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Reprieve for Shelter Afrique in Sh8.7m row

Justice Eric Ogola
Justice Eric Ogola. FILE PHOTO | NMG 

Pan-African financier Shelter Afrique got a reprieve after the High Court halted an order requiring it to pay Sh8.7 million to a company which owns apartments in Mombasa.

Justice Eric Ogola temporarily suspended the execution of the order obtained by Sunset Paradise Apartments pending hearing of an application by Shelter Afrique.

“The certificate raises fear that the property may be dissipated pursuant to an order of garnishee already served. Am satisfied the fear is real and it is prudent to issue the orders of stay,” said Justice Ogola.

Shelter Afrique is seeking to have the execution of the judgment delivered on December 13 last year be suspended pending filing, hearing and determination of its intended case at the Court of Appeal.

“The applicant has an arguable appeal with good prospects of success and intended appeal will be rendered nugatory if stay is not granted,” part of the application by Shelter Afrique which was filed under certificate of urgency states.

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According to the applicant, Sunset Paradise Apartment Ltd had sent a notice of intention to proceed with the execution of the judgment if it does not pay the decretal amount plus interest. Shelter Afrique, a Pan-African residential development financier, further argues that it is likely to suffer substantial loss if execution was allowed to proceed and it eventually succeeds on appeal.

“The applicant has a bank guarantee for the decretal sum in place and is ready and willing to extend the same during the pendency of the appeal,” argues Shelter Afrique in its application.

The High Court had dismissed an appeal by Shelter Afrique which sought to have a decision of a magistrate’s court in favour of Sunset Paradise Apartments Ltd set aside.

The dispute between the parties was that of a lender and a borrower where they had agreed on a Sh380 million loan for specified activities.

Pursuant to the agreement, Shelter Afrique disbursed Sh164 million by December 18, 2013 when it wrote and informed Sunset Paradise Apartments Ltd that it would put all disbursements on hold pending re-appraisal and recommendations.

According to the suit papers, Sunset Paradise Apartments Ltd obtained a new financier and sought to terminate the agreement with Shelter Afrique by repaying all the money advanced together with interests.

Subsequent to the acknowledgement of the termination notice and demand, Shelter Afrique, the court heard demanded a further sum of 4.5 per cent of the total disbursed sums hence made fresh demand of Sh179 million alleged pursuant to a loan agreement.

Sunset Paradise Apartments Ltd argued that the demand for Sh8.7 million being early repayment fees and cancellation, was a contract which had been illegalized by a statute pursuant to section 62 (1) of the Consumer Protection Act 2012.

On its part, Shelter Afrique claimed it was entitled to demand and receive the payment of early repayment and cancellation fees being contractual.

The court had ruled that there was no error or mis-direction in the finding by the trial court (magistrate’s court) when it entered judgment against Shelter Afrique.

“I do find that the trial court was right in its determination,” said Justice Patrick Otieno in his December 13 decision.

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