The iconic Dusit Complex located at the 14 Riverside Drive in Nairobi has been put up for auction following a protracted court battle over a botched deal.
Justice Alfred Mabeya gave orders allowing another firm, Synergy Industrial Credit, powers to auction the complex that houses the famous DusitD2 Hotel.
The complex has been under the ownership of Cape Holdings Limited which has been in and out of the court seeking to block the sale of the iconic complex since 2010. This emanated from a deal that allegedly went wrong.
The decision to allow Synergy Industrial Credit to auction the complex had been delayed after a top bank filed a court case blocking its sale praying the court to include it in the matter over a Ksh2.82 billion loan.
The company that has been granted the powers to auction the complex presented evidence in court revealing that it had paid Ksh750 million to acquire part of the apartment. The deal did not mature forcing it to be referred to an arbitrator.
The arbitrator, after closely examining the documents, awarded Ksh1.6 billion to the company. The amount has since ballooned to Ksh4.9 billion and the complex has not been able to settle it.
“Taking into consideration the foregoing, the court can but only agree with the applicant’s contention that the timing of the administration was not meant for the purpose known under the act,” the Judge ruled.
Synergy Industrial Credit, while opposing the plans by a top bank to block the auctioning bid, argued that it offered the complex the said loan without following the due process. It blamed the financial institution for negligence for entering a deal with a property that was disputed.
The Judge sided with Synergy noting that the bank was acting in a way to help Cape Holdings, owner of the Dusit complex, to evade the legal obligations.
Synergy had gone further to place a caveat on the complex that sent a warning to all financial dealings before the commencement of the case.
“With such a caveat, that property was not free to be given as a security,” the Judge noted.
Synergy, just like any ambitious company, paid for two blocks that has over 14 mini-blocks. At that time, the complex was still under construction. It paid Ksh750 million upfront for the two blocks.
But according to the court documents, Cape Holdings refused to hand over the two blocks to Synergy compelling the matter to be referred to an arbitrator.
The arbitration process, that was led by Ochieng Oduol, ordered Cape Holdings to refund the principal amount of Ksh1.66 billion in relation to the market value at that time.
Cape Holdings decided to oppose the move by arbitration by moving to the High Court but lost the battle, forcing it to move to the Court of Appeal which again ruled against it.
Cape Holdings moved to the Supreme Court and through a judgment delivered on Friday, December 10. The Supreme Court upheld the ruling delivered by the Court of Appeal.
“We reiterate our holding, and find the court lacks jurisdiction to entertain this appeal, having found so, we have no hesitation in declaring the application before us one for dismissal,” the Supreme Court Judges CJ Martha Koome, Mohammed Ibrahim, Smoking Wanjala, Njoki Ndungu and Isaac Lenaola ruled.
