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Investors to wait longer for Sh6b Buxton Housing project after High Court temporarily stops construction

Mombasa businessman Suleiman Shahbal, Housing Principal Secretary Charles Hinga, Buxton Housing project CEO Ahmed Badawi and other officials during a tour at the Buxton housing project in Mombasa County on February 7, 2022. [Kelvin Karani, Standard]

The High Court in Mombasa has temporarily stopped the construction of the Sh6 billion Buxton Housing Project in Mombasa County over the termination of a contract dispute.

On March 10, Justice Olga Sewe ordered that a status quo remain on the project pending hearing and determination of the suit filed by Philmark System Services Limited.

Philmark filed a certificate of urgency on March 8 seeking to stop the project from continuing pending determination of its application.

“Having perused the annexures relied on by the applicant in support of the application, particularly on termination notices dated February 28, it is hereby ordered the status quo prevailing On March 9 be maintained until March 16, 2022."

The judge further ordered the application be certified urgent and the said application be served forthwith on the respondent for further directions on March 16 by the duty judge.

Philmark System Limited had been sub-contracted by Roton Construction Limited to construct part of the multi-billion housing project owned by Buxton Point Developers Limited.

Buxton Point Developers Limited is a company registered in Turkey and Roton Construction Limited is a shareholder of Buxton Point.

Philmark sued Buxton Construction Limited and Roton Construction Limited over the termination of the contract.

Philmark seeks a Sh200 million compensation in damages for profit loss, payment for work done and materials delivered and the declaration that the termination was illegal and without regard to due process and the rules of natural justice.

Philmark through its lawyer Paul Magolo said Buxton Point Developers Limited and Roton Construction Limited had illegally and unprocedurally without regard to the due procedure or natural justice terminated its construction contract.

Magolo said the defendants have refused to let Philmark’s agents take their belongings and intend to demolish the offices where they used to operate.

“Further the plaintiff’s machines and equipment still in the site are being vandalized and misused as time goes by and if the plaintiff is not brought back to the site by an order of this court, he will suffer immense loss,” said Magolo.

On February 28, Buxton Point Developers Limited terminated the Philmark contract.

Philmark wants the court to issue an injunction restraining Buxton Point Developers Limited and Roton Construction Limited from recruiting any other construction firm for completion of the construction works for the Buxton Point Housing Development pending hearing and determination of the application and suit.

Magolo applied that the court order for a joint building council with the registered Quantity Surveyor to do a quantity value of the work done by Philmark so far and materials ordered and delivered to site.

In an affidavit sworn by Philmark’s Director, Philemon Ochieng Okelo, on August 25, 2021, the company was contracted by Buxton Point Developers Limited in the construction of Buxton Point Mombasa County for Buxton Housing Development.

Okelo said that on January 4, 2022, Philmark and Buxton Point Developers Limited came to an understanding where it was agreed that joint valuations shall be done to establish the values of the work done and outstanding balances.

“The entire Buxton project contract sum was valued at Sh6 billion whose contract was awarded to Roton Construction Limited. Roton Construction then contracted Philmark to complete construction of district A and B for a meagre Sh510 million, a sum not even half of the market value,” said Okelo.

He said Philmark has so far constructed major parts of the project in District A which is 90 units, 70 per cent of the work is completed and 40 per cent of the work has been done with regards to District B.

Okelo said no valuation certificate has been raised to effect payments pursuant to work done, and in its stead, advanced payments were usually advanced on request.

“Despite the termination of the contract, the plaintiff has not been paid for the work done so far and materials ordered and delivered,” said Okelo.

He said as a result of Buxton Point Developers Limited terminating the construction contract, Philmark has suffered a loss of profits estimated at over Sh200 million.

However, Buxton Construction Limited and Roton Construction Limited is yet to file any response and asked for more time through their lawyers Omondi from RONN Law Advocates.