- Sharok Ali Hirji has given Housing Finance seven days beginning Tuesday last week to pay the amount that the late Justice Joyce Khaminwa awarded her after finding that the mortgage financier illegally sold her matrimonial home to recover a disputed loan.
- Justice Khaminwa awarded Ms Hirji Sh20.4 million in November 2009 after finding that HF sold her Runda home for Sh6 million nine years earlier to recover the disputed loan.
- The award has risen to Sh722 million on account of compounded interest rate set by the court at 26 per cent from the day the house was sold.
A Nairobi businesswoman has obtained court orders attaching mortgage lender Housing Finance’s property to recover a Sh722 million compensation that the High Court awarded her in 2009.
The orders, issued last week, have seen the businesswoman hit Housing Finance with a Sh726 million demand and a notice attaching equipment in four of the lender’s Nairobi branches.
Sharok Ali Hirji gave Housing Finance seven days beginning Tuesday last week to pay the sum that the late Justice Joyce Khaminwa awarded her after finding that the mortgage financier illegally sold her matrimonial home to recover a disputed Sh600,000 loan it had granted the businesswoman in 1985.
Ms Hirji issued the ultimatum through a warrant of attachment she obtained from the High Court, seeking to enforce the earlier decision.
The Sh726 million demand Ms Hirji has made to Housing Finance includes the judgment amount plus the auctioneers’ fees.
The warrant of attachment targets assets from the bank’s Rehani House head office, Gill House, Masera House and Epren Centre in Nairobi.
Justice Khaminwa awarded Ms Hirji Sh20.4 million in November 2009 after finding that HF sold her Runda home for Sh6 million nine years earlier to recover the disputed loan.
The judge ruled that HF had raised interest rates on Ms Hirji’s loan from 13.5 per cent to 26 per cent without notice and was, therefore, foul of the law.
“You are hereby notified that the moveable property described in the schedule is attached hereto and left in your custody for seven days from June 8,” the warranty of attachment says.
“At the expiry of seven days, the property will be removed to Moran Auctioneers’ premises and sold by public auction unless the amount due together with costs of this attachment shall have been paid.”
Ms Hirji’s Sh20.4 million award has risen to Sh722 million on account of compounded interest rate set by the court at 26 per cent from the day the house was sold.
The amount continues growing until HF settles the sum in full. Among the assets targeted are office partitions worth Sh400 million and 2,000 complete computer sets valued at Sh200 million.
Also attached are 20 safes, office furniture used by employees across the corporate ladder and four lifts, all of which could hit the lender’s operations hard if sold. The auctioneer has set its bill at Sh48 million, which is also to be footed by HF.
HF sold the house in January 2000 claiming that the businesswoman owed it Sh372,582. Justice Khaminwa, however, found that the claim was void because it arose from illegally charged interest.
Lawyer Taib A. Taib questioned the lender’s motives leading to the sale, as the auction was advertised two days after Ms Hirji’s Runda home was auctioned.
He added that HF never issued a 45-day notice of the sale as required by law before auctioning the house.
“The advertisement of January 5, 2000 where the suit property was advertised stated that it would be auctioned on January 19, 2000 at 11am at Viewpark Towers in Nairobi. The evidence is that the property was sold on January 17, two days before the advertised day,” Mr Taib said.
Ms Hirji further claims that her house was grossly undervalued during the sale, as it was worth more than Sh20 million when the bank sold it for Sh6 million.
Justice Khaminwa consequently ordered that the bank pay Sh20 million in special damages for the illegal sale and the Sh434,000 that HF retained after the sale.
HF argued that it used the valuation done before issuing Ms Hirji the loan to arrive at the sale value, but Justice Khaminwa found that the lender had used a 14-year-old valuation to sell the house, which was in bad faith.
The bank also insisted that it had issued a notice to Ms Hirji and her husband 45 days before the auction. Justice Khaminwa, however, struck out the lender’s defence, upon finding out that it failed to attach a copy of the notice it said was issued to Ms Hirji and her husband.
She held that the burden of proof as to whether Ms Hirji had been served was on the lender. The move left Ms Hirji’s suit undefended.
The mortgage financier had in 2009 convinced Justice Khaminwa to stop Ms Hirji from enforcing the award on condition that it would secure a bank guarantee for Sh30 million within 30 days of her judgment.
The assets seizure comes as the lender is restructuring its operations in a move aimed at increasing its profits. HF in April appointed consultancy firm Mckinsey & Company to help restructure its business, including the formation of a stand-alone banking subsidiary.
The mortgage financier has identified eight corporate actions it wants the consultancy to advice on, all of them geared towards growing the company and improving its efficiency.
The firm is in the middle of creating a non-operating holding company which will own all subsidiaries, including Housing Finance Company, a new banking entity being created.
HF has four subsidiaries namely Kenya Building Society, Housing Finance Insurance Agency, First Permanent Limited and the Housing Finance Foundation.
HF moved back to court in October last year seeking to stop Ms Hirji from attaching its assets, but Justice Francis Gikonyo ruled that the order stopping seizure of its assets expired 45 days after Justice Khaminwa’s judgment, as the financier had not secured a bank guarantee then.
In her judgment, Justice Khaminwa faulted HF for not putting the property under receivership and recovering its claim on Ms Hirji.