Kampala university loses bid to halt auction of Sh3.1bn Kajiado land

HF Group head office in Nairobi. FILE PHOTO | NMG

Mortgage lender Housing Finance is now free to auction a 68-acre parcel of land in Kajiado to recover a loan of more than Sh3.1 billion from Kampala International University (KIU).

The Supreme Court stopped the bid by the university to overturn a ruling in favour of the lender in the loan fight that followed KIU's default on the debt tapped in 2014 to develop its Kitengela campus.

A bench of five judges of the Supreme Court dismissed the second appeal by KIU, arguing the suit had nothing on constitutional interpretation to warrant the intervention of the apex court.

Now, Housing Finance will recover $13.8 million, including compounded interest of 9.5 percent per annum from January 2018, pushing the debt to $24.33 or Sh3.1 billion.

"This court has consistently held that the mere claim by a party to the effect that its rights were violated by a superior court for whatever reason, does not bring the intended appeal within the purview of Article 163 (4) (a) of the Constitution," the Supreme Court said. 

The judges added that the appeal by KIU does not fall within their limits.

Supreme Court reviews decisions of the Court of Appeal on matters that hinge on public interest or interpretation of the Constitution.

"In fact, we are satisfied that, by declining to grant leave to appeal in the circumstances of this case, the Court of Appeal was correctly guided by our decisions," Deputy Chief Justice Philomena Mwilu and Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung'u and Isaac Lenaola said.

In the dispute, KIU buoyed by the success of its existing campuses sought to expand into the Kenyan market.

It then acquired a 68-acre parcel of land in Kajiado to construct the Kitengela Campus at an estimated cost of $15 million.

It first approached Housing Finance in 2010 for the loan and the deal was inked in 2014. The land was charged to the mortgage lender as security for the loan.

The lender then accused the university of defaulting on the loan repayment and the matter was referred to an arbitrator in 2017. The parties then settled on Collins Namachanja as the sole arbitrator who ruled in favour of HF in 2019.

A subsequent appeal to the High Court was dismissed by Justice Margaret Muigai forcing KIU to head to the Court of Appeal but suffered the same fate and not satisfied, the university escalated the matter to the Supreme Court.

KIU reckoned that the mortgage lender disbursed a loan of $10 million in January 2014, but there was a delay in disbursing the balance of $5 million.

The university then sued seeking to be paid damages among other demands and HF filed a counterclaim, which was upheld by the arbitrator.

The mortgage firm maintained that the Supreme Court lacked jurisdiction to hear the case.

It added that KIU did not raise the issue of the arbitrator being biased when the parties appeared before Mr Namachanja as required by the Arbitration Act.

The lender say KIU was offered a fair hearing, but failed to comply with the trial court’s directions on numerous occasions, triggering the High Court judgement.

The university said that the appeal hinged on the application of the Constitution in regards to the arbitrator’s bias and violations of the right to fair hearing.

KIU said that the High Court ruling was delivered without giving parties an opportunity to highlight their submissions.

The university also submitted that it was denied a right to a fair hearing by the arbitrator, arguing that he breached his duty by failing to disclose his interactions or relations with HF's lawyer.

HF in response said the parties had agreed and directed the arbitrator to determine whether the lender was entitled to the claims sought in the counterclaim.

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