Wakilii

Omega Construction Company Ltd v Kampala Capital City Authority (Civil Suit No. 780 of 2015)

High Court · [2017] UGCOMMC 90 · 2017 Judgment for Plaintiff AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of certified sums under a construction contract terminated by the Plaintiff for fundamental breach.
Decision
Judgment for the Plaintiff for recovery of certified sums plus interest and costs.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

Held that the Employer may not unilaterally revise or substitute payment certificates issued by the contractually appointed Project Manager. Verification and deductions must occur before certification. Once a final certificate is issued upon termination under GCC 60.2, it is conclusive and the contract administrator is functus officio. The Defendant breached the contract by failing to pay within 30 days of certification. Judgment for the Plaintiff for UGX 2,700,297,537 with contractual interest at 21% per annum from the due date to judgment and 19% thereafter until payment in full.

Outcome

Judgment for the Plaintiff for recovery of certified sums plus interest and costs.

Facts

Plaintiff entered into a contract on 30 December 2011 with Defendant KCCA for upgrading drainage black spots in Kampala Phase 1, contract sum UGX 4,181,073,515, duration eight months. Defendant appointed Messrs Architect Consults (U) Ltd in association with Wanjohi Consulting Engineers as Project Manager on 25 April 2012 to perform all certification duties. Plaintiff submitted Interim Payment Certificates (IPCs 1-4) which were certified by the Project Manager but the Defendant delayed or partially paid them. On 27 October 2014 the Plaintiff terminated the contract under GCC 59.1 and 59.2(d) for fundamental breach by the Employer for non-payment within 84 days of certification. The Project Manager issued a final payment certificate on 23 January 2015 for UGX 3,670,455,850. The Defendant subsequently purported to terminate on 19 January 2015, conducted an internal audit, and issued rival certificates deducting liquidated damages, defective works, uncompleted works, and advance payments, concluding Plaintiff was owed only UGX 970,158,313, which it paid on 24 June 2015. Plaintiff sued to recover the balance.

Issues

  1. Whether payment should be made in accordance with the original certificates issued by the Project Manager or in accordance with the Defendant's revised certificates issued by the Defendant's internal department.
  2. Whether there was a breach of the contract and if so, who is liable.
  3. What remedies are available in the circumstances.

Orders

  • Judgment entered for the Plaintiff.
  • Defendant to pay the Plaintiff UGX 2,700,297,537.
  • Interest awarded at 21% per annum from 23rd February 2015 to the date of judgment.
  • Further interest awarded at 19% per annum on the decreed amount from the date of judgment until payment in full.
  • Costs of the suit awarded to the Plaintiff to be taxed.

Rules and key headnotes

Construction Contracts — Payment Certificates — Authority and Finality
Under a construction contract where a Project Manager or certifier is contractually appointed to determine the value of work done and issue payment certificates, the Employer may not unilaterally revise, substitute, or issue parallel certificates after the Project Manager has certified payment.
Construction Contracts — Certification Process — Verification before Issuance
Payment requests must be verified for accuracy, completeness, and conformity with the contract before a certificate is issued. Once a certificate is issued by the certifier, it creates a debt due from the Employer to the Contractor, and the certifier becomes functus officio with respect to that certificate.
Construction Contracts — Payment Terms — Mandatory Thirty-Day Period
Where a contract and the Public Procurement and Disposal of Public Assets Regulations provide that payment shall be made within thirty days from certification, that period is mandatory and delay triggers contractual interest at the commercial borrowing rate.
Construction Contracts — Final Certificate upon Termination — Finality
Where a Contractor terminates the contract under GCC 59.1 and 59.2(d) for fundamental breach by the Employer, the Project Manager's final certificate issued under GCC 60.2 is conclusive as to the sums due, and subsequent unilateral deductions by the Employer are impermissible absent a counterclaim or set-off properly pleaded and proved.
Estoppel — Representation as to Certifier
Where an Employer appoints a Project Manager by written notice to the Contractor and represents that the Project Manager will perform all certification duties, the Employer is estopped from later asserting that a different entity (such as an internal department) was the proper certifier.
Liquidated Damages and Set-Off — Pleading and Proof
Where an Employer seeks to deduct liquidated damages or other amounts from sums certified as due to a Contractor, such deductions must be pleaded as a set-off or counterclaim and proved to the required standard. Unilateral deductions made after certification are not permissible in the absence of express contractual authority.
Interest on Late Payment — Contractual Rate as Liquidated Damages
Where a contract stipulates a rate of interest for late payment, that rate constitutes liquidated damages and is recoverable without proof of actual loss. The Contractor may not claim a higher rate unless special foreseeable loss is pleaded and proved.

Legislation cited (10)

Cases cited (28)

  • Scheldebouw BV v St James Homes (Grosvenor Dock) Ltd [2006] BLR 113
  • Merton London Borough Council v Lowe (1981) 18 BLR 130
  • Alpha Gama Engineering Enterprises Ltd v Attorney General (Civil Suit No. 438 of 2010)
  • Tan Hung Nguyen & Another v Luxury Design Homes Pty Limited & 2 Ors [2004] NSWCA 178
  • Joob Joob Investments (Pty) Ltd v Stocks Mavundla Zek Joint Venture [2009] ZASCA 23
  • Token Construction Co Ltd v Charlton Estates Ltd (1976) 1 BLR 48
  • Penwith DC v VP Developments Ltd [1999] EWHC Tech 231
  • London Borough of Camden v Thomas McInerney & Sons Ltd (1986) 9 Con LR 99
  • H. Fair-Weather Ltd v Asden Securities Ltd (1979) 12 BLR 40
  • Ocean Diners (Pty) Ltd v Golden Hill Construction CC [1993] 2 All SA 260
  • Sarah Kayaga Farm Limited v Attorney General (Civil Suit No. 351 of 1991)
  • Sempra Metals Ltd v Inland Revenue Commissioners [2007] 4 All ER 657
  • Kampala Capital City Authority v Omega Construction Limited (Miscellaneous Application No. 1810 of 2015)
  • Stanbic Bank Uganda Ltd v Uganda Crocs Ltd (SCCA No. 4 of 2004)
  • Jamil Ssenyonjo v Jonathan Bunjo (Civil Suit No. 180 of 2012)
  • Tororo Cement Co Ltd v Frokina International Ltd (SCCA No. 21 of 2001)
  • Mudiima & 5 Ors v Kayanja & 2 Ors (HCCS No. 232 of 2009)
  • Angella Katatumba v Anti-Corruption Coalition of Uganda (Civil Suit No. 307 of 2011)
  • Comet (U) Limited & Another v DFCU Bank & 2 Others (Civil Appeal No. 82 of 2002)
  • Robins v Goddard [1905] 1 KB 294
  • Attorney General v Virchand Mithalal & Sons Ltd (SCCA No. 20 of 2007)
  • Axel Johnson Petroleum AB v MG Mineral Group AG [1992] 2 All ER 163
  • Mondel v Steel (1841) 8 M & W 858
  • Hanak v Green [1958] 2 QB 9
  • Federal Commerce and Navigation Ltd v Molena Alpha Inc [1978] 3 All ER 1066
  • United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 All ER 62
  • Trans Trust S P R L v Danubian Trading Co Ltd [1952] 1 All ER 970
  • Suisse Atlantique Société D'armement Maritime S A v N V Rotterdamsche Kolen Centrale [1966] 2 All ER 61

Full judgment

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Omega Construction Company Ltd v Kampala Capital City Authority (Civil Suit No. 780 of 2015) [2017] UGCommC 90 (28 August 2017)
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.