Dusit D2 at the Riverside 14 complex on January 31, 2019.
A High Court order issued last Saturday stopping the planned auction of the 14 Riverside complex in Nairobi's Westlands has triggered a fresh legal battle, with the parties sharply divided over whether the weekend proceedings were lawful.
Synergy Industrial Credit Ltd, through senior counsel Ahmednasir Abdullahi, challenged the interim orders issued on May 23, arguing that it was wrong for the court to grant the order on a Saturday without evidence that the required authorisation had been obtained from Chief Justice Martha Koome.
"There is no evidence that the court sought authorization from the Chief Justice to hear the matter on a weekend," Abdullahi told the court. He added that Synergy Industrial Credit was denied its constitutional right to be heard before the order was granted.
A multibillion-shilling office block in Nairobi, 14 Riverside Drive.
He argued that the court should lift the suspension of the sale, arguing that the orders had already served its purpose because the scheduled May 26 auction did not take place.
"The orders were time-bound. The auction did not take place. There is no suit pending before this court upon which those orders can be confirmed," he said.
Mr Abdullahi further dismissed submissions by senior counsel Paul Muite for Cape Holdings, who urged the court to strike out portions of pleadings.
Mr Muite had urged the court to remove what he termed as offending paragraphs claiming that lawyers acting for Cape Holdings ‘coordinated with the court to obtain the orders’, describing the allegations as scandalous and unsupported by evidence.
"We have no apologies for stating the obvious. The court stopped the auction without affording my client a hearing. Why could the matter not wait until Monday when the auction was scheduled for Tuesday?" he submitted.
He maintained that the dispute had been litigated for the last 16 years, all appeals had been exhausted, and Cape Holdings no longer had proprietary rights over the attached property.
"Every month that passes, interest grows by about Sh150 million. This litigation must come to an end," he said.
But Muite, appearing for Cape Holdings Ltd, defended the order, insisting that judges retain jurisdiction regardless of the day of the week.
"A judge is a judge 24 hours a day," Muite said. The lawyer recalled that even under the former constitution, courts routinely entertained urgent applications outside normal working hours to prevent irreparable harm.
Riverside complex in Nairobi.
He argued that the injunction became necessary because the auction process violated mandatory provisions of the Auctioneers Rules and the Civil Procedure Rules.
According to Muite, the auctioneers sought to proceed with the sale using stale execution documents instead of initiating fresh execution proceedings after recent court decisions.
He said the auctioneers relied on a notification of sale first issued in January 2022, merely re-dating it to create the appearance of compliance, contrary to the law.
The auctioneers also allegedly failed to issue a fresh notification of sale in the prescribed format and omitted mandatory details, including the value of the property, as required under the Auctioneers Rules.
"A sale conducted in violation of mandatory procedures is void. We are dealing with immovable property. Damages cannot adequately compensate the loss," Mr Kioko Kilukumi said in support of Muite’s argument.
He distinguished the present proceedings from those pending before the Court of Appeal, saying the appellate court was dealing with earlier decisions authorising execution, while the High Court application challenges the legality of the actual auction process.
"The issues before this court concern whether the auction is being conducted in accordance with the Civil Procedure Rules and the Auctioneers Rules. Those are different questions altogether," he submitted.
Mr Kilukumi further told the court that Cape Holdings remained willing to comply with previous court directions requiring the deposit of Sh577 million—the equivalent of 57 months' rental income—into a joint interest-earning account operated by the parties' advocates.
He accused Synergy of refusing to cooperate.
The dispute stems from Synergy's efforts to recover a debt that has grown from an arbitral award of Sh1.66 billion to about Sh10.7 billion after years of accumulated interest.
The matter dates back to 2011 when Cape Holdings agreed to sell office space in the 14 Riverside development to Synergy for Sh703.2 million.
After the transaction collapsed, an arbitrator in 2015 awarded Synergy Sh1.66 billion, comprising the purchase price, interest and other losses. Although the High Court initially set aside the award, it was later reinstated on appeal, setting the stage for years of enforcement proceedings.
The High Court will rule on the latest application on October 8. Interim orders stopping the auction will remain in force, pending the determination of the case.
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