A real estate investment scheme, Cytonn High Yield Solution LLP, has failed in its bid to suspend a court order that allowed arbitration between it and an aggrieved investor.
The scheme, which is under administration, wanted the court to suspend the implementation of the orders granted to Mary Margaret Njuguna, an elderly retiree, on February 5, 2022. The orders allowed Ms Njuguna to commence and continue with Arbitration proceedings against Cytonn.
In urging the court to grant the stay, Cytonn argued that it has more than 3,500 investors and the orders granted to Ms Njuguna are likely to trigger an avalanche of similar applications for Arbitration proceedings.
It said this would consequently undermine the object of the administration by shifting the Administrator’s attention to defending the claims.
Cytonn added that on the basis of those orders, Ms Njuguna had invited the Chartered Institute of Arbitrators Kenya to appoint an arbitrator to hear the dispute in which she is seeking to recover her investments.
But Justice Dola Chepkwony declined the request and said there was no error in the orders to warrant a stay of execution.
“I am not persuaded that the Applicant has advanced a plausible explanation as to why the orders should be stayed or otherwise interfered with. The Applicant has also not shown any error on face of those orders to warrant their setting aside or review,” said the judge.
The judge added that since Cytonn had agreed to the appointment of an arbitrator to determine the dispute with the investor, Cytonn cannot afford to say that the authority to proceed with arbitration contravened its right to be heard.
Justice Chepkwony said the investor stands to suffer greater harm than Cytonn if the approval sought for Arbitration proceedings had not been granted.
In its order dated February 5, 2022, the court indicated that it had considered the grounds on Ms Njuguna’s affidavit in which she disclosed that she was an elderly retiree and had invested in Cytonn with intention of using the investments for her upkeep in her retirement.
She added that her savings had matured but Cytonn had refused to pay her, and yet she can hardly sustain herself.
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The investor said that she had invested her life savings with Cytonn, but it failed to pay her the investments on the maturity date. Ms Njuguna stated that the application for stay of Arbitration was a malicious device to defeat her right to have the dispute resolved under law.
That prompted a dispute and even before the investment scheme was placed under administration, they had agreed for the appointment of an arbitrator by the chairman of the Chartered Institute of Arbitrators (K) to determine the dispute.
Cytonn’s application had been backed by the Administrator of the investment scheme, Mr Kereto Marima. The scheme was placed under his administration on October 6, 2021.
According to him, the administration order had the effect of stalling all legal proceedings against the scheme.