Court allows bank to auction Upper Hill land in Sh1.2b row

The Pinnacle was expected to become the tallest building in Africa, and the third tallest building in the Southern Hemisphere, at 70 stories and over 1,000 feet (300 m) in height. [File, Standard] A Commercial Court in Nairobi has allowed Credit Bank to auction a prime piece of land in Upperhill where the real estate firm Jabavu Village Ltd intended to build Africa's tallest building, The Pinnacle. Justice Alfred Mabeya, in his ruling, said Jabavu had admitted it was not a party to the loan issued to the lender. According to the judge, the firm was a third party, and could not speak for the owner who took the loan. "To the extent that the plaintiff is not the registered proprietor of the charged property, I do not think it has any locus to challenge the defendant's attempted exercise of statutory power of sale. The injunction order was made in error and cannot stand. The proper party to challenge the defendant's statutory power of sale is not in court," said Justice Mabeya. The court had initially stopped the auction in 2023. However, the judge lifted the orders after finding out that the owner of the land was Upper Hill Towers Ltd, the firm that took the loan. He noted that Upper Hill Towers ought to have come to court to explain why the auction ought to have been stopped if it had not honoured its part of the bargain. Financial ramifications At the same time, he said there was no proposal on how the loan would be serviced. "Notably, statutory power of sale is a legal process and the practice of courts is that it should not be interfered with to assist a defaulter. The financial ramifications on the chargee outweigh the chargor's interest especially where it is proved that the borrower and or the chargor has defaulted and does not have any proposal or is not able to deposit the amount in court," said Justice Mabeya. In the case, Credit Bank argued that Jabavu admitted it was not the registered owner of the prime property. Nevertheless, Jabavu denied misleading the judge. On the other hand, Credit Bank asked the court to set aside its initial orders as Jabavu was not truthful about the ownership of the prime land. The bank said Jabavu was the principal borrower of $5.2 million (Sh670 million), which was meant to refinance an existing credit facility secured using the land.It asserted that it had the right to auction the property because it had issued the notices required by the Lands Act. According to the lender, it first issued a 90-day notice, followed by another 40 days. The third was 45 days as required by the auctioneer's rules. The court heard that Jabavu had misled the court by indicating that the land was registered in its name and that it was Hassan Pharmaceuticals Ltd. In reply, Jabavu said it had served the court documents on the bank and disclosed the property owner's identity. It stated that Credit Bank applied to strike out the case too late, as it was done one year after filing it. Jabavu said its rights would be violated if it was not allowed to fight to stop the auction. Credit Bank demanded around $9.5 million (about Sh1.23 billion) from the company. The real estate firm had intended to build Africa's tallest building, dubbed the Pinnacle Project, on the property. It intended to have a mixed-use project, which would include a five-story mall, a 45-story hotel building, and a 68-story commercial or residential building. However, the Sh20 billion project went into headwinds due to multiple lawsuits and debts owed to creditors. In its case, Jabavu claimed it was undertaking a house project expected to inject at least Sh7.68 billion. It argued that the bank was aware of its cash flow issues and had taken action to meet its end of the bargain. It attached a contract between it and Zhongjiao Third Highway Engineering EA Company on the redevelopment of Jevanjee Bachelors Housing. While opposing the case, the lender said that the real estate firm had admitted to owing an unpaid debt for which it had issued the land as security.

Court allows bank to auction Upper Hill land in Sh1.2b row

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Court allows bank to auction Upper Hill land in Sh1.2b row

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