Tatu City has suffered a significant legal defeat after a court ruling blocked its attempt to claim Ksh10 million from Home Bridge Ltd in a dispute over service charges. The decision, issued by Justice Florence Muchemi, may set a precedent preventing the mixed-use development firm from making similar demands on other landowners within its 5,000-acre project.
Justice Muchemi ruled that service charges should be claimed by a property owners’ association rather than directly by the developer. This decision aligns with agreements that allocate shares to investors in a management firm responsible for maintaining common areas.
The case initially faced dismissal by a chief magistrate’s court, prompting Tatu City to appeal. However, the judge found inconsistencies in the calculation of service charges under existing agreements, including the master declaration, lease terms, and sale arrangements.
“The resultant assessment of service charge is wanting, and it would be unjust to hold the respondent liable for a claim which is uncertain and contrary to agreements,” the ruling stated.
Tatu City had argued that it provided essential services, including maintaining natural spaces, planting trees, and ensuring security in shared areas. However, the court found that the company had not yet fully defined the common areas or formally established the required Property Owners Association (POA), which should have handled such matters.
According to the ruling, Tatu City had deliberately failed to operationalize the POA, thereby retaining exclusive control over service charges—an action deemed to be in violation of agreements. The judge also criticized the firm for issuing invoices without proper justification, stating that they lacked the necessary audit approvals required under the agreements.
This ruling could have far-reaching consequences for Tatu City’s financial model, potentially limiting its ability to levy service charges on various landowners and investors. The case highlights ongoing tensions between developers and property owners in large-scale developments, underscoring the importance of clear governance structures in real estate projects.
