Construction projects worth more than Sh20 billion in jeopardy as residents' associations vow to protect their rights.
Court battles between developers and residents have become increasingly common as conflicting decisions on whether to allow construction at various sites throws the real estate industry into confusion.
A Nation review of 23 cases, involving construction projects worth over Sh20 billion, indicates the heat real estate developers are feeling as several resident associations insist on strict adherence to zoning policies.
Every week since August 14, Lovi Ventures Kenya Company Ltd has had to set aside Sh5 million to cater for a delay penalty charged by contractors it hired to put up apartments along Rhapta Road in Westlands, Nairobi.
The firm had started works when the High Court issued orders suspending its project, alongside those being undertaken by 13 other realtors in the area, following a case filed by Rhapta Road Residents Association.
At the time of Justice Oscar Angote’s orders, Lovi Ventures had spent Sh450 million on various contractors on site.
For Medina Palm Development Ltd, the fine is Sh1.1 million per week, and for Sky Valley Ventures Kenya it is Sh265,038 weekly.
Others who have made similar disclosures in the court case are Wimax Homes (Sh1.57 million per month) and Central Link Property Company (Sh6.9 million per month).
The firms argue that they have already injected over Sh1.5 billion into their projects, and now risk losing their cash even as penalties for delays grow each week.
Rhapta Road Residents Association obtained the orders after arguing before Justice Angote that the developers were violating zoning policies, which control the type and size of buildings that can be put up in a specific area.
Through Macharia-Mwangi & Njeru Advocates, the association holds that aside from violating the zoning policies, the planned developments could strain shared resources such as water and roads. The association holds that zoning policies allow for developers to only construct buildings with four or less floors along and around Rhapta Road.
Kanti Naran Manji Patel, one of the respondents in the Rhapta Road case, said that the association is throwing stones while living in a glass house, as some of its members own buildings that are over four floors high.
“I am aware of several developments within the Rhapta Road, including those owned by the petitioner/applicants that have surpassed the limit of four floors. Notably, no legal action has been initiated against the parties involved in these projects. This selective enforcement demonstrates a clear pattern of discrimination and intimidation directed at the 10th respondent by the petitioner/applicant contrary to Article 27 of the Constitution, which guarantees equality before the law,” Mr Patel says in court papers.
The developers have now asked Justice Angote to lift the orders, as they risk watching billions of their investments go up in smoke, on account of what they insist are misrepresentations and non-disclosures by the residents’ association to the court.
The Rhapta Road case is just one of dozens which indicate that the courts have become a new battleground for investors and residents, fighting over implementation of zoning policies.
The competition for Nairobi’s skyline amid growing demand for apartments and office blocks has opened a new battlefront, as some suburban dwellers fight mega projects in a move that has left developers staring at losses in the billions. From penalties for delays to termination of some projects and hefty legal fees, developers are feeling the heat of inconsistent decisions on zoning policies.
On one hand, developers claim in numerous court filings perused by the Nation that the cases are stalling projects that were legally approved by relevant authorities.
But on the other hand, the residents’ association hold that allowing the projects to proceed will violate zoning policies and infringe on their rights and enjoyment of their properties.
In many of the cases, developers have cried foul over alleged selective implementation of zoning policies, as courts issue orders barring construction despite their acquisition of all required approvals from City Hall and other State bodies.
Sky Valley Ventures, Wimax Homes, Central Link Property Company, Lovi Ventures Kenya and Medina Palm Development have now asked Justice Angote to lift the orders, or alternatively order the residents’ association to deposit Sh2.12 billion as security in court.
The Sh2.12 billion is the amount the five developers would have racked up in idle fees — penalties charged by contractors for delays in construction — for 12 months.
Collectively, the Rhapta Road projects are valued at over Sh10 billion.
“The petitioners failed to disclose that the projects and developments being undertaken in the above properties are in full compliance with the law and that the 7th , 13th , 16th , 18th, and 20th respondents had obtained all the relevant approvals including the 2nd – 4th respondents (Nairobi County, Nema and Nema Director-General), the Kenya Urban Roads Authority, the Water Resources Authority and the National Construction Authority among several other relevant authorities,” the five firms say in a joint affidavit.
The five developers have filed an objection to the case, arguing that the association should have started at the County Physical and Land Use Planning Liaison Committee before lodging a suit at the High Court.
They argue that section 76 of the Physical and Land Use Planning Act gives the committee authority to hear appeals against granted approvals.
They add that the Rhapta Road association should also have approached the National Environment Tribunal to challenge Nema’s decision to grant the developers a go ahead for construction. That argument has been presented in several cases pitting residents against developers over the years, and has returned mixed results from different judges.
Some have held that the Liaison Committee should be the first point of call in objecting approvals, while others have dismissed such objections and issued orders stopping construction.
In Nairobi’s Muthaiga North suburb, Jane Njeri Maina had obtained approvals from City Hall for the construction of a temporary office block on her land, which was registered for both residential and commercial use.
After paying Sh660,000 for the approvals and acquiring construction materials and equipment, City Hall revoked the approvals on account of complaints by the Muthaiga North Residents Association.
The association claimed that the planned construction violated zoning policies, Nairobi County cancelled the approvals. Ms Njeri sued City Hall, arguing that the cancellation was arbitrary as she was not given a fair hearing.
Justice Edwin Wabwoto agreed with Ms Njeri and declared the letter revoking her approvals null and void.
In 2021 Justice Samson Okong’o dismissed arguments by Hwaock IM and International Christian Kindergarten that the zoning dispute should have been exhausted at the Liaison Committee before being taken to court.
Paradise Valley residents had sued Hwaock and International Christian Kindergarten, arguing that zoning policies describe Kyuna as an area strictly for low density residential houses hence the planned construction of a school violated the regulations.
Hwaock and International Christian Kindergarten filed an objection and sought its dismissal on grounds that it was premature as the residents had not exhausted appeal mechanisms under the Physical and Land Use Planning Act – filing an objection before the Liaison Committee.
But Justice Okong’o dismissed the objection and held that the High Court has authority to determine the case, he issued orders blocking construction of the school until the matter is determined in finality.
When determining an application to stop the construction of a church in Kitisuru in November, 2023 Justice David Mwangi upheld a similar objection.
Northern Block Residents Ltd and Lakeview Residents Association sued Nairobi Baptist Church and City Hall in a bid to quash building approvals for the construction of a church along Ngecha Road. Nairobi Baptist said courts can only be involved after the Liaison Committee has made a determination. Justice Mwangi agreed with the church’s arguments and dismissed the case.
In Mombasa, the High Court in April allowed Khansa Developers to proceed with the construction of a highrise building, after dismissing a case filed by a section of Kizingo residents.
The Rhapta Road case returns to court on September 17, before Justice Angote.
