Tatu City loses appeal in Sh10million service charge claim
In the appeal suit, Tatu Connect SEZ Limited, a subsidiary firm Tatu City Limited had been listed as second appellant
Tatu City Limited, the real estate development firm owning the Special Economic Zone (SEZ) designated Tatu City establishment in Kiambu county has lost an appeal in a case in which the management was seeking Sh10million from a tenant as service charge.
Through judgement delivered by Justice Florence Muchemi of the Thika High Court, the court dismissed the appeal by Tatu City Limited against Home Bridge Limited with costs awarded to the latter.
In the appeal suit, Tatu Connect SEZ Limited, a subsidiary firm Tatu City Limited had been listed as second appellant.
“I have perused the records and noted that it seems the appellants have introduced the issue of the Special Economic Zone to justify their computation and collection of service charge…Parties are bound by their pleadings and the appellants have brought a totally new issue that was neither pleaded in the suit or even addressed by the parties herein. This issue has been raised by the appellants at the appellate stage,” ruled Justice Muchemi.
The appeal arose from the judgment of Ruiru Chief Magistrate in CMCC No. E339 of 2021 whereby the trial court dismissed the appellants’ suit which sought judgment in its favour for outstanding service charge of Sh10,003,930.59 due and payable.
Dissatisfied with the court’s decision, Tatu City Limited lodged an appeal citing twelve grounds of appeal.
In her ruling, Judge Muchemi stated that: “Furthermore, the appellants argue that the trial magistrate failed to acknowledge that the 1st appellant was declared a special economic zone, but that issue was never raised during the hearing of the suit. The pleadings in the trial court and the witness testimonies did not touch on the issue of Special Economic Zone.” The judge ruled.
She added: “In fact the appellants were very categorical that the parties relationship was governed by the Master Declaration, the leases and the Agreement for Sale dated 18th May 2016. Accordingly, the appeal lacks merit and is hereby dismissed with costs to the respondent.”
The Judge said from the foregoing, it is evident that the appellants failed to prove their claim on a balance of probabilities as there are glaring contradictions on the computation of service charge and the Masters Declaration, lease agreements and sale agreements which govern the parties relationship is contradictory itself.
“Thus, the resultant assessment of service charge is wanting and it would be unjust to hold the respondent liable for the claim which is uncertain and contrary to the agreements,
“It is noted that the appellants did not adhere to the provisions of the lease agreements, sale agreements and the Master Declaration by unilaterally assuming control over the management of common areas while failing to operationalize the agreement,” she observed.
Tatu City Limited had argued that through Gazette Notice No. 5892 dated May 22, 2017, it was declared a Special Economic Zone and subsequently the area was declared a special planning area through Gazette Notice No. 4975.
In their submissions the appellants, Tatu City Limited and Tatu Connect SEZ Limited further argued that pursuant to the gazette notices, they automatically had an obligation to maintain the area subject to Section 32(1) and 33 of the Special Economic Zone Act, 2015.
On their part, Home Bridge Limited submitted that under Recital 1 of the Sale Agreement the 1st appellant represented to the respondent that it had incorporated a body known as the Property Owners Association (POA) which would own, manage and control the common areas in Tatu City and provide through its agents the common services provided in the Third Schedule of the lease.
Home Bridge also submitted that Clause 8 of the leases read together with Clause 6.7 of the Master Declaration set out the powers of POA which included charging and collecting fees for services rendered by the lessor and the POA and their respective agents.
“The respondent argues that the proposed allocation of 13 acres to them as their share of common areas from the total unsold land measuring approximately 1,625 acres is based on the erroneous presumption that approximately 43 per cent of the unsold land constitutes common areas,” noted the court.
The respondent further argues that that assertion is not only inconsistent with established land use planning principles, but also lacks legal and factual justification.
Under the Physical Planning Act, the proportion of land a private developer may be required to surrender for public utilities typically does not exceed 10% of the total land area.
