Embattled businessman David Lagat can now breathe a sigh of relief after the High Court sitting in Eldoret issued a temporary injunction halting the sale of his properties, worth billions of shillings, located in Nandi and Mombasa counties.
The planned auction of Lagat’s vast tea estate in Nandi Hills Township and office blocks in Mombasa by Garam Investment stemmed from a Ksh 2 billion loan he had taken from Stanbic Bank, which he later defaulted on.
Lagat had intended to use the loan to restructure his tea estate but failed to meet the repayment terms. As a result, Stanbic Bank, through the auctioneering firm, announced the sale of the prime properties in August 2023. The bank granted the businessman, who is also a politician, the loan in April 2020 at an annual interest rate of 9.25% and expected repayment within 120 months.
According to court documents, the lender had agreed with Lagat, requiring him to make monthly repayments of Ksh 12.5 million and sell some of his assets in Tanzania to settle the loan. However, this two-phased repayment plan failed due to a lack of buyers for Lagat’s Tanzanian properties. Stanbic Bank later allowed him to sell the properties to the Tanzanian government, but the transaction has been delayed due to regulatory approvals and budgetary constraints.
In January 2023, the bank issued Lagat with a repayment notice, which was resolved six months later after he agreed to pay Ksh 37.5 million in extended agreements. Two months later, however, the lender-placed a second auction advertisement targeting his Mombasa properties.
In his petition, Lagat argued that he had not breached the standstill agreement with the bank and that any delays were due to circumstances beyond his control. He further contended that rushing to auction his properties would result in undervaluation and prevent a fair resolution of the dispute.
Through his legal team, Lagat requested an opportunity to scrutinise Stanbic Bank’s demand for Ksh 12.5 million monthly payments, claiming the figure was derived from an unlawful variation of interest rates.
On its part, Stanbic Bank insisted that Lagat had defaulted on his loan as per the terms of the facility letters and the standstill agreement. The bank also stated that it had acted in good faith by extending repayment deadlines and engaging in negotiations to restructure the loan.
In his ruling on Lagat’s application to halt the auction, Justice Reuben Nyakundi acknowledged that the pending sale of the Tanzanian assets was a key factor in granting the injunction. He noted that if the transaction is completed, it could settle the outstanding debt owed to Stanbic Bank.
“The premature sale of the charged properties could irreversibly prejudice these negotiations, creating a form of injury that transcends pure financial computation,” stated Justice Nyakundi.
He added: “While the defendants (Stanbic Bank and Garam Investment) are within their rights to recover the loan facility, their position is secured by the charged properties. Conversely, an immediate sale could cause irreversible damage to the plaintiffs’ (David Lagat and his businesses) operations and broader community interests.”
The judge urged both parties to revisit their initial agreement and devise a more practical resolution to the dispute. He further ordered a fresh valuation of the properties within 45 days.
