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Networth Consult Co. Limited v The Attorney General of the Republic of Uganda (Civil Suit 541 of 2022)

High Court · [2024] UGCOMMC 213 · 2024 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 and recovery of contractual payments
Decision
Plaintiff's suit substantially succeeded with declarations of breach and prevention; Defendant ordered to pay 90% balance of contract sum, general damages, interest, and costs

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the Rural Electrification Agency breached the contract by delaying payment of the initial 10% of the contract sum and by failing to provide timely approvals and feedback on the marketing strategy, thereby preventing the consultant from completing the remaining deliverables within the 24-month contract period. The court applied the principle of prevention, holding that a party cannot benefit from its own wrongdoing in preventing contract performance. The consultant was entitled to the outstanding 90% of the contract sum as damages for loss of profit, plus interest and general damages.

Outcome

Plaintiff's suit substantially succeeded with declarations of breach and prevention; Defendant ordered to pay 90% balance of contract sum, general damages, interest, and costs

Facts

On 18 June 2020, Networth Consult Co. Limited entered a consultancy contract with the Rural Electrification Agency for marketing consultancy services under the Energy for Rural Transformation Phase Three project. The contract provided for a lump sum of UGX 2,894,454,000 exclusive of VAT over 24 months with payment tied to six deliverables. The Plaintiff submitted an inception report in December 2020 and a final marketing strategy in May 2021, entitling it to 10% payment. Between December 2020 and May 2021, there were numerous correspondences and revisions driven by feedback from REA, World Bank, and other stakeholders. REA delayed payment of the 10% until February 2022. The Plaintiff could not proceed with remaining deliverables pending formal approval of the marketing strategy, which was never expressly communicated. The contract expired on 17 June 2022 without the remaining deliverables being completed. The Plaintiff sought payment of the 90% balance, special damages for a bank loan, and general damages.

Issues

  1. Whether there was breach of contract
  2. Whether the Defendant agency's conduct frustrated the full performance of the contractual obligations
  3. Whether the Plaintiff is entitled to 90% of the contractual sum as claimed
  4. What remedies are available to the parties

Orders

  • A declaration that Rural Electrification Agency breached its contract with the Plaintiff.
  • A declaration that the conduct of Rural Electrification Agency amounted to prevention of the Plaintiff's full performance of its contractual obligations.
  • An order that the Defendant pays the Plaintiff interest at Central Bank Rate on the delayed payment of 10% of the contract price prorated for any periods below or beyond one year.
  • An order that the Defendant pays to the Plaintiff 90% balance of the contractual lump sum being UGX 2,606,890,500.
  • An order that the Defendant pays to the Plaintiff UGX 150,000,000 as general damages.
  • An order that interest shall accrue on the sums in (d) and (e) above at a rate of 6% per annum from the date of judgment until payment in full.
  • The Defendant shall bear the costs of this suit.

Rules and key headnotes

Contract Law — Breach of Contract — Delay in Payment — Implied Terms — Duty to Provide Timely Feedback and Approvals
Where a lump sum contract is structured around sequential deliverables requiring approval before the next stage can commence, there is an implied term that the client will provide feedback and approvals within a reasonable time to enable timely completion within the specified contract period. Failure to discharge this duty constitutes breach of contract.
Contract Law — Principle of Prevention — Duty of Co-operation — Frustrated Performance
A party to a contract cannot prevent the other party from performing and then rely on that non-performance as a defence to the innocent party's claim for contractual benefits. Where a party's conduct prevents timely completion of a contract, that party cannot benefit from its own wrongdoing by denying payment to the innocent party.
Contract Law — Implied Terms — Sale of Goods and Supply of Services Act s.34(2) — Duty to Accept Service
Under Section 34(2) of the Sale of Goods and Supply of Services Act, it is the duty of a buyer of services to accept a service provided. Where the contract does not specify the form of approval, a term will be implied that communication of approvals will be clear and express.
Damages & Quantum — Loss of Profit — Contract — Prevention of Performance
Where a party is prevented from completing a contract by the wrongful conduct of the other party, damages for loss of profit representing the unearned balance of the contract sum are recoverable where they are not too remote and are a conceivable result of the breach. Where the innocent party would have performed but for the other party's prevention, loss of the outstanding contract revenue is reasonably predictable and recoverable.
Contract Law — Interest on Delayed Payment — Contractual Interest — Court's Inherent Power
Where a contract provides for interest on delayed payments at a specified rate but the claimant fails to lead evidence as to that contractual rate, the court may exercise its inherent powers under Section 98 of the Civil Procedure Act to award interest at a fair rate (such as Central Bank Rate) in the interests of justice, rather than leaving the claimant without any interest remedy.
Damages & Quantum — General Damages — Quantum Assessment — Burden of Proof
A claimant seeking general damages must rationalize the quantum claimed by evidence demonstrating the basis for arriving at the figure. It is not sufficient to present incoherent averments or unsubstantiated allegations and expect the court to speculate or fill in gaps. The court will assess damages as reasonable compensation in light of the evidence actually adduced.
Civil Procedure — Special Damages — Strict Proof — Interest on Loan Facility
Where a claimant seeks special damages in respect of interest on a loan facility taken to sustain project performance during payment delays, the claimant must prove that the borrowing rate exceeded the contractual interest rate and that the superior borrowing was necessary. In the absence of such evidence, and where the contract already provides for interest on delayed payments, the claim for special damages on loan interest will be dismissed.

Legislation cited (5)

Cases cited (38)

  • Meridiana Africa Airlines (U) Limited v Avmax Spares (EA) Ltd (High Court Civil Suit No. 111 of 2017)
  • Prof Rubaire Akiiki & Ors v Development Consultants International Limited (High Court Civil Suit No. 370 of 2011)
  • Andrew Akol v Noah Doka Onzivua (High Court Civil Appeal No. 1 of 2014)
  • Southern Foundries Limited v Shirlaw (1940) AC 701
  • Investors Compensation Scheme Limited v West Bromwich Building Society (1998) I WLR 896
  • The Nai Genova (1984) I Lloyds Rep 353
  • Santa Okema v Okumu David & Anor (High Court Civil Appeal No. 84 of 2018)
  • Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board [1973] 1 W.L.R. 601
  • Multiplex Ltd v Honeywell Ltd (No 2) [2007] Bus LR Digest
  • North Midland Building Ltd v Cyden Homes Ltd 2018] EWCA Civ 1744
  • JustPoint Nominees Ltd v Sovereign Food Investments Limited & Ors Case No 876/2016
  • Gemcore Sampling Ltd v Superkolong & Anor Case No. 1451/2010
  • SMK Cabinets v Hili Modern Electrics Pty Ltd [1984] VR 391
  • ACT Cross Country Club Inc v Cundy [2010] FCA 782
  • Bensons Property Group Pty Ltd v Key Infrastructure Australia Pty Ltd [2021] VSCA 69
  • Hera Project Pty Ltd v Bisognin [No 3] [2017] VSC 268
  • Karim Musa v Gloveg Agri (U) Limited & Ors (High Court Civil Suit No. 593 of 2023)
  • Hotel Services Ltd v Hilton International Hotels (UK) Limited (2000) EWCA Civ 74
  • Attorney General of the Virgin Islands v Global Water Associates Ltd (2020) UKPC 18
  • Victoria Laundry (Windsor) Limited v Newman Industries (1949) 2 KB 528
  • Hall Brothers SS Co. Ltd V. Young [1939] 1 KB748
  • Musoke v. Departed Asians Custodian Board [1990-1994] EA 219
  • Uganda Telecom v. Tanzanite Corporation [2005] EA 351
  • Mutekanga v. Equator Growers (U) Ltd [1995-1998] 2 EA 219
  • Uganda Breweries Ltd v Uganda Railways Corporation (Supreme Court Civil Appeal No. 6 of 2001)
  • Obongo & Another v. Municipal Council of Kisumu [1971] EA 91
  • Ongom & Another v. Attorney-General [1979] HCB 267
  • Kyambadde v. Mpigi District Administration [1983] HCB 44
  • Nsaba Buturo v. Munansi Newspaper [1982] HCB 134
  • Ntabgoba v. Editor-in-chief of the New Vision & Another [2004] 2 EA 234
  • Peter Musoke v Merger Technical Services Uganda Limited (High Court Civil Suit No. 426 of 2022)
  • MTK (U) Limited v Attorney General & Ors (High Court Civil Suit No. 578 of 2022)
  • Sietco v Noble Builders U Ltd (Supreme Court Civil Appeal No. 31 of 1995)
  • Ahmed Ibrahim Bholm v Car & General Ltd (Supreme Court Civil Appeal No. 12 of 2003)
  • Administrator General v Bwanika James & Others (Supreme Court Civil Appeal No. 7 of 2003)
  • Harry Ssempa v Kambagambire David (High Court Civil Suit No. 408 of 2014)
  • Iyamuleme David v Attorney General (Supreme Court Civil Appeal No. 4 of 2013)
  • Anglo-Cyprian Trade Agencies Ltd v. Paphos Wine Industries Ltd, [1951] 1 All ER 873

Full judgment

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Networth Consult Co. Limited v The Attorney General of the Republic of Uganda (Civil Suit 541 of 2022) [2024] UGCommC 213 (30 July 2024)
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.