An insurance company linked to Deputy President William Ruto has failed in its bid to block auctioning of its assets over an unpaid Sh19 million debt owed to a non-governmental organisation.
The Africa Merchant Assurance Company (Amaco) had asked the High Court to stop Mama Rael Memorial Foundation from demanding payment of the amount or auctioning the assets pending the determination of an appeal.
Amaco had told Justice Dorah Chepkwony that it had filed an “arguable” appeal against a magistrate’s ruling dated May 23, 2019, which allowed the Foundation to demand the amount.
This now means the NGO can go ahead and auction the company, making it the latest insurer in recent months to come into trouble after Resolution which collapsed with Sh6.6 billion in client’s cash.
This is the latest setback to hit the insurer which has been fighting several attempts to have it liquidated. The High Court in 2020 sanctioned the winding up of the 24-year-old firm following a petition filed by six people.
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The insurance firm also wanted the High Court to allow it to change its advocates from Ong’anda & Associates Advocates to Kihima & Koech Advocates. In addition, it wanted its late appeal against the ruling to be deemed as properly filed.
But Justice Chepkwony dismissed the request saying Amaco failed to offer a substantive explanation for the delay in filing the request to halt the execution of the magistrate’s ruling.
“The ruling in the lower court which Amaco wishes to appeal against was rendered on May 23, 2019, and the application (for stay) was filed on January 31, 2022. This was beyond the requirement of 30 days as provided for under the Civil Procedure Act,” said Justice Chepkwony.
In the absence of a good explanation, the court said it could not exercise its powers in favour of Amaco as there was an inordinate delay in applying.
“Mama Rael Memorial Foundation, who is a successful party, should not be denied the opportunity to enjoy the fruits of its judgment,” said the judge.
She added that Amaco did not prove it has an arguable appeal or one that had high chances of success. The insurance firm had stated that it stood to suffer substantial loss if the execution of the court orders proceeded.
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On the issue of changing advocates, the judge said there was no evidence that the previous lawyer, Ong’anda & Associates Advocates, was informed about the issue.
She noted that the Civil Procedure Rules require the court to allow the change upon a consent being filed between the outgoing and the proposed incoming advocates.
“It should be noted that any party has a right to choose advocates of their choice to represent them. But the same should not be used as a toll to prejudice the successful party from reaping the benefits of their judgment, as I believe in the case herein,” said the judge.
The court dispute started in 2018 and stemmed from Amaco’s breach of an insurance contract by failing to compensate the Foundation its dues. Court papers indicate that the Foundation had entered into a contractor’s Performance Bond agreement with Amaco in March 2016.
The main term and obligation of Amaco in the agreement was to guarantee a sum of Sh10.5 million as security for compliance with another agreement the Foundation had with a construction company, Newspace creators Ltd.
The construction firm undertook to complete the construction of the Foundation’s premises within seven months which it failed to perform. This prompted the Foundation to serve the contractor with a default notice.
It said Amaco was under legal and contractual obligation to honour the terms of the agreement by paying the guaranteed amount upon the contractor’s failure to finish the work.
The magistrate court ruled in favour of the Foundation and awarded it the guaranteed amounts plus interest at 12 per cent per annum.