Tatu City has suffered a blow after the High Court dismissed its Ksh 10 million service charge claim from Home Bridge Ltd. The ruling by Justice Florence Muchemi is a major decision that may prevent the mixed-use development company from making similar demands on other landowners within the 5,000-acre project.

Service Charge Ruling

Justice Muchemi ruled that only a property owners’ association where investors would hold shares could levy service charges. The judge also faulted Tatu City for not providing Home Bridge Ltd with a transparent formula on how the Ksh 10 million claim was calculated.

Earlier a lower court had dismissed Tatu City’s claim, and the firm appealed. But the High Court upheld the lower court’s ruling, pointing out inconsistencies in the service charge computation in the master declaration, lease and sale agreements.

“The assessment of service charge is wanting, and it would be unfair to hold the respondent (Home Bridge Ltd) liable for the claim which is uncertain and contrary to the agreements,” Justice Muchemi said.

Impact on Other Landowners

This may set a precedent and block Tatu City from enforcing similar service charge demands on other companies and individuals who have bought land within the project.

Under the agreements governing the property, landowners were to be allocated shares in a management company or property owners’ association (POA) responsible for maintaining common areas and preserving the standards of Tatu City. Home Bridge Ltd argued that Tatu City had not defined the common areas nor operationalized the POA.

Dispute Over Management and Charges

Tatu City and Tatu Connect SEZ Ltd – an entity allegedly set up to manage the project – demanded Ksh 10 million plus interest from Home Bridge Ltd which owns 30 acres of land in the project from 2016 to June 2021.

Tatu City claimed it had been providing essential services including maintenance of natural spaces, architectural features, landscaping, waste collection and security in common areas on behalf of property owners.

But the court found that Tatu City had not established the POA instead chose to retain control over management and service charge decisions. The judge ruled that the invoices Tatu City issued lacked audited accounts and were raised unilaterally without the POA’s approval.“They did not follow the agreements by managing the common areas themselves and not operationalizing the POA.”

Historical Service Charge Payments

Tatu City argued that Home Bridge Ltd had paid Ksh 2.1 million in service charges in March 2021, so they acknowledged the obligation. Home Bridge Ltd also said the area was a Special Economic Zone (SEZ) and a Special Planning Area and therefore subject to management obligations as per Ministry of Lands.

Tatu City said as the majority landowner they have the right to appoint a management company to collect service charges. They referenced a service level agreement with Tatu Connect SEZ Ltd dated 1st December 2020 to facilitate this.

Home Bridge Ltd’s Response

Home Bridge Ltd said they were incorporated by the property owners’ association to manage common areas and shared services. They said they had informed Tatu City that they would charge service charges to cover the maintenance and operational costs of the services.

The High Court ruling is that Tatu City must comply with existing agreements and establish the POA before demanding service charges from landowners. This will change how service charge disputes will be handled in the development going forward.