Companies

Judge dismisses leasing firm claim of Sh619m from NCBA

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Justice Wilfrida Okwany. FILE PHOTO | NMG

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Summary

  • Justice Wilfrida Okwany dismissed the case by Vehicle and Equipment Leasing Ltd (VAELL), saying the firm failed to prove that the lender breached a loan agreement entered in 2014 for financing the vehicle deal.
  • The leasing firm had sought compensation of Sh187 million arguing that the vehicles, which were disposed of in 2019, were undervalued.
  • The company also claimed a cost of insurance of Sh50 million plus a refund of Sh382 million, which was allegedly withdrawn unlawfully.

A vehicle leasing company has failed in its bid to compel NCBA Bank Kenya to refund millions of shillings over an alleged breach of contract in the purchase of 291 vehicles that were later leased to Kenya Police.

Justice Wilfrida Okwany dismissed the case by Vehicle and Equipment Leasing Ltd (VAELL), saying the firm failed to prove that the lender breached a loan agreement entered in 2014 for financing the vehicle deal.

The leasing firm had sought compensation of Sh187 million arguing that the vehicles, which were disposed of in 2019, were undervalued. The company also claimed a cost of insurance of Sh50 million plus a refund of Sh382 million, which was allegedly withdrawn unlawfully.

“I agree with counsel for the bank that the onus of proof was on the plaintiff and it failed to discharge it,” the judge said.

The court ruled that, for three years, the parties had treated the account as a collection account and VAELL could not access it.

Court documents show that VAELL borrowed a loan of $2 million (Sh232.2 million at the current exchange rates), from NCBA to purchase 291 vehicles from Toyota. The vehicles were later leased to Tsusho Capital Kenya Ltd, which in turn, leased them to the government.

But in an alleged breach of contract, the company accused the lender of denying it access to the bank accounts, ignoring instructions for payments despite the fact the accounts had sufficient funds and debiting charges on claims of a lack of funds, among other accusations.

The court heard that the lender was oppressive and aggressively detaining the company’s funds and freezing its accounts and applying charges based on insufficient funds.

But Justice Okwany dismissed the claim saying VAELL failed to prove the claims it made against the lender.

The vehicle leasing firm had argued that as a result of the bank’s conduct, it suffered losses and the vehicles were later sold at low prices.

The firm said the vehicles were returned by police to Toyota in September 2018 under unclear circumstances, and the bank allegedly frustrated the sale of the vehicles, which continued to depreciate yet the bank continued to pile interest on the loan.

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