The High Court of Kenya has dismissed a petition filed by Cape Holdings, the owners of the 14 Riverside complex in Nairobi, which houses the DusitD2 hotel. The petition challenged Section 44A(4) of the Banking Act, which excludes judgment debts and court decrees from the in duplum rule, a legal protection that caps the total recoverable interest, fees, and charges on a non-performing loan at an amount equal to the outstanding principal.
The in duplum rule is designed to prevent borrowers from being trapped in endless debt cycles by capping the total recoverable interest, fees, and charges on a non-performing loan. However, Section 44A(4) of the Banking Act excludes judgment debts and court decrees from this rule. Cape Holdings had argued that the debt, which has grown from an original Sh570 million to Sh10.6 billion, exceeds the development's estimated value of Sh7.3 billion as of October 2025.
The court ruled that Cape Holdings attempted to reopen a dispute that had been determined through a constitutional petition. The judge held that the prayers sought by Cape Holdings showed that the company attempted to relitigate issues that had already been determined conclusively. As a result, the court upheld Synergy Industrial Credit Limited's objection and dismissed the petition.
The dismissal leaves Cape Holdings facing the prospect of having its 14 Riverside Drive development auctioned to recover the Sh10.6 billion debt. The company had asked the court to determine whether enforcing the debt against the entire 14 Riverside Drive development would disproportionately limit its right to property under Article 40 of the Constitution.
Cape Holdings has signalled its intention to appeal against the ruling. The company told the court that about Sh9.013 billion of the amount claimed comprises compound interest, accounting for approximately 84 per cent of the total debt. Synergy opposed the petition and asked the court to strike it out. Earlier this month, the court ruled that the procedures followed by Synergy and Moran Auctioneers in a proposed public auction were defective and invalid.
The court's decision allows Synergy to issue fresh notices and execution documents, provided they comply with the law. The judge declared invalid the notification of sale, warrants of sale, auctioneer's notice, and advertisement. Cape Holdings and Synergy have been engaged in a long-running commercial dispute over an aborted transaction involving a block in the 14 Riverside Drive development in Nairobi.
Key points
- The Kenyan High Court has dismissed a petition by Cape Holdings, owners of the 14 Riverside complex, challenging part of the Banking Act in a Sh10.6 billion debt dispute.
- The debt has grown from an original Sh570 million and exceeds the development's estimated value of Sh7.3 billion.
- Cape Holdings has signalled its intention to appeal against the ruling.
