BY SAM ALFAN.
Housing Finance (HF) has been blocked from selling a parcel of land in Nairobi’s Karen area, pending the determination of a loan dispute.
Court of Judges Fatuma Sichale Dr Imaana Laibuta and Lydia Achode stopped the corporation from selling or transferring the property pending the outcome of the appeal before court.
The land belongs to Elite Intelligent Traffic System Ltd.
“We order that a temporary injunction be and is hereby granted restraining the respondent from advertising for sale, offering, selling, disposing off or in any other way dealing or acting in a manner inconsistent with the applicant’s ownership and possession, in all that parcel of land known as LR No.209/1051/1 (the suit property) pending the determination of the intended appeal,” ruled the appellate judges.
The appellate judges observed that the intended appeal will be rendered nugatory if the orders sought are not granted.
The judges noted that third parties are said to have acquired units in the suit property under the development project with the consent of the respondent.
“If therefore, the appeal was to succeed and the property has already changed hands by virtue of the bank exercising its statutory power of sale, the damage thereby occasioned may be cumbersome to reverse, and will adversely affect innocent third parties,” said the judges.
Elite Intelligent Traffic System Ltd moved to the Court of Appeal after its application, seeking to stop the HF from selling the land was dismissed by a judge of the High Court.
The court heard that the company and the lender entered into an agreement for a loan of Sh364million of which Sh95 million was for takeover from Kenya Commercial Bank (KCB) and the balance was meant for the construction of apartments on the property.
Later on, the Elite Intelligent created a supplementary charge in favour of the respondent over a property known as LR. No. 1160/339 (the Karen Property) as security for the loan of Sh 364 million in terms of the loan agreement.
The court heard that Housing corporation paid KCB the Sh95 million, but failed to disburse the funds needed for the construction of the apartments.
The failure resulted in massive losses and the developer lodged a case against Housing corporation, seeking an injunction to restrain the respondent from selling the property, and a discharge of the supplementary charge over the Karen property.
Notwithstanding, the parties herein entered into a Settlement Agreement in which the lender was willing to waive excess interest and the parties reached a final settlement of Sh71,800,000 as the full debt.
Despite the settlement agreement, the lender is said to have acted unilaterally and reverted back to the terms of the previous loan agreement in breach of the deal.
HF then threatened to dispose of the suit property.
The lender in reply argued that it extended the loan of Sh364million with properties known as L.R No. 209/1052 (the suit property) and L.R No. 1160/330 (the Karen property), being offered as security by the company.
In spite of offering the securities, the developer was sourcing for new equity partners or seeking to borrow from other lending entities.
According to the housing corporation, for that reason, it was unable to progress the company’s application for development financing.
” Consequently, the parties entered into a Settlement Agreement, which was dependent on the applicant fulfilling its obligations, and failing which the agreement would be rendered otiose,” said housing corporation.
They said Elite Intelligent failed to adhere to the Settlement Agreement and in the premise, the lender had no option but to recover its outlay by exercising the statutory power of sale.
Housing corporation argued the intended appeal is not arguable and has no merit and there is a valid and existing debt owed to the company by the Elite Intelligent arising out of the loan facilities advanced by the letters of offer dated 10th October, 2013 and the Settlement Agreement.
According to housing corporation, Elite Intelligent has on numerous occasions admitted its indebtedness to the respondent as captured in its letters to the Bank as well as in the Settlement Agreement and the outstanding amount owed by the applicant to the respondent from the date of the Settlement Agreement to date is Sh176,020,547.47 which amount continues to accrue interest at contractual rates.
