The High Court has swatted down Equity Bank’s attempt to claim ownership of a disputed parcel of land, finding that the lender’s backroom sale in 2006 was unprocedural.
The case centered on a 2005 transaction in which the bank sold a land to a private buyer after the original owner, Alice Muthoni, defaulted on a KSh 1.4 million loan.The court found that while the bank had the legal authority to exercise its power of sale following Muthoni’s default, it failed to observe crucial procedural steps including proper notification and public auction attempts before selling the land through a private arrangement.The ruling raised doubts about the bank’s records and controls after it emerged it had cleared Muthoni’s loan and issued a discharge in 2018 — only to later blame a system glitch and lost files.
“The Court has already found that the plaintiff (Equity) never notified the 1st defendant (Alice Muthoni) of any public auction or the sale by private treaty. The plaintiff did not prove that the 1st defendant had knowledge of the sale,” Justice Alfred Mabeya ruled in May.
The buyer of the land, Charles Rucha, claimed to have purchased the land in 2005 but did not register the title for more than a decade. The court ruled that he could not be considered an innocent purchaser due to the prolonged delay and lack of clear action to formalize the sale.
The court found no evidence that he took reasonable steps to complete the registration or to recover allegedly lost documents, and noted that his inaction suggested possible negligence.
“There was no explanation to show why a property purchased in 2005 would wait until 2017 for attempts to be made to have them registered. A period of 12 years is too long. No evidence of any action being taken throughout that period to effect the registration,” the court stated.
Although Muthoni filed a counterclaim seeking damages and the eviction of Rucha from the property, the court declined to address those issues, stating that such matters fall under the jurisdiction of the Environment and Land Court.
In the final judgment, the court dismissed both the bank’s claim and the buyer’s defense. Muthoni’s counterclaim was struck out on jurisdictional grounds, leaving the land dispute unresolved pending further litigation in the appropriate court.