Companies

Mayfair Insurance ordered to pay for construction delay

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Summary

  • Mayfair Insurance has been ordered to pay Sh143 million insurance bond for delays in completing Duplex Apartments Riverside Gardens, Riverside Drive Nairobi.
  • Globe Developers had taken out a performance bond where the lender would pay the money if the contractor failed to finish the construction on time.
  • High Court Judge David Majanja ruled that Mayfair could not avoid paying the claim since it had not demonstrated that the terms of the contract had been breached.

Mayfair Insurance has been ordered to pay Sh143 million insurance bond for delays in completing Duplex Apartments Riverside Gardens, Riverside Drive Nairobi.

Globe Developers had taken out a performance bond where the lender would pay the money if the contractor failed to finish the construction on time.

High Court Judge David Majanja ruled that Mayfair could not avoid paying the claim since it had not demonstrated that the terms of the contract had been breached.

“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,” Judge Majanja said.

The construction of 9 Blocks Ranging from 12 Storey to 19 Storey Including a basement of 5 Floors was to start in July 2016 up to May 2019.

Come May 2019 the works were incomplete, and the developer cancelled the contract filed for the performance bond in June 2019.

Mayfair had issued the Bond in favour of the Globe Developers, so when the contractor failed to deliver the developer issued a demand calling for liquation of the Bond from the lender.

The bank tried to reject the claim saying the developer delayed in filling the claim, some alterations were made by the architect and that the developer and contractor have entered arbitration over their contract.

In court Mayfair admitted that it issued the Bond for the validity period but stated that the Bond provided that any alteration to the terms of the contract, or in extent of the nature of the works to be carried out, or any extension of the time would release it from liability.