Avenue Healthcare and a construction company have resolved a dispute arising from a contract for the expansion and refurbishment of its Garden City Clinic.
Session Blue Contractors Ltd moved to court in March seeking to declare the hospital insolvent and unable to pay a debt of Sh22.4 million.
But the parties reached a consent, which is to be recorded in court, marking the dispute as settled.
“The amounts referred to in (1) above have been paid to the petitioner in full and final settlement of the amounts owed by the petitioner, and the petitioner acknowledges receipt of the same,” the consent signed by lawyers representing both parties read.
The construction company has moved to court to liquidate the hospital after the hospital allegedly refused to pay after completing the work.
The contractor was hired by the hospital management to expand and refurbish its Garden City hospital, in a contract dated June 24, last year.
The company concluded the job as agreed and raised invoices worth Sh22.4 million, which was to be paid within 30 days.
“The company has failed or ignored to settle the outstanding amount despite the same falling due in September 2022 when the petitioner completed his works and handed over the construction site to the company,” the petition stated.
Court documents state that the agreement stipulated that Avenue Healthcare Ltd would pay the debt with interest at an annual rate of 20 percent compounded daily, which amounts continues to accrue.
Mr John Antony Etyang, the director of the construction company said the hospital management has been reluctant to settle the amount.
“The conduct of the respondent has caused the petitioner inconveniences as the petitioner has not been able to recover the full amount owed, which has caused the petitioner to be strained in running its business operations and its dealing with suppliers,” Mr Etyang said.
He said he instructed his lawyers to make a final demand on February 14, but the hospital has neglected or refused to pay. He said there is no application to set aside the demand.
“That due to the above circumstances, the petitioner prays that the court makes an order that the respondent is insolvent and unable to pay its debts,” Mr Etyang said.
But Avenue Healthcare explained that the contractor moved to court before the closure of the review of delivery by the supplier on the project, which was subject to an ongoing discussion and subsequent project closure procedures.
The hospital has been in existence since 1974 and said it is a financially strong organisation committed to always meeting its contractual obligations.
“We are dedicated to fair procurement processes that promote a win-win for both our suppliers and the organization,” the hospital said in response.
Editor note:This story has been updated after the parties resolved the dispute and marked the matter as withdrawn.