Sh10.7b siege: Intrigues into the decade-long court battle for the soul of Dusit D2 property

Behind the polished façade of Nairobi’s Dusit D2 complex lies a decade-long legal war that has ballooned from a Sh703 million property dispute into a Sh10.7 billion battle threatening to swallow the landmark Riverside property.

Eight years before the January 15, 2019 terror attack, Synergy Industrial Credit Limited came into Cape Holdings Limited’s life.

Cape Limited is the owner of the property where Dusit sits.

Synergy expressed interest in buying two blocks of the property sometime in 2011, then scaled down to one. 

Court documents indicate that the negotiations and the agreements were verbal, while others were recorded in 14 documents dated February 8, 2011.

The cost of the block was to be Sh703.2 million. This is where the war started.

On one hand, Cape Holdings insists that Synergy ended the deal later the same year, claiming delays, but had not paid the full agreed amount. It argued that Synergy paid only Sh577 million.

Synergy, on the other hand, wants a pound of flesh next to Dusit’s heart, maintaining that it did not get the block; hence, the money ought to be returned, plus interest.

It demanded Sh715.6 million in funds advanced, Sh750.4 million as interest, Sh147.8 million in income opportunity loss, Sh50.2 million in exchange fluctuations, and Sh1.988 million in costs.

In 2015, the two companies went for arbitration, just as the agreement required.

The arbitrator ordered that Cape Holdings should pay a total of Sh1.66 billion, which covered a refund plus accruing interest, loss of income opportunity, exchange fluctuations and costs.

Cape was also required to pay an 18 per cent compound interest.

Aggrieved, Cape Holdings moved to the High Court, arguing that the arbitrator had acted beyond his powers. It argued that there was no independent accountant’s report to justify the amount demanded and claimed to have been paid by Synergy.

According to the firm, the claim was without evidence, and the payment was illegal, being contrary to public policy.

Justice Charles Kariuki agreed with the plaintiff, set aside the entire award and dismissed Synergy’s application for enforcement.

The judge found that the arbitrator had acted beyond his scope by awarding foreign exchange loss, which had not been highlighted in the reference and the agreements.  He also directed that both Synergy and Cape should shoulder their respective legal costs.

The fight did not end there. Synergy moved to the Court of Appeal, but its appeal was struck out.

Justices Kihara Kariuki (now retired and former Attorney General), Philomena Mwilu (now Deputy Chief Justice) and Festus Azangalala unanimously agreed that arbitration cases ought to end at the High Court. This was on December 20, 2016.

However, Synergy escalated the case to the Supreme Court, arguing that its right to challenge a court order to the highest court had been curtailed.  The then Chief Justice David Maraga, and Justices Mohamed Ibrahim (deceased), Smokin Wanjala, Njoki Ndung’u and Isaac Lenaola sent the case back to the Court of Appeal after finding on December 6, 2019 that the arbitration law was illegally limiting the right to be heard.

“In the circumstances, various questions would necessarily arise; would a Judgment that leaves a party in such a precarious position be said to create confidence in the administration of justice? Would the principle of minimal courts’ intervention in arbitration matters supersede the need to correct an injustice?

“Our position is that where allegations of such manifest unfairness have been made, they should not be left incapable of a higher court’s review,” the bench Maraga ruled.

The case landed before Court of Appeal judges Kathurima M’Inoti, Fatuma Sichale and Jamila Mohammed.

They overturned the High Court’s judgment on November 6, 2020 after finding that the arbitrator had powers to determine the admissibility, relevance materiality and weight of any evidence.

“Ultimately we find merit in this appeal. The learned judge was not justified in setting aside the arbitral award on the grounds that the arbitral tribunal had dealt with a dispute that was not contemplated by the parties, or one beyond the terms of the reference to arbitration, or had decided matters beyond the scope of the reference,” they ruled.

The bench also awarded Synergy the cost of the case.

Undeterred, Cape Holding went back to the Supreme Court, which dismissed its case.

On October 8, 2021, Chief Justice Martha Koome alongside judges Mohammed Ibrahim, Smokin Wanjala, Njoki Ndungu and Isaac Lenaola ruled that they had no jurisdiction to interfere with the Court of Appeal decision.

In the meantime, another battle erupted. Synergy now sought to sell off the property, which prompted Cape Holdings to move back to court. However, the High Court dismissed the case.

It then moved to the Court of Appeal arguing that there was need to review the initial judgment and the subsequent order by the High Court. This, too, was dismissed.

It filed a fresh application, seeking to move to the Supreme Court to determine whether an arbitrator can rewrite the parties' contract and whether the court was correct to invoke American jurisprudence in Kenya.

Cape argued that the Supreme Court also 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 claimed the case was an abuse of court as the applicant had again sought Court of Appeal’s permission to approach the Supreme Court, which was dismissed.

Court of Appeal judges Gatembu Kairu and Aggrey Muchelule rejected the plea by Cape Holdings, finding that the issues raised by the firm had already been resolved before by the apex 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.

The judges were of the view that the court had no powers to revisit the case, as orders by their colleagues 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 two ruled on November 21, 2025.

Justice Fred Ochieng died before the delivery of the ruling.

However, Cape Holdings moved back to the apex court seeking to be allowed to appeal. It argued that the arbitral award was conferring unjust enrichment to Synergy while at the same time denying it a property right.

Cape Holdings said there have been several attempts to sell the property, but in vain, claiming Synergy had sought to auction the property several times despite knowing there was a pending case.

The firm argued that Synergy had opted to steal a match, adding that the wars had caused potential tenants to grow cold feet.

“The repeated attempts to unlawfully auction the suit property has resulted in several tenants either opting not to renew the leases or effectively discouraging prospective tenants from taking up leased space. This has resulted in low uptake of the commercial letting spaces, which in turn has occasioned losses to the applicant,” it said.

Cape Holdings also argued that Synergy’s interest in the property was limited to a portion, being ‘A’ Wing on the ground floor, first, second, third, fourth, fifth and sixth floor, and ‘B’ wing on the ground floor, first, second, third, fourth fifth and sixth floor of the building block formerly known as Synergy Square (now Grosvenor).

The Supreme Court dismissed the application on March 24, 2026. CJ Koome, her deputy Mwilu, and Justices Wanjala, Njoki, Lenaola and William Ouko said they had no powers to hear the case, having ruled on it before.

They observed that a party ought to either decide to pursue an appeal or a review, and not both. They ordered that Cape pays the cost of the application to Synergy.

Initially, I&M Bank blocked the sale through a court order arguing that the building was charged to the lender over a loan of Sh2.82 billion.

Cape Holdings  had been put under administration on October 12, 2021, but this was terminated on June 9, 2023 due to non-performance by the administrator.
I &M Bank, through lawyer William Kabaiku, submitted that from the duly registered debenture, the bank acquired a legal interest in the subject property.
Consequently, a first priority right was created in favour of the bank over Cape Holdings’ assets, overriding any other party’s rights, including those of Synergy.

Kabaiku added the bank lawfully placed Cape Holdings under administration and in view of the fact that when the debenture was effected the subject property had not been sold, the bank had priority over the said property and was entitled to prevent it from being sold.

The lawyer said that allowing Synergy to continue with execution proceedings defeated the essence of administration and distracted the administrator’s attention from his statutory duties.

Cape Holdings supported the bank’s argument, submitting that as a secured creditor by virtue of the debenture, I&M had a superseding legal interest in Cape Holdings properties, including the suit property.

Synergy Credit opposed the application, saying it was yet another attempt by Cape Holdings to stop the execution.

Lawyer Ahmed Abdullahi pointed out that Synergy had given instructions to Moran Auctioneers, who advertised the suit property for sale by public auction on February 8, 2022.
He said Cape Holdings filed an appeal in the High Court against the deputy registrar’s action but by then, the execution was complete.

In their decision, the Court of Appeal judges, Patrick Kiage, Jamila Mohamed and Weldon Korir said a schedule to the debenture did not list the suit property.
“The effect is that it has no bearing whatsoever to the suit property over which no legal charge was ever created by the bank. The said property remained free of encumbrances.

“Absent such a charge, I would think there is substance in Synergy’s contention that it is false and misleading for the bank to refer to the suit property as the charged property in its submissions,” said the bench headed by Justice Kiage.

He added that the record was clear that the charge was registered over a different property, Parkside Towers.

The court also rejected yet another application by Cape Holdings to sell the property through a private treaty and deposit the money into an interest-earning account as the firm tabulated the money owed to I&M and Synergy.

On June 26, 2025, Justice Wayua Mong'are dismissed yet another application to preserve the property.

The firm argued that it remained willing to satisfy any properly ascertained lawful decretal sum following accurate accounting and lawful computation of interest.

Aggrieved, Cape Holdings moved to the Court of Appeal, which also dismissed the application.

Justices Daniel Musinga (Court of Appeal President), Mumbi Ngugi and George Odunga ruled on February 27, 2026 that the fear of auction could not invoke ownership rights. They also said that Justice Mong'are had frozen the exercise until a fresh valuation was done.

"In the circumstances, the applicant cannot properly contend that the intended appeals will be rendered nugatory by steps taken towards realisation of property that has already been lawfully attached. The apprehension of sale does not operate to revive proprietary rights that were curtailed upon completion of attachment.

“In any event, the High Court has stayed the intended sale pending the undertaking of a fresh valuation and the issuance of fresh warrants and there is no material before us to suggest that any step is being taken outside the supervision or authority of that court," the bench headed by Musinga ruled.

The property known as 14 Riverside Drive near the University of Nairobi's Chiromo Campus sits on a 5.2-acre land and comprises five office blocks, a five-star hotel (Dusit D2) with a swimming pool, a parking silo, a food court and a cafeteria.

Following the 2019 terror attack, Cape Holdings dug back into its pockets to refurbish it. However, Synergy had its own argument on this. It went back to court to block the directors from transferring their properties and also sought the lifting of the corporate veil, claiming that they were allegedly transferring them to evade paying the money.

However, Cape Holding directors maintained that the renovations were paid for with company money but that the private residential properties were paid for through lawful dividends that they paid tax on.

The High Court agreed with Cape Holdings and blocked Synergy from going after the directors’ properties.

Following the March 26 Supreme Court ruling, auctioneers set the auction for May 26, 2026.

A valuation of the property, filed in court in 2025, indicated that the block at the heart of the case was valued at around Sh1 billion. At the same time, the entire property was estimated to be worth around Sh7.5 billion, but with a force-sale value of Sh5.4 billion.

However, as it stands, Synergy is seeking at least Sh10.7 billion.

Cape Holdings’ grievance is whether Synergy should get more than it paid, and if the 18 per cent compound interest awarded by the arbitrator can stand. It insists that this is unjust enrichment.

But in another twist to the tale, Justice Moses Ado on May 23, 2026 stopped the auction in a last minute battle that has now created yet a new storm.

Synergy's lawyer Ahmednasir Abdullahi took to X to allege sinister motive by the Judge.

Nevertheless, senior lawyers Kioko Kilukumi and Paul Muite, in their application, argued that the Dusit property sale was based on illegal auction and on a misleading evaluation. In addition, they argued that the auction notice was simply re-dated in guise of compliance.

“The prejudice to the applicant is compounded by the fact that, once the property is sold through public auction, third-party rights may crystallise, thereby rendering it difficult, if not impossible, to reverse the transaction or restore the applicant to its original position," they argued.

The applicant therefore stands to lose its proprietary interest in circumstances where the execution process has not complied with the applicable legal and procedural safeguards,” the application by the two senior lawyers read.

The battle mirrors a commercial stalemate with courts at the heart of it, and unresolved financial disputes that continue to overshadow the revival of the high-end landmark.

jmuthoni@standardmedia.co.ke