Gavel

City tycoon could lose prime property hosting Dusit over Sh5bn debt.

| File | Nation Media Group

City tycoon could lose prime property hosting Dusit over Sh5bn debt

A multibillion-shilling office block in Nairobi, 14 Riverside Drive, could be auctioned if the owner fails to pay his former business partner a long-standing debt of Sh1.6 billion. 

 The debt stems from an arbitration award that has since jumped to Sh5 billion due to accrued interest. 

 The award was made on January 30, 2015 by James Ochieng Oduol, a senior counsel, who ordered the owner of the building, Cape Holdings Limited, to compensate its ex-partner, Synergy Industrial Credit Limited, for business losses and breach of contract.

 The two firms had entered into oral and written sale agreements and made a joint venture towards the development, which hosts prestigious establishments such as the Dusit D2 Hotel.

 In the 14 agreements, Synergy offered to purchase office blocks and parking spaces from Cape Holdings. Synergy had paid Sh577 million for a stake in 14 Riverside Drive before terminating the partnership, accusing the owners of diverting the funds and slowing down construction.

 By the time the dispute arose, Synergy had disbursed a significant amount of money to Cape Holdings, even though the said office blocks and parking spaces were still undergoing construction.

 Sh1.6 billion compensation

The dispute went to an arbitrator and Synergy later successfully petitioned the High Court to pursue fraud allegations against the owners and won a Sh1.6 billion compensation. 

 The amount comprised the money advanced to Cape Holdings, accruing interest, loss of income opportunity, exchange fluctuations and costs.

 Opened in 2012, the complex is owned by the Vijay Sanghrajka family, proprietors of Tile & Carpet Centre, and comprises office blocks with retail spaces on the ground floor, a parking silo and a 100-room hotel. 

Synergy Ltd is owned by Vipul Shah, a Nairobi-based businessman. It got victory after the Supreme Court declined to interfere with the award, bringing the property effectively under an auctioneer’s hammer.

Cape Holdings wanted the protection of the apex court through issuance of an order stopping execution of the appellate court’s decision.

The Supreme Court dismissed the application, saying it lacked the powers to entertain the dispute, having been settled by the appellate appeal and having emanated from an arbitration.

Cape Holdings

The judges reminded Cape Holdings of an earlier declaration, where they held that in conformity with the principle of the need for expedition in arbitration matters, where the Court of Appeal assumes authority and delivers a consequential judgment on matters related to arbitration, no further appeal should be made to the Supreme Court.

“We reiterate our holding and find that this Court lacks jurisdiction to entertain this appeal as it is challenging the Court of Appeal judgment, where the Court of Appeal assumed jurisdiction in conformity with the principles and delivered a consequential Judgment,” said the five-judge bench led by Chief Justice Martha Koome. 

Others were justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung’u and Issac Lenaola.

Lawyer Ahmednasir Abdullahi, who represented Synergy, submitted that a party that seeks to set aside an arbitration award must demonstrate how the figure is against the Arbitration Act.

He said his client set out in its pleadings the history of the transaction before and up to the execution of the 14 agreements.

 But Cape Holdings, through lawyer Elias Mwangi, had argued that the arbitrator “went rogue and completely outside the scope of his mandate by determining the dispute outside the written agreements”.

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