Businessman Ngengi Muigai on Tuesday lost a 25-year battle for a 443-acre coffee estate that KCB #ticker:KCB auctioned more than a decade ago.
Mr Muigai, who is President Uhuru Kenyatta’s cousin, lost the battle after the Court of Appeal dismissed the suit, which stands as one of the longest and most vicious cycles of litigation in Kenya.
Judges Roselyn Nambuye, Milton Makhandia and Kathurima M’Inoti found that all matters relating to the case had been conclusively litigated in different courts, noting that it was in the interest of justice that the matter is laid to rest.
KCB sold Mr Muigai’s Muiri Coffee Estate Limited in 2007 at a price of Sh70 million, after the coffee firm’s sister company, Benjo Amalgamated Limited, defaulted on a loan it took in 1989.
Benjo and Muiri estimate the land to be currently valued at Sh3 billion.
Muiri had acted as a limited guarantor to the borrower, Benjo.
“It should also be remembered that the charge over the sold property was created after KCB requested or demanded further security for the loan facility. LR No.10075 was thereafter charged upon that demand and therefore was given as a security for the loan,” the judges said, adding that “Benjo cannot thereafter argue that KCB exercised its right of sale over the wrong property.”
The dispute dates back to 1992 when Benjo moved to court seeking to stop KCB from auctioning the land over failure to pay loan arrears.
The company had in 1989 borrowed Sh18 million from KCB to start a flower farm and it charged two plots as security but upon demand by the lender, it provided a further security in the form of land owned by Muiri.
KCB chose to dispose of the security when Benjo defaulted, kicking off a series of litigation. In total 14 suits were filed over the dispute.
Benjo and Muiri would in some instances file joint suits and in others separate ones all aimed at stopping the auctioning of the property – a battle that went on until 2007 when KCB succeeded in auctioning the land.
The two companies returned to High Court shortly after the auction claiming the land was fraudulently sold and sought to stop Bidii Kenya Limited, the buyer, from taking possession of the land.
They further asked for a counter claim of Sh2 billion, claiming that the loan account was fraudulently operated.
When KCB filed its response to the claim, the petitioners asked the court to throw out the defence claiming it had been filed out of time.
KCB for its part asked the court to dismiss the petition on grounds that the issues raised had already been determined in other suits.
The High Court declined both requests and instead directed the case proceed to full hearing.
KCB, Benjo and Muiri appealed the decision separately, opening a window for KCB to defend its claim.
Bidii, the buyer of the contested property, also appealed the decision. The Court of Appeal consolidated all the appeals and heard them together.
At the appellate court, Benjo and Muiri claimed the bank had flouted the loan terms leading to the collapse of the project.
Benjo argued that KCB had sold the Sh3 billion coffee estate to Bidii for only Sh70 million, insisting the sale was in bad faith.
KCB said it was given the power to exercise its statutory duty over the property through a consent that was entered between the parties in 1992 and which Benjo and Muiri had vigorously contested.
But in their ruling, the judges dismissed the claim on the validity of the consent, noting it had been affirmed in all previous suits.
The court allowed appeal by Bidii and KCB but dismissed cross appeal by Benjo, instead advising the two firms to accept the fact that they had lost the case.
“It’s time the respondents accepted the inevitable despite the consequences such a possibility portends to it and stops further litigation on this long-running dispute which has all been about KCB’s exercise of its statutory power of sale and accounts,” the judges said.
The judges further directed Benjo to take care of the costs incurred by KCB and Bidii at the Court of Appeal, in a suit where the lender was represented by Philip Nyachoti and Bidii by Isaa Mansour.