A real estate company and a former director have been asked to refund homebuyers after the firm failed to build the houses that had been paid for.
A group of 14 homebuyers has received court approval to demand a refund of Sh19.8 million, which was paid to the real estate firm Dinara Developers Limited as a deposit for the construction of residential housing units in Ruiru, Kiambu County, more than six years ago.
Justice Aleem Visram ordered the company and its former director, Andrew Muhiu Kamau, to refund the sum of Sh19,875,000 collected from clients who had been promised homes, but which were never delivered.
Although Mr Kamau denied liability, saying he was no longer a director of the company, the court observed that he had entered into a settlement agreement with the complainants on September 13, 2023, undertaking to return the sums within 120 days. According to the judge, this was an admission of debt.
"I am of the view that beyond mere denials, Mr Kamau’s defence does not demonstrate a single triable issue worthy of a full trial. Such a trial would amount to no more than a waste of judicial time and resources and this court, therefore, is of the view that such a trial ought not to take place in the circumstances," said the judge.
He said the agreement was titled "Settlement Agreement for claims arising from money paid pursuant agreements of sale between the purchasers and the 1st Defendant for proposed residential houses properties in title number Ruiru/ Ruiru East Block 2/4779 (Ruiru)”.
In the document, both sides (purchasers and Mr Kamau) acknowledged that "the intended residential houses were not constructed and, as a result, the purchasers have made claims for the refund of the money paid".
Mr Kamau was to settle the purchasers' claim in good faith, paying the total outstanding amount, plus expenses incurred in their recovery efforts, in monthly instalments over a period of no more than 120 days.
However, the deadline passed without the refund being issued, prompting the purchasers to seek redress through the courts.
Justice Visram said that the settlement agreement was made between the purchasers and Mr Kamau, who was named as the developer. "I emphasise, the agreement is expressly between Mr Kamau, in his own personal capacity as the developer," stated the judge.
Contesting the claim, Mr Kamau informed the court that he was no longer a director of Dinara and that the company had indemnified him against any liability. Dinara never filed a defence.
After multiple failed attempts to pressure the company and its director to deliver the project or return the money, the homeowners sued, seeking a refund, general damages for breach of contract, interest on the amount, and the cost of the suit.
To support their claim, the homeowners attached copies of the various payments they had made to the company for the construction of various houses. They also presented the settlement agreement.
They argued that there was evidence showing that, despite receiving payments from them, Dinara and Mr Kamau had breached the agreement for sale by failing to develop and construct the houses as agreed, and had never commenced construction.
Prior to the agreement, the homebuyers had made numerous demands for a refund of the money paid.
"The settlement agreement expressly states that Mr Kamau was a director at the material time, and in any event, he is the named party to the agreement. Further, he personally undertook to make the various payments set out in the schedule, which is the same amount the plaintiffs are claiming pursuant to the settlement agreement," said Justice Visram.
