Supreme Court reverses recusal order, allows Tuju to prosecute Sh1.9 billion loan dispute

Former Rarieda MP Raphael Tuju has been allowed to return to the Supreme Court in his bid to salvage his properties in a dispute over a Sh1.9 billion loan.

The apex court, in a ruling, reversed its earlier decision to recuse itself from the case but noted that although Tuju had said he withdrew his petitions before the Judicial Service Commission (JSC) seeking the removal of the judges, he had neither explained why nor apologised.

Deputy Chief Justice Philomena Mwilu and Justices Smokin Wanjala, Njoki Ndung’u, William Ouko and Mohamed Warsame said Tuju ought to have considered the consequences of his actions before filing the petitions.

“There is a corresponding responsibility on a litigant not to casually make allegations sufficiently grave to occasion the recusal of five of the seven Justices of the Supreme Court. An apology cannot be compelled, nor do we insist it must be tendered first for this Court to exercise its inherent jurisdiction. We cannot, however, be indifferent to the fact that the complaints against the Judges have been¬ withdrawn without explanation, retraction or expression of regret. We say no more,” the bench headed by Justice Mwilu ruled.

At the heart of the case is a Sh1.9 billion loan taken by Tuju’s company, Dari Limited.

On April 10, 2015, Dari entered into an agreement with the East African Development Bank (EADB) under which the lender agreed to provide a Sh943.9 million ($9.3 million) loan.

The loan was intended to finance the acquisition of a 22-acre forested property known as Entim Sidai in Karen and the purchase of a 94-year-old bungalow built by Scottish missionary Dr Albert Patterson, which operated as a high-end restaurant with 14 rooms.

Part of the loan was also intended to facilitate the construction of 12 luxury two-storey bungalow homes, each valued at Sh100 million, giving the development an estimated value of Sh1.2 billion.

The project was expected to generate income that would enable Tuju’s company to service the loan.

Tuju claimed that he was approached by then bank chief executive officer Vivian Apopo, who said the lender was willing to support him in acquiring the prime land in Karen.

However, the relationship later deteriorated, leading to a legal battle that began before UK High Court Judge Daniel Toledano.

Tuju accused EADB of reneging on an agreement to release a further Sh294 million to finance construction of the luxury homes for sale, which he said would have helped repay the loan.

However, development of the 12 homes fell behind schedule and Tuju’s company defaulted on repayments, setting the stage for efforts to recover the assets.

Toledano dismissed Tuju’s case, finding that he had no arguable defence. The judge also ruled that the bank was under no obligation to provide the additional Sh294 million.

“It is true that a further facility was proposed and discussed, but it never reached the stage of being agreed and implemented.No facility agreement was concluded and no other contractual obligation to lend this amount was agreed according to the material before the court,” he said.

Tuju appealed in the UK, but the appeal was also dismissed.

EADB subsequently moved to have the UK judgment recognised and enforced in Kenya.

Tuju, in proceedings before Kenyan courts and the East African Court of Justice, argued that EADB was fully aware that without the development and sale of the housing units envisaged in the project proposal, Dari would not be able to service the loan.

He also accused EADB of stopping KCB Group from taking over the loan and frustrating equity investments in the project by Dubai investors.

“The investor was ready pay EADB sh1billion as part of the money they had given him and inject a further billions into the two projects at Dari and Entim Sidai but the EADB refused,” he argued.

Tuju further argued that EADB was holding Sh4.2 billion worth of security.

EADB, however, said it did not require the court’s intervention or mediation to recover the money, arguing that the borrowers were already in default.

The regional lender said it had not gained access to the charged property and could therefore not ascertain its value. It accused Dari, Tuju and his children of preventing receiver-managers from accessing the property.

EADB also said it had not received any offer from a firm or bank willing to take over the loan.

“It must be with ‘tongue in the cheek’ when the applicant on one hand clearly admits having taken monies from the first respondent, not having paid the respondent any monies since 2016, and now seeks, on the other hand, albeit belatedly, the court’s intervention to purportedly engage in determining the amount payable to the facility agreement,” argued EADB.

Tuju also challenged the conduct of the UK judge and EADB’s lawyer, claiming he had not been given an opportunity to fully argue his case or question witnesses presented by the lender.

He equated the judgment delivered on June 19, 2019, to re-colonising the country, alleging that Justice Toledano and EADB’s lawyer in the UK, Michael Sullivan, shared chambers, which he claimed amounted to outright bias.

EADB lawyers Githu Muigai, Sullivan and former Uganda Solicitor General Peter Kabatsi denied the allegations, arguing that Tuju had already lost his case in the UK High Court and on appeal.

They argued that Tuju ought to have sought recourse in the UK rather than reopen the dispute before Kenyan courts.

EADB lawyers also said Tuju had not made any payments or demonstrated a commitment to offset the loan.

According to Githu, the UK judgment met the constitutional threshold for enforcement in Kenya because Tuju had participated in the UK proceedings and had been allowed to appeal.

The former Attorney General further argued that Tuju was attempting to reopen the case in Kenya to deny EADB an opportunity to recover its money.

On the allegation that the EADB lawyer and judge shared chambers, Githu explained that legal practice in the UK differs from that in Kenya.

He said there are two types of lawyers in the UK—barristers and solicitors. Solicitors own law firms, while barristers are independent lawyers who may share a building but have separate chambers, clients and practices.

According to Githu, Toledano and Sullivan were both barristers and therefore had separate chambers and practices.

Prof Githu argued that there was no evidence of collusion or of any meeting between the judge and the bank’s lawyer before or during the hearing.

Judgment recognised in Kenya

On January 7, 2020, the High Court in Nairobi recognised the UK judgment, paving the way for insolvency proceedings.

In her ruling, Justice Wilfrida Okwany said the bank had satisfied the conditions for enforcement of the judgment in Kenya. She said EADB had demonstrated that it obtained summary judgment against Dari Ltd, Tuju and four others in April 2019 and that an appeal subsequently filed by Tuju’s company had been dismissed.

Tuju then moved to the Court of Appeal, where Justices Kathurima M’inoti, Imaana Laibuta and Mwaniki Gachoka dismissed his appeal, prompting him to escalate the matter to the Supreme Court.

At the apex court, the battle hit a new hurdle when Justices Philomena Mwilu, Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung’u and William Ouko ruled that they could not sit on the case because Tuju, Dari Ltd, Mano, Alma and Yma Tuju had filed petitions seeking their removal from office.

Tuju subsequently returned to the Commercial Court, seeking to reopen the case.

He argued that EADB senior manager David Washington Barnabas Ochieng Odongo had admitted that the lender disbursed only Sh240 million, allegedly less than the amount originally agreed upon.

Tuju also said Odongo had recanted key parts of his earlier statement against Dari Limited and revealed that the regional bank had not disbursed the second loan intended to complete the project, which he said would have enabled the company to repay the facility.

However, Justice Wayua Mong’are ruled that the issue had already been determined by another judge and subsequently settled by the Court of Appeal.

She said Odongo’s new evidence did not meet the threshold for reopening the matter.

Still pursuing the dispute, Tuju filed another application against EADB, Garam Auctioneers, Ultra Eureka Limited, the land registrar and the Attorney General, challenging the proposed auction of the properties.

He claimed the auction violated court orders barring EADB from selling the high-end properties to recover the contested loan.

The former Jubilee Party secretary general also filed two separate cases against the registrar.

In one of them, he sued the Chief Land Registrar of Nairobi and the Cabinet Secretary for Lands.

Tuju argued that Justice Mong’are had issued orders barring Garam, Knight Frank Valuers and the regional bank from disposing of properties known as Entim Sidai Wellness Sanctuary, Tamarind Karen and Dari Business Park.

He said the orders were extended on October 20, 2024, and subsequently on February 6, 2025.

Tuju stated that the order concerning the transfer was booked for registration on November 29, 2024, and that the title had not yet been converted to a new register at the time.

EADB accused Tuju of attempting to reopen the debt dispute despite it having already been determined.

Justice Mong’are agreed with the bank and struck out the case.

Tuju subsequently returned to the same court seeking authority to move to the Court of Appeal.

On May 21, 2026, Justice Ado granted him some respite but ordered him to deposit Sh50 million.