Chinese firms in court battle over Lavington apartments

Two Chinese firms, State-owned China Jiangsu and Ahcof, are locked in a bitter court row over the delayed completion of a billion-shilling high-end apartment complex in Nairobi’s Lavington area.

Ahcof Investments (Kenya) Company Limited has now asked the court to commit the directors of China Jiangsu to civil jail after the firm failed to comply with orders directing it to deposit Sh97 million in a joint earning account of the lawyers representing the two companies.

Ahcof Investment in 2017 contracted China Jiangsu to construct Astoria Apartments on Mbaazi Avenue in Lavington, with the completion set for March 2019.

China Jiangsu extended to Ahcof Investment a performance guarantee of Sh97 million which was issued by Equity Bank #ticker:EQTY.

It is this performance guarantee that Ahcof Investment recalled citing delays in completion prompting China Jiangsu to move to court.

“The first defendant (Ahcof) wrongfully, secretly and mischievously demanded from the second defendant (Equity Bank) payment of a total sum of Sh97, 562,888.50 under the performance guarantee dated November 23, 2017 issued by the second defendant on behalf of the plaintiff,” says China Jiangsu in the court document.

The firm denied defaulting in its obligation, arguing that the delays were caused by late delivery of construction materials by Ahcof, held-up payments and delays by sub-contractors nominated by Ahcof.

The firm claimed that Ahcof has not responded to requests for extension of completion time and argued that as per contract it cannot recall the performance guarantee before giving feedback.

Ahcof on its part asked court not to stop the payment of performance guarantee on grounds that it amounts to rewriting contracts signed by the two firms.

The High Court on March 15 directed the Sh97 million to be deposited in a joint interest earning account of the lawyers representing the two firms within seven days.

But five days later, on March 20, China Jiangsu returned to court with a fresh application asking the court to vacate the orders directing it to deposit the money in joint interest earning account, arguing that the order offends the contract signed between the two firms.

The case took another turn on March 29 when Ahcof filed an application seeking to commit China Jiangsu directors Guo Huadong, Zhu Ling and manager Shi Chong to civil jail for failing to comply with court orders.

Astoria Apartments consists of one and two-bedroom apartments in three 12-storey blocks. It will have 192 units once complete.

The minimum price per unit is Sh7 million, which puts the estimated value of the property at over Sh1.3 billion.