The High Court dismissed a petition filed by Cape Holdings and its directors, owners of Nairobi’s 14 Riverside complex that houses the DusitD2 hotel, which challenged Section 44A(4) of the Banking Act.
The petition sought to exclude the KSh10.6 billion debt, which has risen from an original KSh570 million, from the in duplum rule that limits recoverable interest, fees and charges on a non-performing loan to an amount equal to the outstanding principal.
The court upheld Synergy Industrial Credit Limited’s objection, noting that the petition represented “yet another attempt to avoid complying with and settling the arbitral award, now crystallised as a decree of the Court,” and could not be considered in isolation from the extensive litigation history.
The judge ruled that the issues had already been determined in earlier constitutional proceedings, describing the matter as res judicata and ordering costs to be awarded to the first respondent, Synergy.
Cape Holdings said it will appeal the decision.
In its petition the company argued that enforcing the debt against the whole 14 Riverside Drive development would disproportionately limit its right to property under Article 40 of the Constitution and could not be justified under Article 24, especially as the development’s estimated October 2025 value was KSh7.3 billion.
Cape Holdings told the court that approximately KSh9.013 billion of the claim, about 84 per cent of the total, comprised compound interest, which it said had grown far beyond the original award.
Synergy opposed the petition and asked the court to strike it out.
Earlier this month the same court found the procedures used by Synergy and Moran Auctioneers for a public auction scheduled for May 26, 2026 to be defective and invalid, but allowed the creditor to issue fresh notices and execution documents if they complied with the law.
The judge said, “I have carefully considered the material record. I find that contrary to Synergy’s submission, the execution instruments relied upon were defective,” and declared the notification of sale, warrants of sale, auctioneer’s notice and advertisement invalid.
The court also recalled its earlier pronouncements on the applicability of articles 10(2b), 25, 40 and 50 to the decree, stating that a constitutional challenge to Section 44 of the Banking Act could not salvage the petition.
