NAIROBI, Kenya – The Court of Appeal has dismissed I&M Bank’s attempt to prevent the sale of a building housing the Dusit D2 Hotel, concluding a prolonged legal battle over a failed transaction.
On Friday, Justices Patrick Kiage, Lydia Achode, and Mwaniki Gachoka delivered their judgment, stating that the decree-holder’s execution, Synergy Industrial Credit Limited, was finalized upon attachment. This rendered the appeals by I&M Bank and Cape Holdings Limited moot.
The appellate court had previously reached a similar conclusion. Justices Kathurima M’Inoti, Fatuma Sichale, and Agnes Murgor had ruled that Cape Holdings’ review application was moot.
They found that the lender’s placing Cape Holdings under administration was a calculated move to avoid the execution of a long-standing decree.
Justice Kiage remarked on the administration’s suspicious timing. It began immediately after the Supreme Court dismissed another appeal, effectively ending all legal maneuvers.
He criticized the bank’s actions against Cape Holdings, a company that was not in default and was financially solvent.
“I am thus persuaded, on a balance of probabilities, in fact, more, that the statutory management was executed for the sole purpose of aiding Cape Holdings to escape execution,” Justice Kiage said.
Justices Achode and Gachoka agreed with Justice Kiage’s assessment. They found that I&M Bank failed to establish its legal interest in the disputed property, and Justice Alfred Mabeya’s previous findings of bad faith and collusion were upheld.
“In light of the legal impediments and fatal infirmity and given the want of good faith in its creation, I do not think that the debenture was capable of creating rights and priority in favour of the Bank that could defeat the rights of the judgment creditor that Synergy was,” Justice Kiage further stated.
Synergy Industrial Credit is owed approximately Sh5.5 billion by Cape Holdings following a botched sale.
Last year, Synergy advertised the sale of the property, but I&M Bank obtained a court order to block the sale, arguing that the building was collateral for a Sh2.82 billion loan.
Cape Holdings was placed under administration on October 12, 2021, which ended on June 9, 2023, due to the administrator’s non-performance.
I&M Bank, represented by lawyer William Kabaiku, argued that their legal interest in the property through a registered debenture gave them priority over other claims, including those of Synergy.
Senior counsel Allen Gichuhi supported the bank’s stance, asserting that I&M’s position as a secured creditor granted them a superior legal interest.
However, Synergy’s lawyer, senior counsel Ahmednasir Abdullahi, countered this claim, highlighting that the execution was already complete and the bank’s actions were merely another attempt to delay the process.
Justice Kiage pointed out that the debenture schedule did not list the disputed property, undermining the bank’s claim of a legal charge.
“The effect is that it has no bearing whatsoever to the suit property over which no legal charge was ever created by the Bank,” he stated.
