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Court blocks auction of Tuju’s restaurants over disputed true value

Court blocks auction of Tuju’s restaurants over disputed true value

Former Cabinet Secretary Raphael Tuju has obtained court orders stopping the forced sale of his two high-end properties in Karen over a Sh4.5 billion debt to a regional lender, arising from a botched loan deal.

High Court judge Josephine Mong’are put on hold the sale of Mr Tuju’s Entim Sidai Wellness Sanctuary and Tamarind Karen and Dari Business Park, which was scheduled for October 29, pending the determination of a case in which he contested the true market value of the properties.

Market value refers to how much a property could be sold for based on current market trends and recent sales in the area.

In the application, Mr Tuju has accused Knight Frank Valuers Ltd, which was appointed by the East African Development Bank (EADB) to value the two multibillion-shilling properties, of carrying out what he called desktop valuations and internet enquiries on the properties.

He claimed that the report did not reflect the true picture and value of the properties and could not be used to conduct the forced sale.

The valuation reports allegedly conducted in July this year, put the market value of Tamarind Karen and Dari Business Park at Sh590 million with a forced sale value of Sh442.5 million.

The report also valued Entim Sidai at Sh1.395 billion with Sh1.046 billion as forced sale value.

“In the interim, orders in terms of prayer 2 are granted,” Justice Mong’are said. The case will be mentioned on November 20 for directions.

The lender had sought to sell the two properties to recover a debt of $35,057,622 (about Sh4.5 billion).

Garam Investments Auctioneers had said it successfully sold Dari Business Park for Sh450 million in an auction purportedly held on October 1.

In the latest application, Mr Tuju said the valuer failed to conduct proper and accurate valuations, rendering the planned sale unfair and unprocedural. 

He said the reports are based on previous valuations that were never served on him, denying him the opportunity to question or contest them. 

The former CS said that the report is characterised by desktop valuations based on verbal and web enquiries, making it evident that the assessments did not bear any credible relationship to the actual condition and value of the properties on the ground.

He said the valuation prepared by Knight Frank is inaccurate, illegal and fails to satisfy Sections 97(1) and (2) of the Land Act, contravening articles 40 and 46 of the Constitution and offending article 10(1) (b) of the Constitution and for violating his consumer protection rights.

“Without the intervention of this honourable court as sought by the plaintiff/applicants in this application, the plaintiff/applicants face the impending danger of illegally being deprived of their properties contrary to Article 40 of the Constitution,” he said. 

Mr Tuju said the valuation for Tree Lane property (Entim Sidai) contains factual propositions that are outrightly false and inaccurate, therefore misleading.

He pointed out that the valuation report had allegedly valued a swimming pool, yet there is no pool on the premises.

The report further states that there is a Villa No.2 which it is said to be 35 percent complete, yet said the villa was completed and leased at a rent of Sh500,000 per month.

“The valuation reports with respect to both the Tree Lane and Ngong Road (Dari Park) properties are characterised by the 1st respondent (Knight Frank) as desktop valuation reports, which vitiates the attribution of any presumption of accuracy to the said reports,” he said.

The former CS further said that he was not contacted to inquire whether the villas that were under construction had been completed. 

He further said there is no evidence to show that the valuer visited Entim Sidai or Tamarind website to obtain the hotel room rates, hosting rates or any other information relating to income.

Mr Tuju said the valuations are unfit to be used for conducting a forced sale because they are unreasonable. 

“In addition, the valuations fail to satisfy and violate section 97(1) of the Land Act in that due to the aforementioned false information and patent inaccuracy, they cannot possibly lead to the best reasonably obtainable being secured for the properties in the event of a forced sale is in the circumstances illegal,” Mr Tuju said. 

He also said the report does not identify the carport and the restaurant terrace as sheltered areas. 

“The property owners, whose interest and proprietary rights were the subject of valuation and therefore stood to be adversely affected by the authenticity of the valuation report generated by the property valuer,” he said.

Mr Tuju accused the regional lender of breaching a 2015 loan deal. In the deal, the former minister was to develop high-end residential units for sale that was to be financed by the regional bank at $9.3 million and another Sh294 million.

Mr Tuju maintained that the lender has no legitimate basis for claiming any funds under the loan agreement on grounds that no redress can arise in law out of an illegal or void contract which it in any event breached and frustrated. 

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