When The Existence Of A Trust Is Implied But Not Stated In Sale Agreement

HIGH COURT DECLINES TO IMPLY THE EXISTENCE OF A TRUST IN A SALE AGREEMENT

Samuel Njuguna Kimemia v Rose Mgeni Mtwana (2012)eKLR.

High Court of Kenya, at Mombasa

R.M. Mwongo J.

April 30, 2012.

“…..so the trust if there be any, must either be implied by the law, or presumed by the court. There is one good, general and infallible rule that goes to both these kinds of trust; it is such a general rule as never deceives; a general rule to which there is no exception, and that is this; the law never implies, the court never presumes a trust but in the case of absolute necessity.”

The High Court sitting in Mombasa has ruled that a mere allegation of a trust cannot create one and therefore, courts will not imply a trust save in order to give effect to the intentions of the parties and such intention must be clearly determined beforehand.

This dispute related to a suit property under the “house without land” system which was a land system or phenomenon mostly in the Coast. According to justice Mwongo, Judicial notice has long been taken of this strange system in the coast, and there has been substantial case law on it. However, scholarship and legislation has lagged behind on this issue.

In summary, Samuel Kimemia had a relationship with Rose Mtwana who alleged that they were married under Kikuyu customary law and that there was a child born of the union, a statement Kimemia denies. However, there neither was evidence of dowry paid to prove the existence of the marriage nor were there documents produced at the trial evidencing the birth or existence of the child. The parties had a disagreement when Kimemia’s wife came to visit him at the coast and a dispute ensued between Kimemia, the wife and Rose and which was the genesis of this dispute.

During the course of their relationship, Kimemia and Rose had entered into a sale agreement to purchase a house which they jointly owned according to the sale agreement. In her defence, Rose alleged that she had contributed to the purchase and renovation of the property. However, the evidence adduced in court indisputably showed that the entire purchase price had been raised by Kimemia. Although it was alleged that both parties participated in the renovations, it was clear from the evidence adduced before court that Kimemia bore the lion’s share of the financial burden of the renovations.

The main issues before court therefore were whether Kimemia and Rose were husband and wife at the time of purchase and whether Rose held half a share in the suit property in trust for Kimemia.

After reviewing submissions from the rival parties, the court observed that although it was apparent that the parties were in a relationship, it was on record that they had never cohabited. Justice Mwongo therefore found that Rose, by any definition was not a wife to Kimemia although there seemed to have been a close relationship deep enough to draw out the jealousness of a spurned lover when Kimemia’s wife came to visit him. The judge held that if there was cohabitation at all, it had not been shown to have been continuous as there was little evidence of the things they had done jointly other than the purchase of the suit property.

The allegation by Kimemia which was consequently denied in the defence was that during earlier discussions concerning the suit property , it had been agreed between the two that the suit property would have been conveyed into their joint names although Kimemia would solely have contributed to the purchase price. Kimemia had further indicated that Rose’s name would only have been included as a purchaser since she had misrepresented information and told him that he could not have been allowed to own property in that area because he was not a local person but from upcountry and further that she would hold the half share of the suit property in trust for the sole benefit of Kimemia.

After perusal of the sale agreement, the judge found that the agreement identified Kimemia and Rose as joint purchasers of one part and further, that there was no indication in the agreement or in any other writing or communication between the parties to have suggested that Rose’s name was to have featured in the agreement on any condition or subject to any trust or other understanding. Justice Mwongo also observed that even subsequent actions of the parties had not evinced any intention on the part of Kimemia that Rose’s inclusion in the purchase was done on trust for him. It was not until the parties had fallen out and criminal proceedings had been instituted that the issue arose.

According to the court, the burden of proof was on Kimemia to have proven the existence of a trust and therefore a mere allegation of its existence could not have created one. The court further observed that it was trite law that a trust, by definition, arose when a donor reposed confidence in a person who was termed a trustee, for the benefit of another who was called a cestui que trust, respecting property which was held by the trustee for the benefit of the cestui que trust.

It further held that nothing in the purchase transaction had manifested any intention on the part of Kimemia that Rose should have held a share of the property for him or anyone else. While relying on the case of Mbothi & 8 Others v Waitimu and 11 Others [1986]KLR 171, the court held that courts would not have implied a trust save in order to have given effect to the intentions of the parties and such intention must have been clearly determined beforehand. The judge therefore found that Rose was not holding any part of the property as a trustee for Kimemia and further that no shares had been distinguished in the agreement and none were distinguishable in interpretation.

Having found that no trust had been proved, the judge concluded that the inclusion of Rose’s name as a purchaser was purely gratuitous on the part of Kimemia and having done so, he could not have reversed the proffered gift and obtained an injunction to have prevented Rose from enjoying the same. Similarly, having proffered the gift, Kimemia could not have obtained a court cancellation of Rose’s name from the landlord’s records in the absence of a contractual pre-condition, except with her consent. She was a proprietor of that which had been proffered to her . However, the judge dismissed the issue of misrepresentation by Rose to Kimemia that she had to have been included in the purchase as a local person because Kimemia was not from that area and added that there was no evidence which had been led by Kimemia to have proven this point.

The court in deciding whether Kimemia was entitled to an account of rent collected from the suit property, ordered that Kimemia be given an account of all income that had been received and the true expenses that had been reasonably paid out from 2009 to present by Rose. It further held that rent was a right to each joint owner of the suit property and Kimemia was entitled to a share thereof.

In conclusion, the court ordered for the parties to agree on the extent of each party’s share in the rent earned by the property and that failing agreement, the court would allow the parties to make submissions before it on the extent of their respective percentage interest in the suit property including detailed submissions on the rental income and expenses.