Tussle between upmarket hotel owner and creditor
National
By
Francis Ontomwa
| Oct 07, 2024
A company that owns an upmarket hotel and office complex in Nairobi's Westlands suburb wants the court to stop a creditor from interfering with the property until all disputes between the parties are resolved.
Cape Holdings Limited (Under Administration) wants the court to stop Synergy Industrial Credit Limited and its lawyer, Ahmednasir Abdullahi, from further interfering with the 14 Riverside complex.
In a letter dated July 19, 2024, which is part of the documents filed in court by Cape Holdings, lawyer Abdullahi had written to the tenants of 14 Riverside directing them to pay rent to his client (Synergy) claiming change in ownership and management of the property. The letter reads in part, "...henceforth all rent due and accruing on account of your occupation of the respective premises will be payable to our client."
"Therefore, you should not pay any rent to Cape Holdings Limited either through its Administrators or its agents Knight Frank, as its interests in the said property has (sic) effectively been extinguished...." the letter further states.
However, in an application filed in court on 21st August, 2024, Cape Holdings contested this position arguing that "Synergy's interest as a purchaser was limited to the caveat registered in 2011 and did not extend to the rest of the property secured by debentures since 2009."
The dispute arises from a botched deal signed in 2010 whereby Synergy was to purchase one out of six office blocks on the land occupied by the complex, for the sum of Ksh 703 million. However, in 2011, Synergy sought to terminate the contract and demanded a refund of the monies paid. The parties failed to agree and the matter went to arbitration and Synergy was awarded Ksh. 1.66 billion by the arbitrator for the Ksh 577 million paid, plus interest, forex loss, opportunity cost, loss of business, at a compound interest rate of 18 per cent.
Cape Holdings contested the award in the High Court and the matter wound its way to the Court of Appeal and the Supreme Court. Eventually, the courts ruled in favor of Synergy. The award has since ballooned to Ksh 5.4 billion. Meanwhile, Synergy has registered a caveat against the single office block it had initially offered to purchase.
While Cape Holdings acknowledges the caveat and prohibitory order by the court protecting Synergy's interest, it (Cape Holdings) argues Synergy cannot now purport to sell the entire property to realize the Ksh 5.4 billion award. In an affidavit filed in court, Cape Holdings joint administrators P.V Rao and S.R. Ponangipalli, says the caveat and prohibitory order were not against the entire property but limited to the part of the property in which Synergy had an interest.