Connect with us

Business

Lloyd Masika Ltd Fined Sh40M Over Fake Valuation Report

Published

on

The once highly respected property management firm Lloyd Masika Limited has been caught flat-footed after it emerged that the company may have colluded with a client to give a fake valuation report that enabled the client to secure a loan with Stanbic Bank Ltd.

According to available information, Stanbic Bank had instructed Lloyd Masika Ltd. to value the property Machakos/Ndalani Phase II/461, 462, and 465 for the purposes of deciding on whether to advance loan facilities to a borrower. Lloyd Masika carried out the valuation of the said property and prepared a valuation report, which was then used by the bank to advance a Ksh. 40 million loans to a borrower who later defaulted.

The bank later sought a re-valuation of the suit property and discovered that it was valued less than that indicated by Lloyd Masika Ltd. The bank was aggrieved by the loss occasioned due to the fact that it advanced a loan facility on the basis of Lloyd Masika’s report. Llyod Masika’s report indicated that the property had an open market value of Ksh.87 million and a forced sale value of Kshs.56.5 million.

However, the re-evaluation assigned the same property a lower open market value of Ksh. 17 million and a forced sale value of Ksh. 13.125 million. The dispute was referred to arbitration, and the arbitrator made some material orders. A declaration that the applicant (Lloyd Masika) was wholly negligent in submitting false valuation reports and is liable to meet the direct loss of Ksh.40 million suffered by the respondent (Stanbic Bank), who relied entirely on the valuation reports when lending out money to its customer.

Related Content:  Is Kenya Settling The China Loans With Crude Oil

A declaration that the applicant’s valuations over the properties known as Land Reverence Numbers Machakos/Ndalani Phase 11/461, Machakos/Ndalani Phase 11/462, and Machakos

/Ndalani Phase 11/465, are outside permissible margins of error. The applicant (Llyod Masika) is to forthwith pay the respondent (Stanbic Bank) the sum of Ksh. 44,036,555.51.

Following the ruling, Llyod Masika approached the High Court via an application dated March 18, 2022, seeking to set aside the award. The respondent, on its part, approached the court via an application dated May 16, 2022, seeking to enforce the award. The court saw no reason to set aside the impugned award and dismissed the applicant’s application. The court found merit in the respondent’s’ application and allowed the same by ordering that the mentioned award be recognized and entered as a judgment of the court.

The findings in the impugned judgment aggrieved the applicant, who filed a notice of appeal dated February 9, 2023. In a judgment dated February 9, 2024, by Court of Appeal Judges F. Tuiyott, Gatembu Kairu, and J. Lesiit, the judges noted, “We have considered the application before us, which is the one dated March 31, 2023, the supporting and opposing affidavits, and the rival arguments by counsel and authorities relied on. An applicant seeking an order of stay of execution, stay of proceedings, and injunction pending appeal”

The court was reminded by the bank that the claim before the tribunal was professional negligence by a valuer. The judges in their final orders ruled, “We find therefore that even though the appeal is arguable, it will not be rendered nugatory if the stay sought is declined. In the result, the application dated March 31, 2023, is dismissed in its entirety with costs to the respondent”.

Related Content:  Airtel Kenya Confirms They Did Not Launch Non-Expiring Data Bundles


Kenya Insights allows guest blogging, if you want to be published on Kenya’s most authoritative and accurate blog, have an expose, news TIPS, story angles, human interest stories, drop us an email on [email protected] or via Telegram

Advertisement
Advertisement

Most Popular