‪Blow To Michael Macharia As Court Allows Bank To Attach Seven Seas Technology Properties Over Sh730M Loan‬

The High Court has dismissed with costs a petition by business and technology solution firm, Seven Seas Technology, seeking to quash Bank of Africa’s move to attach its assets over Ksh 730,303,076 loan default at the current exchange rates for lack of merit.

Justice Alfred Mabeya indicated that from a review of the evidence as a whole he was not persuaded that there were fundamental mistakes in the calculation of interest before and after the consent which justify the setting aside of the consent. “I am also not persuaded that there were any variations of interest as alluded to.”

The judge also noted that the alleged claim by Managing Director of Interest Rates Advisory Center (IRAC) Wilson Onono that there was a probability that the bank increased the interest rate without providing Seven Seas prior notice as required, the calculation reports he produced were questioned, adding that the company did not offer a rebuttal to explain the assumptions made in the reports.

He further said that the last payment made before the filing of the suit was Ksh 100,000 on December 11, 2017 and after the consent, Seven Seas only paid Ksh 582,512 on June 18, 2022. This points to the interference that the application might not have been brought in good faith.

It was evident that while Bank of Africa accepted computations based on simple interest there was a different rate of interest for USD currency (9 percent) and the Kenya Shillings currency (13 percent).

Under the terms of the consent dated December 2, 2019 it was agreed by consent that judgement be entered against Seven Seas owner Michael Macharia and his company jointly and severally for the sum of Ksh 4,026,728.91 together with interest thereon at 9 percent per annum and Ksh 274,272,695 together with interest thereon at 13 percent per annum respectively with effect from November 25, 2019 on any outstanding balance until payment is done in full.

The court also put in to consideration the principle to be relied on whether to set aside a consent judgement set out by the Court of Appeal in Flora M Wasike V Destimo Wamboko (1988) where the court held that: “It well settled law that a consent judgement or order has contractual effect and can only be set aside on grounds which would justify aside, or if certain conditions remain unfulfilled which are not carried out.”

The court noted that a consent is to be set aside it can only really be set aside on the grounds which would justify the setting aside of a contract into knowledge of material matters by legally competent persons.

Thus, a consent order made in the presence and with the consent of a counsel is binding on all parties to the proceedings or action, and on those claiming under them and cannot be varied or discharged unless obtained by fraud or collusion, or by an agreement contrary to the policy of the court, or if the consent was given without sufficient material facts or in misapprehension or in ignorance of material facts or in general for a reason which would enable the court to set aside an agreement.

“A court cannot interfere with a consent judgement except in such circumstances as would afford good ground for varying or rescinding a contract between the parties. The grounds laid by the defendants were on the claims that there were fundamental mistakes incurred during the calculation of the outstanding loan balances before and after the consent was executed. They avers that before the consent, the bank charged Ksh 520,482,899 yet the recalculated amount by IRAC was Ksh 450,177,422 creating a difference of Ksh 70,305,476,” Justice Mabeya said.

Further, it indicated that there were no grounds to justify the setting aside of the consent as it was entered in good faith and lawful. It also added that the interest rate applicable before the consent was in accordance with the facility letters and after the consent remained at simple interest.

It accused the company of stopping reneging on the terms of the consent adopted on December 2, 2020 and waiting for over four years and seven months before applying to set aside the consent on September 25, 2024.

On the issue of delay of the consent, the judge indicated that, “it is my view the delay was inordinate.”

Justice Mabeya also rejected the plea by defendants to set aside the application dated September 25, 2024.