M and B Engineers Limited v Uganda National Roads Authority and Another (Civil Appeal No. 316 of 2021)

Court of Appeal · [2023] UGCA 118 · 2023 Appeal Dismissed ✦ AI-generated summary ↓ Download

Jurisdiction

Uganda

Case Type

First appeal from a High Court (Commercial Division) decision dismissing a contractor's claim and a cross appeal by the 2nd Respondent

Decision

Both the appeal and cross appeal dismissed; trial court decision upheld

The full judgment

Read the complete, verbatim text of this judgment.

AI-generated summary. This summary was generated by AI from the full text of the judgment. It may contain errors or omissions — always read the source judgment before relying on it.

Holding

The Court of Appeal dismissed a contractor's appeal against the dismissal of its breach of contract claim arising from a terminated bridge construction contract. The court held that waiver of a contractual right requires an express or implied agreement, and merely permitting continued work and imposing liquidated damages did not extinguish the employer's right to terminate. Time for completion was a condition, not a warranty, and its breach, together with abandonment and substandard work, justified termination and seizure of equipment under the contract. The court declined to fault the trial court for not assessing damages where no entitlement existed. The cross appeal failed for want of proof of the counterclaim and because costs were properly denied. Each party bore its own costs.

Facts

By a 2009 agreement, the Government of Uganda, through the Ministry of Works and Transport, contracted the appellant to construct the Birara Bridge. The contract price was revised upwards and the completion date was extended to 30 July 2010. The appellant failed to complete the works by that date and was penalised in liquidated damages for the delay. Despite the penalty and notices of intention to terminate, the appellant did not complete the works. The Ministry alleged frequent stoppages, abandonment of the site for more than 28 days without the Project Manager's permission, and substandard work, ordering demolition and reconstruction of piers and an abutment, which the appellant did not comply with. By letter dated 30 October 2012 the Ministry terminated the contract and, invoking clause 61 of the General Conditions of Contract, retained possession of the appellant's materials, plant and equipment on site. The appellant sued for breach of contract, unjust enrichment, quantum meruit, wrongful seizure and conversion. The High Court dismissed the suit and partially allowed the second respondent's counterclaim on declarations only. The appellant appealed and the second respondent cross appealed.

Issues

Whether the Ministry of Works and Transport waived or acquiesced in the agreed completion date by permitting the contractor to continue working after that date.
Whether the trial court erred in holding that the waiver, if any, was express, conditional and temporary.
Whether failure to complete works within the agreed time was a fundamental breach (condition) or a mere warranty remediable by liquidated damages.
Whether the contractor stopped works and abandoned the site for more than 28 days without the Project Manager's permission.
Whether the seizure of the contractor's materials and equipment under clause 61 of the GCC was lawful.
Whether the trial court erred in relying on substandard work as a ground supporting termination when not stated in the termination letters.
Whether the trial court was obliged to assess damages despite dismissing the suit.
Whether the cross appellant proved its counterclaim for overpayment and liquidated damages and was entitled to costs.

Orders

Appeal dismissed in its entirety.
Cross appeal dismissed.
Each party to bear its own costs of both the appeal and cross appeal.

Key headnotes

Contract Law — Waiver — Requirement of express or implied agreement

Waiver of a contractual right of action requires an express or implied agreement by the person entitled to that right; merely permitting a contractor to continue working after the completion date and subjecting it to liquidated damages does not extinguish the employer's right to terminate for non-completion.

Contract Law — Conditions and Warranties — Time of completion as a condition

Where parties intend time for completion to be a fundamental term, the existence of a liquidated damages clause for delay does not reduce that term to a mere warranty; breach of such a condition entitles the innocent party to terminate the contract.

Contract Law — Construction of Contracts — Ascertaining the intention of the parties

In construing contractual provisions the court gives effect to the parties' intention by reading the contract as a whole, giving words their natural and ordinary meaning in the context of the agreement and the surrounding facts known to the parties.

Contract Law — Termination — Seizure of materials and equipment on default

Where a construction contract provides that all materials, plant and equipment on site become the property of the employer upon termination for the contractor's default, seizure of such property following a valid termination for breach is lawful.

Civil Procedure — Assessment of Damages — Duty after dismissing a suit

Although it is recommended practice for a trial court to assess the damages it would have awarded even where it dismisses the suit, failure to do so causes no miscarriage of justice where the appellate court finds the claimant was not entitled to damages in any event.

Evidence — Burden of Proof — Party asserting waiver bears the burden

A party pleading waiver or acquiescence as a defence bears the burden of proving its existence and cannot shift that burden onto the opposing party.

Civil Procedure — Costs — Discretion to deny costs to a substantially unsuccessful party

Costs follow the event under section 27 of the Civil Procedure Act, but a court may judicially exercise its discretion to order each party to bear its own costs where both the main suit and counterclaim have substantially failed.

Legislation cited (6)

Judicature Act Cap 13 s.11
Judicature (Court of Appeal Rules) Directions S.I.13-10 r.30(1)(a)
Civil Procedure Act Cap 71 s.27
Evidence Act Cap 6 s.101
Sale of Goods Act Cap 82 s.15
Civil Procedure Rules S.I 71-1 Order 6 rr.1 and 7

Cases cited (19)

Interfreight Forwarders v EADB (Supreme Court Civil Appeal No. 33 of 1992)
Nazmudin Gulam Hussein Viram v Nicholas Roussos (Supreme Court Civil Appeal No. 1 of 2006)
J K Patel v Spear Motors (Supreme Court Civil Appeal No. 4 of 1991)
Departed Asians Property Custodian Board v Issa Bukenya (Supreme Court Civil Appeal No. 26 of 1992)
Uganda Revenue Authority v Stephen Mabosi (Supreme Court Civil Appeal No. 26 of 1995)
General Parts (U) Limited v NPART (Supreme Court Civil Appeal No. 9 of 2005)
Richards vs Oppenheim [1950] 1 ER 420
National Bank of Kenya Limited vs Pipe Plastic Sakowitz (K) Limited and Another (2002) 2EA 503
Thrift Homes Ltd vs Kays Investment Limited [2015] eKLR
Lutaya v Attorney General (Supreme Court Civil Appeal No. 10 of 2002)
Uganda v George Wilson Simbwa (Criminal Appeal No. 37 of 2005)
Insurance Corporation of the Channel Islands vs The Royal Hotel Ltd [1998] Lloyds Rep IR 151
Agri-Industrial Management Agency Ltd v Kayonza Growers Tea Factory Ltd & Anor (High Court Civil Suit No. 819 of 2004)
Bank of Credit & Commercial International S.A. (in liquidation) vs. Ali (2001) 1 All ER 961
Mute v Elikana and another [1975] 1 EA 201
Mpungu & Sons Transporters Ltd v Attorney General and Another (Civil Appeal No. 63 of 1999)
Kaggwa Michael v Olal Mark and 6 others (High Court Civil Appeal No. 10 of 2017)
Candiru Alice v Amandua Fenisto and Another (High Court Civil Suit No. 19 of 2014)
Republic versus The Minister of Agriculture ex parte Njuguna & Others [2006] 1 EA 359 (HCK)

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