14 Riverside loses Supreme Court Sh1.6bn pay dispute
Chief Justice David Maraga. FILE PHOTO | NMG
What you need to know:
- The Supreme Court ruled that it has the right to hear a suit where owners of the six luxury office blocks are resisting paying Sh1.6 billion to its former partner, Synergy Industrial Credit Limited, for breach of contract and lost business after the collapse of the joint venture.
- Synergy had paid Sh577 million for a stake in 14 Riverside before terminating the partnership, accusing the owners under a vehicle known as Cape Holdings of diverting the funds and slowing construction.
The Supreme Court has agreed to hear a Sh1.6 billion compensation row linked to the development of the multibillion-shilling exclusive office block, 14 Riverside, adding a new twist to the eight-year row.
The top court ruled that it has the right to hear a suit where owners of the six luxury office blocks are resisting paying Sh1.6 billion to its former partner, Synergy Industrial Credit Limited, for breach of contract and lost business after the collapse of the joint venture.
Synergy had paid Sh577 million for a stake in 14 Riverside before terminating the partnership, accusing the owners under a vehicle known as Cape Holdings of diverting the funds and slowing construction.
It successfully petitioned the High Court to pursue fraud allegations against the owners and won Sh1.6 billion compensation via arbitration that Cape Holdings blocked at the Appeals Court.
Synergy moved to the Supreme Court to overturn the Appeals Court ruling and pushed for a refund of the Sh577million, interest and lost business for nine years amid opposition from Cape Holdings.
Cape Holdings argued that the Supreme Court under Chief Justice David Maraga has no jurisdiction to hear an arbitration row that had been settled at the High Court.
“We therefore find that the present appeal is properly before use, and that the preliminary objection is without merit,” said Justice Maraga.
Before the Supreme Court action, Synergy had won a High Court fight seeking investigation of Cape Holdings for obtaining the money through false pretense.
The commercial complex, opened in 2012 and owned by the Sanghrajka family, proprietors of Tile & Carpet Centre, comprises office blocks with retail spaces on the ground floor, a parking silo and a 100-room hotel on the ground floor.
The Sanghrajka family in 2011 entered a Sh700m deal with Synergy for development 14 Riverside.
Synergy paid Sh577 million in exchange for one of the office blocks, but later walked out of the deal six months later citing breach of contracts and diversion of funds, prompting the dispute to be referred for arbitration.
The arbitration was led by commercial lawyer Ochieng Oduol who found Cape Holdings at fault, and awarded Synergy Sh1.6 billion.
Cape Holdings has opposed refunding the Sh570 million and arbiter compensation, prompting Supreme Court suit.
The office of the DPP and Synergy got High Court order asking police to investigate Cape Holdings accounts at I&M Bank.
