(On the applications dated:
16th June 2025 by Gen. Paul Opiyo;
13 May 2026 by Esther Nyaguthii Munderu;
21st May 2026 by Nicholas William Marsh;
14th April 2026 by Jotham Nasser Olwero;
20th May 2026 by Amritpal Singh Chaggar;
16th June 2025 by Cytonn High Yield Solution LLP (In Liquidation);
18th May 2026 by Bakulchandra Kothari and Prafulla Kothari;
26th August 2025 by Paul Wanyika Wambugu; and
27th April 2026 by Prof. Daniel Njiru Mugendi and 109 Others)
COMPOSITE RULING
Background and Introduction
1. This Composite Ruling determines several applications filed at different stages of these liquidation proceedings, as per the directions issued by this Court on 22nd May 2026. Rather than recite each application strictly in the order in which it was filed, I have found it more useful to group them according to the interest each seeks to advance, both in the interest of expedition, given the sheer number of parties before the Court.
The joinder application:
2. I begin with the application dated 16th June 2025, filed by Saroni & Stevens Advocates, by which Gen. Paul Opiyo seeks joinder on behalf of some 25,000 persons said to be investors in the Cytonn High Yield Fund (CHYF). The case advanced on their behalf is that CHYF invested more than Kshs 300,000,000/= in the development of the properties that are now subject to the preservation orders issued by this Court. It is stated that this investment entitles the investors to recognition as first-ranking creditors in respect of the Ridge, Applewood and Taraji, and as second-ranking secured creditors over the Alma. It is their case that the Official Receiver has, to date, declined to recognize that standing and the joinder is sought so as to enable them to canvas their interests.
3. The application is supported by the affidavit of Gen. Paul Opiyo sworn on 16th June 2025, to which is annexed a list identifying the investors on whose behalf he claims to act.
The individual homeowners:
4. The second, and by far the larger, family of applications comes from individuals who purchased apartment units at the Alma and now find themselves caught between the developer, Cytonn Integrated Project LLP (CIPL) and the secured creditor Bank (SBM). 11 interested parties, acting through C. Koile & Co. Advocates, moved this Court on 16th June 2025 for injunctive relief against the Official Receiver from interfering with units C-505, D-308, D-301, E-701, D-401, D-1005, D-1007 and C-201 at the Alma, erected on L.R. No. Kiambaa/Ruaka/6667 (the suit property).
5. Their case is that each of them purchased his or her respective unit from CIPL before the preservation orders were issued, that they are bona fide purchasers for value who had made the requisite payments and had already set in motion the process of perfecting their titles. They claim that this process was overtaken by the preservation orders of 6th January 2023, notwithstanding their status as purchasers without notice. They complain, further, that despite submitting proof of ownership to SBM, they have received no formal response. They take issue with the consent orders issued by this Court between the Official Receiver and SBM, the appointment of Muigai Commercial Agencies to manage the Alma, and what they describe as the sidelining of the developer from the verification exercise. Their application is supported by the affidavit of Mercy Muthoni Mbuba.
6. A materially similar application was brought on 26th August 2025 by Abdullahi, Gitari & Odhiambo Advocates on behalf of Paul Wanyika Wambugu, who seeks to have the preservation orders of 6th January 2023 varied to exclude his own unit. He deposes to having executed a Letter of Offer with CIPL at a purchase price of Kshs 10,900,000/=, of which Kshs 5,450,000/= was satisfied by the conversion of an existing investment in Cytonn Project Notes (CPN), an SPV within the CHYS structure, and the balance was paid in further instalments which culminated in full and final settlement and the execution of a lease agreement. He maintains that this transaction was concluded well before the institution of these insolvency proceedings.
7. That same thread runs through a series of later applications filed by C. Koile & Co. Advocates on behalf of Esther Nyaguthii Munderu (13th May 2026), Bakulchandra and Prafulla Kothari (18th May 2026), Amritpal Singh Chaggar (20th May 2026) and Nicholas William Marsh (21st May 2026). Each of them impugns the verification process conducted by SBM as evidenced by its Affidavit of Verification dated 6th May 2026, on the footing that it was carried out without the collaboration of the developer that the Court's directions had contemplated, and each seeking a declaration that they are bona fide purchasers and an order for partial discharge of their units.
8. Esther Nyaguthii Munderu's (Esther) case is that she paid the full purchase price of Kshs 9,500,000/= directly into the developer's account at Diamond Trust Bank (DTB), took possession under a sub-lease pending completion, and had already commenced the process of securing a partial discharge and title when the preservation orders of 6th January 2023 were issued. This, she says, was some 3 years after she had completed payment, and well before SBM's facility of Kshs 650,000,000/=, was advanced.
9. She relies on SBM's own Conditional Offer letter dated 27th February 2019, which she says expressly acknowledged the existence of pre-sale homeowners of her description, such that the Bank extended its facility with full notice of purchasers who already held equitable interests in the apartments.
10. Bakulchandra Kothari and Prafulla Kothari (the Kotharis), for their part, say they purchased their unit for Kshs 9,000,000/=, paid part of the price to the developer's accounts at Chase Bank and DTB before 23rd August 2019, and the remainder to SBM once the facility was in place, only to be told, by the Bank's own verification response, that only payments made into SBM's accounts could be verified.
11. Amritpal Singh Chaggar (Chaggar), deposes to a sale agreement executed with CIPL on or about 25th October 2016 for the purchase of a unit at a price of Kshs 7,900,000/=. He confirms that the unit was paid in full to the developer's accounts at DTB, with certain further sums paid to SBM only after the facility was advanced.
12. Nicholas William Marsh (Marsh), similarly, executed his sale agreement on 5th June 2018 for a unit priced at Kshs 7,500,000/=, and paid the full purchase price to DTB and Stanbic before 23rd August 2019.
13. Jotham Nasser Olwero's (Nasser) application, which was filed on 14th April 2026 through C. Koile Advocates, takes a somewhat different turn. He seeks permanent injunctive orders against SBM in respect of his units at the Alma, and an order setting aside as illegal the auctioneer's letter and instructions of 12th and 16th March 2026. As a purchaser of Units D-606 and A-304, he says he duly submitted proof of ownership and a detailed schedule of payments to the advocates for SBM and to the Official Receiver and received no response.
14. In his supplementary affidavit he raises what he terms differential treatment, pointing out that one of his units was discharged notwithstanding payment through DTB, while the Bank simultaneously maintains that payments through that same institution cannot be verified in respect of his other units.
15. Finally, 110 homeowners of the Alma, through Lwanga Onyango Advocates LLP, moved this Court on 27th April 2026 to set aside the redemption notice issued on 16th March 2026 and to have an independent and neutral person or body appointed to oversee the verification process, which they describe as fundamentally flawed. Their application is supported by the affidavit of Peter Maina Wachira.
The developer and the related SPVs:
16. Considering the directions issued on 17th July 2026, and having regard to the pendency before the Supreme Court of Supreme Court Petition (Application) No. E001 of 2026: Cytonn Investments Partners Four LLP & 6 Others V The Official Receiver & Others, several applications filed by the SPVs have been held in abeyance.
17. That said, the application dated 14th December 2025 supported by the affidavit of Elizabeth Nailantei Nkuukuu is for determination. It seeks to set aside the consent dated 1st August 2024, adopted before Mabeya J. on 30th November 2024, on the ground that it was negotiated, executed and adopted without CIPL's participation, knowledge, instructions or approval, notwithstanding that CIPL is both the registered proprietor of the Alma and the actual borrower under the SBM facilities.
18. CIPL accuses the Bank of reneging on its earlier averments confirming CIPLs compliance with its loan obligations, and points to its own application of 17th February 2023 seeking the lifting of the preservation orders to allow for repayment of the outstanding facility, contending that the direct effect of the impugned consent was to extinguish its proprietary rights without its involvement.
19. A further application, dated 10th April 2026 and filed through the same firm, supported by the affidavit of Adamskey Dudi sworn 17th March 2026, seeks an order compelling the Official Receiver to complete the proof of debt and verification exercise in respect of CIPL's claim, and to furnish a definitive written response in compliance with the Court's directions of 30th January 2026, before taking any further step in the tender process. CIPL says it placed before the Official Receiver evidence supporting both its claim to exclude the subject property from the liquidation estate and a proof of debt, and that a public tender for disposal of the asset was advertised before any response issued.
The rival positions:
20. Each of these applications is opposed by either the Official Receiver, SBM and the Creditors Committee. As against the joinder application, the Official Receiver maintains that this Court is functus officio, the issues raised having already been determined in COACA E590 of 2023, COACA E647 of 2024 and HCCOMM 760 of 2024, that counsel for the investors was directed by the Court of Appeal to furnish particulars of the parties he represents and has not done so, and that Gen. Paul Opiyo has produced no authority entitling him to depose on behalf of the class he purports to represent.
21. The Official Receiver further denies that the investors hold any registered security, insisting that SBM is the sole secured creditor over the Alma, and maintains that the proper course for any investor is to lodge an individual proof of debt.
22. As against the home owner applications generally, the Official Receiver's position is that neither the charge, the further charge, nor the conditional offer letters carved out any exclusion for units that had already been sold to the applicants, that SBM's status as secured creditor over the whole of the Alma is unaffected by payments made to CIPL, and that home owners who did not pay SBM directly must look to CIPL, and not the Bank, for recovery.
23. The Official Receiver denies that the verification exercise was conducted unilaterally, laying the blame instead on the developer and the applicants for failing to furnish the necessary documentation. The Official Receiver points, in respect of the 110 homeowners, to their want of locus standi, the absence of any authority for Peter Maina Wachira to depose on their behalf, and the Court of Appeal's Ruling of 29th May 2026 dismissing an injunction against the sale of the suit property.
24. SBM's position rests on the grounds that none of the applicants holds a registrable interest capable of binding the Bank; that the letter of offer issued to CIPL required all pre-sale proceeds to be channeled into an escrow account held with SBM and that Clause 13 of the Charge prohibited any dealing with the charged property without the Bank's written consent; that the developer was obliged under Clause 8(h) to furnish pre-sale contracts to the Bank and largely failed to do so, which default was acknowledged by CIPL. SBM argues that consequently, any units with monies not traceable to the Bank's own records remain available for realization, subject to the categorization of purchasers as set out in its Affidavits of Verification.
25. The said affidavits categorize the units as those fully paid through the Bank, units partially paid, and units on which nothing was received through the Bank. In respect of Nasser’s unit specifically, the Bank confirms, that unit B 502 will not form part of the sale, while maintaining that the other units, on which no payment and one payment respectively were received, cannot be discharged. As against CIPL's application of 14th December 2025 seeking to set aside the consent, the Bank maintains that the grounds raised have already been argued before this Court and the Court of Appeal and are accordingly barred by the sub judice rule, and that its dealings with the Official Receiver, rather than with CIPL directly, were mandated by the preservation orders and the Insolvency Act.
26. Having considered the applications, responses and submissions on record I now turn to identify the issues properly arising for determination.
Issues for Determination:
27. Again, stripped of their individual detail, and from an overall consideration of the cases advanced by all the parties, the applications raise the following issues for determination:
i. Whether the application dated 16th June 2025 for the joinder of Gen Paul Opiyo on behalf of the CHYF investors is barred by res judicata or sub judice, and whether the joinder should be allowed,
ii. Whether the individual applicants who purchased units at the Alma from CIP LLP hold equitable interests capable of binding SBM as chargee,
iii. The interests of the various homeowners with reference to the date of registration of SBM's charge on 23rd August 2019,
iv. Whether the verification exercise conducted by SBM, as reflected in its Affidavits of Verification, was conducted in compliance with this Court's directions and is a sound basis on which to determine which units may be sold,
v. Whether the Consent dated 1st August 2024, adopted on 30th November 2024, ought to be set aside,
vi. Whether the Official Receiver should be directed to complete the proof of debt and verification exercise in respect of CIPL's claim, and to issue a definitive response, before any further step is taken in the tender or sale process,
vii. Whether the redemption notice of 16th March 2026 and the associated auctioneer's letter and instructions of 12th and 16th March 2026 ought to be set aside, whether in whole or as against specific units and
viii. Whether an independent or otherwise reconstituted verification mechanism ought to be put in place, and what should be done about the apparent inconsistency in treatment illustrated by some units.
Analysis and Determination
i. Joinder of the 25,000 investors of CHYF:
28. I begin with determining the application dated 16th June 2025 by which Gen. Paul Opiyo seeks joinder on behalf of the CHYF investors. That is because if the Official Receiver's preliminary objection is upheld, it would dispose of the application without any need for me to descend into its merits. The objection is grounded on matters which are said to render the application either res judicata or sub judice by dint of Nairobi Court of Appeal COACA E590 of 2023, COACA E647 of 2024 and HCCOMM 760 of 2024.
29. The Official Receiver drew this Court’s attention to the proceedings of 6th March 2025 before the Court of Appeal in COACA E590 of 2023. At pages 45, 46 and 47 of the typed proceedings, the learned Judges of Appeal expressed concern over the evidence tendered by Mr. Ogolla on behalf of the 25,000 investors, and specifically over the fact that the list annexed to that evidence had been redacted. It was submitted, by the Official Receiver and the Creditors Committee, on the strength of that exchange, that this Court ought to decline jurisdiction to make any adverse finding.
30. I do not accept the submission in the terms in which it was put. Section 7 of the Civil Procedure Act is the provision that governs the doctrine of res judicata, and it is settled that before that doctrine can be invoked, the matter said to be res judicata must have been heard and finally determined by a court of competent jurisdiction. (See the Supreme Court decisions in Communications Commission of Kenya & 5 Others V Royal Media Services Limited & 5 Others, [2014] eKLR and John Florence Maritime Services Limited & Another V Cabinet Secretary Transport & Infrastructure & 3 Others, (Petition 17 of 2015) [2021] KESC 39 (KLR).
31. Nothing placed before me shows that the Court of Appeal in that case, or any other for that matter, has made any final determination on the question of joinder of the 25,000 investors. What the record does show, and what counsel for the Official Receiver was on firmer ground in pointing out, is that the very question of the joinder is presently and actively before the Court of Appeal, which engages an altogether different provision.
32. Section 6 of the Civil Procedure Act provides for the sub judice rule, which restrains a court from proceeding with a matter directly and substantially in issue in a previously instituted proceeding between the same parties that remains pending before a court of competent jurisdiction.
33. That the same question is indeed pending is not, on this record, seriously in doubt. Page 5 of the proceedings before the Court of Appeal confirms that what was before that Court was an application dated 4th January 2025 “in which some applicants representing other persons seek joinder as interested parties”. Mr. Ogolla, resisted the suggestion that this renders the present Court functus officio, insisting that the issues before the Court of Appeal are distinct from those raised in this application. I would have expected, if that were truly so, that counsel would have identified with some precision wherein the distinction lies. None was offered. What I am left with, on the material before me, is the unremarkable fact that a superior court is already seized of the question whether these 25,000 persons ought to be joined as parties asserting an interest in these very properties.
34. Comity and indeed the ordinary hierarchy of courts, demand that I not run a parallel race to judgment on that same question. That is precisely the mischief the sub judice rule exists to guard against, and I find the objection well taken on that ground.
35. I should add, lest this finding be thought to turn on a technicality alone, that the application fares no better on its own merits. The affidavit sworn by Gen Paul Opiyo on 16th June 2025, stripped of its exhibits, discloses nothing beyond a bare list of names and telephone contacts. There is nothing in that list, or anywhere else in the supporting material, capable of establishing that the persons named are in fact investors in CHYF, still less that they hold the first-ranking security they claim over the suit properties. An applicant who asks the Court to recognize 25,000 persons as secured creditors carries, at the very least, an evidentiary burden to show who those persons are and what they are owed. That burden has not been discharged. Whether the matter is approached on the threshold objection or on its substance, therefore, the result is the same, and the application must fail with costs.
ii. The Alma Unit Owners:
36. Before I come to the substance of the homeowners’ claims, I must first dispose of the objection raised by SBM that the applications are incompetent by reason of the doctrine of res judicata under Section 7 of the Civil Procedure Act. The Bank's argument, put simply, is that its statutory right of sale over the Alma was conclusively settled in Civil Application No. E102 of 2026; Cytonn Integrated Project LLP V SBM Bank Kenya Limited & Another and by this Court's own Ruling of 18th December 2025, and that the home owners cannot now be permitted to reopen, through the back door, a question that has already been laid to rest between the Bank and the developer.
37. The parameters of the doctrine are not in doubt. As previously stated, for a proceeding to stand barred, it must be shown that a matter had been directly and substantially been in issue in the former proceeding, that the former proceeding was between the same parties, or parties under whom they or any of them claim, that those parties were litigating under the same title and that the matter had been heard and finally decided by a court competent to try it. It is the second and third of these requirements that defeat SBM's objection.
38. The record confirms that the proceedings relied upon by SBM were contests between the Bank and CIPL over the existence and enforceability of the statutory power of sale following default. On that narrow question, I accept without hesitation that both this Court and the Court of Appeal have spoken and spoken with finality. The homeowners now before me were neither parties nor privies to those proceedings, and the question they raise is a wholly different one, not whether the Bank's charge is valid and its power of sale exercisable but whether individuals, by virtue of agreements and payments made to the developer, hold interests capable of standing in the way of the exercise of that power over their specific units. The objection accordingly fails, and I now turn to the merits.
iii. The doctrine of the bona fide purchaser for value:
39. The various homeowners’ cases rest, in centrality, on the doctrine of the bona fide purchaser for value without notice, a doctrine as old as equity itself, and one which the Supreme Court had recent occasion to restate with clarity in Sehmi & Another V Tarabana Company Limited & 5 Others, [2025] KESC 21 (KLR). The Court there affirmed that a purchase of a legal estate for value without notice remains an absolute and unanswerable defence against the claims of a prior equitable owner, but was equally emphatic that the burden of establishing the defence lies squarely on the person who asserts it. The Court stated as follows:
“It is a fundamental principle of the law of property in land that a purchase of a legal estate for value without notice is an absolute, unqualified and unanswerable defence against the claims of any prior equitable owner or encumbrancer. … Three main ingredients must be present for a claimant to mount a successful defence based on the doctrine. These are, innocence, purchase for value, and a legal estate.”
40. In evaluating these ingredients, the Court went further to state:
“The element of innocence means that the purchaser must act in good faith. His conduct must not raise any doubt as to whether indeed, he did not have any notice or knowledge as to the existence of a rival interest in the suit land. … The element of innocence also connotes the exercise of diligence expected of any reasonable purchaser. The claimant must demonstrate that he acted diligently and conducted a reasonable inquiry into the status of the estate or land that he sought to purchase. … Purchase for value means that consideration in money or money’s worth was paid by the claimant in return for the land. … Even a person who has given value will be bound if before he obtained the land, he knew of the existence of equitable interest.”
41. It equally bears mentioning the decision in Torino Enterprises Limited V Attorney General, (Petition 5 (E006) of 2022) [2023] KESC 79 (KLR), cited by the Supreme Court in Sehmi. Of relevance to the present situation is the finding that an innocent purchaser for value denotes a purchaser who exercised due diligence, which would include, being aware of what they were purchasing.
42. It is against this background that the position of each home owner’s application must be tested. I find it convenient to consider the applications in two categories, determined by the date of 23rd August 2019, being the date when SBM's charge over the Alma was registered.
Category A: purchasers who dealt with the developer before 23rd August 2019:
43. I begin with those who purchased and paid for their units before the charge came into existence, for it is here that the doctrine speaks most clearly. The offer letter dated 27th February 2019 in respect of the facility addressed to CIPL acknowledges, on its face, that the facility was intended to "partly finance completion" of the development, a language which itself presupposes a project that was already under way and, necessarily, already sold in part.
44. That inference is further corroborated by the letter dated 7th March 2019 sent by Elizabeth Nkuukuu on behalf of the developer to Peter Ndirangu of SBM, in which the developer expressly informed the Bank that "sales are currently at 60%." A lender who is told, before it advances a shilling, that 6 in every 10 units have already found a buyer, whether the same was accurate or not, cannot afterward present itself as an innocent chargee unaware of pre-existing purchasers as the Bank would want this Court to believe.
45. Indeed, the Bank went further and built that knowledge into the very architecture of the facility. Clause 8(h)(viii) of the letter of offer of 27th February 2019 made it a condition precedent that the developer avail to the Bank "the sales contracts for the pre-sales, mortgage and cash buyers already onboarded". This was an acknowledgment, in the clearest possible terms, that such buyers existed and that the Bank considered their position material enough to warrant disclosure before the charge was created.
46. Clause 8(u) of the Supplemental Letter of Offer of 25th May 2022 carried the same theme forward, requiring that: ‘all project pre-sale collections [be] made directly into the escrow account’, with the escrow details ‘embedded into the sale agreements’.
47. These provisions cannot be read in isolation from one another. Read together, they show a Bank that knew, at the point of taking its security, that pre-sale purchasers existed at the Alma and that it required the developer to disclose them. A chargee that takes security with that degree of actual knowledge cannot, when the developer defaults on the very disclosure obligations the Bank itself insisted upon, turn around and treat the undisclosed purchasers as though they had never existed. The developer's failure to comply with clause 8(h) is a breach owed to the Bank, and sounds in whatever claim the Bank may have against the developer.
48. It is not a breach that can be visited upon an innocent purchaser who had no hand in it, no visibility into it, and no means of compelling the developer to comply. Nor, in my view, can SBM insist on the benefit of a charge over the entirety of the Alma while it was the Bank's own conditions precedent that required sight of the pre-sale contracts before completion, that went unmet. In other words, a party cannot rely on a contractual condition inserted in a contract for its own protection and, in the same breath, disclaim responsibility for having proceeded without it having been satisfied.
49. Applying the elements set out in Sehmi, I am unable to reach any conclusion other than that this category of purchasers entered into their purchases honestly, for value, and at a time when no rival interest existed of which they could reasonably have had notice. They were, on this record, bona fide purchasers for value. What is more, the evidence does not stop at showing that these purchasers were innocent. It goes further and shows that it was the Bank which entered the arrangement with its eyes open.
50. Be that as it may, a purchaser seeking the protection of this equitable relief must also show the value actually paid for the unit. Favourable timing alone proves nothing. A purchaser before the charge is no less bound than any other to satisfy the second limb of Sehmi; that is, purchase for value, and cannot escape the requirement to prove payment simply because the question of SBM's notice does not arise in his case.
51. Esther Munderu in her application dated 13th May 2026 produced a sale agreement dated 19th December 2016 in respect of Apartment J-501. The same indicates that the purchase price was Kshs 9,500,000/=. Clause 3.2.5 of that agreement required her to remit the purchase price into the developer's account at Diamond Trust Bank (DTB), and Clause 3.3 provided that the funds so paid would be applied towards the development of the apartment. She later on signed a Deed of Variation and changed her unit to F902.
52. From a review of the evidence Esther has placed before this Court, I am unable to find that she has discharged the burden that Sehmi demands of her. The only proof of payment on record is a bank deposit of Kshs 925,000/- made on 13th May 2016, not by Esther herself, but by a D. Omuga. Where the payment relied upon to found an equitable interest was made by a third party, it falls to the claimant to explain the connection between that payment and her own purchase, whether by producing the underlying cheque, an instruction authorizing the deposit on her behalf, or some other evidence tracing the funds to her. None of that has been done here, and I am left with a deposit slip bearing a stranger's name and nothing to bridge the gap.
53. The position is no better in respect of the cheque dated 17th March 2017 for Kshs 550,000/-. A cheque, without more, proves only that an instrument was drawn; it says nothing of whether it was honoured, whether it was in fact presented, or whether the sum it represents ever found its way into the developer's account. In the absence of a corresponding bank statement or receipt confirming that the developer received and banked that sum, the cheque remains no more than a piece of paper and evidence, at best, of an intenti
[...truncated]
16th June 2025 by Gen. Paul Opiyo;
13 May 2026 by Esther Nyaguthii Munderu;
21st May 2026 by Nicholas William Marsh;
14th April 2026 by Jotham Nasser Olwero;
20th May 2026 by Amritpal Singh Chaggar;
16th June 2025 by Cytonn High Yield Solution LLP (In Liquidation);
18th May 2026 by Bakulchandra Kothari and Prafulla Kothari;
26th August 2025 by Paul Wanyika Wambugu; and
27th April 2026 by Prof. Daniel Njiru Mugendi and 109 Others)
COMPOSITE RULING
Background and Introduction
1. This Composite Ruling determines several applications filed at different stages of these liquidation proceedings, as per the directions issued by this Court on 22nd May 2026. Rather than recite each application strictly in the order in which it was filed, I have found it more useful to group them according to the interest each seeks to advance, both in the interest of expedition, given the sheer number of parties before the Court.
The joinder application:
2. I begin with the application dated 16th June 2025, filed by Saroni & Stevens Advocates, by which Gen. Paul Opiyo seeks joinder on behalf of some 25,000 persons said to be investors in the Cytonn High Yield Fund (CHYF). The case advanced on their behalf is that CHYF invested more than Kshs 300,000,000/= in the development of the properties that are now subject to the preservation orders issued by this Court. It is stated that this investment entitles the investors to recognition as first-ranking creditors in respect of the Ridge, Applewood and Taraji, and as second-ranking secured creditors over the Alma. It is their case that the Official Receiver has, to date, declined to recognize that standing and the joinder is sought so as to enable them to canvas their interests.
3. The application is supported by the affidavit of Gen. Paul Opiyo sworn on 16th June 2025, to which is annexed a list identifying the investors on whose behalf he claims to act.
The individual homeowners:
4. The second, and by far the larger, family of applications comes from individuals who purchased apartment units at the Alma and now find themselves caught between the developer, Cytonn Integrated Project LLP (CIPL) and the secured creditor Bank (SBM). 11 interested parties, acting through C. Koile & Co. Advocates, moved this Court on 16th June 2025 for injunctive relief against the Official Receiver from interfering with units C-505, D-308, D-301, E-701, D-401, D-1005, D-1007 and C-201 at the Alma, erected on L.R. No. Kiambaa/Ruaka/6667 (the suit property).
5. Their case is that each of them purchased his or her respective unit from CIPL before the preservation orders were issued, that they are bona fide purchasers for value who had made the requisite payments and had already set in motion the process of perfecting their titles. They claim that this process was overtaken by the preservation orders of 6th January 2023, notwithstanding their status as purchasers without notice. They complain, further, that despite submitting proof of ownership to SBM, they have received no formal response. They take issue with the consent orders issued by this Court between the Official Receiver and SBM, the appointment of Muigai Commercial Agencies to manage the Alma, and what they describe as the sidelining of the developer from the verification exercise. Their application is supported by the affidavit of Mercy Muthoni Mbuba.
6. A materially similar application was brought on 26th August 2025 by Abdullahi, Gitari & Odhiambo Advocates on behalf of Paul Wanyika Wambugu, who seeks to have the preservation orders of 6th January 2023 varied to exclude his own unit. He deposes to having executed a Letter of Offer with CIPL at a purchase price of Kshs 10,900,000/=, of which Kshs 5,450,000/= was satisfied by the conversion of an existing investment in Cytonn Project Notes (CPN), an SPV within the CHYS structure, and the balance was paid in further instalments which culminated in full and final settlement and the execution of a lease agreement. He maintains that this transaction was concluded well before the institution of these insolvency proceedings.
7. That same thread runs through a series of later applications filed by C. Koile & Co. Advocates on behalf of Esther Nyaguthii Munderu (13th May 2026), Bakulchandra and Prafulla Kothari (18th May 2026), Amritpal Singh Chaggar (20th May 2026) and Nicholas William Marsh (21st May 2026). Each of them impugns the verification process conducted by SBM as evidenced by its Affidavit of Verification dated 6th May 2026, on the footing that it was carried out without the collaboration of the developer that the Court's directions had contemplated, and each seeking a declaration that they are bona fide purchasers and an order for partial discharge of their units.
8. Esther Nyaguthii Munderu's (Esther) case is that she paid the full purchase price of Kshs 9,500,000/= directly into the developer's account at Diamond Trust Bank (DTB), took possession under a sub-lease pending completion, and had already commenced the process of securing a partial discharge and title when the preservation orders of 6th January 2023 were issued. This, she says, was some 3 years after she had completed payment, and well before SBM's facility of Kshs 650,000,000/=, was advanced.
9. She relies on SBM's own Conditional Offer letter dated 27th February 2019, which she says expressly acknowledged the existence of pre-sale homeowners of her description, such that the Bank extended its facility with full notice of purchasers who already held equitable interests in the apartments.
10. Bakulchandra Kothari and Prafulla Kothari (the Kotharis), for their part, say they purchased their unit for Kshs 9,000,000/=, paid part of the price to the developer's accounts at Chase Bank and DTB before 23rd August 2019, and the remainder to SBM once the facility was in place, only to be told, by the Bank's own verification response, that only payments made into SBM's accounts could be verified.
11. Amritpal Singh Chaggar (Chaggar), deposes to a sale agreement executed with CIPL on or about 25th October 2016 for the purchase of a unit at a price of Kshs 7,900,000/=. He confirms that the unit was paid in full to the developer's accounts at DTB, with certain further sums paid to SBM only after the facility was advanced.
12. Nicholas William Marsh (Marsh), similarly, executed his sale agreement on 5th June 2018 for a unit priced at Kshs 7,500,000/=, and paid the full purchase price to DTB and Stanbic before 23rd August 2019.
13. Jotham Nasser Olwero's (Nasser) application, which was filed on 14th April 2026 through C. Koile Advocates, takes a somewhat different turn. He seeks permanent injunctive orders against SBM in respect of his units at the Alma, and an order setting aside as illegal the auctioneer's letter and instructions of 12th and 16th March 2026. As a purchaser of Units D-606 and A-304, he says he duly submitted proof of ownership and a detailed schedule of payments to the advocates for SBM and to the Official Receiver and received no response.
14. In his supplementary affidavit he raises what he terms differential treatment, pointing out that one of his units was discharged notwithstanding payment through DTB, while the Bank simultaneously maintains that payments through that same institution cannot be verified in respect of his other units.
15. Finally, 110 homeowners of the Alma, through Lwanga Onyango Advocates LLP, moved this Court on 27th April 2026 to set aside the redemption notice issued on 16th March 2026 and to have an independent and neutral person or body appointed to oversee the verification process, which they describe as fundamentally flawed. Their application is supported by the affidavit of Peter Maina Wachira.
The developer and the related SPVs:
16. Considering the directions issued on 17th July 2026, and having regard to the pendency before the Supreme Court of Supreme Court Petition (Application) No. E001 of 2026: Cytonn Investments Partners Four LLP & 6 Others V The Official Receiver & Others, several applications filed by the SPVs have been held in abeyance.
17. That said, the application dated 14th December 2025 supported by the affidavit of Elizabeth Nailantei Nkuukuu is for determination. It seeks to set aside the consent dated 1st August 2024, adopted before Mabeya J. on 30th November 2024, on the ground that it was negotiated, executed and adopted without CIPL's participation, knowledge, instructions or approval, notwithstanding that CIPL is both the registered proprietor of the Alma and the actual borrower under the SBM facilities.
18. CIPL accuses the Bank of reneging on its earlier averments confirming CIPLs compliance with its loan obligations, and points to its own application of 17th February 2023 seeking the lifting of the preservation orders to allow for repayment of the outstanding facility, contending that the direct effect of the impugned consent was to extinguish its proprietary rights without its involvement.
19. A further application, dated 10th April 2026 and filed through the same firm, supported by the affidavit of Adamskey Dudi sworn 17th March 2026, seeks an order compelling the Official Receiver to complete the proof of debt and verification exercise in respect of CIPL's claim, and to furnish a definitive written response in compliance with the Court's directions of 30th January 2026, before taking any further step in the tender process. CIPL says it placed before the Official Receiver evidence supporting both its claim to exclude the subject property from the liquidation estate and a proof of debt, and that a public tender for disposal of the asset was advertised before any response issued.
The rival positions:
20. Each of these applications is opposed by either the Official Receiver, SBM and the Creditors Committee. As against the joinder application, the Official Receiver maintains that this Court is functus officio, the issues raised having already been determined in COACA E590 of 2023, COACA E647 of 2024 and HCCOMM 760 of 2024, that counsel for the investors was directed by the Court of Appeal to furnish particulars of the parties he represents and has not done so, and that Gen. Paul Opiyo has produced no authority entitling him to depose on behalf of the class he purports to represent.
21. The Official Receiver further denies that the investors hold any registered security, insisting that SBM is the sole secured creditor over the Alma, and maintains that the proper course for any investor is to lodge an individual proof of debt.
22. As against the home owner applications generally, the Official Receiver's position is that neither the charge, the further charge, nor the conditional offer letters carved out any exclusion for units that had already been sold to the applicants, that SBM's status as secured creditor over the whole of the Alma is unaffected by payments made to CIPL, and that home owners who did not pay SBM directly must look to CIPL, and not the Bank, for recovery.
23. The Official Receiver denies that the verification exercise was conducted unilaterally, laying the blame instead on the developer and the applicants for failing to furnish the necessary documentation. The Official Receiver points, in respect of the 110 homeowners, to their want of locus standi, the absence of any authority for Peter Maina Wachira to depose on their behalf, and the Court of Appeal's Ruling of 29th May 2026 dismissing an injunction against the sale of the suit property.
24. SBM's position rests on the grounds that none of the applicants holds a registrable interest capable of binding the Bank; that the letter of offer issued to CIPL required all pre-sale proceeds to be channeled into an escrow account held with SBM and that Clause 13 of the Charge prohibited any dealing with the charged property without the Bank's written consent; that the developer was obliged under Clause 8(h) to furnish pre-sale contracts to the Bank and largely failed to do so, which default was acknowledged by CIPL. SBM argues that consequently, any units with monies not traceable to the Bank's own records remain available for realization, subject to the categorization of purchasers as set out in its Affidavits of Verification.
25. The said affidavits categorize the units as those fully paid through the Bank, units partially paid, and units on which nothing was received through the Bank. In respect of Nasser’s unit specifically, the Bank confirms, that unit B 502 will not form part of the sale, while maintaining that the other units, on which no payment and one payment respectively were received, cannot be discharged. As against CIPL's application of 14th December 2025 seeking to set aside the consent, the Bank maintains that the grounds raised have already been argued before this Court and the Court of Appeal and are accordingly barred by the sub judice rule, and that its dealings with the Official Receiver, rather than with CIPL directly, were mandated by the preservation orders and the Insolvency Act.
26. Having considered the applications, responses and submissions on record I now turn to identify the issues properly arising for determination.
Issues for Determination:
27. Again, stripped of their individual detail, and from an overall consideration of the cases advanced by all the parties, the applications raise the following issues for determination:
i. Whether the application dated 16th June 2025 for the joinder of Gen Paul Opiyo on behalf of the CHYF investors is barred by res judicata or sub judice, and whether the joinder should be allowed,
ii. Whether the individual applicants who purchased units at the Alma from CIP LLP hold equitable interests capable of binding SBM as chargee,
iii. The interests of the various homeowners with reference to the date of registration of SBM's charge on 23rd August 2019,
iv. Whether the verification exercise conducted by SBM, as reflected in its Affidavits of Verification, was conducted in compliance with this Court's directions and is a sound basis on which to determine which units may be sold,
v. Whether the Consent dated 1st August 2024, adopted on 30th November 2024, ought to be set aside,
vi. Whether the Official Receiver should be directed to complete the proof of debt and verification exercise in respect of CIPL's claim, and to issue a definitive response, before any further step is taken in the tender or sale process,
vii. Whether the redemption notice of 16th March 2026 and the associated auctioneer's letter and instructions of 12th and 16th March 2026 ought to be set aside, whether in whole or as against specific units and
viii. Whether an independent or otherwise reconstituted verification mechanism ought to be put in place, and what should be done about the apparent inconsistency in treatment illustrated by some units.
Analysis and Determination
i. Joinder of the 25,000 investors of CHYF:
28. I begin with determining the application dated 16th June 2025 by which Gen. Paul Opiyo seeks joinder on behalf of the CHYF investors. That is because if the Official Receiver's preliminary objection is upheld, it would dispose of the application without any need for me to descend into its merits. The objection is grounded on matters which are said to render the application either res judicata or sub judice by dint of Nairobi Court of Appeal COACA E590 of 2023, COACA E647 of 2024 and HCCOMM 760 of 2024.
29. The Official Receiver drew this Court’s attention to the proceedings of 6th March 2025 before the Court of Appeal in COACA E590 of 2023. At pages 45, 46 and 47 of the typed proceedings, the learned Judges of Appeal expressed concern over the evidence tendered by Mr. Ogolla on behalf of the 25,000 investors, and specifically over the fact that the list annexed to that evidence had been redacted. It was submitted, by the Official Receiver and the Creditors Committee, on the strength of that exchange, that this Court ought to decline jurisdiction to make any adverse finding.
30. I do not accept the submission in the terms in which it was put. Section 7 of the Civil Procedure Act is the provision that governs the doctrine of res judicata, and it is settled that before that doctrine can be invoked, the matter said to be res judicata must have been heard and finally determined by a court of competent jurisdiction. (See the Supreme Court decisions in Communications Commission of Kenya & 5 Others V Royal Media Services Limited & 5 Others, [2014] eKLR and John Florence Maritime Services Limited & Another V Cabinet Secretary Transport & Infrastructure & 3 Others, (Petition 17 of 2015) [2021] KESC 39 (KLR).
31. Nothing placed before me shows that the Court of Appeal in that case, or any other for that matter, has made any final determination on the question of joinder of the 25,000 investors. What the record does show, and what counsel for the Official Receiver was on firmer ground in pointing out, is that the very question of the joinder is presently and actively before the Court of Appeal, which engages an altogether different provision.
32. Section 6 of the Civil Procedure Act provides for the sub judice rule, which restrains a court from proceeding with a matter directly and substantially in issue in a previously instituted proceeding between the same parties that remains pending before a court of competent jurisdiction.
33. That the same question is indeed pending is not, on this record, seriously in doubt. Page 5 of the proceedings before the Court of Appeal confirms that what was before that Court was an application dated 4th January 2025 “in which some applicants representing other persons seek joinder as interested parties”. Mr. Ogolla, resisted the suggestion that this renders the present Court functus officio, insisting that the issues before the Court of Appeal are distinct from those raised in this application. I would have expected, if that were truly so, that counsel would have identified with some precision wherein the distinction lies. None was offered. What I am left with, on the material before me, is the unremarkable fact that a superior court is already seized of the question whether these 25,000 persons ought to be joined as parties asserting an interest in these very properties.
34. Comity and indeed the ordinary hierarchy of courts, demand that I not run a parallel race to judgment on that same question. That is precisely the mischief the sub judice rule exists to guard against, and I find the objection well taken on that ground.
35. I should add, lest this finding be thought to turn on a technicality alone, that the application fares no better on its own merits. The affidavit sworn by Gen Paul Opiyo on 16th June 2025, stripped of its exhibits, discloses nothing beyond a bare list of names and telephone contacts. There is nothing in that list, or anywhere else in the supporting material, capable of establishing that the persons named are in fact investors in CHYF, still less that they hold the first-ranking security they claim over the suit properties. An applicant who asks the Court to recognize 25,000 persons as secured creditors carries, at the very least, an evidentiary burden to show who those persons are and what they are owed. That burden has not been discharged. Whether the matter is approached on the threshold objection or on its substance, therefore, the result is the same, and the application must fail with costs.
ii. The Alma Unit Owners:
36. Before I come to the substance of the homeowners’ claims, I must first dispose of the objection raised by SBM that the applications are incompetent by reason of the doctrine of res judicata under Section 7 of the Civil Procedure Act. The Bank's argument, put simply, is that its statutory right of sale over the Alma was conclusively settled in Civil Application No. E102 of 2026; Cytonn Integrated Project LLP V SBM Bank Kenya Limited & Another and by this Court's own Ruling of 18th December 2025, and that the home owners cannot now be permitted to reopen, through the back door, a question that has already been laid to rest between the Bank and the developer.
37. The parameters of the doctrine are not in doubt. As previously stated, for a proceeding to stand barred, it must be shown that a matter had been directly and substantially been in issue in the former proceeding, that the former proceeding was between the same parties, or parties under whom they or any of them claim, that those parties were litigating under the same title and that the matter had been heard and finally decided by a court competent to try it. It is the second and third of these requirements that defeat SBM's objection.
38. The record confirms that the proceedings relied upon by SBM were contests between the Bank and CIPL over the existence and enforceability of the statutory power of sale following default. On that narrow question, I accept without hesitation that both this Court and the Court of Appeal have spoken and spoken with finality. The homeowners now before me were neither parties nor privies to those proceedings, and the question they raise is a wholly different one, not whether the Bank's charge is valid and its power of sale exercisable but whether individuals, by virtue of agreements and payments made to the developer, hold interests capable of standing in the way of the exercise of that power over their specific units. The objection accordingly fails, and I now turn to the merits.
iii. The doctrine of the bona fide purchaser for value:
39. The various homeowners’ cases rest, in centrality, on the doctrine of the bona fide purchaser for value without notice, a doctrine as old as equity itself, and one which the Supreme Court had recent occasion to restate with clarity in Sehmi & Another V Tarabana Company Limited & 5 Others, [2025] KESC 21 (KLR). The Court there affirmed that a purchase of a legal estate for value without notice remains an absolute and unanswerable defence against the claims of a prior equitable owner, but was equally emphatic that the burden of establishing the defence lies squarely on the person who asserts it. The Court stated as follows:
“It is a fundamental principle of the law of property in land that a purchase of a legal estate for value without notice is an absolute, unqualified and unanswerable defence against the claims of any prior equitable owner or encumbrancer. … Three main ingredients must be present for a claimant to mount a successful defence based on the doctrine. These are, innocence, purchase for value, and a legal estate.”
40. In evaluating these ingredients, the Court went further to state:
“The element of innocence means that the purchaser must act in good faith. His conduct must not raise any doubt as to whether indeed, he did not have any notice or knowledge as to the existence of a rival interest in the suit land. … The element of innocence also connotes the exercise of diligence expected of any reasonable purchaser. The claimant must demonstrate that he acted diligently and conducted a reasonable inquiry into the status of the estate or land that he sought to purchase. … Purchase for value means that consideration in money or money’s worth was paid by the claimant in return for the land. … Even a person who has given value will be bound if before he obtained the land, he knew of the existence of equitable interest.”
41. It equally bears mentioning the decision in Torino Enterprises Limited V Attorney General, (Petition 5 (E006) of 2022) [2023] KESC 79 (KLR), cited by the Supreme Court in Sehmi. Of relevance to the present situation is the finding that an innocent purchaser for value denotes a purchaser who exercised due diligence, which would include, being aware of what they were purchasing.
42. It is against this background that the position of each home owner’s application must be tested. I find it convenient to consider the applications in two categories, determined by the date of 23rd August 2019, being the date when SBM's charge over the Alma was registered.
Category A: purchasers who dealt with the developer before 23rd August 2019:
43. I begin with those who purchased and paid for their units before the charge came into existence, for it is here that the doctrine speaks most clearly. The offer letter dated 27th February 2019 in respect of the facility addressed to CIPL acknowledges, on its face, that the facility was intended to "partly finance completion" of the development, a language which itself presupposes a project that was already under way and, necessarily, already sold in part.
44. That inference is further corroborated by the letter dated 7th March 2019 sent by Elizabeth Nkuukuu on behalf of the developer to Peter Ndirangu of SBM, in which the developer expressly informed the Bank that "sales are currently at 60%." A lender who is told, before it advances a shilling, that 6 in every 10 units have already found a buyer, whether the same was accurate or not, cannot afterward present itself as an innocent chargee unaware of pre-existing purchasers as the Bank would want this Court to believe.
45. Indeed, the Bank went further and built that knowledge into the very architecture of the facility. Clause 8(h)(viii) of the letter of offer of 27th February 2019 made it a condition precedent that the developer avail to the Bank "the sales contracts for the pre-sales, mortgage and cash buyers already onboarded". This was an acknowledgment, in the clearest possible terms, that such buyers existed and that the Bank considered their position material enough to warrant disclosure before the charge was created.
46. Clause 8(u) of the Supplemental Letter of Offer of 25th May 2022 carried the same theme forward, requiring that: ‘all project pre-sale collections [be] made directly into the escrow account’, with the escrow details ‘embedded into the sale agreements’.
47. These provisions cannot be read in isolation from one another. Read together, they show a Bank that knew, at the point of taking its security, that pre-sale purchasers existed at the Alma and that it required the developer to disclose them. A chargee that takes security with that degree of actual knowledge cannot, when the developer defaults on the very disclosure obligations the Bank itself insisted upon, turn around and treat the undisclosed purchasers as though they had never existed. The developer's failure to comply with clause 8(h) is a breach owed to the Bank, and sounds in whatever claim the Bank may have against the developer.
48. It is not a breach that can be visited upon an innocent purchaser who had no hand in it, no visibility into it, and no means of compelling the developer to comply. Nor, in my view, can SBM insist on the benefit of a charge over the entirety of the Alma while it was the Bank's own conditions precedent that required sight of the pre-sale contracts before completion, that went unmet. In other words, a party cannot rely on a contractual condition inserted in a contract for its own protection and, in the same breath, disclaim responsibility for having proceeded without it having been satisfied.
49. Applying the elements set out in Sehmi, I am unable to reach any conclusion other than that this category of purchasers entered into their purchases honestly, for value, and at a time when no rival interest existed of which they could reasonably have had notice. They were, on this record, bona fide purchasers for value. What is more, the evidence does not stop at showing that these purchasers were innocent. It goes further and shows that it was the Bank which entered the arrangement with its eyes open.
50. Be that as it may, a purchaser seeking the protection of this equitable relief must also show the value actually paid for the unit. Favourable timing alone proves nothing. A purchaser before the charge is no less bound than any other to satisfy the second limb of Sehmi; that is, purchase for value, and cannot escape the requirement to prove payment simply because the question of SBM's notice does not arise in his case.
51. Esther Munderu in her application dated 13th May 2026 produced a sale agreement dated 19th December 2016 in respect of Apartment J-501. The same indicates that the purchase price was Kshs 9,500,000/=. Clause 3.2.5 of that agreement required her to remit the purchase price into the developer's account at Diamond Trust Bank (DTB), and Clause 3.3 provided that the funds so paid would be applied towards the development of the apartment. She later on signed a Deed of Variation and changed her unit to F902.
52. From a review of the evidence Esther has placed before this Court, I am unable to find that she has discharged the burden that Sehmi demands of her. The only proof of payment on record is a bank deposit of Kshs 925,000/- made on 13th May 2016, not by Esther herself, but by a D. Omuga. Where the payment relied upon to found an equitable interest was made by a third party, it falls to the claimant to explain the connection between that payment and her own purchase, whether by producing the underlying cheque, an instruction authorizing the deposit on her behalf, or some other evidence tracing the funds to her. None of that has been done here, and I am left with a deposit slip bearing a stranger's name and nothing to bridge the gap.
53. The position is no better in respect of the cheque dated 17th March 2017 for Kshs 550,000/-. A cheque, without more, proves only that an instrument was drawn; it says nothing of whether it was honoured, whether it was in fact presented, or whether the sum it represents ever found its way into the developer's account. In the absence of a corresponding bank statement or receipt confirming that the developer received and banked that sum, the cheque remains no more than a piece of paper and evidence, at best, of an intenti
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