Wakilii

Engineer Investments Ltd v Attorney General & Anor (HCCS 331 of 2012)

High Court · [2016] UGCOMMC 71 · 2016 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of contract following partial judgment on points of law
Decision
Judgment entered for the plaintiff; defendants ordered to pay outstanding contract sum with interest; defendant's counterclaim dismissed with costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court held that the defendants were in breach of contract and ordered payment of outstanding sums with interest. The court found no evidence that the Public Procurement and Disposal of Public Assets Act 2003 procedures were not followed, and that the burden of proving non-compliance rested on the defendants. The contract was valid and enforceable, particularly as the plaintiff had satisfactorily completed the works certified by the defendants' project manager. Even if irregularities existed, the statute should not be used to defraud a party that provided satisfactory services in good faith.

Outcome

Judgment entered for the plaintiff; defendants ordered to pay outstanding contract sum with interest; defendant's counterclaim dismissed with costs

Facts

In January 2003, Kampala City Council invited bids for solid waste management services in Kawempe Division under a World Bank-funded local government development programme. On 3 May 2004, Engineer Investments Ltd, the Ministry of Local Government, and Kampala City Council executed a contract for solid waste management. The plaintiff provided the services and was issued a certificate of completion on 17 March 2005 by the project manager certifying satisfactory performance. The total certified amount was UGX 71,312,436. After demand, the defendants made a partial payment of UGX 30,000,000 on 14 June 2010, leaving a balance of UGX 41,312,436. The defendants subsequently refused further payment and counterclaimed for refund of the partial payment, alleging the contract was illegal for non-compliance with procurement law and failure to obtain the Attorney General's consent under article 119(5) of the Constitution.

Issues

  1. Whether the Defendants are in breach of their contract with the Plaintiff?
  2. Whether the contract was illegal for failure to comply with the Public Procurement and Disposal of Public Assets Act 2003?
  3. What are the remedies available to the aggrieved party?

Orders

  • Judgment for the Plaintiff.
  • The Defendants are ordered to pay the Plaintiff the principal sum of UGX 41,312,436 being the balance outstanding under the contract.
  • Interest awarded on UGX 41,312,436 at 19.5% per annum from 1 June 2006 until suit was filed in August 2012.
  • Interest awarded on UGX 30,000,000 at 19.5% per annum from 1 June 2006 until 14 June 2010 (when it was paid).
  • Interest awarded at 21% per annum on the aggregate amount from filing of suit in August 2012 till date of judgment.
  • Interest awarded at 20% per annum on the aggregate amount from date of judgment until payment in full.
  • The second Defendant's counterclaim is dismissed with costs.
  • Costs of the suit awarded to the Plaintiff.

Rules and key headnotes

Contract Law — Illegality — Public Procurement — Burden of Proof — Effect on Valid Contracts
Where a contract has been executed by the accounting officers of a procuring entity after a published invitation for bids, and the contractor has performed satisfactorily as certified by the entity's project manager, the burden of proving non-compliance with procurement procedures rests on the procuring entity defending a claim for payment, not on the contractor who had no control over the entity's internal processes.
Administrative Law — Public Procurement — Retrospective Application of Regulations
Regulations promulgated after a contract has been executed do not have retrospective effect and cannot be relied upon to invalidate a contract entered into before their coming into force. The Local Governments (Public Procurement and Disposal of Public Assets) Regulations of 2006 do not apply to a contract executed in 2004.
Contract Law — Illegality — Statutory Non-Compliance — Distinction Between Void and Illegal Contracts
Unless a statute expressly prohibits an act and provides sanctions for disobedience, non-compliance with statutory provisions relating to procurement procedure does not necessarily render a contract illegal. A distinction exists between contracts that are void for non-compliance with directory provisions and contracts that are illegal for contravening mandatory prohibitions.
Contract Law — Illegality — Fraud on Statute — Unjust Enrichment
A statute should not be used as an instrument of fraud. Where a procuring entity has received and enjoyed satisfactory services under a contract it executed, represented funds were available, and issued a certificate of completion, it cannot rely on alleged internal procedural irregularities to avoid payment and retain the benefit of the contractor's performance. To allow otherwise would permit unjust enrichment.
Evidence — Documentary Evidence — Best Evidence Rule — Contractual Terms
Under section 91 of the Evidence Act, where the terms of a contract have been reduced to writing, no evidence except the document itself shall be given in proof of the terms of that contract. Where a contract document states that the employer accepted the contractor's bid, this fact cannot be contradicted by submissions without evidence, and the burden shifts to the party alleging irregularity to adduce proof.
Contract Law — Damages — Liquidated Damages — Interest on Delayed Payments
Where parties to a contract agree that interest shall be paid on delayed payments at a specified rate, such agreement constitutes liquidated damages and is recoverable without necessity of proving actual loss. The agreed rate of interest represents a genuine pre-estimate of loss and binds the parties. The plaintiff cannot recover more than the agreed damages, nor general damages in addition to contractual interest.

Legislation cited (18)

Cases cited (18)

  • Behange v School Outfitters (U) Ltd (2000) 1 EA 20
  • United Building Services Ltd v Yafesi Muzira t/a Quick set Builders and Company (HCCS No. 154 of 2005)
  • Finishing Touches v Attorney General (HCCS No. 144 of 2010)
  • Nabro Properties Ltd v Sky Structures Ltd and Two Others (2002) 2 KLR
  • Makula International Ltd v Cardinal Nsubuga and Another (1982) HCB 11
  • Eladam Enterprises Ltd versus SGS (U) Ltd, SGS (K) Ltd, Societe General De Surveillance (SA)
  • Mark Foley versus United Africa Company Ltd (West Africa) PC 27 Nov 1961
  • Kisugu Quarries v Administrator General (1999) 1 EA 158
  • Clear Channel Independent Uganda Ltd v Public Procurement and Disposal of Public Assets Authority (HCMA No. 380 of 2008)
  • NAS Airport Services Limited v Attorney-General of Kenya [1959] 1 EA 53
  • Bostel Brothers, Ltd versus Hurlock [1948] 2 All ER 312
  • Phoenix General Insurance Co of Greece SA v Administratia Asigurarilor de Stat [1987] 2 All ER 152
  • Rochefoucauld v Boustead [1897] 1 Ch 196
  • Excel Construction Ltd v Attorney General (HCCS No. 3 of 2007)
  • Suisse Atlantique Société D'armement Maritime SA v NV Rotterdamsche Kolen Centrale [1966] 2 All ER 61
  • Cullimore v Lyme Regis Corporation [1961] 3 All ER 1008
  • Montreal Street Railways Co v Normandin [1917] AC 174
  • Harbutts Plasticide Ltd versus Wayne Tank and Pump Company Ltd (1970) 1 QB 447

Full judgment

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Engineer Investments Ltd v Attorney General & Anor (HCCS 331 of 2012) [2016] UGCommC 71 (7 October 2016)
Source: this page presents Wakilii’s issue analysis and metadata for a publicly reported Ugandan judgment. Any AI-generated summary is marked as such. Judgment text is sourced from the Uganda Legal Information Institute (ulii.org). Wakilii is not affiliated with ULII.