advertisement

Companies

NBK targets Delamere land over loan default

Hugh Cholmondeley, the fifth Lord Delamere. PHOTO | FILE
Hugh Cholmondeley, the fifth Lord Delamere. PHOTO | FILE 

The family of one of Kenya’s wealthiest colonial-era settlers risks losing a huge chunk of the prime land it owns in Nakuru after it got entangled in a friend’s fight with a bank over an unpaid loan.

Hugh Cholmondeley, the fifth Lord Delamere, got into trouble after he loaned his friend Kenneth Patrick Dawson’s company, Ceres Estates Limited, £60,000 (Sh8.2 million) that later got him listed as a director of the firm.

But the company did not service the loan that has since ballooned to Sh560 million and become the centre of a court battle between it and the National Bank of Kenya (NBK) #ticker:NBK.

Ceres Estates later collapsed in 2003, under the weight of instability in coffee prices, unreliable weather that interfered with the planting and late payment from the Kenya Planters Coffee Union.

NBK and the World Bank’s lending arm IFC then came calling to recover loans advanced to the coffee firm.

The two lenders placed Ceres Estates under receivership and in 2005, sold its prime asset, a 739.7 acre piece of land to Lasit Limited for Sh75 million, leaving a large chunk of the money owed outstanding.

NBK in 2009 filed a suit against Mr Dawson and Mr Cholmondeley, who is said to have issued guarantees in 1997 to repay the lender in the event Ceres Estates defaulted.

NBK is claiming Sh60.2 million from the two former Ceres Estates directors, which earned annual interest at the rate of 25 per cent from May 2007 when it demanded payment. By May this year, the amount had ballooned to Sh560 million.

Tricked

Mr Cholmondeley now says in fresh court filings that his friend, Mr Dawson, hoodwinked him into issuing the guarantee.

“Mr Dawson would often visit my home and ask me to sign documents that already bore the title ‘Lord Delamere’ but which documents were never explained to me and/or whose purport I was not aware of. I only signed the documents on the confidence of my friend and at no time were the documents signed in the presence of an advocate or explained by any advocate. In my own estimation, I thought they were just routine business documents hence I never retained and/or held any documents to do with Ceres Estates,” the fifth Lord Delamere says in suit papers.

Mr Cholmondeley was born in 1939, and acquired the title of Lord Delamere in 1979. The Cholmondeley family owns the over 50,000-acre Soysambu Ranch, which is valued at over Sh5 billion.

The family in 2013 subdivided its Naivasha-based estate as part of a succession plan involving the grandsons of the settler farmer.

The aristocrats registered a new company, Ngombe Limited, to inherit some 1,680 steers and 792 cows in their stable and a separate entity to hold the real estate property.

The High Court had in 2010 delivered a summary judgment against Mr Dawson after he failed to file a defence. The former Ceres Estates director, however, filed an application in September 2014 to set aside the judgment against him.

A few months later, Mr Dawson perished in a road accident.

His lawyer, Evans Gaturu, in March this year sought the court’s permission to be excused from representing Mr Dawson any further as his family has never given instructions as regards the NBK suit.

Mr Dawson had before his death insisted that the guarantees to NBK cannot be enforced because they were not recorded under the Registration of Documents Act. He added that the guarantee documents were drawn by unknown persons.

Mr Cholmondeley adds that some of the guarantee documents only bear Mr Dawson’s signature while many of them are incomplete and do not contain authors’ names.

NBK, however, says that both directors lost their opportunity to challenge the guarantees six years after signing the documents hence cannot do the same now.

“The sale (of the 739.7 acre land) was completed in May 2005 when payment was made, and after apportionment of the sale proceeds and sharing of the receivership proceeds with IFC, NBK’s share was credited to Ceres Estates’ account, leaving a shortfall of Sh112.3 million as at April 1, 2007 which amount continues to attract interest at the rate of 25 per cent until payment in full.
The Lord Delamare is statute barred by Limitation of Actions Act from belatedly challenging the validity of the guarantees following a lapse of six years after their creation,” NBK says.

advertisement