Credit Bank is free to sell Edermann Property’s land in Mavoko Municipality after the developer defaulted on a loan of more than Sh817 million.
Part of the land hosts a sewage plant run by Mavoko Water & Sewerage Company (MWSC) which has lost a case that sought to stop Credit Bank from disposing of the property.
In an application at Nairobi’s Court of Appeal, MWSC argued that it needed to be in control of the parcel of land hosting the sewage plant and had already entered into a sale agreement with Edermann.
The court however said that the entire land had been offered as security to Credit Bank which has a right to seize it after the borrower defaulted.
“The applicant has not disputed the outstanding amount which keeps accruing interest and the default by the 1st respondent. To that extent, we would agree with the 2nd respondent’s submissions that the applicant is but a surrogate of the 1st respondent (Edermann),” Justices Daniel Musinga, Asike-Makhandia and Mumbi Ngugi said.
“Given all the foregoing and the history of the dispute already set out elsewhere in this ruling, we are not satisfied that the intended appeal is arguable.”
The ruling was issued on July 26, 2024.
Edermann owed Credit Bank Sh817.8 million as of August 16, 2023 and the amount continues to accrue interest and penalties. Edermann is one of the largest developers of low-cost houses, with most of its projects located in Machakos County.
The developer has taken multiple bank loans to fund its projects.
MWSC told court that the sewage plant risks being handed over to a private individual should the land be auctioned as a whole.
The agency operates and manages the plant for and on behalf of approximately 30,000 residents of Mavoko on a plot measuring 0.177 hectares (0.43 acres).
The court however ruled that the agency was using the case to force Credit Bank to cede the portion hosting the sewage plant.
“The applicant has yet to legally acquire the portion it claims, and even if it had, a clause in the purported agreement suggests that the applicant can only take over the management of the sewerage plant perhaps after 10 years which period has not yet elapsed,” the court said.
“The suit property was charged to the 2nd respondent as a whole, and no part thereof belongs to the applicant.”
EDITOR’S NOTE: This article has been updated to state that it is Credit Bank involved in the matter.
