in the alternative, the current market value of the property, general damages, costs of the suit, and interest. 8.The Appellant filed a Statement of Defence dated 22nd October 2020, denying liability and contending that it was not privy to the sale agreement between the 1st and2nd Respondents and, consequently, that no cause of action lay against it. Upon hearing the parties and considering their respective submissions, the learned trial magistrate delivered its judgment on 29th October 2021. **Directions of the Court:** 9.The court, by consent of the parties directed that the matter be canvassed by way of written submissions. Appellant filed its submissions dated 16th April 2026 whereas the 1st Respondent filed her written submissions dated 31st July 2026 belatedly on account of counsel’s indisposition whereas 2nd Respondent did not enter appearance, file a statement of defence or submissions which was admitted though out of time vide the court’s ruling of 3.8.2026. The court applauds the learned counsels for their well-researched and reasoned written submissions so to cited authorities. **Parties Submissions:** 10. The Appellant in its submissions dated 16th April 2026 enumerated the following issues: - 1. “a) Whether there existed a contractual relationship between the Appellant and the 1st Respondent? 2. Whether the Learned Trial Magistrate erred in finding the Appellant liable contrary to the doctrine of privity of contract? 3. Whether fraud was proved to the required standard? 4. Whether the trial court failed to consider and apply binding authorities? 5. Whether the Respondent’s suit ought to have been dismissed?” 11. The Appellant challenged the judgment of the trial court on the basis that liability was erroneously imposed upon it despite the absence of any contractual relationship with the 1st Respondent. It urged that the learned trial magistrate erred in applying the doctrine of privity of contract against it as the sale agreement was exclusively between the 1st and 2nd Respondents Relying on **Agricultural Finance Corporation v Lengetia Ltd(1985)klr , National Bank of Kenya v Pipeplastic Samkolit (K) Ltd and another (2001)eklr Savings & Loan (K) Ltd v Kanyenje Karangaita Gakombe & another(2015)eklr ,** and **Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd(1915)AC,** while asserting that contractual obligations cannot be imposed on a non-party to a contract. 12.The Appellant further contended that the finding of fraud against it was not supported by evidence on record thereby 21st Respondent failed to meet the higher standard of proof required for allegations of fraud as restated in the case of **John Mbogua Getao v Simon Parkoyiet Mokare (2017) keca 156 klr and Gichinga Kibutha v Caroline Nduku (2018) keelc klr**. It argued that no evidence established that it made any misrepresentation, received the purchase price, or acted fraudulently. 13.Similarly, the Appellant submitted that the learned trial magistrate disregarded binding authorities on privity of contract, contractual liability, and proof of fraud, contrary to the doctrine of stare decisis citing the cases **Abdul Aziz Ngoma vs Mungai Mathayo &another (1976) eklr and Mwai kibaki vs Daniel Arap Moi (2008) eklr**. It argued that 1st respondent failed to discharge the burden of proving the alleged contractual relationship and fraud against it pursuant to section 107 and 108 of Evidence Act. The Appellant further faulted the learned trial magistrate for exonerating the 2nd Respondent though a party to the sale agreement, while imposing liability upon the Appellant. 14.Accordingly, the Appellant urged the Court to find that the trial court erred in law and fact by disregarding settled legal principles, and making an unsubstantiated finding of fraud against it. It therefore prays that the appeal be allowed, impugned judgment and consequential orders be set aside, suit against the Appellant be dismissed with costs of the suit and the appeal be awarded to the Appellant. 15.The 1st Respondent in its submissions dated 31st July, 2026 submitted on the following issues: 1. Whether the Trial Court erred in finding the Appellant liable for fraud. 2. Whether the award of Kshs. 2,800,000/= was justified. 3. Whether the Appellant can hide behind the privity of contract. 16.The 1st Respondent contended that she lawfully purchased the suit property from the 2nd Respondent (Peter Njuguna Kimwaki) a registered member and allottee of the Appellant. The Appellant facilitated the transaction by approving the transfer, issuing an ownership certificate, receiving transfer fees and confirming the allocation of the plot. Despite these representations, the 1st Respondent was allegedly denied possession due to competing claims over the property. 17.The 1st Respondent further submitted that the trial court correctly found that the Appellant's conduct amounted to fraud, relying on the principles governing the standard of proof for fraud as articulated in **R.G. Patel v Lalji Makanji [1957] EA 314** and **Gichinga Kibutha v Caroline Nduku [2018] eKLR.** She further argued that the Appellant cannot invoke the doctrine of privity of contract to escape liability, having actively participated in and facilitated the impugned transaction, as recognised in **David Njuguna Ngotho v Family Bank Limited & Another [2018] eKLR.** 18.The 1st Respondent urged that the award of compensation based on the current market value of the suit property was justified under the principles of restitution and supported by authorities, **including Peter Kimani Wainaina & 2 Others v Decon Enterprises Limited [2018] eKLR**. The Appellant is said to have owed the 1st Respondent a duty arising from its role as the allocating authority and custodian of ownership records, rendering it liable notwithstanding the absence of direct contractual privity. 19.The 1st Respondent urged the Court to uphold the learned trial magistrate’s findings on liability and quantum, dismiss the appeal with costs, and affirm the judgment on the basis that the Appellant's grounds of appeal are unsupported by both the evidence and the applicable law. **Issues for determination:** 20.Having considered the entire record of appeal, Memorandum and grounds raised in the appeal together with the Appellant’s and 1st Respondent's written submissions so to cited decided authorities the following issues arise for determination: 1. Whether there existed a valid contractual relationship between the 1st Respondent and appellant 2. Whether the learned trial court rightly absolved the 2nd respondent from liability. 3. Whether privity of contract existed between the appellant and 1st respondent 4. Whether fraud was proved against the appellant by the 1st Respondent 5. Whether the doctrine of restitution in integrum was correctly applied against the appellant 6. Whether the Appellant is entitled to the reliefs sought 7. Who to pay costs of the appeal? Analysis and determination: **Jurisdiction;** 21.The court’s duty to sit, revaluate, analyse and reassess the learned trial magistrate or judge’s Court ‘s finding as to whether it should be upheld or interfered with on account of being inconsistent with the evidence on record, misdirection on applicable legal principles or wrong in exercise of discretion that occasioned injustice to a party was settled in the case of **Abok James Odera & Associates vs John Patrick Macharia t/a Macharia & co advocates (2013) eklr** where the court stated as follows: “This being a first appeal, we are reminded of our primary role as a first appellate court namely to reevaluate, reassess and re-analyse the extracts on the record and then determine whether the conclusion reached by the trial judge are to stand or not and give reasons either way. see also Kenya ports authority versus kustron (Kenya) limited 2000 2EA 212”. 22.In the case of **Selle and Another vs. Associated Motor Boat Company Ltd & Others, [1968] EA 123,** where Sir Clement De Lestang, stated: - “(i) An appeal from the High Court is by way of a re-trial and the Court of Appeal is not bound to follow the trial judge’s findings of fact if it appears either that he failed to take account of particular circumstances or probabilities or if the impression of the demeanor of a witness is inconsistent with the evidence generally. (ii) there was no valid reason for interfering with the learned judge’s finding on the facts; (iii) …” 23.The Court in **Mbogo & Another v Shah [1968] EA 93** coined that: “(i) in the circumstances the judge exercised correctly his discretion to refuse the Application to set aside the judgement; (ii) a Court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that he misdirected himself in some matter and as a result arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge was clearly wrong in the exercise of his discretion and that as a result there has been there has been misjustice.” 24.Considering that the first appellate court never had the opportunity to hear the evidence of the appellant or 1st respondent or had the advantage to look at demeanor of the witnesses at time of hearing can only interfere with judgment of the lower court in instances where there is clear manifestation that the court was so wrong in exercise of its discretion and occasioned a miscarriage of justice or disregarded known legal principles thereby arriving at a wrong decision. **Whether a valid contractual relationship existed between the 1st Respondent and Appellant on 24.8.2011.** 25.The Appellant’s averment that it is a stranger to the agreement executed between the 1st and 2nd Respondent’s on the 24.8.2011 pertaining sale of plot No 054 and should not be held responsible for breach of the contract thereof is anchored on the reasoning of the court in the case of **Agricultural finance corporation vs lengetia ltd & Another (1985) klr** as follows: “That a contract affects only the parties to it and cannot be enforced by or against a person who is not a party, even if the contract is made for his benefit and purport to give him the right to sue or to make him liable upon it. the fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue upon the contract” 26.The Appellant restated the principle that parties are bound by the terms of their contracts and courts cannot rewrite contracts for parties by citing the case of **National Bank of Kenya ltd vs Pipelastic samkolit (k) ltd & another (2001) eklr** hence not liable for breach of contract dated 24.8.2011. However, the general principle that a contract cannot be enforced against a nonparty to it is subject to exceptions to wit coercion, fraud or undue influence which must be pleaded and proved. Basically, the Appellant was not a party to the contract dated 24.8.2011 and cannot be directly held liable for the consequences emanating from the failed contractual relations between 1st and 2nd respondents on 24.8.2011. 27.As to whether privity of contract existed between the Appellant and 1st Respondent on 24.8.2011 the appellant reiterated the principle that only parties to a contract can sue or be sued citing the celebrated case **of Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & another [2015] KECA 784 (KLR)** where the court of appeal held: - “In its classical rendering, the doctrine of privity of contract postulates that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly, a contract cannot be enforced either by or against a third party”. The Appellant further cited the case of **Dunlop Pneumatic tyre co ltd vs Selfridge & Co ltd (1915) AC** reiterating the principle that only a person who is a party to a contract can sue on it. Based on the cited cases the Appellant was not privy to the contract executed between the 1st and 2nd Respondents on 24.8.2011. 28.It is on record that Appellant directly engaged with the 1st Respondent on 12.8.2011 by confirming plot No 054 was in their register and belonged to the 2nd Respondent with no competing claims, issuing a certificate of ownership of plot No 054 in name of and receiving kshs 22,500/= from the 1st respondent as service charge fees respectively. 29.The Appellant by directing and actively participating in identification of plot No 054 on the ground to 1st respondent while in company of 2nd Respondent that turned out to be occupied by a 3rd party and mediating over the dispute between 2nd , 1st respondents and 3rd party for refund of expenses incurred by the 1st respondent while constructing the perimeter wall on plot no 053 and other expenses arising therefrom on 6.12.2011 posits that liability shifted to the Appellant too in case of breach of the contractual obligations of the 2nd respondent to the 1st respondent. The learned trial magistrate rightly found the Appellant actively involved in the transaction between the 1st respondent and 2nd respondent from 12.8.2011 till the time of mediating between the seller, 3rd party and buyer on 6.12.2011 hence liable to compensate 1st respondent for damages arising from the failed contractual transaction herein. Whether fraud was proved against the Appellant 30. Black’s Law Dictionary Ninth Edition at Page 731 defines ‘fraud’ as: **“A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment**.” 31.The Court in the case of Ali v Faraj & 2 others [2025] KEELC 1023 (KLR) stipulates that: **“Fraud consists of some deceitful practice or willful device, resorted to with intent to deprive another of his right, or in some manner to cause him an injury”**. Fraud therefore means a concealment of a material fact to induce another to act to his or her detriment or deceitful practice or willful device resorted to with intent to deprive another of his right or in some manner to cause him an injury. The general rule is that fraud must be specifically pleaded and proved as restated in the case of **Kinyanjui Kamau vs George Kamau (2015) eklr** and Order 2 rule 4 of the civil procedure rules 2010 that provides for matters which must be specifically pleaded as follows: **“A party shall in any pleading subsequent to a plaint plead specifically any matter, for example performance, release, payment, fraud, inevitable accident, act of God, any relevant Statute of limitation or any fact showing illegality— (a)which he alleges makes any claim or defence of the opposite party not maintainable; (b)which, if not specifically pleaded, might take the opposite party by surprise; or (c)which raises issues of fact not arising out of the preceding pleading”** 32.The Appellant urged that the evidence on record did not prove fraud against it beyond balance of probability standard though not beyond any reasonable doubt citing the case of **Kinyanjui kamau vs George Kamau (2015) eklr and Gichinga kibutha vs Caroline Nduku (2018) eklr** where the court restated that allegation of fraud are serious allegations and need be proved a higher standard than the ordinary standard of balance of probabilities a fact disputed by the 1st respondent who urged that evidence on record proved the particulars of fraud as pleaded against the Appellant hence liable for fraudulent transactions pertaining plot no 054. 33. The 1st Respondent in paragraph 5 of the amended plaint dated 8.9.2020 pleaded fraud against the Appellant and 2nd Respondents as follows: “Knowingly making the plaintiff to believe that there was a parcel of land available to the plaintiff for purchase from the defendants when there was none. Deceiving the plaintiff that the purported purchase of kshs 422500/=was in exchange of a parcel of land that had been pointed out to her. 34.The 1st respondent contended that fraud was proved against the Appellant on grounds that the Appellant admitted confirmation of records of plot no 054 held in its custody as belonging to the 2nd respondent hence the basis upon which it received kshs 22,500/= as service charge from the 1st respondent on 12.8.2011. The appellant issued ownership certificate to 1st respondent as the one to be registered owner of the plot. Based on the certificate of ownership to the 1st respondent for plot number 054 dated 12th day of August 2011 kshs 400000/=was paid to the 2nd respondent by 1st respondent on 24.8. 2011 as purchase price. 35.Similarly, the Appellant’ through Dw1(Joseph) admitted in cross examination that it identified plot no 054 on the ground to 1st Respondent after 2nd Respondent erroneously identified plot 053 as 054 to the 1st respondent which plot turned out to be available but occupied and developed by a 3rd party hence not available for occupation and development by 1st respondent during the site visit on 7.9.2021. further the Appellant admitted that it participated in mediating between the 1st ,2nd respondents and 3rd party on 6.12.2011 for refund of kshs 216 000/= to the 1st respondent by the 3rd party on account of expenses incurred while developing plot no 053 erroneously corroborated the evidence of 1st respondent on record. 36. The Appellant’s direct participation and involvement in confirmation of availability of plot no 054 in their records and available for sale on 12.8.2011 up to the time of mediating between the respondents and 3rd party on 6.12/2011 for refund of kshs 216,000/= to 1st respondent is proof of fraud on account of knowledge by the 2nd respondent and appellant that plot no 054 was not available for occupation and development by 1st respondent which fact was concealed from the 1st respondent during the transaction process yet misrepresented to her that it was available for sale to her by 2nd respondent and induced to pay kshs 422500/= as purchase price and service fees. Based on the evidence on record the I find that 1st respondent proved fraud against the Appellant. The learned trial magistrate was right to find and hold that fraud was proved against the Appellant by the 1st Respondent to the required standard. **Whether the trial magistrate rightly absolved the 2nd respondent from liability:** 37. The court of appeal in the case of **Charterhouse Bank Ltd (Under Statutory Management) v Kamau [2016] KECA 153 (KLR)** stated: - 1. **“that it is trite that where a party fails to call evidence in support of its case, that party’s pleadings remain mere statements of fact since in so doing the party fails to substantiate its pleadings. Which finding was restated in the case of Karuru Munyororo vs. Joseph Ndumia Murage & Another Nyeri HCCC No. 95 of 1988 and Interchemie EA Limited vs. Nakuru Veterinary Centre Limited Nairobi (Milimani) HCCC No. 165B of 2000 that where no evidence is adduced to controvert the evidence of the plaintiff that evidence by the plaintiff against them is uncontroverted and unchallenged”** 38. It is trite that uncontroverted evidence of a plaintiff against a defendant is unchallenged and binding on the defendant subject to proof of liability by the plaintiff in accord with sections 107 and 108 of Evidence Act. The court proceedings prove that the 2nd respondent was duly served with court process hence A default judgement was entered against 2nd Respondent on 19th November, 2019 on Application by the 1st Respondent as follows. **“Defendant Peter Njuguna Kimwaki having been duly served and having failed to enter appearance/file defence and on the application by Plaintiff's advocate,** **I enter judgment as prayed.** **Magistrate.** **Omulele & Tollo Advocate By ex parte fixed for 4/2/2020** **Court clerk** **Chief Magistrate's Court – Milimani Commercial Court 19/11/2019”** 39.The evidence of 1st Respondent proves that the 2nd respondent as the principal contracting party to the sale agreement, bore the primary contractual obligations arising from the sale agreement executed between 2nd and 1st respondents on 24.8.2011. It is the 2nd respondent who introduced the 1st Respondent to the Appellant and presented the transaction details between the duo to the appellant on 12.8.2011 hence the transfer of interest of 2nd respondent in plot No 054 to the 1st respondent. The 2nd respondent did not controvert the evidence of 1st respondent which remained unchallenged at close of proceedings. Accordingly, the learned trial magistrate erred in absolving the 2nd Respondent of absolute liability while imposing absolute liability upon the Appellant. The 2nd Respondent is therefore found equally liable for the performance and consequences of breach of sale agreement herein alongside the Appellant. **Whether the learned trial court rightly invoked the doctrine of restitutio in integrum in awarding compensation against the Appellant**. 40. Restitutio in integrum simply means restoration to the previous condition widely applied in the law of contract, tort and civil law. The 1st Respondent (plaintiff) prayed for refund of the plot value after being frustrated from occupying and developing plot 054 sold to her by the 2nd respondent citing the case of **Peter Kimani Wainaina & 2 Others v Decon Enterprises Limited [2018] eKLR** where the market value of the plot was awarded in favor of the purchaser for failure by the seller to honor his part of the agreement. 41.similarly in the case of **Millicent pepertua Atieno versus alouis Onyango Otieno (2013) eklr** the court held “that where it is the vendor who wrongfully refused to complete the measure of damages is similarly the loss incurred by the purchaser as the natural and direct result of the repudiation of the contract by the vendor. These damages include the return of any deposit paid by the purchaser with interest together with expenses which he has incurred in investigating title and other expenses within the contemplation of both parties at the time they made a contract as the probable result of a breach of it. 42.The trial court in adjudicating the matter rendered the judgement as follows: “… and 1st defendant nor do I find it fair that the court orders the 1st defendant to refund the purchase price, this is because, there is an admission even in evidence that Plaintiff plot is in existence, it is in the maps and the 2nd defendant admits there is such a plot, however they are not able to trace it on the ground. 43.From the foregoing findings, it is apparent that the Court is invited to consider and apply the doctrine of an innocent/bona fide purchaser for value without notice vis the applicability of restitutio in integrum in this matter. The Black’s law Dictionary 10th Edition defines a 'bona fide purchaser' as follows: “One who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in or infirmities, claims or equities against the seller’s title; one who has in good faith paid valuable consideration for property without notice of prior adverse claims.” 44.The Supreme Court in **Sehmi & another v Tarabana Company Ltd & 5 others [2025] KESC 21 (KLR) stated: “58. It is a fundamental principle of the law of property in land that a purchase of a legal estate for value without notice is an absolute, unqualified and unanswerable defence against the claims of any prior equitable owner or encumbrancer. The onus of proof however lies upon the person claiming to be a bona fide purchaser. Three main ingredients must be present for a** claimant to mount a successful defence based on the doctrine. These are, innocence, purchase for value, and a legal estate.” 45.From the foregoing, it is evident that, the 1st Respondent has to establish innocence, purchase for valuable consideration, and acquisition of a legal interest in the property to qualify as a bonafide purchaser for value. Similarly, it is trite that an award of compensation must be founded upon the breach of a legal or contractual obligation. 46. In the present case, the 1st respondent averred that she was an innocent purchaser for value and paid a consideration without notice of fraud attaching plot no 054. It is on record the appellant admitted having confirmed to the 1st respondent that plot 054 was in their records and allocated to the 2nd respondent as beneficial owner and issued a certificate of ownership to 1st respondent upon payment of the service charge /fees of kshs 22,500/=. The 2nd respondent identified the plot 054 on the ground for 1st respondent. The 1st respondent therefore exercised due diligence prior to executing the agreement on 24.8.2011. 47.It is not disputed kshs 4000000/= was paid to 2nd respondent as consideration for sale of plot no 054 to the 1st respondent on 24.8.2011. The 1st respondent had no notice of fraud attaching plot 054 as at 12.8.2011 or 24.8.2011 as the plot was identified to her on ground by the 2nd respondent and its availability for sale confirmed by Appellant. 48. On the legal estate/interest, for a party to be a bona fide purchaser, the root of title of the plot/ land ought to be interrogated. In this case the root of title to plot no 054 could be traced to Appellant who issued the ownership certificate in favor of the 1st respondent and received kshs 22,500/= from her as service charge. Further, the Appellant in cross examination stated plot 054 is in their records and it belonged to the 2nd Respondent, who was a member of the Scheme. Further, the same was transferred to the 1st Respondent and issued with the ownership certificate upon payment of Kshs. 22,500.00. Therefore, the 1st Respondent was the lawful beneficial owner of plot no 54 with no competing claim(s). The issue of 1st respondent’s legal estate/interest in plot no 054 was proved by the 1st respondent. 49. On compensation to 1st Respondent based on restitutio in integrum doctrine, the Appellant’s contention that the award of kshs 2.8million equivalent to market value of the plot is erroneous is controverted by the evidence of 1st respondent and Pw2(Njuguna-valuer) on record. The 1st respondent paid ksks22,500/= and 400000/=to Appellant and 2nd 1st Respondent in terms of service charge/fees and purchase price on 12.8.2011 and 24.8.2011 respectively. The appellant admitted that kshs 216000/=was incurred by 1st Respondent while developing plot no 053 erroneously identified to her by 2nd respondent as plot 054. They have retained 1st Respondent’s money since 2011 to date for their benefit at expense/detriment of 1st respondent hence denying the 1st respondent use and enjoyment of kshs 422500/= and other expenses incurred in developing plot no 053 to date. Had she deposited the money in the bank, she would have earned interest at market rates therefrom. It is evident on record that 1st respondent cannot recover and occupy plot 054 as it is occupied by another person who put up a storey building on it as per the valuer’s report dated 14.8.2018 prepared by John Ngugi (PW2). 50.Notably on record the evidence of Pw2(John Ngugi Njuguna) was not controverted by the 2nd respondent and Appellant during cross examination of the 1st Respondent on 19.7.2021 hence binding on the 2nd respondent and Appellant. 51.The 1st Respondent being a Bonafide purchaser for value for consideration without notice of fraud attaching plot no 054 on 12.8.2011 and 24.8.2011 is entitled to compensation for the damages suffered. The learned trial magistrate was right in awarding a sum of kshs 2,800,000/= as compensation to the 1st Respondent based on the valuation report prepared on the 14.8.2018 by Pw2(John Ngugi Njuguna) whose content remain uncontroverted by the Appellant and 2nd Respondent. **As to whether the court errored in failing to consider the cited authorities of Appellant:** 52.I have perused the judgment dated 29.10.2021 and notes that the trial court referred to an authority and took account of it in her judgement dated 29.10.2021 as against the appellant. That notwithstanding the trial court relied on evidence as adduced before her to arrive at her judgement dated 29.10.2021. The learned trial magistrate took into consideration other legal principles (Fraud has to be specifically proved) in arriving at the award/judgement as against the appellant. Based on the findings above I am inclined not to fault the trial court solely on this ground. **Who is liable to pay costs of the Appeal?** 53.As to the questions of costs in this matter, the Supreme Court in the case of in **Rai & 3 others Vs Rai & 4 others [2014] KESC 31 (KLR)** has settled the law on award of costs. The appellant has partially succeeded in overturning the judgment of the trial court though still liable for compensation in favor of the 1st respondent hence order that each party to bear own costs of the appeal. **Final Orders:** The Appeal is partially meritorious and allowed as follows a. The Judgement of the trial court dated 29.10.2021 absolving the 2nd respondent from liability and finding the appellant wholly liable is set aside and substituted with entry of judgement against the Defendants jointly and severally to satisfy the decretal sum payable to the 1st respondent. b. The award of kshs 2.800,000/= payable to 1st respondent is upheld. c. 2nd Respondent and Appellant to pay a sum of kshs 2,800,000/ in favor of the 1st Respondent jointly and /or severally with interest at court rates from the date of judgement till payment in full. d. each party to bear own costs of the Appeal. ordered accordingly. **DATED, SIGNED AND DELIVERED VIRTUALLY AT VOI ON THIS 6TH DAY OF AUGUST 2026** **BY J.A. ORWA** **JUDGE.** **IN THE PRESENCE OF:** **MR MANYARA FOR THE APPELLANT.** **MS AWUOR FOR THE 1ST RESPONDENT** **MR LETISIA-COURT ASSISTANT** **BUT ABSENCE OF 2ND RESPONDENT /1ST DEFENDANT**