Tsusho ordered to repair, refurbish Vaell vehicles in legal tussle

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Tsusho Capital Kenya Limited, the in-house financer for the Toyota Kenya Group, has been ordered by Charted Arbitrator to repair and refurbish vehicles belonging to the regional leasing firm, Vehicle and Equipment Leasing Limited (VAELL). 

In a press statement sent to media houses, the lessor and Toyota Group’s in-house financier had entered into an agreement to sublease the 285 vehicles. Following the maturity of the lease and Tsusho’s failure to comply with the sublease contract compelled VAELL to seek an interim measure of protection through arbitration.

The claimant through its lawyers submitted to the tribunal that the leased units which included Toyota Land cruisers, Single cabs and double cabs, continue to waste away and are depreciating in value, without proper storage or maintenance yet they ought to be disposed of or leased to mitigate the imminent loss or damage. The units are estimated to cost Kes. 2.4 billion during initial purchase. 

The Applicant’s lawyer Mr. Dachi, pointed the Tribunal to Clause 15 of the Agreement with respect to return of the fleet and restated Appendix II to the Agreement. 

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He admitted that the fleet was being held by the Respondent at a warehouse in Thika town, which action he submitted was an act of mischief and an attempt to frustrate the contract. 

The counsel for the lessor further submitted that there was no dispute over the ownership of the fleet.

According to the ruling, the regional leasing firm contends that the duration of the leases expired in the course of 2018 and the parties did not agree on an extension of the lease periods, thereby obligating the return of the leased vehicles. 

“It is the Claimant’s position that the Respondent has refused to meet any return conditions. Further, it is the Applicant's contention that the said motor vehicles were financed by Commercial Bank of Africa ('CBA') who hold securities over them and the repayment of the principal loan amounts as well as interest continues to accrue,” the lawyer added in his submission. 

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In his ruling John M Ohaga, the Managing Partner of Triple Oklaw Advocates, said “it is for these reasons that the Tribunal was persuaded to find that the orders sought herein are meritorious and therefore the arbitrator ordered and directed as follows:

...That as an interim measure of protection, that the Respondent (Tsusho Capital) be and is hereby ordered to forthwith meet all the return conditions documented in the agreement between the parties dated 15th November 2013 including refurbishing, removing police colours and other paraphernalia, repairing, repainting replacing missing and/or defective and/ or faulty parts, restoring and returning and/ or surrendering to the Claimant/Applicant the motor vehicles pending the hearing and determination of the arbitration proceedings envisaged in the Lease Agreement.” 

According to the arbitrator the order above were to be complied within 30 days failure to which the claimant was to go back to the court and seek courts guidance. 

The application sought inter alia in regard to the above orders is based on 14 grounds and supported by the Affidavit of Susan Muthoni, the Claimant's Legal Officer.

The factual basis of the application is that the parties had entered into a motor vehicle lease agreement in 2013 wherein the Claimant leased out several motor vehicles to the Respondent which subsequently subleased the same to the National Treasury for use by the Kenya Police the Sub-lessee.

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