On What Basis Did The Court Award “Damages” To “Aggrieved Parties” Of 14 Riverside

You may have heard, either through social media or through the dailies that the iconic 14 Riverside is about to be auctioned. You may have also seen some “bigwig” lawyers bragging about it online and asking those with big money to place their bids.

The story leading to the mess that the 14 Riverside is in now is one marred with controversy, miscalculations, and misjustice that will not only affect the real owners of 14 Riverside but paint a dark picture to the future investors.

Now, I am no lawyer. I am a journalist. In matters of arbitration and awarding of damages, I am a layman and will present my points as a layman for you my fellow layman to understand. We may take the matter of 14 Riverside as a “private matter” that affects only “one investor” but the repercussions run deep into the inner roots of investments.

The first question that we should ask ourselves is, how did a liability of 570 million shillings balloon to 5.5 billion shillings in a period of 10 years? How is this possible? How were the calculations done to arrive at this crazy figure?

As you ponder about the above question, let me take you through where it all began. The story began when 14 Riverside was being constructed in 2010. A company called Synergy approached the 14 Riverside development team, Cape Holdings, and offered to purchase a block.

For any investor in real estate, the first client is usually very important. In the African culture, it is a sign of good luck and trust in whatever is being put up. Synergy wanted its block to be customized with specific features. Formal sale agreements were drawn, signed, and payments made. It was a good deal.

After the formal sale agreements were signed and payments made, Synergy withdrew from the agreement and demanded a refund of the cash that had been paid and more. The first red flag was here. You buy something, later withdraw and demand your money back with interest. Some sort of business. Right?

Keep reading. Synergy then rushed to the Directorate of Criminal Investigation (DCI) to accuse Cape Holding of “obtaining money by false pretense. How? Where does the “false pretense” come in when agreements had been signed and payments made?

Now, remember Synergy had asked for a refund. Did Cape Holdings refuse to pay? No. Cape Holdings was willing to pay but Synergy was asking for crazy amounts that were contrary to the agreements that had been signed.

When one retracts on a sale agreement, there are terms and conditions especially on the “non-refundable deposit”. Interestingly, Synergy wanted all and more. As a result of the back and forth, Cape Holdings ran behind schedule in terms of project delays hence unprecedented losses.

It was obvious that Synergy was using delaying tactics to frustrate 14 Riverside and maybe demand much more by exploiting loopholes in the law. The matter proceeded to Arbitration in 2012. This was despite the fact that Cape Holdings wanted the matter settled amicably outside the court.

This kicked off one of the longest arbitrations in this country. The arbitrator, James Ochieng Oduol, delivered the first shock. He unjustly awarded a sum of 1.67 billion shillings in 2015 based on terms that are not even within the Arbitration Act. The some is now 5.5 billion shillings compounded at 18 percent. This is crazy.

Now, the Arbitrator awarded the damages in interest, opportunity cost, and foreign exchange. Now, where on earth do damages go beyond the amount agreed for the purchase in the first place? The agreement was in Kenyan currency, what the hell was the foreign exchange loss for?

The arbitrator seems to have ignored simple rules of interest computation that legally, have to be limited to 6 years and capped at the principal amount. What was awarded was an open rip-off. And all concerns by Cape Holdings were rejected by the Arbitrator.

This blatantly unjust arbitration ruling was fairly set aside by the High Court and thereafter dismissed by the Court of Appeal. Then Synergy went to the Supreme Court who directed the matter back to the Court of Appeal who reinstated the flawed arbitration award with a different bench.

How can an unjust arbitration award be reinstated? How can the Court of Appeal reinstate an award which they initially dismissed and agreed to the ruling of the High Court to set it aside?

Is it ironic that James Ochieng Oduol was a very close friend of Justice William Ouko, the then President of the Court of Appeal?

Just how did an initial amount of approximately 570 million explode to a colossal amount of approximately 5 billion shillings? Where do judges get the numbers when making a ruling of such magnitude? From the sky?

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