Dr Samuel Gatabaki and his wife, Nancy Wanja, leave the Nairobi High Court yesterday after settling a dispute over a multi-billion shilling housing project in Nairobi. With them is their lawyer, Mr Ashford Muriuki (left), who will be paid Sh5 million to meet the costs of withdrawing the case filed by Mrs Gatabaki paul waweru
Nancy Wanja Gatabaki, the woman who brought Nairobi’s Sh30 billion Fourways Junction housing project to an abrupt stop last month, on Tuesday walked away with Sh725 million in a historic out-of-court settlement that also unmasked the full extent of returns to investors in Kenya’s booming real estate market. (See Fourways real estate saga goes for full hearing )
Mrs Gatabaki left Mr Justice Mohammed Warsame’s chambers satisfied that the developer had fulfilled all the requirements needed to end the dispute and agreed to withdraw her court case.
The parties in the dispute recorded the settlement before Mr Justice Warsame after two hours of negotiations. All the directors signed the consent, clearing the way for the complainant to terminate the case she filed last month. (Read: Court lifts earlier orders on disputed Sh30bn city estate )
As part of the settlement, Peter and Sue Muraya, who are the directors of Suraya Properties — the company that originally partnered with the Gatabakis in the real estate project — will pay Mrs Gatabaki Sh140 million within two weeks and another Sh262 million in six months.
She will receive the remaining Sh323 million in form of residential apartments and land on the project site.
Apartments
Directors of the multi-billion real estate project signed off 24 three-bedroom apartments valued at Sh7.5 million each, six two-bedroom apartments valued at Sh4.9 million each and 12 three-bedroom villas with a market price of Sh9.5 each as part of the settlement. (See story: Battle for Sh30bn real estate project takes a new shape )
Suraya Properties also agreed to allocate Mrs Gatabaki 3.6 acres of land, free from encumbrance or costs and within the disputed project area in the next 24 months, effectively making her one of Kenya’s richest women.
At Sh750 million for the 25 per cent stake that Mrs Gatabaki had in Muga Developers, she has earned an estimated Sh15 million for every acre of land she jointly contributed to the Fourways Junction project with her husband.
When the coupled struck a deal with the Murayas to develop the estate four years ago, the value of land in the area was estimated at Sh7 million an acre, meaning Mrs Gatabaki more than doubled her investment in the project.
Mr Justice Warsame told the parties that the consent had been adopted as an order of the court, giving it legal teeth in the event of breach by any party.
Mrs Gatabaki got further court protection from Mr Justice Warsame’s ruling that in the event of a default in repayment of the outstanding bank loans, Equity Bank will have no right to sell the properties allocated to her.
“She will not be liable for any eventuality that befalls the projects,” ruled the judge.
The agreement effectively meant Mrs Gatabaki had relinquished her position as a director of Muga Developers and Sagana Development Limited – the company they co-owned with her husband, Dr Samuel Gatabaki.
She also agreed to transfer her shares in Sagana to her husband within two weeks. Sagana Developers has 33 per cent shareholding in Muga Developers, the company that owns Fourways Junction estate.
In the initial agreement, Suraya Properties was to inject funds in the housing project while the Gatabakis’ contributed the land owned by Sagana Developers for a 50:50 stake in Muga Developers.
That arrangement meant Mrs Gatabaki had a 25 per cent stake in Muga Developers but the articles of association allowed for the entry of a strategic partner to invest between Sh200 million and Sh300 million in exchange for a stake.
In suit papers filed in court last month, Mrs Gatabaki claimed that the Murayas illegally increased their stake in Muga Developers to 67 per cent, leaving the remaining 33 per cent stake to be shared between her and her husband.
She further alleged that she was kept in the dark while all the changes, including the entry of a fifth shareholder, Frangie Investments, which was allocated a 12 per cent stake, took place.
While adopting the consent as a court order, Mr Justice Warsame discharged all orders the court had issued in the matter and directed that Mrs Gatabaki withdraws the case.
The settlement, however, left Mrs Gatabaki and directors of Suraya Properties with a Sh20 million bill each in litigation costs incurred by Equity and I&M banks. They have two weeks to pay the money for disbursement through Cecil Miller and Company Advocates.
Parties to the dispute must also jointly settle a separate Sh10 million bill in favour of Iseme, Kamau and Maema Advocates who mediated the settlement.
Suraya Properties directors were ordered to pay lawyer Ashford Muriuki Sh5 million to meet the costs of withdrawing the court case that Mrs Gatabaki filed against them.
Before the settlement was reached, Mr Miller for the Murayas, had told the court that talks to resolve the dispute had collapsed and asked the judge to hear the matter to determination.
After the settlement, Mrs Gatabaki, her husband as well as the Murayas left the court in smiles and hugging to signal a successful end to the dispute.
“God was my judge, lawyer and witness and I am happy with the outcome,” said Mrs Gatabaki as she hugged her husband.
The settlement came as relief to the more than 250 home buyers who had paid Muga Developers close to Sh2 billion for units in the Fourways Junction estate and risked getting stuck in a long-drawn court battle.
Transferring 200 acres
The Murayas had complained that they could not access funds in Equity or I&M banks causing them to incur an estimated Sh1 million loss every day. The two lenders advanced Sh2.1 billion for the housing project.
Mrs Gatabaki had accused Mr Muraya and his wife of fraudulently transferring 200 acres to Muga Developers and used the property as collateral for two loans worth Sh2.1 billion from the two banking institutions without her knowledge.
The project, Fourways Junction, is located 500 metres from the leafy Runda Estate in South West Nairobi and overlooking the newly opened northern by-pass.
Upon completion, it is expected to hold a mix of cluster apartments, office blocks, a shopping mall, a three-star hotel and a country club.
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