- Mr Bii had asked the High Court to declare the auction and transfer of the properties in Runda and Highview Phase II Nairobi by his former employer null and void.
- He also sought for the refund of lost rental income for the Highview Phase II property at Sh40,000 per month with effect from February 9, 2007 when the auction happened.
Former KCB Group #ticker:KCB chief executive Elijah Kipng’eno Arap Bii has lost his bid to overturn the auction of his two properties in Nairobi by the bank over a debt of Sh90 million.
Mr Bii had asked the High Court to declare the auction and transfer of the properties in Runda and Highview Phase II Nairobi by his former employer null and void.
He also sought for the refund of lost rental income for the Highview Phase II property at Sh40,000 per month with effect from February 9, 2007 when the auction happened.
But Justice Maureen Odero dismissed the request upon finding that Mr Bii was indebted to KCB and that the bank properly served him with the required notices ahead of auction. She also found that the bank was entitled to vary the rates of interest applied to loans advanced to Mr Bii once he ceased to be a bank employee.
Further the judge established that Mr Bii failed to prove fraud in the manner the two properties were auctioned.
“Both the Runda and Highview properties were sold above the recommended reserve prices quoted by Centenary Valuers. Therefore the titles currently being held by George Mburu and Jayala Investments Company Ltd are not impeachable as both were in my finding innocent purchasers for value as Mr Bii’s right of redemption was extinguished upon the sale by auction of the two properties,” said Justice Odero.
Mr Bii was removed as the bank’s general manager in 1998. By then the bank was largely owned by the government.
As general manager he had access to subsidised credit facilities from the bank at the interest rate of three per cent per annum. Following his exit, the bank varied the terms of interest to market rates.
The bank’s recoveries manager, Francis Komen, told the court that the lender claimed Sh91.3 million from Mr Bii.
Mr Bii testified that the bank sold his two properties at a ‘stage-managed auction’ and denied having received the 90-day statutory notice as required under Section 92 of the Land Act, 2012.
The Highview property was sold for Sh3.2 million and the Runda Property auctioned at Sh3.1 million. In challenging the prices at which the two properties were sold, Mr Bii referred to his own valuation through Liberty Homes Limited.
Liberty Homes quoted the market value of the Runda property at Sh6 million and forced sale worth of Shs4.2 million.
The bank via Centenary Valuers gave Mr Bii’s Runda property open market value of Sh3.5 million, mortgage value Sh3.1 million and forced sale value of Sh2.8 million. The valuer recommenced reserve price of Sh2.4 million.
It valued Highview property at Sh3.6 million on open market, Sh3.2 million for mortgage, Sh2.9 million forced sale and recommended reserve price of Sh2.5 million.
Justice Odero dismissed Mr Bii’s claim that the properties were undervalued, saying the Sh950,000 and Sh1.4 million difference arrived at by the two valuers in the forced sale values for the Highview property and Sh1.4 million for the Runda Property was not so extreme as to raise any suspicion.
“Furthermore the mere fact that two valuers have arrived at different valuations for the two properties does not amount to proof that the sale by auction was fraudulent,” said the judge.