The Supreme Court of Kenya has agreed to hear an appeal by former Cabinet Secretary Raphael Tuju in a Sh4.5 billion loan dispute with the East African Development Bank (EADB). A five-judge bench, led by Deputy Chief Justice Philomena Mwilu, will review the case after initially recusing themselves in October 2024. The recusal was due to a complaint filed by Tuju at the Judicial Service Commission (JSC) against the judges.
The judges noted that Tuju has since withdrawn his complaint, allowing the court to proceed with the appeal. The court stated that its earlier decision to recuse itself was proper given the circumstances at the time. However, the change in circumstances does not invalidate the ruling. The apex court emphasized that everyone has a constitutional right to lodge a complaint with the JSC, but litigants must not make grave allegations casually.
The dispute between Tuju and EADB dates back to 2015 when Tuju's companies, Dari Ltd and SAM Company Ltd, secured a $9.3 million (Sh1.2 billion) loan for business expansion. The loan was intended to finance the construction of two-storey bungalows on a 20-acre forested land called Entim Sidai and the purchase of a 94-year-old bungalow in Karen, Nairobi. The loan was secured with several properties, including Entim Sidai, Tamarind Karen, and Dari Business Park.
When Dari Ltd defaulted on the loan, EADB demanded immediate repayment and filed a suit in the United Kingdom against Tuju, his children, and SAM Company Ltd. On June 19, 2019, the High Court of Justice in the UK entered a summary judgment against Dari Ltd and the guarantors for $15,162,320.95. EADB then moved to the Kenyan High Court, which recognized the UK judgment on January 7, 2020.
The Kenyan High Court's recognition of the UK judgment was under the Foreign Judgments (Reciprocal Enforcement) Act. Dari Ltd's application to set aside the UK judgment was dismissed, leading to an appeal to the Supreme Court. However, the Supreme Court judges initially recused themselves, halting the planned sale of other properties, including Entim Sidai Wellness Sanctuary.
Tuju had challenged the valuation conducted by Knight Frank Valuers, who were appointed by EADB. He accused the bank of failing to disburse the full loan amount, causing cash flow challenges for the borrower. EADB defended itself, stating that the balance was not disbursed because Dari Ltd breached the agreement by failing to pay $11,462,757 as of November 10, 2017.
The Supreme Court's decision to hear the appeal brings new hope to Tuju, who has been entangled in a protracted dispute with EADB. The court's ruling on the appeal will determine the fate of the properties charged as security, including Tamarind Karen and Dari Business Park, which was sold for Sh450 million in October last year.
Key points
- The Supreme Court will review the Sh4.5 billion loan dispute between Raphael Tuju and East African Development Bank (EADB).
- Tuju's companies, Dari Ltd and SAM Company Ltd, secured a $9.3 million loan in 2015, which was secured with several properties.
- The dispute has been ongoing since 2015, with EADB filing suits in the UK and Kenya to recover the loan amount.
