The Court of Appeal has suspended the auction of the Nairobi Upperhill Hotel after the reclusive billionaire owner challenged the planned sale to recover a Ksh281 million loan.
The order extends the long-running court battle in which the tycoon challenged the process, asking the court to grant him time to get a buyer for the prime property.
He has argued in court that the bank has undervalued the property and frustrated his early attempts to get a buyer by advertising the auction on local dailies.
"The ruling in this application shall be delivered on 26th January 2024. Until then, there shall be stay of execution of the ruling and order of the High Court," a three-judge bench ruled.
The High Court had initially granted the orders to the lender to auction the property, but the Court of Appeal has paused the matter.
"I agree with the counsel for the bank that the UpperHill hotel does not have any standing to agitate this suit in respect of a property in which it lacks a proprietary interest," Justice David Majanja ruled.
The tycoon had filed an application, seeking to restrain the bank from carrying out the sale. He also sought more time to pay the loan as he was pursuing a buyer who had committed.
In the application, the owner stated he was committed to paying the loan but had faced numerous challenges that delayed the process among them a tough economy and an accident that left him disabled.
He pointed out that his business was affected for a period when the entrance to the hotel was blocked when the government was constructing and upgrading roads in the Upper Hill area in Nairobi.
The tycoon added that he was also involved in a road traffic accident in 2022 which required him to travel outside the country for medical treatment.
Despite the challenges, the owner noted that he had secured a buyer for the prime property but later found out that the bank had advertised the property on an online platform before the transaction could be completed, repulsing the purchaser.
"He contends that the Bank has acted in an unconscionable manner as it had led him to believe that it would not advertise the property for sale while the negotiations were ongoing. The plaintiff (owner) also complains that he is apprehensive that the Bank will sell the suit property at an undervalue as the value advertised is based on the valuation conducted in 2017 contrary to section 97(D of the Land Act,2012," court documents show.
The protracted battle began in 2015 when the owner filed an application seeking the court to grant orders suspending the auction.
The tycoon sought more time to pay the loan, blaming the poor structuring of the financing systems for the delay.
He also argued that his attempts to have the loan acquired by another bank were stalled after the bank placed him on the Credit Reference Bureau (CBK) list.
