In a recent legal development, Equity Bank has secured the right to auction the Wida Highway Motel, a Kiambu-based establishment, after the High Court rejected a plea to stop the imminent sale.
This decision came in the wake of the motel’s owners’ inability to demonstrate any meaningful effort to repay a substantial loan, totalling Ksh89 million, which they had acquired from the bank back in 2015.
The High Court, presided over by Justice Nixon Sifuna, ruled against the motel’s application, asserting that despite approaching the court approximately five months ago, the owners had failed to furnish any proof of loan repayment efforts.
The critical absence of supporting evidence raised questions regarding the motel’s commitment to meeting its financial obligations.
Justice Sifuna underlined that the primary indicator of good faith in loan repayment was the actual repayment of the loan.
Moreover, he emphasized that simply claiming to repay the loan was insufficient; rather, tangible evidence, such as receipts, payment slips, or bank deposit records, was necessary to support such claims.
Wida Highway Motel had sought the court’s intervention to prevent the bank from auctioning the property, which had been used as collateral for the loan.
However, the court was not convinced by their argument. Despite their assertion that they were actively working to repay the loan and negotiating with potential partners to assume the debt, they were unable to provide substantive proof to substantiate these claims.
Daniel Wainaina Njuguna, one of the motel’s directors, expressed his concerns about the valuation of the intended auction price, suggesting that Ksh200 million was a significant undervaluation.
He also highlighted the potential impact of the auction on the motel’s employees and suppliers.
Despite these concerns, Justice Sifuna contended that such factors did not absolve the motel from its financial responsibilities under the mortgage agreement.
The judge further emphasized that the concept of equity of redemption did not absolve the mortgagor from their obligation to meet their financial commitments.
The motel had a clear duty to fulfil the periodic instalments on time, a duty that they had failed to fulfil, which led to the court’s decision to allow the auction to proceed.
