Chinese construction company China Wu Yi has failed in its bid to recover houses from troubled developer Suraya. This is after the High Court in Nairobi ruled that the construction company could not recover the houses because Suraya’s co-developer, Muga Developers, owes Equity an undisclosed amount of money.
China Wu-Yi is seeking to possess 10 houses in phase one of the Fourways Junction. The houses are owned by Suraya Property Group and Muga Developers.
In court papers, China Wu-Yi said that it struck a deal with the two developers to posses some of the houses as part of the payment for its services in the project that is located along Kiambu Road. Suraya Property however denied this and said that the property was charged to Equity Bank, which granted the Sh. 1.76 billion cash for the project.
In its suit papers, China Wu-Yi says that Suraya advertised in a newspaper in March 2009, a tender for the construction of Fourways Junction, phase I. The Chinese firm said it completed the job. As at August 2011, the pending certificates had accumulated an outstanding sum of Sh. 166 million. The parties allegedly engaged in talks and it was proposed that the developer pays Sh. 30 million for bill of quantities, a further Sh. 57 million was to be paid in cash after the houses were sold and the balance of Sh. 79 million was to be repaid by transferring four hibiscus villas and two tulip apartment units to the construction company.
The deal entailed three more hibiscus villas and one tulip apartment to make it seven hibiscus villas and three tulip apartments. The construction company, however said the real estate company failed to honour the deal, only handed to it four villas and refused to transfer the title of all the house as agreed. And during routine checks, the company said it met a buyer who said he was in the process of purchasing one of the houses they had agreed, should be transferred to it.
In his ruling though, Justice David Majanja declined the request since Muga Developers owes Equity an undisclosed amount of money. It advanced the company the loan nine years ago. “The bank is owed money by Muga, which continues to accrue interest and will at some point outstrip the value of the security if not paid. In that event, the bank, which has no contractual relationship with the Plaintiff (Chinese Contractor), will not have any recourse against the Plaintiff for that loss,” Justice Majanja ruled.
Justice Majanja further ruled that if the contractor’s claim against the bank succeeds, it can be compensated. The judge said the bank could not be restrained from exercising its statutory rights under the securities based on a claim by a third party, in this case, China Wu Yi, who has no proprietary interest in the suit property.