23 February 2018

Kenya: Developer Loses Bid to Raise House Prices for KQ Staff

A real estate firm has lost a protracted battle to raise by up to Sh825,000 house prices for 312 Kenya Airways #ticker:KQ employees.

The developer, Epco builders, has been seeking to raise the prices above what was signed in the initial sale agreement citing cost escalations during construction.

Epco builders was initially to sell the houses to KQ staff at Sh2.675 million each for two-bedroom units and Sh3.925 million for the three-bedroom units.

But the company sought to increase the cost by Sh575,000 for each of the two-bedroom units and Sh825,000 for each of the three-bedroom units, citing delays in completion of the project.

The dispute ended up before an arbitrator who ruled in favour of the employees.

The employees returned to the High Court last year to enforce the arbitrator's decision after the court dismissed an appeal filed by Epco Builders against the ward.

But the developer opposed the application to enforce the award claiming it was unfair and skewed in favour of the employees, arguing that it failed to consider extra costs it had incurred.

Justice Olga Sewe noted that the issue raised by Epco Builders had already been determined by the court, noting that any additional claim the firm was raising could be dealt with in a separate pending suit that the real estate firm has filed against KQ.

"That the final arbitral award published on August 13, 2015 be recognised as binding on the parties and the same be adopted as an order of the court," ordered Justice Sewe.

KQ sold the project land to Epco for Sh100 million, but the developer says it incurred extra costs due to the national carrier's delays in effecting transfer of the property.

The contractor says it was given possession of the land in September 2011, yet the agreement was that construction was to start in October 2009 and be completed by September 2011. The firm argued conciliator Martin Munyu went out of his scope in ordering Epco to retain the original selling price of the housing units.

The employees paid a 10 per cent deposit on the purchase price to finance purchase of the land from KQ, after which Epco used the same property to secure loans to cater for construction.

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