A court has directed property management firm Lloyd Masika to submit detailed financial and asset documents to Stanbic Bank Kenya, escalating a longstanding dispute over a Sh40 million loan linked to contested property valuations.
The ruling underscores the bank’s determination to recover the debt after previous attempts, including public auctions, yielded minimal results.
Stanbic Bank had petitioned the High Court to compel Lloyd Masika to provide audited accounts, bank statements, title deeds, and any other relevant records that could aid in recovering the outstanding loan.
The request followed a public auction of the company’s assets, which raised only Sh1.1 million—just a tiny fraction of the money owed.
The disagreement traces back to February 2018 when Lloyd Masika assessed three properties in Machakos County—Machakos/Ndalani Phase II/461, 462, and 465—placing their open market value at Sh87 million and forced sale value at Sh56.5 million. Relying on this valuation, Stanbic Bank advanced a Sh40 million loan to a borrower whose identity has not been disclosed.
The borrower later defaulted, prompting Stanbic to commission an independent revaluation. The new assessment dramatically lowered the properties’ worth to Sh17 million open market value and Sh13.1 million forced sale value, highlighting a massive gap from Lloyd Masika’s earlier report. The bank argued that it suffered a significant loss due to reliance on inaccurate valuations.
The case moved to arbitration, where in December 2021, the arbitrator found Lloyd Masika “wholly negligent in submitting false valuation reports” and ordered the firm to pay Sh44 million, including costs. The arbitrator emphasized that the valuations submitted were “outside permissible margins of error,” establishing clear responsibility for the loan loss.
Lloyd Masika challenged the ruling in court, but the High Court upheld the arbitration award in April 2023, confirming that the firm was liable for the full amount.
Despite this, attempts to recover the funds have been largely unsuccessful. Proceeds from a public auction amounted to just Sh1.1 million, with Sh706,335 going to Stanbic Bank.
The lender has accused the company of hiding assets to avoid repayment and has sought court orders to require the directors to attend oral examinations regarding their ability to satisfy the debt.
Stanbic Bank has also suggested that it may seek to pierce the corporate veil if it finds evidence of directors transferring assets fraudulently to evade obligations.
The court’s order marks a significant development in the protracted dispute and reinforces the bank’s legal avenues to ensure that its financial losses are addressed. Analysts note that the ruling could have broader implications for property valuation accountability in Kenya’s financial sector.
