The CEO of Fly540 airline Donald Smith Earle and a fellow investor risk losing two prime properties in Malindi that include cottages and a restaurant after the court declined to stop auctioneers from selling them over a Sh678.7 million debt.
The ruling by Environment and Land Court judge James Olola means that William Auctioneers are at liberty to auction the assets.
The judge dismissed the case that was filed by Mr Earle and Ms Sonal Smith even after finding that the court had jurisdiction to hear and determine the dispute.
“The suit as filed is defective and misconceived. The same is struck out,” said justice Olola.
The judge said that though the plaintiffs had raised serious issues that required the attention of the court, they could not be heard because of failing to obtain the leave of the court before filing the case.
The plaintiffs filed the case in 2020, asking the court to declare that they did not owe Chase Bank Sh678.7 million.
They sued Kenya Deposit Insurance Corporation (KDIC) as receiver of the bank and William Auctioneers. They wanted the defendants permanently barred from advertising and offering for sale or selling their properties.
The investors also asked the court for an order compelling the corporation to discharge original title deeds for the two properties, arguing that they might have been fraudulently used as security without their knowledge.
“The plaintiffs pray for an order of injunction restraining the defendants from selling the suit properties either through a public auction, private treaty or in any manner whatsoever pending the hearing and determination of the suit,” they said.
The plaintiffs also asked the court to order the corporation to release $1 million (approximately Sh113.6 million) together with accrued interest, which they claimed is being held by Chase Bank.
According to KDIC, the dominant issues that fall for determination, in this case, are whether the plaintiffs fully settled the loan advanced to them by the bank on account of a contractual relationship of a lender and borrower, and if not, how much would be a just and legal amount still owing.
In response, the plaintiffs denied that they have charged the suit properties to the bank on account of a loan advanced to Messrs Five Forty Aviation Ltd (Mr Earle’s company).
They told the court that they use the two properties as their rural home and that they have developed a cottage and family restaurant thereon, which if sold as proposed by the defendants would cause them grave and irreparable loss.
They wanted the title deeds discharged arguing that they might have been fraudulently used as security without their knowledge.