Wakilii

Kituni Construction Co. Ltd v Julius Okeny (HCT-00-CC-CS 250 of 2004)

High Court · [2007] UGCOMMC 86 · 2007 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of construction contract seeking recovery of contract price
Decision
Plaintiff awarded full contract price of Shs.102,528,500 with interest at 20% per annum from date of filing suit until payment in full, plus taxed costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court held that the defendant breached a lump sum construction contract by ordering the contractor off the site when work had substantially been completed. Under the doctrine of substantial performance, the plaintiff contractor was entitled to recover the full contract price where the defendant failed to provide a consultant to supervise the works, accepted the work as it progressed, and subsequently used the completed building without payment. Oral evidence of contract variation was admissible where no written variation requirement existed in the contract, and the defendant was estopped from denying agreed variations where he monitored and accepted the work as it progressed to near completion.

Outcome

Plaintiff awarded full contract price of Shs.102,528,500 with interest at 20% per annum from date of filing suit until payment in full, plus taxed costs

Facts

On 28 March 2003, the plaintiff construction company entered into a written contract with the defendant to construct a petrol station in Soroti at Plot 143-145 Gweri Road for Shs.102,528,500. The contract was to be completed by 10 July 2003. Upon reaching the site, the plaintiff found the ground soggy, requiring more hardcore and murram than anticipated. The parties orally agreed to use bricks instead of blocks and timber trusses instead of steel trusses to stay within budget. The defendant was to provide a consultant to supervise the works but failed to do so, instead personally monitoring progress. By June 2003, when work had progressed to roofing level, the defendant ordered the plaintiff off the site without notice or payment. The defendant issued post-dated cheques covering the contract price, which were dishonoured. The defendant subsequently used the petrol station from December 2003 without paying for it. The plaintiff sued for the contract price.

Issues

  1. Whether the agreement was breached and by whom?
  2. Whether the plaintiff is entitled to the whole contract price or at all?
  3. What remedies are available?

Orders

  • Judgment entered for the plaintiff against the defendant for Shs.102,528,500 as special damages.
  • Interest on the special damages at 20% per annum from the date of filing the suit until payment in full.
  • Costs of the suit to be taxed and paid by the defendant to the plaintiff.

Rules and key headnotes

Contract Law — Variation of Written Contracts — Oral Variation — Admissibility
Where a written contract contains no express or implied provision requiring variations to be in writing, oral evidence is admissible under s.92(d) of the Evidence Act to prove variation or rescission of the written contract.
Contract Law — Estoppel — Variation by Conduct
A party who stands by and keeps silence while observing another person acting under a misapprehension or mistake, which by speaking he would have prevented, is estopped from later alleging the true state of affairs and cannot deny an implied variation of contract terms.
Contract Law — Lump Sum Contracts — Substantial Performance Doctrine
In a lump sum construction contract, where a contractor substantially performs the contract in good faith and the essential purpose is accomplished, the contractor is entitled to recover the full contract price less any damages for defects and omissions. Substantial performance occurs where the contractor completes most of the work, provides all materials, and further performance is prevented by the employer's breach.
Contract Law — Breach of Contract — Repudiatory Breach
Where an employer orders a contractor off the site without written notice as required by contract and without giving opportunity to complete substantially performed work, this constitutes a repudiatory breach going to the root of the contract, entitling the contractor to damages and recovery of the contract price.
Contract Law — Unjust Enrichment — Employer Benefit
Where an employer takes benefit of a contractor's materials and services by using a substantially completed building without paying for it, refusing payment would sanction unjust enrichment and the contractor is entitled to recover the contract price.
Contract Law — Entire Contracts — Degree of Completion Required
In an entire lump sum contract, it is not every breach that absolves the employer from paying the price, but only a breach going to the root of the contract such as abandonment when work is half done. Where a contractor substantially completes the work, the employer must pay the price subject to any cross-claim for defects and omissions.
Contract Law — General Damages — Compensation versus Punishment
General damages are awarded to compensate a plaintiff and place them in the same financial position as if the contract had been performed, not to punish the defendant. Where an award of the full contract price achieves this compensatory purpose, no additional general damages should be awarded.

Legislation cited (3)

Cases cited (4)

  • Hoening v Isaacs [1952] 2 All ER 176
  • Bolton v Mahadeva [1972] 1 WLR 1009
  • Denis Senkungu v Masaka Diocese & 2 Others [1998] 111 KALR 128
  • Dakin H & Co Ltd v Lee [1916] 1 KB 166

Full judgment

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The original judgment as reported. Read the original PDF before relying on any passage.

Kituni Construction Co. Ltd v Julius Okeny (HCT-00-CC-CS 250 of 2004) [2007] UGCommC 86 (30 October 2007)
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.