Blow to CBK as Supreme Court agrees to rule hotel’s case over Laico Regency deal
Blow to Central Bank of Kenya (CBK) after Supreme Court has decided to determine the controversial sale of the multi-billion shilling Grand Regency Hotel (Laico Regency) with Westmont Holdings.
Westmont Holdings convinced a bench of five judges to determine its suit with CBK stating that its case of public importance since the firm was asked to deposit Sh20 million before pursuing the claim against the CBK.
Led by Deputy Chief Justice Philomena Mwilu, the judges agreed to hear the case.
“…we hereby determine and certify the following issue as one of general public importance and which we shall consider in the intended appeal. The court needs to determine whether an order for security for costs is unreasonable as it impedes a litigant’s access to justice, by imposing a condition before being heard, against the Constitution,” stated the judges.
Westmont Holdings, a local subsidiary of Malaysia-based Lynwood Development, claims that $3.7 million (Sh325 million) it allegedly paid the CBK in 1997 as 10 per cent deposit for the purchase of the hotel.
The firm had told the court that it heard of the CBK’s intention to sell the hotel from Pattni and paid the 10 per cent of the hotel’s purchase price.
The hotel was sold to Libya Arab Investment Company (Laico) and renamed Laico Regency, prompting Westmont to sue seeking refund of the money plus interest.
However, the court ruled that CBK did not enter into agreement with Westmont Holdings but with businessman Kamlesh Pattni, the former owner of the hotel.
According to Pattni, the said amount had been settled and wanted to be left out of the dispute.
The bank, through lawyer Philip Murgor, urged the court to dismiss the case arguing that the businessman had paid the money to reduce his liability as per the agreement he signed with the government in May 1997.
CBK challenged Lynwood’s claim, arguing that Pattni paid money to offset a loan he owed the regulator, setting the stage for a legal battle that could have cost taxpayers millions of shillings.
Westmont Holdings moved to court in 1998 seeking a refund of the money it allegedly paid as deposit for the hotel but the case was dismissed in 2002.
In 2013, the Malaysian firm sought to reinstate the case, arguing that the delay was caused by unforeseen circumstances.
However, Lady Justice Jacqueline Kamau dismissed the application forcing the company to move to the Court of Appeal before the matter returned to the High Court where it was finally concluded.
The long-drawn fight for Sh318 million compensation claim, saw ten judges handle the case involving CBK, Westmont Holdings, Uhuru Highway Development and Pattni.
