Athlete, former MP fight NCBA Sh526m auction

A former athlete, his wife and a former assistant minister Stephen Tarus are fighting NCBA Bank over a planned Sh520 million auction in a dispute that tests the matrimonial law and loan guarantee rules.

The bank wants to auction Mr Tarus’ home in Karen, Nairobi, and a building in Eldoret town belonging to Sammy Kipketer after an investor who the two had guaranteed defaulted on the loan which has since ballooned to more than half a billion shillings.

And now, Mr Kipketer’s wife — Beatrice Jeruto — has joined the court fight claiming that the two-storey office block which was used as security for the loan without her consent is a matrimonial asset.

She has also disowned a signature and a national ID card attached to the loan agreement documents which purportedly linked her to the sale deal.

The court fight will test the extent to which the matrimonial rules — which bar sale of assets without the consent of married people — can be used to block a property auction.

Mr Tarus and Mr Kipketer are also challenging the bank for pursuing their properties as guarantors and not the principal borrower, Prayosha Ventures, which is owned by Tejaskumar Ratilal Patel.

Mr Patel who tapped the loan from NIC (now NCBA) in 2015, allegedly fled the country, shifting the debt burden to Mr Tarus and Mr Kipketer.

"The case was determined summarily yet doubt had been cast on spousal consent and the authenticity of the affidavit signature," she said in an affidavit.

Section 93 of the Registered Land Act states that "Subject to any law to the contrary, if a spouse obtains interest in land during the subsistence of a marriage for the co-ownership and use of both spouses or all spouses, such property shall be deemed to be matrimonial property and shall be dealt with under the Matrimonial Act."

It is Ms Kipketer’s argument that as a wife, she has an equitable interest in the property and control of the matrimonial home gives her an overriding interest to that of the bank.

She said she contributed towards buying the land and in the construction of the building on Utalii Street and oversaw its development while her husband was away at an athletics training camp.

Prayosha Ventures had a Sh606 million credit facility with NCBA Bank, and defaulted on repaying the loans in 2017, pushing the cumulative arrears to Sh526 million today.

Mr Kipketer gave out the title deed for the Eldoret building to the bank for an Sh80 million guarantee on behalf of Prayosha Ventures.

Mr Tarus charged his matrimonial property in Karen for Sh70 million and Garam Auctioneers has issued notices for the sale of the prime property.

The Law of Contract Act has no restriction and offers lenders liberty to pursue a guarantor without having to pursue a defaulting principal borrower.

Both families are separately fighting to save their matrimonial properties.

Ms Kipketer tried last year to stop the bank from auctioning the property but Justice Hellen Omondi dismissed her application stating that there was no proof that she was married to the athlete.

Justice Omondi has temporarily stopped the auction following Ms Kipketer latest application.

The bank has opposed the case, saying the latest application is a ploy to further delay the dispute.

"It is our submission that the instant application can only be construed as a deliberate action to further delay the progression of the case to a full hearing and ultimate hearing and determination of the matter," the bank said in reply.

Mr Tarus’ wife, Jane Rotich, has also challenged the charge, stating that she bought the property jointly with her husband and that at no time did she give the former diplomat consent to charge the house for the loan.

Mr Kipketer is a former long-distance runner, who specialised in cross-country and 5,000 metres, while Mr Tarus is a former Internal Security assistant minister and Kenya’s former High Commissioner to Australia, where he served between 2009 and 2012. He also served as the MP for Emgwen Constituency between 2003 and 2007.

Ms Kipketer went back to court after Joyland Auctioneers advertised the building for the second time in April.

She managed to convince the court to stop the planned sale and the hearing is slated for September 16.

She maintained that she never consented to the charging of the property and that she and their children will suffer if the building in the North Rift town is sold as the family solely depends on the rental income from the property.

Mr Kipketer supported her saying he did not know a spousal consent was required and though he had bought the land jointly with his wife, it was registered in his name. He also supported claims that the signature on the charge document was not his wife’s.

The bank said after failing to service the loan, it issued a statutory notice for payments within three months. The lender engaged the services of the auctioneer after the lapse of 45 days’ notice as required by law.

She also alleged that the sale is also an affront to the rule of law and directions given by Chief Justice David Maraga in March, suspending execution during the Covid-19 pandemic.

Her lawyer Ham Lagat said her contention is that her signature was forged and the matter of fraud should not be wished away. "Justice would have been properly served if the court would have allowed the application and heard the main suit on merit," he said.

The lawyer said with claims of forgery, the bank should have established whether due diligence was conducted prior to the charge being executed at the three levels, including the historical search, the sanctity of the title, if any, and the availability of a proper consent by the spouse before charging the property.

"The only way to determine whether the signatures were correct would be through the hearing of the evidence of the witnesses and the advocate who allegedly handled the transaction," he said.

Justice Omondi dismissed the case last year, saying the two men voluntarily offered to secure their properties as collateral for the advance of the money. "They became aware of the risk they were subjecting themselves to," the judge said.