In a landmark decision that reshapes Kenya's leasehold landscape, the Supreme Court of Kenya (the "Supreme Court") has delivered a powerful verdict in Sehmi & Another (the "Appellants") v Tarabana Company Limited & 5 Others (Petition E033 of 2023). The court addressed critical questions surrounding the renewal of leasehold interests over public land, the doctrine of legitimate expectation, and the doctrine of innocent purchaser.
The Appellants acquired a leasehold interest in a property situated in Ngara, Nairobi, in 1968, for a term of fifty-nine (59) years set to expire or be renewed in 2001. The Appellants applied for its renewal prior to expiry, relying on communications with the Commissioner of Lands, the Director of City Planning and the Director of Survey indicating no objection to the renewal; they continued remaining in possession. However, in 2009, the government allocated the property to Rospatech Limited, who then subsequently transferred it to Tarabana Company Limited, and they forcibly evicted the Appellants in 2014, claiming title over the land by virtue of a separate title.
In a dispute before the Environment and Land Court (the "ELC"), the Appellants challenged the allocation of the property. The ELC found that the Appellants had a legitimate expectation of their lease renewal, as they remained in possession after the lease expired, and determined that the subsequent allocation to Rospatech Limited and transfer to Tarabana Company Limited were unlawful due to procedural irregularities. The ELC noted that despite the allocation of the Land in 2009, Rospatech Limited did not take possession until the eviction in 2014. Consequently, the ELC nullified the allocation and transfer, restoring the land to the Appellants. The ELC also found that the allocation to Rospatech Limited by the Commissioner of Lands was not as per the prescribed procedure of allocating town plots under the Government Lands Act (Repealed in 2012). However, on appeal, the Court of Appeal reversed this decision, holding that the lease had expired, the land had reverted to the State, and that Tarabana Company Limited was an innocent purchaser for value without notice of the irregularities.
Aggrieved, the Appellants further appealed to the Supreme Court to determine whether such an allocation, and the resulting title, could override their legitimate expectation of lease renewal. In its decision issued on 11 April 2025, the Supreme Court restated the doctrine of innocent purchaser that it does not immunise acquisitions rooted in illegality. The Supreme Court clarified that even if a purchaser is innocent and unaware of the underlying irregularity, any title acquired from an invalid root cannot be cured by registration alone. The Supreme Court reaffirmed its precedent in the Dina Management case (as discussed here) that any title derived through a process that fails to comply with legal requirements cannot enjoy the status of indefeasibility.
In determining the issue on lease renewal, the Supreme Court took a purposive interpretation of the law, holding that an initiated renewal process can create enforceable rights under the doctrine of legitimate expectation. The Supreme Court distilled the doctrine of legitimate expectation into four legal requirements: a clear and unambiguous promise; a reasonable expectation; an expectation arising from a competent authority; and consistency with the law. Applying these criteria, the Supreme Court found that the Appellants had initiated renewal of their lease via a formal application supported by correspondence from the Commissioner of Lands and other departments, indicating an absence of objection. The Supreme Court stated that it is the application for renewal that ignites the legitimate expectation, given the fact that it is addressed to an authority that has the competence to renew the lease, as demonstrated by the Appellants.
Ultimately, the Supreme Court allowed the appeal and declared that the Appellants were entitled to an extension of their lease over the property. The Supreme Court reinforced that Tarabana Company Limited was not an innocent purchaser of the property and hence their title to the property was invalid. The Supreme Court ordered the cancellation of Tarabana Company Limited's title and directed an entry be made in the land register to reflect the Appellants as the proprietors of the property.
Key Takeaways for potential purchasers and land owners
- Due Diligence is Paramount - purchasers must conduct thorough due diligence, including investigating the root of the title and a physical visit to the land. A registered title is not guaranteed to be indefeasible if it results from a procedurally flawed or illegal transaction.
- Limitation of the Doctrine of Bona Fide Purchaser - the protection offered by the doctrine of bona fide (innocent) purchaser for value without notice does not extend to titles that are illegally or irregularly allocated, particularly in respect of public land.
- Indefeasibility of title is not absolute - under the current legal regime, a certificate of title is only prima facie evidence of ownership, not conclusive. Courts are empowered to inquire into the legality of the process leading to the issuance of a title, and titles acquired illegally or unprocedurally can be cancelled.
- Legitimate expectation in lease renewals - lessees who apply for renewal of their leases before expiry may have a legitimate expectation that their application will be considered fairly and expeditiously. However, this does not guarantee renewal, nor does it create pre-emptive rights over the land.
- Government land reverts upon lease expiry - once a lease over public land expires and is not renewed, the land reverts to the government. Continued occupation by the former lessee does not confer any legal or equitable interest in the land.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
