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Attorney General v Alpha Gama Enginering Enterprises Limited (Civil Appeal 25 of 2021)

Supreme Court · [2024] UGSC 44 · 2024 Appeal Partly Allowed ✦ AI-generated summary ↓ Download
Jurisdiction
Uganda
Case Type
Second civil appeal from the Court of Appeal concerning the assessment of special damages in a government construction-contract dispute
Decision
Appeal substantially failed; special damages reduced from UGX 224,838,247 to UGX 186,669,001 (VAT inclusive), with interest, general damages and costs affirmed.

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Holding

On a second appeal the Supreme Court held that the Court of Appeal erred in computing special damages by applying the revised contract price in isolation from the evidence. Where the Project Manager, as the employer's agent, breaches the contract by refusing to certify final payment after the contractor has completed and handed over the works, the employer is estopped from insisting that entitlement be proved only by that certificate, and the contractor may recover on a quantum meruit. The correct measure is the proven value of the completed works less sums already paid. The award of UGX 224,838,247 was set aside and substituted with UGX 186,669,001 (VAT inclusive); interest, general damages and costs were affirmed.

Facts

Alpha Gama Engineering Enterprises Ltd contracted with the Government of Uganda (Ministry of Justice and Constitutional Affairs) to construct regional offices in Arua at a contract price of UGX 984,618,278 (VAT inclusive). In April 2009 the Ministry's Contracts Committee revised the price upward by 15% to UGX 1,132,311,019 owing to rising material and fuel costs. The contractor completed the works and handed over the premises in September 2009. The Project Manager issued a final certificate in September 2009 based on the original contract price (UGX 984,653,972) and declined to certify the contractor's revised final account (Exhibit P10), submitted on 5 October 2009, treating it as time-barred. The Ministry paid UGX 907,442,772. The contractor sued to recover the balance. The High Court awarded special damages of UGX 17,674,628, general damages of UGX 10,000,000 and costs. On the respondent's appeal, the Court of Appeal revised special damages upward to UGX 224,838,247 using the revised contract price, with interest and costs. The Attorney General appealed to the Supreme Court against the award of special damages.

Issues

  1. Whether the Court of Appeal erred in law in awarding the respondent special damages of UGX 224,838,247 (VAT inclusive).
  2. Whether the Court of Appeal erred in holding that the trial judge wrongly relied on the Project Manager's final certificate in assessing the unpaid balance.
  3. Whether, in the absence of a final payment certificate, the contractor could prove its entitlement to payment and on what basis.

Orders

  • The appeal substantially fails and only partially succeeds, to the extent of correcting an error in computation by the Court of Appeal based on a wrong principle.
  • The Court of Appeal's award of UGX 224,838,247 in special damages is set aside and substituted with UGX 186,669,001 (VAT inclusive).
  • Interest of 18% per annum on the substituted award from the date of filing the suit till payment in full is upheld.
  • Costs of three-quarters in the Supreme Court and two-thirds in the Court of Appeal are awarded to the respondent.
  • General damages of UGX 10,000,000 in favour of the respondent are affirmed.
  • Interest at court rate on the general damages from the date of the High Court judgment (18 December 2013) till payment in full is affirmed.
  • Costs of the High Court proceedings to the respondent are affirmed.

Key headnotes

Contract Law — Building & Construction Contracts — Quantum Meruit on Failure to Certify Payment
Where an employer's agent wrongfully refuses to certify final payment after the contractor has completed and handed over the works, the contractor may recover the reasonable value of the works done on a quantum meruit, notwithstanding the absence of a payment certificate the contract required.
Contract Law — Estoppel — Reliance on a Certification Clause Breached by the Employer's Agent
An employer whose agent has breached the contract by declining to certify completed works is estopped from insisting that the contractor's entitlement to payment can be proved only by that agent's certificate.
Contract Law — Repudiatory Breach — Failure to Certify Going to the Root of the Contract
Failure by the Project Manager to issue a final payment certificate after the defects liability period and receipt of the contractor's final account is a fundamental breach going to the root of a construction contract, relieving the contractor of the obligation to ground its claim on that certificate.
Damages & Quantum — Special Damages — Measure for Unpaid Works in a Construction Contract
Special damages for unpaid construction works are measured by the proven value of the completed works less sums already paid, and may not be assessed by applying the revised contract price in isolation from the evidence.
Damages & Quantum — Appellate Interference with Awards of Damages
An appellate court will not reverse an award of damages unless satisfied that the trial court acted on a wrong principle or that the amount awarded is so large or so small as to be an entirely erroneous estimate of the damage.
Civil Procedure — Second Appeals — Power to Reappraise Evidence
On a second appeal where the facts are uncontested, the Supreme Court may decide matters of law and mixed law and fact under rule 30(1) of its Rules, but has no discretion to take additional evidence.
Evidence — Burden of Proof — Party Asserting a Right and Effect of Admitted Facts
Under section 101(1) of the Evidence Act the burden of proving facts establishing a legal right lies on the party asserting them; but a party in breach who prevented certification cannot shift onto the claimant the burden of proving facts that party itself obstructed, and an agreed fact requires no proof under section 57.

Legislation cited (4)

  • Evidence Act Cap 6 s.101(1)
  • Evidence Act Cap 6 s.57
  • Civil Procedure Rules Order 6 rule 7
  • Rules of the Supreme Court rule 30(1)

Cases cited (13)

  • Godfrey Ssebanakita v Fuelex (U) Ltd (Civil Appeal No. 4 of 2016)
  • Mpungu & Sons Transporters Ltd v Attorney General (Civil Appeal No. 17 of 2000)
  • Peters v Sunday Post Limited [1958] EA 421
  • Trustees of Marc Gilbard 2009 Settlement Trust v O.D. Developments & Projects Ltd [2015] EWHC 70 (TCC)
  • Uganda Telecom Ltd v Tanzanite Corporation [2005] EA 331
  • Fang Min v Belex Tours (Consolidated Civil Appeals No. 6 of 2013 and No. 1 of 2014)
  • Kasifa Namusisi v Ntabaazi (Civil Appeal No. 4 of 2005)
  • Bhom v Car and General Ltd (Civil Appeal No. 12 of 2002)
  • Lombard North Central plc v Butterworth [1987] 1 All ER 267
  • Craven-Ellis v Canons Ltd [1936] 2 All ER 1066
  • Clarke v Cuckfield Union Guardians
  • Lawford v Billericay Rural District Council
  • Alpha Gama Engineering Enterprises Ltd v Attorney General (HCT-00-CC-CS 438 of 2010) [2013] UGCommC 213
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