‘Happy Valley’ mall, love and the British millionaire who had tough luck in Africa

What you need to know:

  • Michael was going through a divorce and, as he was to tell the court in London, he had to part with a substantial amount of money to pay his ex-wife.

  • Michael’s payment to his ex-wife had depleted his coffers and he had been forced to take a £2.3 million loan facility.
  • His case has now become a case study of the liability of individuals who are beneficial owners of collapsed companies.

The two Lloyd brothers – Michael and Christopher – had invested in Naivasha’s Buffalo Mall, hoping to do business and make a fortune out of Africa.

The project was adjacent to their friend Tom Cholmondeley’s Soysambu estate — the land of the great-grandson of British aristocrat Lord Delamere, a pioneer and one of the most influential colonial settlers in the Rift Valley of Kenya. It was Cholmondeley, perhaps, who had lured Michael into this two-phased project — estimated to cost Sh2.6 billion once complete — and which was to turn a chunk of the expansive farm into a profitable enterprise.

KIJABE HOSPITAL

The Delamere family had managed to turn the jungle into a dairy farm — ever since the Third Baron Delamere convinced the colonial government not to give the land to Charles Hulburt, the American missionary who had identified the land for a mission hospital in 1903. Lord Delamere convinced the colonial land officer, after a few beers, not to “waste” such prime land on missionaries and that is how African Inland Mission ended up on the hill in Kijabe where Hulburt built what was then known Kijabe Theodora Hospital in honour of his friend, former US President Theodore Roosevelt. It was later renamed Kijabe Mission Hospital.

It was at the edge of Soysambu that Michael arrived to build the Buffalo Mall. Sitting on 45 acres at the turn-off on Moi South Lake Road, and adjacent to the Nakuru-Nairobi highway, the shopping centre was to have offices, restaurants and leisure facilities and was a good bet as a stopover for travellers on the busy highway

COBWEBBY INVESTMENT

Michael’s Lloyd Capital Partners was to own 75 per cent of the enterprise while Cholmondeley was to own the balance. LCP had injected $3 million (Sh300 million) in equity, while Housing Finance offered a loan of $5 million (Sh500 million) for the initial phase.

Then things went wrong — so wrong that he had to sell part of his stake in Naivasha in a story of love, divorce and conspiracy.

The story of Michael’s sale of stake in Naivasha’s Buffalo Mall is tied to the purchase of the Sh320 million Hillersdon House, a historic 150-year-old eight-bedroom Victorian house in Devon, England — once dismissed as “a bat-ridden, cobwebby” investment.

Built in 1848 by theatre architect Samuel Beazley, this listed house was, at one time, the equivalent of colonial Kenya’s Happy Valley escapades in Wanjohi, Nyandarua — with the Telegraph once describing it as the place where 1920s jazz “would float through the thickset double doors and out onto the terrace to greet socialites from London, arriving …in anticipation of a hedonistic night.”

EROTIC NOVELS

It is also reported that one of the regulars then at Hillersdon was novelist Elinor Glyn, a British author of piquant romances who is credited as a pioneer of erotic novels that not only incensed critics but titillated the world. Glyn lived in the era of flappers, who were young British girls who loved jazz and short skirts in defiance of traditions.

Hillersdon and Buffalo Mall were back in the news this month as they became part of an ongoing hearing in London in a conspiracy case facing millionaire Michael Lloyd over the rehabilitation of the Devon property – which is now famous for high society weddings.

But it was not always like that. A story is told that the reason Elinor Glyn frequented Hillersdon was that she was the girlfriend of Billy Grant, who had inherited the property from his father William Grant. Billy was not married and had no children, his wife having eloped with a guest who had visited Hillersdon House during one of those hedonistic parties. It was discovered after he died in 1935 that Billy Grant had left this property to his friend Sir Mark Sturgis “on condition that he added 'Grant' to his name. (Which he did!)

DEPLETED COFFERS

This is the reason the property that the Buffalo Mall owner bought is famous – and why it was a well-known destination in Devon; if you can forget stories of ghosts, wives running off with dinner guests; drug experiments; and of “husbands locked out of bedrooms and tumbling from balconies...”

Michael Lloyd, then in his 40s, had arrived in Kenya with the dream of building an iconic mall. In early December 2013 the groundbreaking was done in a public ceremony attended by the developers, Buffalo Mall Developments Limited, a special purpose vehicle whose directors were Simon Trappes-Lomax, Michael Lloyd and Paul Phillips.

Michael told the press in Naivasha that the mall would give global chains a route to cover a new market out of Nairobi, a dream for any investor.

But then, it now appears, he had taken too much to chew. Besides the construction project in Naivasha, Michael was going through a divorce and, as he was to tell the court in London, he had to part with a substantial amount of money to pay his ex-wife. While the first phase of the Buffalo Mall project went on smoothly, and it opened on time on February 2015, Michael’s payment to his ex-wife had depleted his coffers and he had been forced to take a £2.3 million loan facility from EFG Bank dated December 28, 2012 for the divorce settlement. It is this money, as he would say later, that gave EFG Bank a stake in his Hillersdon project.

TATLER MAGAZINE

In his scouting for a place to invest, the heartbroken Michael had found love in Kenya – after meeting the fashion guru Annabelle Thom, who designs African-themed hats, bags, and cushion covers. Annabelle, known for her elegance, was running high-end shops and was sourcing Maasai-inspired jewellery materials from as far away as Samburu, which she tweaked for the London and local middle-class market.

In an interview she gave to the 300-year-old Tatler magazine, the age-old high society British magazine that covers fashion and glamour, Annabelle said she met Michael in 2011, “at a dinner party thrown by a woman who 'had a crush' on Mike”. She would later marry Michael in October 2016 in a wedding held on the grounds of Hillersdon House inside a purpose-built temple.

Annabele had fallen in love with Kenya and had opted to invest all her time and money in the country – and she said as much in various published interviews. That was, most likely, before she met Michael. In September last year, Annabelle was given the Freedom of the City of London, an honour conferred on people who have done good in their lives – perhaps for helping bring back to life the Hillersdon property (I might be wrong).

SOLE SHAREHOLDER

But something went wrong during the transformation of Hillersdon. Michael – a man who works through layers of companies –  had purchased this property on June 18, 2010 for £3.2m through Seizar Holdings Limited, a Cypriot company of which he was the beneficial owner. The purchase money came from a loan from Bluecoat Trust Limited, another Cypriot company in which Michael was the sole shareholder. His brother Christopher further incorporated another company, Hillersdon House Limited, which was to lease the property and which gave a London-based company, Palmer Birch, the contract to rehabilitate the house. But all the payments to finance Hillersdon House Limited came from Michael.

As the London court has stated, in the case facing Michael and Christopher, who have been sued by the contractor for liquidating the company before making payments, this saga has shown the perils of entering into a contract with an undercapitalised limited liability company, with no guarantees from the individuals associated with it.

“HHL was plainly one such company…it was in effect a Special Purpose Vehicle,” said the court this month.

CORPORATE VEIL

Palmer Birch had brought claims against Michael and Christopher Lloyd for breach of contract; unlawful interference; and unlawful means conspiracy. It argued that the Lloyds had colluded to bring about the insolvency of employer firm Hillersdon House Ltd in order to avoid paying it for the work.

This case is important because it means that going forward, business owners might not be able to hide behind the corporate veil but can be sued in person – if they acted in bad faith.

And the bad faith in this case emanates from the sale of Buffalo Mall shares and the court was told that Michael could have paid Palmer Birch its dues from the promised sale of the Naivasha asset. Instead, he brought down Hillersdon House Limited to escape payment – and engaged some sub-contractors to finish the work at Hillersdon, using the material brought on site by Palmer Birch.

It was Palmer Birch's case that Michael had induced HHL to breach the contract, while Michael and Christopher had conspired to bring about the liquidation of the company.

Actually Judge Russen QC, sitting as a judge of the High Court, found in favour of Palmer Birch on the allegation of inducement of breach of contract.

COLLAPSED COMPANIES

While Michael was not legally obliged to fund HHL in order to enable it to meet its contractual obligations, the court said that his actions "crossed the line" from prevention to inducement when by his actions he brought about the liquidation of the company. His conduct was "not a reflection of HHL's separate corporate personality but an abuse of it", the judge said.

And now, the man who built Buffalo Mall is waiting for the court to determine how much damage he has to pay for that.

When he came to Kenya, the British pound millionaire had hoped to have some luck in business. Although he found love, he certainly didn’t have any luck. Instead, his case has become a case study of the liability of individuals who are beneficial owners of collapsed companies.

[email protected]; @johnkamau1