Dusit D2 owners lose appeal over Sh4.4 billion award

A section of Dusit D2 hotel in Nairobi located along river driver. [Edward Kiplimo, Standard]

The Court of Appeal has thrown out an application by Dusit D2 Hotel owners, seeking to get certification to challenge Sh4.4 billion arbitration award in favour of Synergy Industrial Credit Ltd before the Supreme Court afresh.

Court of Appeal Judges Gatembu Kairu, and Aggrey Muchelule unanimously found that the issues raised by Cape Holdings Limited had already been resolved before by the Supreme Court.

“There is merit therefore in the preliminary objection taken by Synergy that the matters raised in the present application, though disguised as intended to challenge the ruling declining review, are matters already heard and determined by this Court and by the Supreme Court and the application is therefore res judicata,” the bench headed by Justice Gatembu ruled.

Cape Holdings, in its application, argued that it needed the apex court to determine whether an arbitrator can rewrite the parties' contract and whether the court was correct to invoke American jurisprudence in Kenya.

It argued that it also argued that it needed to correct errors of law in the judgment of the Court of Appeal, which allegedly caused a miscarriage of justice.

In response, Synergy argued that the issues raised had been resolved. It asserted that it was an abuse of the court as it had again sought Court of Appeal’s permission to approach the Supreme Court, and which was dismissed in 2021.

At the heart of the case was another ruling Justice Fathuma Sichale, Kathurima M’Inoti, and Jamila Mohammed who dismissed an application filed by Cape Holdings Ltd, seeking a review of the orders in favour of Synergy Industrial Credit Ltd.

The judges were of the view that the court has no powers to revisit the case, the orders had already been executed.

“We do not find any merit in the applicant’s application to recall, review, and set aside the judgment of this Court dated November 6, 2020. Accordingly, the application fails and is dismissed with costs to the respondent,” the bench headed by Justice M’Inoti.

In the case, the three judges observed that Cape Holding had moved to the Supreme Court had was ordered to pay Sh4.4 billion.

According to the judges, Cape Holding again moved to the high court to block the auction of its property but the High Court ruled that the execution had been completed.

The High Court ordered the file to be closed.

Before the Supreme Court, Chief Justice Martha Koome alongside judges Mohammed Ibrahim, Smokin Wanjala, Njoki Ndungu and Isaac Lenaola ruled that they have no jurisdiction to interfere with the Court of Appeal decision, which ordered Cape Holdings Ltd to pay Synergy Industrial Credit Ltd its dues.

The initial amount awarded in 2015 was Sh1.6 billion in addition to 18 percent per annum compound interest.

“The Supreme Court lacks jurisdiction to entertain appeals that emanate from arbitration and which have been conclusively determined by the Court of Appeal. The appeal before us, therefore, lacks merit and is dismissed,” ruled the judges.

Their decision marked the final hurdle in the 10-year fight between Cape Holdings Ltd and Synergy Industrial Credit Ltd over the 14 Riverside Drive properties that include the Dusit D2 Hotel, residential apartments, and office blocks.

It has been a battle between two billionaire businessmen as records filed in court showed that Cape Holdings Ltd is owned by Vinay Sanghrajka while Synergy Industrial Credit Ltd is owned by Vipul Shah.

Their dispute dates back to 2011 when Synergy Industrial Credit Ltd agreed with Cape Holdings Ltd to purchase 14 blocks of apartments which the developer was constructing at 14 Riverside Drive.

The company claimed that they paid an upfront of Sh750 million for the blocks which were still under construction but when the property was completed, Cape Holdings refused to transfer their units.

In 2015, lawyer Ochieng Oduol, the sole arbitrator found that the developer had breached the terms of the contract by failing to hand over the blocks paid for and ordered Cape Holdings to refund the principal amount and compound interest totaling Sh1.6 billion.

The arbitrator had ruled that the compensation would cover a refund of advance payments, loss of interest costs, opportunity cost, and loss of exchange fluctuation for monies paid in dollars as well as loss of goodwill.

Cape Holdings moved to the High Court to challenge the arbitration award and in March 2016, the court set aside the award on grounds that the arbitrator acted beyond his jurisdiction.

Synergy Industrial Credit again moved to the Court of Appeal and in 2019, the court overturned the High Court decision and reinstated the arbitration award, and also ordered the developer to pay all accrued interests.