Commercial Law Index

The dispute emanated from a decision of the appeal court to overturn compensation award given to the appellant by the High Court.

The appellant was offered 6.19 acres of land by the respondent under a lease agreement. The respondent after 10 years was ordered to cede the land leased to the appellant back to its original owners. The respondent took 5 acres from the appellant leaving him with 1.6 acres of the land which was given to him for free. After 11 years the appellant successfully claimed compensation for the 5 acres taken, a decision which was later overturned by the appeal court.

The appellant was now appealing against the decision to overturn the compensation award. He argued that the trial court erred by concluding that the 1.6 acres given to him was compensation. He further contended that there was no evidence to show that as the respondent’s employee he manipulated the system to allocate himself land. The respondent maintained that there was evidence to show that the 1.6 acres allocated to the appellant was compensation and that he manipulated the system to allocate himself large pieces of land.

In deciding the matter, the court held that the appellant was the lessee and not the owner of the land in dispute. He was not entitled to any compensation. It ruled that the 1.6 acres that he received was more than enough compensation. It further ruled that the appeal court never said the appellant manipulated the system. The appeal was thus dismissed.

The court considered whether; the land occupied by the respondent was registered land, the grant of the lease was fraudulent, and estoppel is applicable.

The court held that s 31(1) of the Land Act gives security of tenure to a tenant on registered land. Moreso, the implications of the abolitions of statutory leases in terms of art 237 of the Constitution remains a grey area. The court also held that security of tenure protects a bona fide occupant 's interest. Also, under s 176 of the Registration of Titles Act, a registered proprietor is protected against ejectment except in certain cases including fraud. Further, to procure registration of title to defeat an unregistered interest amounts to fraud. The court also held that registration tainted with fraud does not give rise to the doctrine of estoppel.

The court found that respondent must continue occupation because they were in undisturbed possession and occupation before the 1995 Constitution. The abolition of statutory leases did not automatically extinguish such right. Also found that fraud was attributable to appellants because the grant and registration of suit land in the name of the second appellant was intended to defeat the unregistered interest of the respondent.

Accordingly, the court dismissed the appeal with costs. Further ordered the first appellant to give due consideration to the respondent's application for a lease over the suit land including giving it a priority in the granting of the lease.

In 1998 the appellant filed a suit against the respondent, to which the responded reacted with a counter-claim. The appellant’s claim was withdrawn in 2006 but the respondent’s counter-claim was not. The trial judge ruled in favour of the respondent. The appellants were dissatisfied with the decision and filed an appeal.

The Court of Appeal considered whether the burden of proof of fraud alleged in the counter-suit rested on the appellants. The court held that the burden of proof rests on the party who alleges that fraud was committed. In this case, the appellants had withdrawn their case against the respondent and only the respondent’s counter-claim remained. Consequently, the court upheld the appellant’s complaint and placed the burden to prove that fraud was committed on the respondent.

The court then considered whether the lease of the suit property to the first appellant was fraudulent and reviewed the lower court’s order in cancellation. The court held that fraud must be specifically pleaded and strictly proved and cannot be left to be inferred from the facts. Neither party attempted to prove fraud against the other. Therefore, the courts held that the lease of the suit property to the first appellant was not fraudulent and that the trial judge should not have cancelled the first appellant’s certificate of title.

The court also considered whether the respondent’s lease agreement was breached because the first appellant denied the respondent possession of the suit land and reviewed the lower court’s order to extend the respondents lease. The court found that the respondent was in breach of contract and, therefore, had no right of possession and overturned the trial judge’s order to extend the respondent’s lease because the respondent had failed to request it in due course.

All grounds of the appeal succeeded.