Deacons sues landlords, seeks Sh343 million in compensation

Inside Deacons store (PHOTO: FILE)
Troubled fashion retail chain store Deacons East Africa now wants the High Court to award them a whooping Sh343 million as compensation over illegal evictions by its landlords.

The chain has accused its former landlord Ideal Location and Azalea Holding Limited for, alleged, illegal eviction in 2018 from their four premises in Mombasa and Nairobi.

“The retail enterprise suffered a whooping loss of Sh343,113,317 after the illegal eviction from its premises both in Nairobi and Mombasa during the illegal eviction,” said Deacon’ lawyer D. Ngonze.

In a petition filed before Justice Charles Yano in Mombasa, the fashion retail wants Sh88,521,202 from Ideal Location.

The firm has also filed a separate petition in Justice Antonina Kossy Bor in Nairobi where it seeks Sh254, 592,115 from Azalea Holding Limited in Nairobi being loss of income and profits, stock and movables.

Ngonze told the court in Mombasa that the retail shop had been placed under receivership on November 16 and 23, 2018 and it led to a joint appointment of administrators Peter Kahi Opondo and Atul Shah.

He said that the landlords failed to issue any statutory notices for payment of the said arrears prior to levying distress and forceful eviction from the premises.

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“The defendants removed all the stock from the respective shops and locked the demised premises, thereby effectively constructively evicting Deacon illegally and unlawfully,” said Ngonze.

He said that Ideal Location Limited had evicted Deacons from its premises in Mombasa Nyali City Mall over rental arrears of Sh851,394 and proceeded to auction stock and utilising movables and equipment that led to the loss of business.

Ngonze further said that Azalea Holding Limited also evicted the fashion chain store from three shops located at Karen and Dagoretti in Nairobi over alleged rental arrears of Sh3, 833,622.

He said that all the outstanding arrears prior to the appointment of Kahi and Opondo on November 11, 2018, remain a subject of the said administration and are only payable upon due approval of the administrators’ schedule of payment by the creditors.

 “The illegal distress and constructive eviction was done without the express consent of the joint administrators and sanctions of the insolvency court,” said Ngonze.

The lawyer said that the fashion retail was placed under receivership and administration after it experienced financial troubles with the exit of anchor tenants Nakumatt and Uchumi from most malls across all its branches.

Ngonze accused Ideal Location Limited of clamping down the premises on November 9, 2018, thereby barring a multitude of customers from accessing the retail shop.

"Ideal Location Holding clamped down the suit premises effectively barring multitudes of customers from accessing the suit premises on account of unspecified rental arrears and constructively evicting the Deacons," said Ngonze.

However, Ideal Location Manager Talasam Mohamed insisted that as at October 2018 Deacons was in both rent and service charges arrears totaling to Sh2,056,394 accrued from the month of May 2017.

"The Deacons paid rent irregularly and persistently defaulted in either paying rent at all or paid rent in instalments thereby creating the colossal amount of rent arrears," said Mohamed.

He said that as a result of the rent arrears, the landlord exercised its primary remedy to levy distress and a proclamation was duly issued to Deacons on October 25 2018.

Ali said from the levy distress the landlord managed to get Sh1,205,000 after necessary deductions were made.

"Before the landlord could realize the full arrears of Sh2,056,394, it was informed that the tenant was under administration and the landlord immediately suspended the process of levying distress," said Mohamed.

He said that Deacons continued to accumulate rental arrears from November 2018 up to date despite communicating to the property owner that they no longer wanted to occupy the premises.

Mohamed said that the landlord was not able to earn any income from the premises and he could not also lease it to other interested parties.

He said the administrators had failed to address the landlord's demands for handing over of the vacant possession and for permission to proceed with the distress causing the landlord substantial loss.

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DeaconsUchumiNakumattOpondo Kahi