The High Court has quashed notices issued earlier this year seeking interested buyers for Nairobi’s 14 Riverside Drive, which houses DusitD2 hotel.
The court ruled that the process Synergy Industrial Credit and Moran Auctioneers followed in the proposed public auction, scheduled for May 26, was defective and invalid.
However, the judge said Synergy is free to issue fresh notices and execution documents, provided they comply with the law.
“I have carefully considered the material record. I find that contrary to Synergy’s submission, the execution instruments relied upon were defective,” the judge said.
The court identified several defects in the execution process, including the failure to properly state the reserve price.
Under the Auctioneers Rules, a warrant for the sale of immovable property must include the reserve price for each separate parcel of land, based on a professional valuation conducted not more than 12 months before the proposed sale.
The court also found that the sale documents failed to disclose registered encumbrances, as required under the Civil Procedure Rules.
“In the present case, the warrant marked encumbrances as NA (not applicable or not available), omitting the four registered long leases,” the judge said.
The court said the requirement for a reserve price is intended to safeguard against property being sold at an undervalue.
“Consequently, the notification of sale and warrants of sale alongside the auctioneer’s notice and advertisement are invalid and must be set aside,” the court ruled.
The judge said Cape Holdings remains the registered proprietor of the property until a sale is lawfully completed. “The notification of sale in respect is set aside for lack of compliance with the procedure. The respondent (Synergy) is at liberty to issue execution documents strictly complying with the law.”
The dispute stems from Synergy’s efforts to recover a debt arising from an arbitral award of Sh1.66 billion, which has since grown to about Sh10.7 billion due to accumulated interest.
The dispute dates back to a 2011 agreement under which Cape Holdings agreed to sell office space in the 14 Riverside development to Synergy for Sh703.2 million.
