Mayfair Insurance ordered to pay for construction delay in Kenya
Mayfair Insurance was ordered to pay an insurance bond of Sh143 million for delays in completing the Duplex Apartments Riverside Gardens, Riverside Drive Nairobi.
A performance bond had been taken out by Globe Developers where the lender would pay the money if the contractor failed to complete the construction on time.
Judge David Majanja of the High Court ruled that Mayfair could not prevent paying the lawsuit because it had not proven that the terms of the contract had been violated.
Judge Majanja said “The notice of motion dated 25th June 2020 is allowed and judgment be and is hereby entered for the Plaintiff (Globe Developers) against the Defendant (Mayfair Bank) for the sum of Sh143,430,335.00,”
The building of 9 blocks ranging from 12 to 19 floors, including a 5-floor basement, was scheduled to begin in July 2016 until May 2019.
The works were incomplete as of May 2019, and the developer terminated the contract filed in June 2019 for the performance bond.
In favor of the Globe Developers, Mayfair issued the Bond, but when the contractor failed to produce the developer, the lender issued a demand asking for the liquidation of the Bond.
The bank attempted to dismiss the claim by claiming that the developer postponed the claim, the architect made certain adjustments and that the developer and contractor entered into arbitration over their contract.
Mayfair acknowledged in court that it had granted the Bond for the time of duration, but claimed that the Bond provided that it would be excluded from responsibility for any change to the terms of the contract or to the degree of the nature of the work to be carried out, or for any extension of the period.