Court allows auction of Tuju's prime property in Sh1.9b loan dispute

 

Justice Moses Ado said that Tuju had failed to honour court orders requiring him to deposit Sh50 million security within 30 days. [File, Standard]

The Commercial Court in Nairobi has handed former Cabinet Secretary Raphael Tuju a major setback after lifting its orders which shielded East Africa Development Bank (EADB) from auctioning his remaining hotel, Entim Sidai Wellness Sanctuary, in the Sh1.9 billion loan dispute.

Justice Moses Ado said that Tuju had failed to honour court orders requiring him to deposit Sh50 million security within 30 days.

 Tuju was expected to respond to a proposal of a joint account by June 22.

“The applicants cannot unilaterally choose to apply those funds, deposited pursuant to a separate appellate proceeding, to satisfy a new condition in an Order issued by this Court in

2026. Furthermore, the ruling of 21st May 2026 required opening an interest-bearing joint account in the names of Counsel for the parties in this suit.”

“It is not controverted that they failed to respond to the second defendant's proposal of June 5, 2026 regarding banks for the joint account and took no steps to deposit the funds. Accordingly, since the applicant failed to deposit the Sh50 million in the manner ordered, I hold and find the order issued lapsed automatically on June 22, 2026,” ruled Justice Ado.

He also ordered that Tuju should bear the cost of the application.

Initially, the judge was of the view that there was a risk of selling Entim Sidai before the appeal was heard. Justice Ado was of the view that, however, there was also a need to safeguard the bank’s interests in recovering its debt.

He said that Tuju should challenge the forced sale within 60 days; failure to do so, he will lose the court’s protection.

He further found that the bank could sell off the property if Tuju fails to succeed at the Court of Appeal since the property is still charged.

Initially, the Judge had directed that the title should not be transferred until an application he filed before the court is heard and settled.

However, he had declined to issue other prayers sought in the application, including suspension of Justice Wayua Mong’are’s ruling, saying that the orders sought were far-reaching in nature and could not be issued without giving the other parties a chance to be heard.

“I give an order restraining any transfer or assignment of the title subject to these proceedings pending the hearing and determination of this application,” ruled Justice Ado.

However, the orders could have come too late in the day as Ultra Eureka Limited, the firm that purchased the Karen property, had earlier told the court that the property had already been transferred in February last year and it had subsequently used the same to secure a Sh284 million loan from the Kenya Commercial Bank.

Justice Moses Ado said that Tuju had failed to honour court orders requiring him to deposit Sh50 million security within 30 days. [Courtesy]

“The 10th defendant paid the purchase price in full, and the 2nd defendant issued it with the completion documents, including the Transfer, to enable the Chief Land Registrar to effect the transfer of the subject property in favour of the 10th defendant. The subject property was subsequently transferred in favour of the 10th defendant, who has since changed it to Kenya Commercial Bank Ltd. The 10th defendant is now the registered and lawful owner of the subject property, having bought the same from the second defendant in the aforementioned public auction on October 1, 2024,” the firm said in its reply to Tuju’s case.

In her ruling, Justice Mong’are said that the case against East Africa Development Bank (EADB), real estate company Knight Frank Valuers Limited and Garam Investment Auctioneers was inviting the court to re-determine issues that had already been previously resolved by different courts.

She upheld the bank’s position that the fresh case could not be heard as it amounted to re-opening the battle found in the United Kingdom and Kenya.

“I find that the Bank’s position and objection is well- founded that this application is a blatant abuse of court process, meant to frustrate its lawful recovery efforts after years of default and litigation. There is no way that the plaintiff’s amended plaint dated 25th April 2025 survives, and the same is accordingly struck out,” ruled Justice Mong’are.

In the case, Tuju accused the lender, the auctioneer and the valuer of violating court orders. He told the court that the bank had already sought transfer of the titles of Entim Sidai Wellness Sanctuary, and  Tamarind Karen and Dari Business Park to Ultra Eureka Limited.

 He claimed that the auction violated court orders barring EADB from selling the high-end property in a bid to recover a contested Sh1.9 billion.

The former Jubilee Party Secretary General filed two separate cases against the registrar. In the first, he sued the Chief Land Registrar of Nairobi and the Ministry of Lands Cabinet Secretary.

“It will manifest an unfair administrative action if the respondent proceeds and executes a transfer in favour of a third party while having been served with a valid court order,” his court papers filed before the Commercial Court in Nairobi read in part.

According to Tuju, Justice Wayua Mong’are had issued orders barring Garam, Knight Frank Valuers and the regional bank from disposing of the property dubbed Entim Sidai Wellness Sanctuary and Tamarind Karen and Dari Business Park.

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

On the other hand, EABD and Garam asked the court to strike out the case.  They argued that the court had no power to entertain the case. In the alternative, they asked the court to find that it was vexatious and an abuse of court process.

The case is a culmination of a series of titanic battles as Tuju sought to salvage his properties, while EADB asked the court to hand it a pound of flesh, close to Tuju’s business’s heart. It all started in the United Kingdom, where he lost in two instances: the trial and the appeal. The bank then asked the court in Kenya to adopt and recognise the United Kingdom judgment in favour of EADB for enforcement.