Woman sues Ecobank over sale of property used to get a loan

A woman is seeking a Sh34 million compensation from Ecobank for the sale of a property used to secure a loan which financed an irrigation project in Turkana County in 2015.

The Commercial Division of the High Court has been told the property was sold at a throw away price without proper valuation.

Besides, the contractor is also asking the court to compel the bank to pay Sh20 million in damages for illegal auction of the property and for selling it for far less than its market value.

Ms Mary Wanjiru Chege alongside her company, Nakuru Machinery Services Limited, through lawyer Titus Koceyo, wants the court to declare as null and void the sale of her property.

PRIVATE AUCTION

“The auction was conducted in a private event in flagrant violation of banking rules,” Mr Koceyo states.

Mr Koceyo is urging the court to cancel the sale as the amounts demanded as owing “were not actually due but arose from the charging of non-contractual interests and illegal charges and fees on the plaintiffs (Ms Chege and her company) account.”

The plaintiffs had been advanced a Sh15 million loan by Ecobank Kenya Limited to finance the construction of a dam to supply of water for Navemit Irrigation Scheme Phase I in Turkana County in 2015.

“The lender demanded exaggerated amounts not due to it and charged interest penalties and other charges not contracted and not allowed in law with the sole aim of denying Ms Chege an opportunity redeem her property,” Mr Koceyo.

Mr Koceyo says the amount overcharged on the plaintiff's account is Sh5,327,557.

REPAYMENT

The loan was to be repaid at the prevailing Kenya Bankers Reference Rate (KBRR) of 21 percent.

It had been further agreed that the loan would attract an additional 10 percent charge for amounts not paid on due date.

Ms Chege states that no bank statements were given to her before her property, which is her matrimonial home, was sold in a private auction to a person sent from the bank’s head office. Adn Advisory Valuers had valued it at Sh34m on January 30, 2018.

“An unknown purchaser bought the property at a measly price of Sh15,450,000 and paid a deposit of Sh3,862,500 two days later contrary to the Auctioneers Act and Rules which requires payments be done at the fall of the hammer,” Mr Koceyo states.

Mr Koceyo says independent inquiries at the bank showed that the purchaser had not paid the monies within the stipulated 90 days as required by law thereby rendering the whole process a sham.

AGREEMENT

Ms Chege states that the agreement with the bank was that the loan was to be discounted through payments received from the water board through her bank account.

“The plaintiffs received all payments by way of certificate and invoice discounted to the defendant (Ecobank),” Mr Koceyo argues.

Before giving the loan, Ecobank instructed Acumen Valuers to visit the property and value it on April 21, 2015 at Sh30 million and a forced value at Sh22.5 million.

On November 9, 2016, the bank issued a 45-day notice for the sale of the property by public auction and without any valuation, it placed its market at Sh20 million and a forced value of Sh15 million.

Dalali Traders Auctioneers on January 9, 2018 advertised the sale of the property in 15 days which “never took place as Ms Chege attended the premises of sale as placed in the advert [and there were] no bidders on the auction day nor was there a list of interested parties indicating bid prices.”

The bank has been ordered by the High Court to file evidence in 15 days failure to which a judgement will be entered.