Tatu City has lost its bid to claim Sh10 million from Home Bridge Ltd in a landmark court decision that may block the mixed-use development firm from making similar demands to landowners in the 5,000-acre project.
Justice Florence Muchemi has ruled that service charges could only be claimed by a property owners’ association in which investors that have bought land were to be allocated shares.
The judge also held that Tatu City failed to furnish Home Bridge with the formula used to arrive at Sh10 million.
A chief magistrate’s court had earlier dismissed Tatu City’s claim, prompting the appeal before Justice Muchemi. The judge said there were glaring contradictions in the computation of service charges under the master declaration, lease, and sale agreements that govern the parties’ relationship.
“The resultant assessment of service charge is wanting and it would be unjust to hold the respondent (Home Bridge Ltd) liable for the claim which is uncertain and contrary to the agreements,” said the judge.
The decision could block Tatu City from demanding service charges from several firms and individuals that have bought land there.
Under the various agreements, landowners were to be allocated shares in a management firm or property owners association, which would then be tasked with maintaining the aesthetic values of Tatu City, especially in common areas.
Home Bridge argued that Tatu City had yet to properly define where common areas were, or properly kick-start the property owners association.
Tatu City and Tatu Connect Sez Ltd, a company allegedly incorporated for the preservation of the values and qualities of the project had demanded Sh10 million plus interest from Home Bridge Limited, which owns 30 acres from 2016 to June 2021.
Tatu City Limited had claimed that it had been providing services including maintaining natural open spaces, architectural and ornamental features, planting trees, gardens, collecting and disposal of waste as well as security for common areas, among other services on behalf of property owners.
The court, however, said contrary to the expectation and in breach of the lease and master declaration, Tatu City deliberately refused to operationlaise the Property Owners Association (POA) to retain exclusive control over the management and decision-making process related to service charges within Tatu City.
The judge said the agreement did not envisage a scenario where Tatu City would unilaterally usurp the powers and functions of the POA and the invoices raised were not supported by any audited accounts as required and approved by POA and they were unilaterally raised by the real estate firm.
Tatu City moved to the High Court after its claim was dismissed in April last year by a Ruiru court stating that Tatu City did not show how it arrived at the charges, without the participation of the property owners.
The company faulted the magistrate saying he erred in law and fact by dismissing the case and for absolving Home Bridge from paying the amount.
The real estate firm argued that the area was declared a special economic zone, and subsequently special planning area, and certain conditions or obligations were placed upon it by the Ministry of Lands, to ensure that the zoned area is managed in a manner that reflects the national government’s interests.
The firm further stated that it was empowered to retain certain interests in the sold parcels of land, which was to facilitate the processing and issuance of development and construction permits as well as certificates of occupancy.
Tatu City maintained having the majority ownership interest in the property, it retained exclusive rights and authority to engage a management company to fulfill duties assigned to itself as a declarant under the agreement and the property owners association.
It further stated that pursuant to that authority, Tatu City entered into a service level agreement between itself and Tatu Connect Sez Ltd on December 1, 2020, as the managing agent responsible for the collection of service charges.
The firm then demanded the amount saying they were both historical costs before 2020 and additional expenses and accumulated thereafter.
Tatu City added that Home Bridge Ltd had previously paid Sh2.1 million in March 2021 and the previous payments serve as clear evidence that it was aware of its obligation to pay the service charge.
Tatu City did not deny that the Home Bridge has been providing services such as architectural or ornamental features, maintaining natural open spaces, plants, trees, and gardens, and collecting and disposal of waste.
Home Bridge said it was incorporated by property owners association to manage common areas in Tatu City and provide through its agents the common services.
The company said it notified Tatu City that it would be levying service charge to cater for maintenance and operational costs of provision of shared service of common areas.
“It is noted that the appellants (Tatu City) did not adhere to the provisions of the lease agreements, sale agreements, and master declarations by unilaterally assuming control over the management of common areas while failing to operationalise the property owners association,” said the judge.
