Home Sports Airline demands Ksh.9 bn from Stanbic Bank over aborted plane-leasing contract

Airline demands Ksh.9 bn from Stanbic Bank over aborted plane-leasing contract

by kenya-tribune
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Passenger and cargo carrier Air Afrik may pocket over Ksh.9 billion as compensation from Stanbic Bank if a fresh determination by a Nairobi court is successfully prosecuted.

High Court has granted the airline permission to amend its compensation demand for losses suffered following the decision by South Sudan Government to terminate a plane leasing contract with the company. The airline says the contract failed to materialize due to damaging actions taken by the bank.

While the carrier initially wanted Stanbic Bank to pay Ksh.1.7 Billion (US$14ml) as compensation, it returned to court and applied to be allowed to amend the claim upwards citing huge losses as a result of the cancelation of the contract.

“Initially the loss and damage suffered by the plaintiff was quantified and pleased as US$14,400,000 but that the Financial Projection report dated 9th march 2022 prepared by its Certified Public Accountant Mr Orwa Warren Odhiambo shows that the quantified loss and damage amounts to US$80,090,432 hence the necessity to amend the Plaint,” the airline through Triple OK Law Advocates told the court.

In a deal signed in 2014, Air Afrik was to lease several aircrafts to the South Sudanese Government for a term of one year but renewable for Five years for an agreed total cost of US$20,640,000.

The terms of the deal included an agreement that the Government of South Sudan was to pay a deposit of 35pc of the value of the total contract sum equivalent to US$7,224,000 as advance payment.

The airline claims that the actions that followed from the bank led to the cancellation of the deal. Air Afrik says, in 2018, after crediting US$7.2 million into its accounts; Stanbic allegedly froze and reversed the money without a valid court order.

According to the airline, the said actions constituted fraud and fraudulent banking by Stanbic. It went ahead to accuse the bank of recklessness, malice, oppression, bad faith, breach of duty of care, and negligence.

“As a consequence of the 1st defendant’s actions, the plaintiff as suffered extreme inconveniences, loss and damage and its business operations were totally crippled and that it failed to execute its obligations under the leasing agreement…which was eventually terminated due to the plaintiff’s failure and/or inability to execute its part of the contract,” the law firm representing Air Afrik charged.

The carrier, operating cargo and passenger services in South Sudan and the rest of East Africa, says it lost the business opportunity and benefit contained in the contract with the Government of South Sudan and also lost an opportunity to execute other contracts of similar nature.

Stanbic Bank opposed the application by the airline claiming that it was in bad faith and only aimed at delaying the case and further maintained that the amendments sought are of genuine.

It asked the court to reject the application as this was going to force the bank to procure additional witnesses to respond to additional claims and that this would come at a huge expense.

Justice David Majanja in his ruling, however, allowed the airline a chance to amend its compensation claim saying the bank would not suffer any prejudice.

“While I agree with the 1st defendant that there has been a delay in seeking the amendment given the information was in the plaintiff’s possession, I think the proposed amendment, in substance, does not change the cause of action but expands the scope of damages pleaded,” justice Majanja ruled.

The parties have also explored the possibility of settling the matter out of court.

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