Balancing Legitimate Expectation and Indefeasible Title
By Larry Moyo Chula Trainee Advocate
Legitimate Expectation vs. Indefeasible Title: A deep dive into the Supreme Court’s judgement in Harcharan Singh Sehmi & another v Tarabana Company Limited & 5 others (Petition E033 of 2023).
The Supreme Court of Kenya delivered a defining decision that is likely to have far reaching consequences on expiry and renewal of land leases for landowners, investors, lessees and public authorities. The apex court has clarified the principles on the bona fide purchaser doctrine, indefeasibility of title, and legitimate expectation.
The Sehmi & another v Tarabana Company Limited & 5 others (Petition E033 of 2023) [2025] decision follows the The Court of Appeal in Torino Enterprises Limited and Dina Management cases of 2023.
Executive Summary
The Supreme Court has affirmed that once a lease expires without a formally processed extension, the land automatically reverts to the government. Simply applying for an extension before expiry, without completing the process, does not maintain ownership rights.
In addition, the court emphasised that Titles acquired through irregular allocations cannot be legitimized, even by innocent purchasers. As a result, the doctrine of bona fide purchaser does not protect individuals from the consequences of an invalid root of title.
BRIEF BACKGROUND
Jaswarana Sehmi and the late Harcharan Singh Sehmi (the appellants) were the registered proprietors of a piece of land situated in Ngara area, Nairobi County (the property). The property was on leasehold for a defined term of fifty-nine (59) years commencing on 1st October 1942 and was scheduled to expire on the 1st of October 2001, subject to any extension.
In October 2014, the appellants were forcibly evicted from the property by two companies namely Tarabana Company Limited (1st respondent) and Rospatech Limited (2 nd respondent) who had laid claim on the property. This then prompted the appellants to file a suit at the Environment and Land Court.
LITIGATION JOURNEY
At the Environment and Land Court
At the ELC, the appellants argued that before the lease for the property expired, they had applied for an extension of the same. They relied on three key documents: a letter dated 13th July 2001 from the Commissioner of Lands requesting any objections to 2 the proposed lease extension and two letters confirming the absence of objections dated 17th December 2001, and 15th November 2007 from the Director of Physical Planning and the Director of Survey respectively.
In its defence, the 2nd respondent denied any unlawful acquisition of the property, maintaining that the appellants’ lease had expired on 1st October 2001, causing the property to revert to the Government of Kenya. The 2nd respondent further asserted that it had applied for the property and was lawfully allocated it in 2010.
The 1st respondent on its part also denied the appellants’ claims, asserting that it was an innocent purchaser, having acquired the property from the 2nd respondent without any notice of fraud. They further contended that they had conducted due diligence, which confirmed that the appellants’ lease had expired in 2001, and that the 2nd respondent was the registered proprietor of the property.
In the ELC judgment delivered on 22nd July 2019, the court found that the appellants had indeed initiated the process of extending their lease over the property before its expiration. The court also noted that the appellants remained in occupation of the property past 2001, when their lease expired, up until 2010, when the property was allocated to the 2nd respondent. Based on these findings, the court held that the appellants had a legitimate expectation that their lease would be extended.
On whether the allocation of the property to the 2nd respondent was lawful, the court found that the Commissioner of Lands had not followed the prescribed procedure for allocating town plots under the now repealed Government Lands Act.
Consequently, the ELC allowed the appellants’ claim, nullifying the allocation of the property to the 2nd respondent and its subsequent transfer to the 1st respondent, as a result restoring ownership of the property to the appellants.
At the Court of Appeal
The 1st respondent lodged an appeal at the Court of Appeal, contending that it was a bona fide purchaser for value without notice and was not involved in any alleged fraud that deprived the appellants of ownership of the property.
The appellants countered that the 1st respondent could not be considered a bona fide purchaser for value without notice, noting inconsistencies in the transaction documents; the fact that the purchase occurred while the appellants were still in possession; and failure of the 1st respondent to explain how they became aware of the property to then apply for a lease, despite a witness testifying that the official who allegedly allocated the property to the 2nd respondent denied doing so.
The w delivered on 8th October 2021, set aside the judgement of the ELC, holding that the appellants’ lease had expired, and the land had reverted to the Government. It further found the 1st respondent to be a bona fide purchaser for value without notice, whose title was protected under Section 26 of the Land Registration Act, and thus, the ELC erred in dispossessing the 1 st respondent without evidence linking it to any illegality.
The Supreme Court’s Precedent Setting Decision
Aggrieved, the appellants challenged the decision of the Court of Appeal and filed an appeal at the Supreme Court. The Supreme Court carefully examined representations made by the appellants and the respondents and reasoned as below:
Firstly, the Supreme Court clarified that for a purchaser to claim protection under the doctrine of an innocent purchaser for value, they must demonstrate three elements: good faith, purchase for value, and acquisition of a valid legal estate. The Court stressed that due diligence is critical as mere ignorance of irregularities cannot shield a purchaser if they fail to properly investigate the status of the property.
The Court further emphasized that no protection can be extended to titles arising from illegal or irregular allocations of public land. Citing its earlier decision in Dina Management Limited [2023] , the Court reiterated that titles whose foundations are tainted cannot be saved by subsequent transactions, regardless of the purchaser’s innocence. Therefore, the doctrine of bona fide purchaser, it held, cannot sanitize a fundamentally illegal title.
Notably, on the issue of legitimate expectation, the Court recognized that lessees who apply for lease renewal before expiry have a legitimate expectation that their applications will be fairly considered by the relevant authorities. However, this expectation does not automatically confer ownership of the land unless clear and unambiguous promises have been made by a competent authority.
In the present case, although the appellants’ lease had technically expired, their timely application for renewal and the Government’s conduct in processing it created a legitimate expectation deserving of protection.
Concluding, the Court found that the allocation of the property to the 2nd respondent was unlawful, and that the 1st respondent’s title, based on that flawed allocation, was invalid. It therefore set aside the Court of Appeal’s judgment, reinstated the appellants as the rightful lessees and cancelled the 1st respondent’s title.
IMPLICATIONS
- For Leaseholders: It is vital to start and conclude lease extension processes well before the lease expires. Simply making an application without ensuring you follow-up on its progress may not protect one’s rights and can result in loss of the property.
- For Government Agencies: There is an obligation to handle lease extension applications fairly, transparently, and in a timely manner. Failure to do so amounts to breach of the applicant’s legitimate expectation that the lease would be extended and expose the government to legal disputes.
- For Potential Purchasers: Thorough due diligence is critical. Purchasers must investigate the property’s history and status diligently, as acquiring land with a defective title — even in good faith — can result in costly legal battles and potential loss of the property.
This case reshapes Kenya’s jurisprudence on public land allocation, lease renewal rights, and title protection. The judgment underscores the importance of strict adherence to procedures in land lease renewals or extensions and the potential consequences of administrative lapses.