Karumes, Gatabakis fight over Sh200m prime Nairobi land

Nancy Gatabaki, the woman who nearly brought the construction of upmarket Fourways Junction estate in Nairobi to a stop four years ago, has opened a fresh court battle against the family of the late Kiambu politician and business magnate Njenga Karume.

At the centre of the legal battle is a 20-acre piece of land worth Sh200 million that is registered in Ms Gatabaki’s name and was initially part of a larger parcel that the couple sold to real estate firm Suraya Properties Group for the construction of the Sh30 billion Fourways Junction estate.

Ms Gatabaki and her husband Samuel have sued Jacaranda Holdings — a firm owned by the Karume family — seeking to regain full ownership of the land.

The Gatabakis claim that the Karume-owned company has been selling the property to third parties illegally and is seeking orders to stop it.

Jacaranda has replied to Ms Gatabaki insisting that she agreed to the sale of the land to Suraya Property, which wants to use it to expand the multi-billion shilling Fourways Junction estate.

Jacaranda reckons that it struck a deal to sell the land to Suraya for Sh200 million in 2009, and that it has already received a Sh20 million deposit for the transaction.

Irrevocable authority

Mr Karume was initially to buy the land from Ms Gatabaki for Sh18 million in 1992 through his firm Jacaranda Holdings, but the deal stalled for over 10 years as disputes arose, with the taxman causing a caveat to be placed on the land.

“Ms Gatabaki was all along aware of the said transaction and gave consent for sale of the suit property by Jacaranda Holdings to Suraya Properties. She gave Suraya irrevocable authority to finalise the sale agreement between it and Jacaranda Holdings either by way of cash or issuance of land titles,” Jacaranda says in court filings.

Mr Karume’s firm had paid a Sh6 million deposit and was waiting for the caveats to be lifted so it could seal the deal. The Karume-owned company, however, took occupancy of the land as the Gatabakis attempted to resolve the numerous disputes.

Ms Gatabaki’s latest court fight now threatens to stall a lucrative deal that would have seen Mr Karume’s firm earn a massive profit from selling the land to Suraya.

Jacaranda was to complete its purchase of the land at the same Sh18 million purchase price agreed to in 1992 despite the protracted battle to settle the tax disputes with the Kenya Revenue Authority and the Kenya Planters Co-operative Union (KPCU), which had placed caveats on the land.

Jacaranda wants to sell the land to Suraya at Sh200 million and use the proceeds to pay Ms Gatabaki her dues as agreed in the original contract. The firm had already paid a Sh6,345,000 deposit to Ms Gatabaki and her husband in 1992, leaving a balance of Sh11,655,000.

The transaction would have left Mr Karume’s firm with a whopping Sh182 million profit, mainly arising from the steep rise in land prices in the past 13 years and its 23-year wait to acquire the prime property. The value of land has been on the rise in the area because of its close proximity to the Northern Bypass and the upmarket Runda Estate.

Mr Karume formed Jacaranda Holdings to control all his real estate interests, which includes the Jacaranda Hotels and a number of apartments in Nairobi and Kiambu.

The property firm is one of the assets at the centre of another vicious court case pitting Mr Karume’s children against the trustees of a company the politician formed to consolidate and run his massive business empire after his death. Mr Karume died in 2012 following a battle with cancer.

The list of properties under Mr Karume’s firm includes Jacaranda hotels in Nairobi and Mombasa, Lake Elementaita Lodge and the Village Inn.

Ms Gatabaki wants the High Court to revoke any transactions the Karume-owned firm may have initiated regarding the land. She also wants the court to dismiss Jacaranda’s defence and award her the land.

The businesswoman claims Jacaranda’s defence is scandalous and an abuse of the court process. But Jacaranda in its rejoinder says Ms Gatabaki’s case is full of half-truths and selective disclosures aimed at tricking the court into ruling in her favour.

Jacaranda claims that Ms Gatabaki had promised to protect its interest in the land stemming from the 1992 sale agreement, and that the same was included in its 2009 deal with Suraya.

The firm has attached a copy of the 2009 agreement as evidence that Ms Gatabaki consented to the sale.

“It was a fundamental condition of the contract that Ms Gatabaki was to indemnify and to keep indemnified Jacaranda in respect of the suit property. Jacaranda denies that it wrongfully alienated and deprived Ms Gatabaki possession and interest in the suit property by transferring it to third parties,” Jacaranda says.

Sued Suraya

The dispute has opened a second battle involving Ms Gatabaki and Suraya over land for the Fourways Junction, following the 2011 court case that saw her walk away with a cool Sh750 million award in an out-of-court settlement.

Ms Gatabaki has enjoined Suraya as a defendant in the suit, as she seeks to stop the allegedly illegal sale of her land. She had in 2011 sued Suraya for locking her and her husband out of the Sh30 billion Fourways Junction project, which was initially a joint venture between Suraya and the Gatabakis.

The matter was, however, settled out of court, and Suraya paid Ms Gatabaki a Sh725 million settlement. Ms Gatabaki received Sh402 million in cash, received the remaining Sh323 million in the form of residential apartments and land in the estate.

Suraya 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.

Suraya Properties also agreed to allocate Mrs Gatabaki 3.6 acres of land, free from encumbrance or costs and within the disputed project area effectively making her one of Kenya’s richest women.

The settlement, however, saw Ms Gatabaki relinquish her stake in the multi-billion shilling project. She had initially sought Sh20 billion as compensation from Suraya prior to the out-of-court deal.

Suit papers indicate that Suraya has spent over Sh100 million in its bid to clear the caveats and settle all other disputes arising from the 20-acre land.