Despite the lawyer agreeing to a professional undertaking to indemnify Diamond Star, he allegedly refused to honour his part of the bargain.
A High Court judge has ordered prominent lawyer Ambrose Rachier to pay Sh80 million to an investor for failure to honour his professional undertaking.
Mr Rachier had allegedly promised to repay a loan advanced to his client, Friends That Care Holding, by Diamond Star General Trading, through his law firm Rachier and Amollo Advocates in case the client defaulted in fulfilling its obligations.
Diamond Star had entered into an agreement with Friends That Care Holding to loan the firm Sh80 million in two batches of Sh50 million and Sh30 million.
Mr Rachier, according to the suit papers, undertook to pay Diamond Star in the event his client reneged on the repayment deal.
However, in court proceedings, Mr Rachier denied giving any professional undertaking and maintained he only made a promise to indemnify his client in default.
He argued that Diamond Star’s claim for payment could only be directed to his client, Friends That Care Holding, and any attempt to recover the money from him would amount to a violation of the doctrine of privity of contract.
But Diamond Star insisted that since Mr Rachier’s client failed to honour the deal, it was incumbent upon him to pay the full amount of the loan plus interest. The firm demanded Sh80 million and another Sh24 million in interest.
The lawyer said the various letters he wrote guaranteeing the loan did not contain any statement to the effect that he was giving a professional undertaking.
According to Mr Rachier, the letters exchanged between him and Diamond Star’s advocates – Hamilton Harrison and Mathews – were just promises in an ordinary understanding.
He defended himself, saying he never represented his client either in negotiating or drawing the loan and did not know about the terms of the loan agreement.
The lawyer further stated the letters referred to by Diamond Star did not constitute an undertaking since there was no indication of exchange of security documents.
However, Justice Grace Nzioka dismissed his arguments and concurred with Diamond Star that, indeed, Mr Rachier made a promise to pay the Sh80 million advanced to his client in his capacity as an advocate.
She said the lawyer had an obligation to indemnify Diamond Star for the loss incurred through failure by his client to service the loan. “The bottom line is that the fulfilment of an obligation is for Mr Rachier to indemnify Diamond Star for loss suffered,” Nzioka said.