In a landmark judgment delivered on April 11, 2025, the Supreme Court of Kenya in Petition No. E033 of 2023, Harcharan Singh Sehmi & Another v Tarabana Company Limited & 5 Others, revisited and clarified critical principles surrounding land ownership in Kenya, particularly concerning the renewal of leases on public land, the doctrine of innocent purchaser for value, and the indefeasibility of title. This decision holds significant implications for landowners, potential purchasers, and legal practitioners alike.

The Background: A Lease, An Eviction, and a Battle for Title

The case revolved around a property in Nairobi’s Ngara area (L.R. No. 209/2759/9, I.R. 6477). The appellants (Harcharan Singh Sehmi & Jaswarana Sehmi) acquired a 59-year leasehold interest in this property in 1968, which was set to expire on October 1, 2001. They contended that they applied for an extension of their lease before its expiry and presented evidence, including letters from the Commissioner of Lands seeking objections and replies from the Director of Physical Planning and Director of Survey indicating no objections.

Despite their efforts and continued occupation while paying rates and rent, the property was allocated to the 2nd respondent (Rospatech Limited) in 2010, who subsequently transferred it to the 1st respondent (Tarabana Company Limited). The appellants were forcibly evicted in October 2014 by persons representing the 1st respondent, who relied on a new title (I.R 12263).

Journey Through the Courts:

• Environment and Land Court (ELC): The ELC found that the appellants had initiated the lease extension process before expiry and continued possession until 2010. It determined that the appellants had a legitimate expectation that their lease would be extended. The court also found the allocation to the 2nd respondent was unlawful and unprocedural, citing non-adherence to the Government Lands Act procedures and discrepancies in the purchase price between the 2nd and 1st respondents. Consequently, the ELC nullified the allocation and transfer, restored ownership to the appellants, ordered eviction of the respondents, and awarded general damages to the appellants.
• Court of Appeal: The Court of Appeal overturned the ELC decision. It held that while the appellants applied for renewal, there was no evidence the lease was actually renewed or extended, thus the property reverted to the Government upon expiry. Crucially, the Court of Appeal found the 1st respondent to be a bona fide purchaser for value without notice of any fraud or irregularities in the acquisition process by the 2nd respondent. It also held that the 1st respondent’s title was indefeasible under Section 26(1)(a) and (b) of the Land Registration Act (LRA).

The Supreme Court’s Examination:

The appeal reached the Supreme Court after the Court of Appeal certified it as involving matters of general public importance. The certified issues included the uncertainty around the concept of innocent purchaser and indefeasibility of titles, legitimate expectation in lease renewal, whether an irregular allocation can create a genuine title, and whether an innocent purchaser’s title can be challenged.

The Supreme Court formulated three key issues for determination:

1. The meaning, scope, and extent of the doctrine of Bona fide/Innocent Purchaser for value without Notice.
2. Whether the doctrine protects a purchaser of an illegally/irregularly allocated title over Public Land.
3. To what extent, if at all, is the doctrine of Legitimate Expectation applicable to the renewal of leases over public land?

Supreme Court’s Findings and Clarifications:

1. The Doctrine of Bona Fide/Innocent Purchaser for Value: The Supreme Court took the opportunity to clarify this fundamental principle of property law. It reiterated that this doctrine is an “absolute, unqualified and unanswerable defence against the claims of any prior equitable owner or encumbrancer”. However, it emphasized that the onus of proof lies on the claimant.

The Court outlined the three main ingredients for a successful defence based on this doctrine:

• Innocence: The purchaser must act in good faith and their conduct must not raise doubt about their lack of notice of a rival interest. This includes the exercise of diligence and reasonable inquiry into the property’s status. The Court referenced its decision in Torino Enterprises Limited vs. Attorney General, stressing that an innocent purchaser “exercised due diligence, which would include, but is not limited to, inspecting the suit property”. It quoted its earlier caution that “The fact that the suit land was occupied must have sounded a warning of ‘buyer be aware’ to the appellant”.
• Purchase for value: Consideration in money or money’s worth must have been paid before receiving notice of the equitable interest.
• A legal estate: The contending interests must be a legal estate versus an equitable interest. The doctrine protects against equitable interests, not legal ones.

Applying this to public land leases, the Court noted that an original allottee is a lessee, not a purchaser. The doctrine would only apply if the original lessee created an equitable interest (like a trust) in favour of a third party, and a subsequent purchaser acquired the leasehold without notice of this equitable interest.

2. Protection for Purchasers of Illegal/Irregular Titles: This was a core issue challenging the Court of Appeal’s findings. The Supreme Court emphatically stated that the doctrine of innocent purchaser does NOT protect a purchaser of an illegally or irregularly allocated title over public land.

The Court highlighted the critical shift from the repealed Registration of Titles Act (RTA) to the current Land Registration Act (LRA). While Section 23 of the RTA considered a certificate of title conclusive evidence of indefeasible ownership (unless the holder was party to fraud), Section 26(1) of the LRA now states that a certificate of title is only prima facie evidence of ownership and can be challenged not only on grounds of fraud/misrepresentation by the holder but also “where the certificate of title has been acquired illegally, unprocedurally or through a corrupt scheme”.

This, the Court noted, aligns with Article 40(6) of the Constitution, which provides that the right to property “does not extend to any property that has been found to have been unlawfully acquired”.

Referencing its earlier decision in Dina Management Limited vs. County Government of Mombasa & 5 Others, the Court reiterated that to determine if a party is a bona fide purchaser, one must “first go to the root of the title”. The Dina Management case established that if the process of acquiring the root title “did not comply with the law, then such a title cannot be held as indefeasible”. The Court in the present case quoted Dina Management again: “The root of the title having been challenged… the appellant could not benefit from the doctrine of bona fide purchaser”.

Therefore, the Court concluded that since the 2nd respondent’s allocation was illegal (made by a ‘lands officer’ instead of the Commissioner and without prescribed procedures), they could not pass a valid title to the 1st respondent. The 1st respondent could not claim to be a bona fide purchaser because there was no “legal estate” acquired from the 2nd respondent in the first place. Furthermore, the “absence of ‘notice'” element of the doctrine applies to existing equitable interests, not the illegality or irregularity of the title itself. A purchaser cannot claim protection by equity if the title itself is illegal, even if they were unaware of the illegality.

3. Legitimate Expectation in Lease Renewal: The Supreme Court confirmed that the doctrine of legitimate expectation is applicable to the renewal of leases over public land.

The Court referred to its established principles from the Communications Commission of Kenya & 5 Others vs. Royal Media Services Limited & 5 Others case, requiring an express/clear promise, reasonableness, competence of the decision-maker, and conformity with the law.

In the appellants’ case, the Court found merit in their claim of legitimate expectation. They applied for renewal before expiry. The Commissioner of Lands initiated inquiries with other departments regarding objections, and responses indicated no objections. Significantly, a Part Development Plan (PDP) was prepared for “Extension” of the lease, not a “new allotment”.

The Court concluded that, given this “chronology of events leading up to the inexplicable allotment… to the 2nd respondent, it is only logical to conclude that the appellants had a legitimate expectation that their lease would be extended”. This expectation was reasonable and directed at the competent authority.

However, the Court clarified that legitimate expectation does not automatically grant pre-emptive rights to renewal over all others, as this would risk converting leases into absolute proprietorships. Instead, it means an applicant has a right to have their application considered fairly, to be informed of the decision in reasonable time, and to be furnished with reasons if the application is denied. The Court noted that none of these actions were taken regarding the appellants’ application.

The Supreme Court’s Final Determination and Orders:

Based on its analysis, the Supreme Court made the following declarations and orders:

• The allotment of the suit property to the 2nd respondent was procedurally flawed and illegal.
• The 1st respondent was not a bona fide purchaser for value without notice.
• The 1st respondent’s title to the suit property is invalid.
• The appellants had a legitimate expectation that their lease would be extended before expiry.
• The appellants are entitled to an extension of the lease over the suit property.

The Court consequently overturned the Court of Appeal’s Judgment and allowed the appellants’ petition. It directed the Chief Land Registrar to cancel the 1st respondent’s title and register the appellants as proprietors. Furthermore, it ordered the removal and demolition of structures erected by the 1st respondent within six months, supervised by the Inspector General of Police. The 1st and 2nd respondents were ordered to pay the appellants’ costs at the ELC and Court of Appeal levels.

Key Takeaways:

This Supreme Court decision reinforces the principle that the legality of the root of title is paramount in land transactions in Kenya, particularly concerning public land. A party acquiring land that was illegally or unprocedurally allocated cannot claim protection under the doctrine of bona fide purchaser or indefeasibility of title, even if they were unaware of the initial irregularities. This underscores the critical importance of thorough due diligence that goes beyond merely checking the current register entry and involves investigating the history and process of allocation, especially for properties previously held under public land leases. It also confirms that holders of public land leases have a right to fair administrative action regarding their applications for lease renewal based on legitimate expectation.

For anyone involved in land transactions, especially concerning properties with a history as public land, this judgment serves as a crucial reminder: buyer beware, and critically, ensure the title’s foundation is solid and legally acquired.