Jubilee Party Secretary-General Raphael Tuju who has allayed fears of a
falling-out with Deputy President William Ruto. PHOTO | FILE | NATION
MEDIA GROUP
From the onset, the case against Jubilee Party Secretary General
Raphael Tuju and his company Dari Limited appeared straight forward --
“You eat, you pay”.
STRAIGHTFORWARD
Mr Tuju’s firm had borrowed money from a bank and it was expected that he would pay, period.
But he started repaying and then in 2016, stopped.
East
African Development Bank, which had lent him the money in 2015, wanted
him to continue servicing the loan, but he didn’t. The bank then moved
to London for arbitration as per the contract terms between them. The
arbiter heard the application and ruled in favour of the bank.
Mr
Tuju appealed. But a Court of Appeal judge in London, Britain, was
blunt: “This is a straightforward claim to recover money owing under a
loan facility agreement to which, for the reasons given in the judgment,
there is no arguable defense.”
Having lost the appeal, all of Mr Tuju’s legal options in the UK
had been exhausted. So the bank expected him to pay up. He didn’t.
MAJOR SETBACK
Fast
forward to Thursday of last week, the Cabinet Secretary without
portfolio suffered a major setback after the High Court of Kenya
affirmed a decision by the London Arbitrator that he should repay the
Sh1.5 billion he owes the regional bank.
But Mr Tuju
has not given up. On Thursday he applied to High Court to have the
adopted judgment set aside on grounds that the Judge in London ignored
rules of natural justice.
Through Lawyer Paul Nyamondi,
Mr Tuju says that the Judgment which was adopted by the High Court of
Kenya denied him his rights to a fair hearing.
He says
that his pleas through his lawyer that the advocate for the bank Michael
Sullivan had worked with the judge Daniel Toledano and, therefore,
there arose a likelihood of conflict of interest, went unheard. That
application is yet to be heard.
TWO BUNGALOWS
Back
in London, the arbitration was presided over by Queens Counsel Daniel
Toledano who had sat as Deputy High Court Judge in line with British
law.
Court documents showed that Mr Tuju’s Dari Limited
entered into an agreement with the bank on April 10, 2015, under which
it agreed to give Dari a $9.3 million (Sh943.9 million) loan.
The
loan was for the construction of Sh100 million two-storey bungalows
sitting on a 20-acre forested land dubbed Entim Sidai and purchase of a
94-year-old bungalow built by a Scottish missionary, Dr Albert
Patterson, which currently operates as a high-end restaurant.
In
his affirmed ruling, Mr Toledano stated that East Africa Development
Bank from whom Mr Tuju had taken the loan had all the rights to get back
its money.
Through his company Dari Limited, Mr Tuju,
who has listed his family members as other directors, were able to
access the loan and gave property at Upper Hill as security.
NO DOCUMENTS
In 2016, according to the ruling by Judge Toledano, Mr Tuju started having difficulties servicing the loan.
In
November 27, 2017, the bank made demands to Mr Tuju and other directors
in the company and despite these notices and demands the amounts owing
to the bank were not paid.
It is at this point that the bank moved for arbitration. The Arbitration was provided for in the agreement between the parties.
In their defense, Tuju’s lawyers argued that in fact the bank was to give loans in two phases.
They
added that the second tranche of money which was not given by the bank
was to cater for developing the property and it’s from then he would
have money to repay the loan.
But
the arbitrator was not convinced: “I note first of all that the
facility agreement does not say anything about a two phase project; nor
does the offer letter that has been shown to the court dated 12th
September 2014. Indeed there are no documents relied on by the
defendants in which the alleged representations are to be found,” noted
Judge Toledano.
FIRST PHASE
The amount the defense said was to be part of the second phase amounted to Sh294 million.
“The
short answer to the specific allegation concerning a failure to provide
Sh294 million, in my judgment, is that the bank was not under any
obligation to lend this amount. 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,” stated Judge Toledo.
The Tujus also lost on the point that an outstanding amount of Sh10 million was not disbursed as part of the first phase.
“There
is no evidence before the court of any further drawdown request being
made by Dari Company. Clause 3.1 of the facility agreement requires a
drawdown request to be delivered by the company in a prescribed form in
order to start the process of a drawdown. In the absence of any such
request, the bank cannot be liable for not providing balance of the
funds,” noted Judge Toledo.
MAKE ENFORCEABLE
The judge, therefore, entered a summary judgment against Mr Tuju. Upon appeal the case was also lost.
“This
is a straightforward claim to recover money owing under a loan facility
agreement to which, for the reasons given in the judgment, there is no
arguable defense. By the same token, none of the grounds of appeal has
any reasonable basis; the judge gave not merely adequate but compelling
reasons for his decision,” Appeal Judge Lord Justice Leggatt ruled.
The bank then moved to have the Judgement from London adopted by the Kenyan court to make it enforceable.
Last
week Justice Wilfrida Okwany at Milimani Courts said the bank had
satisfied the conditions for the judgment to be enforced in Kenya. The
judge said EADB had proved that it obtained a summary judgment against
Dari Ltd, Mr Tuju and four others in April last year and an appeal filed
by Tuju’s company subsequently dismissed.
FOREGOING FACTS
“I
have carefully considered the application and the supporting affidavit
together with the submissions … From the above foregoing facts, I am
satisfied that the applicant has proved that is has a foreign judgment
in its favour and that the said judgement is capable of enforcement in
the United Kingdom, and by operation of the Act, also capable of
enforcement in Kenya. Consequently, I allow the Originating Summons
dated 31st December 2019 as prayed. I also award costs of the
application the judgment creditor and direct that the notice of
registration of the judgment be served on the judgment debtors as
provided for under Section 5(3) of the Act,” Justice Okwany ruled.
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