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Last Updated: 25 May 2007
Eclipse/EDIL Soil JVC Co. Ltd V Kampala City
Council -HCT-00-CC-CS-0256-2005 [2007] UGCommC 13 (9 February
2007).
THE REPUBLIC OF UGANDA
IN THE HIGH COURT OF
UGANDA AT KAMPALA
(COMMERCIAL COURT
DIVISION)
HCT-00-CC-CS-0256-2005
Eclipse/Edil Soil
Jvc Co. Ltd Plaintiff
Versus
Kampala City Council Defendant
9
February 2007
BEFORE: THE HONOURABLE MR. JUSTICE
YOROKAMU BAMWINE
J U D G M E N T:
The
plaintiff’s case against the defendant is for recovery of
Shs.18,626,292- as special damages, interest, general damages and
costs of the suit arising out of an alleged breach of contract. The
plaintiff’s case is that it was awarded a contract for the
periodic
maintenance of Kisalosalo Rd, Kawempe Division at a contract price of
Shs.24,720,675-. That it successfully executed the
works to
completion and satisfaction of the defendant but that the defendant
managed to pay only Shs.5,994,383-. Its contention is
that it was
obliged to complete the said works and submit claim certificates to
the defendant. That it did so and the defendant partly
honoured the
same. Hence this suit for the recovery of the balance.
Issues:
1.
Whether there was a contract between the plaintiff and the
defendant.
2. Whether the plaintiff performed its part of the
contract.
3. Whether the plaintiff is entitled to the reliefs
sought.
Counsel:
Mr. Robert Bautu for the
plaintiff.
Mr. Sendege for the defendant.
Upon
completion of oral testimony on 13/12/2006, both counsel were allowed
to file written submissions. Mr. Bautu under took to file
the
plaintiff’s by 27/12/2006 and Mr. Sendege by 16/1/2007. In case of
a reply, Mr. Bautu was to file it by 23/1/2007. Court reserved
delivery of judgment on notice. As I write this judgment long passed
the dates agreed upon by counsel, only Mr. Bautu has done the
needful. I will do the best I can in the circumstances.
As to
whether there was a contract between the defendant and the plaintiff,
there is on record P. Exh. 1, a contract for the periodic
maintenance
of Kisalosalo Rd in Kyebando Parish, Kawempe Division. Throughout the
hearing, no dispute was raised as to its execution.
In view of this
undisputed Exhibit, the Court’s answer on the first issue is in the
affirmative.
As to whether the plaintiff performed its part of the
contract, I have considered the evidence of the parties.
First,
the plaintiff’s evidence, as contained in the oral testimony of PW1
Kato plus documentary evidence. From the evidence, Tender
Board
awarded the contract on 13/2/2003 and the decision was communicated
to the plaintiff on 14/2/2003. However, the contract document
was not
signed till 14/4/2003. According to the plaintiff, the road needed a
roller grader. It also needed murram. Part of the work
required
installation of culverts. It is his evidence that they installed 56
of them. He summarized the performance of the contract
thus:
"There was a stretch of 5.5 sq metres to be scarified and compacted. We did that. Another part was to be graded and filled with murram. We graded it and filled it as required. The other part required grading, leveling and filling with murram. We did so. Final part was to replace services damaged in the process, e.g. water lines, telephone wires. We did so."
From the evidence of this witness, the picture
he paints is a rosy one, of work successfully done but not paid for,
except for the
Shs.5,994,383- paid in November 2003. However, the
evidence of Joseph Musoke, the Site Engineer points to the opposite
direction.
He testified that the work was never completed. That the
contractor started the work sometime in April 2003; he was supposed
to execute
it within 2 months, but some where in May 2003, the
contractor abandoned the work without giving any reason. Musoke’s
evidence
on this point is of course problematic given that he himself
states that he was on sick leave by then and one Richard Semakula was
acting in his absence. From Musoke’s evidence, he was involved in a
road accident and for 2 months, May/June, he was on sick leave.
The
said Semakula did not appear as a witness. So Musoke’s evidence on
this point is largely what he was told happened while he
was
away.
The man said to have been on the ground, recording
activities and reporting to the Division Engineer was DW2 Lwasi
Samuel. From his
evidence, he was not an employee of K.C.C. However,
some how he got involved into the supervision of the road works on
behalf of
the Division Engineer. From the contract document, the duty
of supervising the works was the Division Engineer’s which DW2
Lwasi
was not. It has been submitted to me by learned counsel for the
plaintiff that whereas the Engineer could delegate his role to
another
person, he had to do so to somebody with requisite skill and
knowledge, this being a technical project. From my own assessment of
this witness, DW2 Lwasi, I’m unable to fault that submission. He
did not impress me as someone fit for the task. He may have been
asked to step in following Engineer Musoke’s involvement in an
accident, but certainly he lacked the competence for that task.
He
was not a suitable substitute for Musoke. Little wonder that things
did not go as planned. I will point out a few instances that
discredit Lwasi’s performance. He claims to have been keeping a
record of all on-going activities at the time. The daily activity
reports/measurement sheets relied upon by the defence were neither
signed by the contractor nor the Division Engineer. When PW1 Kato
swears that no such reports were being made, his evidence cannot be
disbelieved as long as they were never signed by him or any of
the
contractor’s agents. The reports themselves are not free of
suspicion. For instance, the purported activity report of 27/6/2003
indicates the first site meeting to have been held on 27/6/2006. How
would the year 2006 come into the mind of the author in 2003?
Likewise under the activities of 26/11/2003, the author indicates the
murram to have been delivered on 24/11/2004. Without wasting
more
time and ink on this point, it appears clear to me that in a bid to
bolster its case, the defendant looked for Lwasi in 2006.
He sat down
and compiled these so called activity reports, either from memory or
sketchy notes which he made at the time without
PW1 Kato’s
knowledge. They are not reliable records.
According to Article
5 of the contract document, signature of contract and payment of
advance would constitute an implicit order to
commence the works.
From the records, the plaintiff was never paid anything till November
2003, implying breach on the part of the
defendant to effect some
advance payment before the works could begin. The Engineer testified
that they found that the contractor
failed to complete the road. That
where he attempted to bring murram for the surface, it was of poor
quality. That much as contractually
he was given 2 months in which to
perform the contract, the little percentage of the work he did was
outside the contract period.
In my opinion the defendant cannot be
heard to raise pertinent issues of delayed execution of the works
when for the entire contract
period (of two months) it never extended
to the plaintiff any funds in accordance with the contract document.
They submitted a bill
in July 2003 and instead of processing payment
within 28 days of its receipt, the defendant ‘sat’ on it till
November 2003 when
they released the first and only payment in the
sum of Shs.5,994,383-. In these circumstances, I find it rather
ironical that the
defendant could expect works of excellent quality
without any investment in them. They simply looked on as the
plaintiff single handedly
struggled to execute the works without any
advance payment to them as agreed.
Learned counsel for the
plaintiff has raised issue of DW1 Musoke’s suitability for the job.
He admitted at the hearing that he was
not a registered Engineer by
2003 though duly qualified academically. It has not been shown,
however, that lack of registration negatively
impacted on his
performance or that registration under the Act is a must for any
person seeking to join the public service as an
Engineer. He was an
employee of the defendant, duly authorized to transact business on
its behalf. The issue was never raised at
the material time. Given
that non-registration was never raised as an issue for Court’s
determination herein, I would over look
it as a technicality curable
under Article 126 (2) (e) of the constitution. I do so.
Finally
on this point, the plaintiff evidently encountered problems in the
performance of the contract. Firstly, the Division Engineer
disappeared from them. They were left on their own, without any
Engineer on the part of the Employer to supervise them in accordance
with the contract terms. Secondly, the funds to facilitate them were
not released as agreed. Clearly, through omission or commission,
the
defendant did not create the necessary conducive environment for
excellent performance of the contract by the plaintiff. Even
then
Court is satisfied that they did something. They made substantial
performance of the contract, contrary to the defence contention
that
they made a complete mess of it.
I have considered Engineer
Musoke’s evidence. At the hearing, he estimated the overall work
done at 30%. In the report, D. Exh.
1, he puts it at 40%. In a letter
to the Secretary Tender Board, Ruth Kijjambu, the then Principal
Assistant Town Clerk, estimated
it at 60%. Though perhaps less
qualified than Musoke to make the assessment, she was more on the
ground than him. Musoke relied on
reports, most of them questionable.
Ruth Kijjambu did not appear as a witness. Be that as it may, Court
is satisfied on the balance
of probabilities that performance of the
contract was not 100%. Doing the best I can, I have assessed it at
70%, 10% above the Principal
Assistant Town Clerk’s assessed value.
I so find.
As to whether the plaintiff is entitled to the
reliefs sought, the plaintiff’s head prayer is for special damages
in the sum of
Shs.18,626,292- and miscellaneous expenses in the sum
of Shs.1,000,000-. It has not been indicated what that miscellaneous
expense
was. I disallow this claim. As to what remains of the
plaintiff’s claim for special damages, I have already indicated
that this
was a fixed, non-adjustable contract of the over all price
of Shs.24,720,675-. The plaintiff performed 70% of the work. In
practical
terms, what they did was worth Shs.17,304,472- (that is
Shs.24,720,675- x 70%). They were paid Shs.6,244,149- (less 4%
withholding
tax). I would deduct it from the amount they were
entitled to and award them the balance in the sum of Shs.11,060,323-
as special
damages, inclusive of the 4% withholding tax in place at
the time. The same is awarded to them on the principle of quantum
meruit.
As regards general damages for breach of contract, the
plaintiff submits that a figure of Shs.10,000,000- would be an
adequate award.
Counsel for the defendant filed no submissions and
therefore made no proposal. General damages are what may be presumed
by law to
be the necessary result of the defendant’s tortious acts.
The plaintiff may not prove that he suffered general damages. It is
enough
if he shows that the defendant owed him a duty of care which
he breached. In the instant case, the plaintiff has shown to the
satisfaction
of Court that it did not receive payment commensurate
with the work it did for the defendant. It was either assessed for
work done
by another company, Eastern Builders Construction Ltd, or
the defendant was careless in arriving at a figure it did. I’m
saying
so because the figure of Shs.6,244,149- was unjustifiable and
not based on any known criteria. The certificate on which it was
based,
known as Summary of Progressive Payment certificate (also
dated 30/10/2003) gives the contract start date as 28/3/2003 and
completion
date as 28/05/2003. This information could not definitely
have been in relation to the plaintiff company given that the start
date
of their contract was, according to Engineer Musoke’s own
report, 16th April, 2003 and the contract completion dated
16th June, 2003. Bearing in mind the facts of the case,
the attendant loss the plaintiff is presumed to have suffered and
doing the best
I can, an award in the sum of Shs.3,000,000- would
adequately compensate the plaintiff’s loss as general damages. The
same shall
attract interest at the rate of 25% p.a. from the date of
judgment till payment in full.
In the plaint, the plaintiff
prayed for interest on special damages at Court rate. However, in the
submissions, counsel has prayed
for interest at commercial rate of
25% on the unpaid balance. The justification for this departure from
own pleadings is that this
was a contract of a commercial nature
which ordinarily invites a commercial rate of interest. I have not
been persuaded by this argument,
given that the plaintiff knew the
nature of the transaction at the time of filing. It is of course
plain that it should be compensated
for the loss thereby occasioned
to its business. It is not enough that the money withheld from it by
the defendant is by reason of
this judgment to be replaced. In these
circumstances, the plaintiff shall be compensated by an award of
interest on the special damages
at the Court rate as prayed in the
plaint to be calculated from the date of filing till judgment and at
a commercial rate of 25%
per annum from the date of judgment till
payment in full.
In view of partial success by the defendant
on the quantum of damages, the plaintiff shall get two thirds of the
taxed costs of the
suit.
In the result, judgment is entered
for the plaintiff against the defendant in the following terms:
(i).
Special damages: Shs.11,060,323- (4% withholding tax
inclusive).
(ii). General damages: Shs.3,000,000-.
(iii).
Interest on (i) at Court rate from the date of filing till judgment,
and thereafter at commercial rate of 25% per annum on
both (i) and
(ii) from the date of judgment till payment in full.
(iv).
Two-thirds of the taxed costs of the suit.
Yorokamu
Bamwine
J U D G E
9/2/2007
Order: This judgment shall be
delivered by the Registrar on my behalf on the due date.
Yorokamu
Bamwine
J U D G E
9/2/2007
9/2/2007
Robert Bautu for
plaintiff.
Mutyaba for defendant.
Clerk – Milton.
Judgment
read in open Court.
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