Dari Restaurant, a posh facility in a natural environment complete with animals and plants in Karen, Nairobi, is one of the properties former Cabinet Secretary Raphael Tuju is set to lose through auction over $9.3 million borrowed in 2015 and which has snowballed to Sh2.2 billion.
In the imminent forced sale, the former Rarieda MP is also set to lose a pristine 20-acre property on Tree Lane, Karen. The property offers a panoramic view of the peaks of Ngong Hills.
The indigenous plants and fauna in the ecosystem of the two properties make the hospitality business boom in the neighbourhood. Mr Tuju, a career journalist, TV producer and real estate investor, was known in the neighbourhood for maintaining Dari as an ecopark-themed restaurant and conference centre.
Tall old trees, shrubs and different flowers, coupled with the architectural design that incorporates water features, gazebos and mazera pathways, are some of the features that make the restaurant stand out. At the centre of the ambience garden is a water body fenced off and surrounded with layers of flower varieties. The green garden is ideal for picnics and private ceremonies such as birthday parties. It also has an entertainment section for children.
The restaurant, sitting on seven acres, was established in 2013. It is cool and calm, given the wooded natural environment, with animals such as peacocks and wild birds wandering around.
East African Development
The other property, a 20-acre farm, has a boutique business and accommodation units. The hotel and the farm are set to undergo the hammer over $9.3 million borrowed by Mr Tuju’s company, Dari Ltd, from East African Development Bank on July 31, 2015. The company was later put under receivership after defaulting on the loan. At the time he borrowed the money, one US dollar was exchanging for Sh102. But the shilling continued to lose its strength to the dollar, so Mr Tuju’s loan became a heavy burden. The loan has since snowballed to over $16.5 million (Sh2.22 billion) and courts have cleared the way for the lender to sell Mr Tuju’s assets to recover the debt.
The purpose of the loan was to upgrade Dari Restaurant to have a five-star facility. Dari was to be transformed to look like the Victorian-themed Windsor, the golf resort owned by the family of former Cabinet minister John Michuki, or Hemingways – the five-star luxury boutique hotel on Mbagathi Ridge, Nairobi, owned by Mr Richard Evans and overlooking Ngong Hills. Or, as they said in the application papers, like Sultan Sands Resort Island in Zanzibar. Another purpose was to commence a real estate project through development of housing units and luxury homes for sale. The money was disbursed to Dari Ltd.
Agreement
According to court papers, the parties entered into a written facility agreement dated April 4, 2015, between the bank and Dari Ltd, Mr Tuju, Mano Tuju, Alma Tuju, Yma Tuju and S.A.M Company Ltd. The loan was also to fund the acquisition and development of commercial units for sale in Nairobi.
Mano, Alma, Yma and S.A.M Company were the loan guarantors and co-directors of Dari. They entered with the lender into a guarantee and indemnity for repayment of the loan by Dari. They were also to buy the close to a century-old Victorian bungalow in Karen and set up a gated community project described as “Karen Retirement Home” comprising 30 three-bedroom retirement homes and a destination spa. It was thought that the sale of these houses and the income from the accommodation, spa and restaurant would be enough to repay the loan. To get the loan, Mr Tuju offered Dari’s seven acres and his residential home on Mwitu Road, also in Karen, as securities. EADB also held as collateral the project’s 20 acres title.
The properties targeted for auction are the 20-acre parcel worth over Sh1.3 billion and the high-end outdoor garden restaurant, Dari. The hotel situated on Ngong Road is near the indigenous Karen forest.
In April 2020 during litigation of a dispute concerning the forced sale of the properties, court was informed that the value of the hotel was Sh3.5 billion.
Bank-appointed valuers, Knight Frank, visited the properties for valuation ahead of a planned forced sale to recover the outstanding loan. Two receiver managers, Muniu Thoithi and George Weru, were appointed by the lender to manage Dari Ltd, but they were also unable to access it, according to documents filed in court.
They said in court documents that when they went to the premises, they were blocked by police officers manning the gate.
The receivers said the armed police officers ordered them out because they were creating a security threat. Mr Tuju had opposed the takeover and filed an appeal, after High Court judge Grace Nzioka allowed the lender to manage the company.
Dari restaurant
During the hearing, Mr Tuju told court the two properties (LR No. 1055/165 and LR No. 11320/3) had been undervalued and claimed that the bank was acting in bad faith. Dari restaurant was valued at more than Sh3.5 billion and he feared losing it, yet the company was not given a fair hearing. The property was last valued in 2015 and estimated at Sh1.84 billion.
Dari argued that the deal was two-pronged, funding the acquisition of a property in Karen known as Tree Lane for development and construction of residential units and the balance of Sh294 million was to fund, in part, the renovation of hospitality facilities on the property.
Mr Tuju said the bank then disbursed $9,197,084, and not the entire facility of $9,300,000, a sum that was paid directly to the seller of the property. He said the bank later declined to finance the construction of residential units on the grounds that they needed additional security.
The bank wanted another property in Upper Hill that had already been charged to the Bank of Africa, he said. “The bank’s refusal to disburse the balance was a most flagrant violation of contract and evidence of impunity informed by nothing but malice, in our reading.”
After failing to disburse the entire amount, plus the Sh294 million, Dari experienced financial difficulties and was unable to service the loan as agreed. But UK court judge Daniel Toledano said the bank was under no obligation to lend the Sh294 million. The dispute was subjected to the English court as per the facility agreement. The bank filed a claim on November 5, 2018, in the High Court of Justice Business and Property Courts of England and Wales, Queens Bench Division Commercial Court Royal Courts of Justice.
Contending that the Tujus and Dari had failed to repay the disbursed loan as per the Facility Agreement, the bank filed a claim against them on November 5, 2018 in the High Court of Justice Business and Property Courts of England and Wales, Queens Bench Division Commercial Court Royal Courts of Justice.
Dari and the Tujus duly entered appearance and filed a defence to the claim and a counter-claim.
“No facility agreement was concluded and no other contractual obligation to lend this amount was agreed according to the material before the court. It is true that a further facility was proposed and discussed, but it never reached the stage of being agreed and implemented,” the English Judge ruled in the judgement dated June 19, 2019.
Bank interest
Orders in the United Kingdom judgment were that the Tujus and Dari Ltd jointly pay the bank the sum of USD 15,162,320 under the Facility Agreement dated April 10, 2015 and the Guarantee and Indemnity of the same date.
In addition, that they jointly and severally pay the bank interest from June 20, 2019 until payment as provided under the Facility Agreement.
Further that they pay the bank’s costs of the proceedings and that they make an interim payment of GBP 100,000 on account of the bank’s costs within 28 days.
On July 10, 2019, Dari and the Tujus unsuccessfully applied in the English Court of Appeal, Civil Division, for leave to appeal and stay of execution.
The theatre then shifted to Nairobi, when the bank on January 3, 2020 filed an application at the High Court for recognition, registration and enforcement in Kenya of the judgment of the English court.
By a ruling dated January 7, 2020 High Court judge Winfrida Okwany allowed the application, thus paving the way for execution of the judgment of the English court in Kenya.
The very next day, the Tujus and Dari applied for stay of execution and setting aside of the ruling. The application for stay was granted with the condition of depositing Sh50 million as security pending the appeal.
Last week the Court of Appeal dismissed the appeal, paving way for the enforcement of English Court judgment.
