Why Capital Hotels paid over N500 million as damages to an ex guest

In a notice to the Nigerian Stock Exchange (NSE) recently, Capital Hotels Plc stated that it had the sum of N560 million deducted from its account with Guaranty Trust Bank, on Friday December 8, 2018, following the execution of a garnashee order.

Why did this happen?

According to the company, the order was following a court judgement obtained by one of its occupants, Alhaji Musa Abdullahi. Abdullahi had checked into the hotel in January 2002 and paid his bills till 2012, when he began to default. Sensing his eviction, he then instituted a case against the hotel at an FCT High Court, alleging that his valuables had been damaged by flood.

However, Abdullahi did not accede to the hotel’s insurers request to provide documents showing the cost of the properties. He was awarded damages to the tune of N453,600,000.

The judgment was appealed and a motion for stay of execution was served on all parties.

Alhaji Abdullahi then sought to obtain a garnishee order from the FCT High Court 28, without disclosing that the judgement had been set aside. The garnishee was set aside. He proceeded to a second FCT High Court, where he obtained another garnishee order. This motion was appealed and a stay of execution filed and served on all due parties. Despite this, execution was levied last week.

Plainly speaking, the sum of N503.6 million was deducted from the company’s account with GTBank. The firm, however, stated that it would pursue its appeal to its logical conclusion.

Implications of the action

Results for the nine months ended September 30, 2018 show that the firm had cash and cash equivalents of N4 billion. The sum paid, thus amounts to 14% of the company’s cash reserves. In addition, the firm could end up spending a significant sum on legal expenses.

About the company 

Capital Hotels Plc was incorporated on 16 January, 1981 as a private limited liability company. It became a public liability company on 31 May, 1986. Its hotel, Sheraton Abuja Hotel, commenced business in January 1990. The Company is a subsidiary of Ikeja Hotel Plc.

Source: Nairametrics

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