High Court bars Credit Bank from auctioning Pinnacle Towers land over Sh1.2 billion loan dispute

A Nairobi commercial court has issued injunction orders barring Credit Bank Limited and Garam Auctioneers from advertising, auctioning and offering for sale the land  meant to host Kenya’s tallest building, The Pinnacle Towers owned by One Upperhill Towers Limited over a Ksh 1.2 billion loan dispute.

High Court Judge Peter Mulwa issued the restraining orders on January 31, 2025 after One Upperhill Towers Limited sued Credit Bank Limited fir erroneously instructing Garam Auctioneers to advertise and sell their land without issuance of the requisite statutory notices.

Credit Bank Limited and Purple Royal Auctioneers are listed as first and second defendant respectively.

On the other hand, Jabavu Village Limited and Hasscon Pharmaceuticals Limited are listed in the suit as first and second interested parties respectively.

The disputed land of the project is registered as title No. Nairobi/Block 31/219.

“An order of temporary injunction is hereby issued restraining the respondents (Credit Bank Limited and Purple Royal Auctioneers) whether by themselves, their agents, servants, or any person claiming through or under them from entering, selling, taking over, advertising and offering for sale or in any manner whatsoever interfering with the parcel of land known as Title No. Nairobi/Block 31/219,” Justice Alfred Mabeya ruled.

In its application, One Upper Hill Towers Limited told the court that the actions of Credit Bank Limited are mala fides as the bank is overly eager to sell the land, which it has grossly undervalued, without first giving the company an opportunity to redeem the property.

Upon reaching out to the directors of One Upperhill Towers Limited, they confirmed that the company took a loan facility with Credit Bank Limited and that the Company has been diligently servicing the loan.

The attempted auction by Credit Bank Limited and Garam Auctioneers came as a shock to them and this necessitated the filing of a suit against the bank and the auctioneers. The Directors further confirmed that the project is still on and construction is ongoing.

“We wish to assure the general public that there is no cause for concern. We remain fully committed to safeguarding the interests of the Company and ensuring our operations remain uninterrupted” said the Director.

One Upperhill Towers Limited is in the process of constructing Kenya’s tallest building in Upperhill, Nairobi.

In light of the orders issued by Judge Peter Mulwa, this goal seems achievable.

This comes barely a fortnight ago after another court allowed Credit Bank to auction the prime piece of land.

Justice Mabeya, in his ruling, however, said Jabavu had admitted it was not a party to the loan issued to the lender.

According to the judge, the firm was a third party, and could not speak for the owner who took the loan.

“To the extent that the plaintiff is not the registered proprietor of the charged property, I do not think it has any locus to challenge the defendant’s attempted exercise of statutory power of sale. The injunction order was made in error and cannot stand. The proper party to challenge the defendant’s statutory power of sale is not in court,” said Justice Mabeya.

The court had initially stopped the auction in 2023.

However, the judge lifted the orders after finding out that the owner of the land was Upper Hill Towers Ltd, the firm that took the loan.

He noted that One Upperhill Towers ought to have come to court to explain why the auction ought to have been stopped if it had not honoured its part of the bargain.

At the same time, he said there was no proposal on how the loan would be serviced.

“Notably, statutory power of sale is a legal process and the practice of courts is that it should not be interfered with to assist a defaulter. The financial ramifications on the chargee outweigh the chargor’s interest especially where it is proved that the borrower and or the chargor has defaulted and does not have any proposal or is not able to deposit the amount in court,” said Justice Mabeya.

In the case, Credit Bank argued that Jabavu admitted it was not the registered owner of the prime property. Nevertheless, Jabavu denied misleading the judge.

On the other hand, Credit Bank asked the court to set aside its initial orders as Jabavu was not truthful about the ownership of the prime land. The bank said Jabavu was the principal borrower of $5.2 million (Sh670 million), which was meant to refinance an existing credit facility secured using the land.It asserted that it had the right to auction the property because it had issued the notices required by the Lands Act. According to the lender, it first issued a 90-day notice, followed by another 40 days. The third was 45 days as required by the auctioneer’s rules.

The court heard that Jabavu had misled the court by indicating that the land was registered in its name and that it was Hassan Pharmaceuticals Ltd. In reply, Jabavu said it had served the court documents on the bank and disclosed the property owner’s identity. It stated that Credit Bank applied to strike out the case too late, as it was done one year after filing it.

Jabavu said its rights would be violated if it was not allowed to fight to stop the auction. Credit Bank demanded around US$9.5 million (about Sh1.23 billion) from the company.

The Pinnacle Towers was being developed as a joint venture between landowner Jabavu Village Limited and White Lotus, an Indian-based firm.

Construction of Africa’s tallest building had been set for 2018 and completed in December 2019.

Had things gone according to plan, Kenya would be hosting the tallest building in Africa at 320 metre-high ending the reign of Johannesburg’s 223-metre Carlton Centre, which is currently Africa’s tallest building.

But court battles ensued challenging construction of the project.

Owners of a disputed piece of land adjacent to The Pinnacle site had gone to court as far back as 2016 and accused The Pinnacle management of trespassing through debris and construction equipment.

The case was filed by Ugandan tycoon James Mugoya through his Kingorani Investments and a trust formed by former United Arab Emirates leader Sheikh Zayeed Nayan.

The case was settled and it appeared that the developers had abandoned the project when National Construction Authority (NCA) issued an ultimatum to the developer to restore the site which was posing danger to the neighbouring buildings.

“The authority hereby orders the developer, Jabavu Village Limited, of the construction site on Plot LR No 31/219 in Upper Hill, Nairobi County, to immediately undertake remedial actions to restore the site and that of the neighbouring properties within 14 days of the date of this notice,” said NCA through Executive Director Maurice Akech.

Now, the developers have moved to secure the site through strengthening its perimetre fence so as to prevent unauthorised personnel to the grounds.

They say that they were unable to get international financing due to challenges beyond their control.

“The demolitions of properties in parts of Nairobi from 2018 greatly impacted on international financing, leading to lowering of confidence in the Kenyan building and construction sector,” the developers added.

Plans are now underway to secure financing and redesign the project, according to the developers.