Former Cabinet Minister Raphael Tuju has been dealt a blow after the High Court paved the way for a regional lender to auction off its prime Karen properties, over a Sh4.5 billion debt arising from a failed loan deal.
A five-judge panel of the High Court recused themselves from the case and reinstated the Court of Appeal decision of April last year, dismissing Mr Togo’s appeal challenging the implementation decision in favor of the East African Development Bank (EADB).
Deputy Chief Justice Philomena Mwilo and Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung’u and William Okwu backed out of hearing as they were accused of bias and working towards a predetermined outcome that was not disclosed.
“Consequently, inevitably, each of us on this bench hereby withdraws from participating in the hearing and determination of the appeal dated April 25, 2023 and filed on April 26, 2023,” the court said.
The judges said they were “strongly persuaded that our further involvement” in the case would not serve the ends of justice, at least in Mr Tojo’s view and perception.
This decision comes a few days after Garam Investments Auctioneers put up for auction one of the Tuju hotels in Karen.
The auctioneer placed a notice of the sale in a newspaper ad on Monday, inviting bids for the exotic Entim Sidai Wellness Sanctuary in Karen.
This was after Tuju’s attempt to stop the sale, arguing that he was never notified under Section 90 of the Land Act, was rejected by High Court Judge Njoki Mwangi.
Mr Tuju also challenged the notice of sale, arguing that the bank was seeking to recover $35,051,622 (about Sh4.5 billion), an amount that exceeded the original amount, on account of interest.
The former Jubilee Party secretary-general moved to the High Court last year to stop the sale as well as challenge the UK ruling, which the High Court adopted in February 2020.
After being allowed to appeal the Court of Appeal decision, Mr Tojo applied to introduce new evidence obtained from a bank official, which allegedly supports his case on the disputed loan.
Mr Tojo also sought to respond to the additional evidence adduced by the bank, after the lender was given the opportunity by the same court.
He said that if they were not answered, the bank’s false and inaccurate claims would remain uncontested and unchallenged.
However, the application was rejected and Mr Tojo then applied to the judges to stay the proceedings saying he had lodged a complaint with the Judicial Service Commission (JSC) about the way they handled the case.
In the application, Mr Tojo and Dare Ltd accused the court of handling the applications in a way that made them believe the judges were working to achieve a pre-determined outcome.
The previous Court of Appeal stated that the judges ignored important and relevant issues and proceedings which were directly relevant and integral to the main issues on appeal.
Despite his complaints, the court allegedly ignored or refused to take any action to remedy him.
The bank objected to the application, arguing that it failed to meet the principles required to grant a stay of proceedings.
In the dispute, his companies Dari Ltd and SAM Company Ltd entered into a facility agreement with the lender for a $9.3 million loan in 2015 to expand its business.
The loan was secured by several forms of collateral, including an indemnity and security agreement dated April 10, 2015.
The Tuju Entim Sidai properties along with Tamarind Karen and Dari Business Park were charged as collateral for the loan.
The former CS accused the bank of failing to disburse the entire amount causing cash flow difficulties for the principal debtor. This allegedly hampers its ability to fulfill its obligations under the agreement.
He said that negotiations took place between the two parties in an attempt to resolve the dispute, and despite the drafting of the settlement agreement, the bank moved to a court in the United Kingdom and obtained a judgment against it.
Mr Tuju accused the lender of offering $9.1 million to purchase the property but the balance of Sh294 million was earmarked for the development of high-end residential units for sale. Selling the units would have offset the loan, he said.
The bank defended itself, saying that the balance was never disbursed because Dari Limited breached the agreement by not paying the amount of US$11,462,757 until November 10, 2017.
The loans were for the construction of a Sh100 million flat-roofed two-storey bungalow located on a 20-acre forestland called Entim Sidai, and the purchase of a 94-year-old bungalow built by Scottish missionary Dr Albert Patterson, which now operates as an upscale restaurant.