Imanyara loses Karen property battle, ordered to pay Ecobank Sh91.7m

Veteran lawyer Gitobu Imanyara has suffered a major setback after the High Court upheld the auction of his Karen property and ordered him to pay Ecobank Sh91.7 million over defaulted loans.

Justice Freda Mugambi dismissed the former Imenti Central MP’s suit challenging the auction of his residential property, upholding the March 2016 sale for Sh47 million and the title subsequently acquired by businessman Opondo Isaac Ochieng

In her judgment, Justice Mugambi found that Ecobank had lawfully exercised its statutory power of sale after Imanyara defaulted on loans secured against the property 17 years ago.

“This court does hereby uphold the March 2016 auction, at which businessman Opondo Isaac Ochieng bought the property for Sh47 million. This court finds that Ecobank had not unlawfully sold the property or violated Imanyara’s rights as a borrower,” the judge ruled.

"The Plaintiff’s(Imanyara) Re-amended Plaint dated April 13, 2021 is hereby dismissed. Judgment is entered for the 1st Defendant(Ecobank) against the Plaintiff on the counterclaim for Sh 91,759,103.66, with interest at court rates from the date of this judgment until payment in full."

The dispute dates back to 2009, when Ecobank advanced Imanyara banking facilities totalling Sh33.5 million, comprising a term loan and mortgage financing intended to facilitate the construction of a residential house on his Karen property, LR No. 13460/19.

The property was charged to the bank as security for the facilities, with the charge registered on September 17, 2009.

In 2013, the parties negotiated a restructuring of the facilities, allowing Imanyara to seek a private buyer for the property and use the proceeds to settle the outstanding debt.

Under an arrangement dated June 6, 2013 find in court, he was given two months to find a buyer.

However, the deadline expired on August 6 without a completed sale.

Imanyara argued that the private-sale arrangement remained in force, but the court disagreed, describing it as “a time-limited indulgence” that had expired under its terms.

 The judge found that the arrangement did not permanently surrender Ecobank’s statutory power  to sell the charged property to recover the outstanding debt.

Ecobank subsequently issued fresh notices and obtained professional valuations before proceeding with the auction on March 23, 2016.

The bank’s forced-sale valuations placed the property’s value at approximately Sh37 million and Sh36.375 million, while Imanyara relied on a separate valuation of Sh76.5 million.

However, the court noted that the person who prepared Imanyara’s valuation had not been called to testify.

Justice Mugambi found insufficient evidence that a substantially better price could reasonably have been obtained, noting that the Sh47 million auction price exceeded the two forced-sale valuations presented by the bank.

The court also rejected Imanyara’s challenge to the bank’s accounting of the auction proceeds and outstanding loan balance.

Ecobank produced certified statements and a settlement account showing credits totalling Sh43.53 million between March 2016 and July 2017.

The remaining amounts were attributed to auctioneer fees, legal expenses and other recovery costs.

The judge accepted the bank’s accounting, finding that Imanyara had not demonstrated specific errors through an alternative reconciliation or expert evidence.

The former legislator also invoked the Banking Act’s in duplum rule, which limits the amount of interest recoverable on non-performing loans, arguing that accumulated interest and charges exceeded the statutory ceiling.

However, the court found that he had not established when the loan became non-performing, the principal outstanding at that point or how the alleged excess had been calculated.

Consequently, the court found Ecobank’s claim for Sh91,759,103.66 proved and recoverable.

The judge also upheld Ochieng’s title, finding no evidence of fraud, collusion or prior knowledge of wrongdoing on his part.

Although Ochieng initially failed to pay the balance within the stipulated 90 days, Ecobank extended the payment period and the purchase price was eventually settled in full.

The court rejected the argument that financing subsequently obtained by Ochieng from Ecobank undermined the auction.

“The financing could not have influenced the price, which was fixed by the bidding,” the judge ruled.

Justice Mugambi recognised Ochieng as a bona fide purchaser, protecting his ownership of the property.

However, the court declined to award Ecobank additional con intractual and penal interest dating back to 2017, directing that the judgment debt attract interest at court rates from October 2, 2026, until payment in full.

Imanyara was also ordered to pay the costs of his suit, Ecobank’s counterclaim and Ochieng’s litigation costs, marking a major setback in the decade-long dispute over the Karen property.