Tatu City Foreign Investors Win Court Battle Against Local Shareholders

by Mahakamani News

The foreign investors in the Sh240 billion Tatu City project in Kiambu County have won an appeal in their long-drawn legal battle with their Kenyan minority shareholders.

Appellate Judges Roselyne Nambuye, Asike-Makhandia and James Otieno-Odek ruled that the directors were at liberty to shelve the appeal after the court invalidated contempt proceedings against them on February 23.

Justices Asike-Makhandia, William Ouko and Kathurima M’Inoti had ruled that the directors Tatu City and Kofinaf Limited enjoyed exclusive mandate to appoint auditors and there was no evidence that the five investors had willfully disobeyed High Court orders to frustrate the exercise.

” In the end, and for the reasons we have given, we find merit in the appeall”. Judges ruled.

They had said Commercial Court Judge Francis Tuiyot erred in his ruling on May 4, last year, by attempting to interfere with the internal affairs of the two companies, whose directors have disagreed on the appointment of an audit firm to replace PricewaterHouse (PWC).

“We are not convinced that there was evidence to support the assertion that the appellants frustrated and scuttled the commencement of the in-depth audit by intimidating PwC, the learned judge himself expressed satisfaction from the correspondence and affidavits before him that there was an attempt by the parties and PwC to agree on modalities of the in-depth audit. It was , therefore , in error for him to make a protracted negotiations for stonewall”. Ruled judges.

The bench said high court judge relied on the affidavit of Nyagah to prove that the appellants and Reid were in deliberate disobedience of the court order.

Judges said it was the burden on the respondents to demonstrate in what the appellants and Reid had “completely frustrated and scuttled the commencement of the in-depth audit by intimidating PwC”.

The appellate judges said the Judge erred in finding that Jennings, Frances Holliday, Pius Ngugi, Frank Mosier and Christopher Barron had deliberately disobeyed court orders issued on June 12, 2015 regarding the appointment of the auditor in accordance with the decision made by the board of directors on January 28, 2015.

“That order was directed at PwC to conduct the audit strictly in accordance with company’s board resolution,” the Appellate Judges pointed out.

Stephen Jennings CEO Rendovon group(left),and Chris Barone Chief Operating officer Tatu City before court in the past

The foreign investors been involved in a protracted legal battle with their Kenyan minority partners, led by former Central Bank of Kenya (CBK) Governor Nahashon Nyagah and industrialist Vimal Shah, over the control and management of the two firms which are undertaking the unique project in Kiambu County.In May last year, Justice Francis Tuiyott found foreign investors of multi billions shillings worth real estate development project Stephen Jennings, Francis Holiday, Hans Bochum Horn, Frank Mosier and Christopher Baron were found guilty for disobeying orders issued last year that directed The PriceWaterHouse Cooper to conduct independent audit the offshore loan account of the Tatu City companies with 45 days.

“I find that the 1,2,3,5 and 7 defendants are guilty of disobeying and being in contempt of the orders made in respect to orders for audit” ruled the judge.

However,  the judge said he can’t commit them on jail because they were not served with the order.

“I direct Counsel for the parties herein to address me on which Firm should be appointed in place of PWC. This will enable court make further orders in regard to the order” ruled the judge.

The court was urged to ignore any allegations made against  Mr Reid as he is not a party before court.

Defendants argued that , the court orders lapsed on their first anniversary and could not therefore be disobeyed.

“I make no finding against Mr Robert Reid because at the time of making this decision, evidence that he had been served with the application for contempt was not readily available to me” ruled the judge.

Christopher Barron said orders issued on 6 March and April 28, 2015 and 12 June 2015 were made without jurisdiction. He cited shareholders agreement of 13 May 2010 in which it was allegedly agreed that any dispute , claim or matter a raising under or in connection with the agreement was subject to the exclusive jurisdiction of London court International Arbitration.

High court ordered the international audit firm PriceWaterHouse Coopers (PWC) to conduct independent in depth audit account  of the offshore loan of the Tatu City and Kofinaf Limited and to report it findings to the court within 45 days or reasonable period of time they found adequate to perform the audit.

“The audit upon completion, it should cover all issues relating to the company ,all facts and figures be laid on the auditors table by the parties to give full effect to the exercise ‘ To otherwise will render the audit exercise in futility” noted the judge.

He said Courts do not make orders in vain. The orders they make, unless reviewed, raised or set aside must be obeyed,” justice Francis


Mahakamani News is Kenya’s top court reporting and crime coverage website. If you have a case that needs coverage, or if you are facing injustice from powerful forces, fired unfairly or reporting any corruption or relevant news pertaining judiciary etc please contact us via cases@mahakamani.news

Comments

comments

You may also like