Wakilii

Morex Contractors v Nakawa Division Local Government (HCT-00-CC-CS 34 of 2010)

High Court · [2012] UGCOMMC 109 · 2012 Judgment for Plaintiff — Damages Awarded AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for breach of construction contract and recovery of unpaid sums
Decision
Plaintiff awarded general damages of Ushs 10,000,000 with interest and costs for employer's fundamental breach, but claim for retention dismissed as works not completed

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that retention money is payable only upon completion of works and issue of completion certificate. Where contractor did not complete works, retention is not payable. However, employer's failure to pay certified interim certificate within 84 days constituted fundamental breach under the contract. Though contractor not entitled to retention, entitled to general damages for employer's fundamental breach. Plaintiff awarded Ushs 10,000,000 general damages with interest at 8% per annum from judgment date plus costs.

Outcome

Plaintiff awarded general damages of Ushs 10,000,000 with interest and costs for employer's fundamental breach, but claim for retention dismissed as works not completed

Facts

On 7 July 2006, plaintiff was awarded tender by second defendant for single surface dressing of Mutungo tank hill/church Road measuring 500 metres in first defendant's division, for contract sum of Ushs 147,593,050. Plaintiff commenced work on 14 December 2006. First defendant issued interim certificate No. 1 for Ushs 40,367,200 with retention of Ushs 4,036,720, and interim certificate No. 2 on 29 March 2007 for Ushs 35,787,000 with retention of Ushs 3,578,700. Certificate No. 1 was partially paid leaving balance of Ushs 2,049,039. Certificate No. 2 was paid late in November 2007, beyond the 84-day contractual period. Work came to standstill. Evidence showed plaintiff completed 51% of works. Eventually defendants hired new contractor to complete works. Plaintiff claimed unpaid balance, retention money and loss of future income.

Issues

  1. Whether the retention of Ushs 7,615,420/= is payable to the plaintiff.
  2. Whether there was breach of contract.
  3. What are the remedies available to the parties?

Orders

  • Judgment on admission entered against defendants for Ushs 2,049,039/= being balance on certificate No. 1.
  • Plaintiff's claim for retention sum of Ushs 7,615,420/= dismissed.
  • Defendants found to have committed fundamental breach of contract by failing to pay interim certificate No. 2 within 84 days as required by contract.
  • General damages of Ushs 10,000,000/= awarded to plaintiff.
  • Interest at 8% per annum awarded from date of judgment until payment in full.
  • Costs of the suit awarded to the plaintiff.

Rules and key headnotes

Construction Contracts — Retention Money — Payment Conditions
Retention money held under a construction contract is payable only upon completion of works as certified by the project manager. Where a contractor has not completed the works and no certificate of completion has been issued, the contractor is not entitled to payment of retention money even if substantial work has been done.
Construction Contracts — Retention Money — Purpose and Function
The practical purpose of retention money in construction contracts is to ensure completion of works by the contractor and to safeguard against defects. Where works remain uncompleted and defects cannot be assessed, the retention serves its purpose by remaining with the employer to secure completion through another contractor.
Breach of Contract — Fundamental Breach — Late Payment under Construction Contracts
Where a construction contract expressly provides that failure to pay a certified interim certificate within a specified period constitutes fundamental breach, delay beyond that period gives the contractor the right to terminate the contract. Failure by an employer to pay a certified interim certificate within 84 days as stipulated in the contract amounts to fundamental breach.
Remedies — Damages for Fundamental Breach by Employer
Where an employer commits fundamental breach of a construction contract by late payment of certified interim certificates, the contractor is entitled to general damages for the breach notwithstanding that the contractor may not be entitled to other claims such as retention money due to non-completion of works.

Cases cited (2)

  • CHITTY ON CONTRACTS Vol. 2 at Paragraph 37-125
  • Paragraph 37-130

Full judgment

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

Morex Contractors v Nakawa Division Local Government (HCT-00-CC-CS 34 of 2010) [2012] UGCommC 109 (27 August 2012)
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.