The High Court has stopped the planned auction of a property at Nairobi’s 14 Riverside Drive complex after finding serious flaws in the process used to prepare the property for sale.
Justice Moses Ado ruled in favour of Cape Holdings and cancelled the warrants and auction notices that had paved the way for the sale. The decision followed a long running commercial dispute between Cape Holdings and Synergy Industrial Credit Limited.
The court also rejected Synergy’s challenge to its jurisdiction in the case. Justice Ado further ordered the removal from the court record of allegations Synergy had made against the court. The ruling means Synergy cannot proceed with the planned auction using the existing warrants and notices. If the property comes up for auction again, the parties will have to start the process afresh and follow the court’s directions. The court will also determine the reserve price for any future sale.
The dispute goes back to 2010 and centers on a failed property transaction involving an office block within the Riverside development. Synergy had paid about KSh577 million as a deposit towards the purchase of the office block. The transaction later collapsed, prompting Synergy to demand a refund.
Synergy argued that delays in completing the development frustrated the agreement and prevented the deal from going ahead. Cape Holdings challenged that position and attributed part of the delays to design changes that Synergy had requested during the development process.
The disagreement eventually turned into a lengthy legal battle, with efforts later shifting towards recovering the disputed money through the sale of Cape Holdings’ property. Cape Holdings then moved to court to challenge the auction process. The company argued that those seeking to sell the property had failed to follow the legal requirements governing the auction.
Justice Ado agreed with Cape Holdings and found the auction process defective and invalid. He consequently set aside the warrants and notices that had authorized the intended sale.
The decision stops the immediate auction of the property but does not bring the wider commercial dispute between the two companies to an end. Any party seeking to auction the property in future must comply with the court’s requirements, including obtaining a fresh process and having the reserve price determined by the court.
The ruling therefore protects the property from the current auction while leaving the underlying dispute over the KSh577 million deposit unresolved.