A Sh775 million dispute between two international aircraft leasing firms against regional budget airline Fly540 and its partner East African Safari Air Express has taken a twist after a court imposed a daily penalty of Sh50,000 on three top officials of the latter over alleged contempt of court.
High Court judge Aleem Visram imposed the fine on Fly540 and East African Safari Air Express CEO and founder Don Smith together with David Cattermole and George Kivindyo over disobedience of an order for inspection of aircraft at the centre of a court case.
“It is also not lost on me that to date, the Fly540 and East African Safari Air Express have failed to comply with the said order, almost two years later. The wording of the court order is, therefore, clear and unambiguous,” said Justice Visram.
He imposed the fine after declining a request to commit the three officers to civil jail, stating that the penalties were appropriate remedies at first instance as he granted them another chance to ensure compliance.
The dispute involves the repossession and storage of two bombardier aircraft by Canadian leasing firm, Avmax Aircraft Leasing Inc, and Wells Fargo Trust Company National Association.
Wells Fargo and Avmax are claiming $6 million (Sh775.6 million) from Fly540 and East African Safari Air Express over an alleged breach of settlement and conditional sale agreements.
Following the dispute and pending determination of the same, they sought to have the aircraft parked in an independent hangar.
On March 1, 2023, both opposing sides made an agreement, which was adopted by the presiding judge as an order of the court.
They agreed to conduct a joint inspection of the aircraft (including technical records) within 14 days from that date for the purposes of handing over the aircraft to Wells Fargo and Avmax.
They also agreed that the aircraft would remain where they were parked pending the inspection and further order of the court. The Kenya Airports Authority was directed to allow access to the representatives of both parties for purposes of the joint inspection.
But Wells Fargo and Avmax returned to court stating that the defendants denied them access to various technical records for the joint inspection including Original Engine Logs, Landing gear installation records, Propeller records, AD and SB status records, and Inspection records.
Justice Visram found that, based on records in court, while it was evident that a joint inspection took place on March 9, 2023, the same was not completed.
He stated that Fly540 and East African Safari Air Express ought to have known that once the Consent Order had been adopted as an order of the court, compliance with the terms, including access for the period of time stipulated for the purpose of inspection, was mandatory, and not optional.
"I find that the refusal on the part of the Defendants was deliberate," he stated.
The daily fine will continue running until the officials comply with the court order.
Justice Visram declined to commit the three officers to civil jail saying committal to prison ought not be issued in the first instance. He said the appropriate remedy in the circumstances was a fine.
He redirected the defendants to comply with the court orders by granting the plaintiffs access for the purpose of inspection.
"The court order was issued by this court by consent of the parties and was clear and express in its wording, specifically: "Plaintiffs and Defendants shall conduct a joint inspection of the aircraft (including technical records) within 14 days". This specifically includes "technical records" as part of the joint inspection. The wording of the order is therefore clear and unambiguous," the judge said.
