City property in Sh5b tussle set for auction

Supreme Court upheld Appeal Court’s decision compelling the owner of 14 Riverside Drive to pay creditor. [Collins Kweyu, Standard]

The Supreme Court has set the stage for the auction of a prime property at Nairobi’s 14 Riverside Drive if the owner fails to pay a creditor Sh5 billion.

Chief Justice Martha Koome alongside judges Mohammed Ibrahim, Smokin Wanjala, Njoki Ndungu and Isaac Lenaola ruled that they have no jurisdiction to interfere with the Court of Appeal decision which ordered Cape Holdings Ltd to pay Synergy Industrial Credit Ltd the amount.

“The Supreme Court lacks jurisdiction to entertain appeals that emanates from arbitration and which have been conclusively determined by the Court of Appeal. The appeal before us, therefore, lacks merit and is dismissed,” ruled the judges.

Their decision marked the final hurdle in the 10-year fight between Cape Holdings Ltd and Synergy Industrial Credit Ltd over the 14 Riverside Drive properties that include the Dusit D2 Hotel, residential apartments and office blocks.

Paid upfront

It has been a battle between two billionaire businessmen as records filed in court showed that Cape Holdings Ltd is owned by Vinay Sanghrajka while Synergy Industrial Credit Ltd is owned by Vipul Shah.

Their dispute dates back to 2011 when Synergy Industrial Credit Ltd entered into an agreement with Cape Holdings Ltd to purchase 14 blocks of apartments which the developer was constructing at 14 Riverside Drive.

The company claimed that they paid an upfront of Sh750 million for the blocks which were still under construction but when the property was completed, Cape Holdings refused to transfer their units.

In 2015, lawyer Ochieng Oduol, the sole arbitrator found that the developer had breached the terms of the contract by failing to hand over the blocks paid for and ordered Cape Holdings to refund the principal amount and compound interest totalling Sh1.7 billion. The arbitrator had ruled that the compensation would cover a refund of advance payments, loss of interest costs, opportunity cost and loss of exchange fluctuation for monies paid in dollars as well as loss of goodwill.

Cape Holdings moved to the High Court to challenge the arbitration award and in March 2016, the court set aside the award on grounds that the arbitrator acted beyond his jurisdiction.

Synergy Industrial Credit again moved to the Court of Appeal and in 2019, the court overturned the High Court decision and reinstated the arbitration award, and also ordered the developer to pay all accrued interests.