Wakilii

Pioneer Construction Co. Ltd v British American Tobacco (HCCS 209 of 2008)

High Court · [2013] UGCOMMC 107 · 2013 Judgment for Plaintiff (Partial Award) AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of unpaid certified works with counterclaim for liquidated damages and third party proceedings for indemnity
Decision
Judgment entered for the plaintiff in the reduced sum of UGX 348,826,497 with interest. Counterclaim dismissed. Third party proceedings dismissed.

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The court found that the defendant waived its right to claim liquidated damages for delay by taking possession of the premises after practical completion certificates were issued. The plaintiff was entitled to payment of a penultimate certificate (UGX 176,975,795) but not the final certificates which were irregularly issued before defects were rectified. Applying the doctrine of unjust enrichment, the court awarded the plaintiff UGX 170,850,702 for work performed and retained by the defendant, less retention money. The defendant's counterclaim for liquidated damages was dismissed. No indemnity was granted against the third party consultant.

Outcome

Judgment entered for the plaintiff in the reduced sum of UGX 348,826,497 with interest. Counterclaim dismissed. Third party proceedings dismissed.

Facts

In March 2006, the defendant engaged the plaintiff to construct central purchasing facilities in Arua and Hoima districts, with possession on 21 March 2006 and completion by 16 June 2006. Infrastructure Projects Ltd was engaged as project architect and quantity surveyor. Practical completion certificates were issued on 18 August 2006 (Hoima) and 22 August 2006 (Arua). The plaintiff claimed UGX 560,394,373 for unpaid certified works. The defendant counterclaimed UGX 320,000,000 in liquidated damages for delay and alleged substandard work, and sought indemnity from the third party. The third party issued certificates of payment but the defendant occupied the premises while defects remained outstanding. The final certificates were issued in April 2007 before final inspection confirmed that defects had been rectified. Joint inspections in December 2007 identified further snags.

Issues

  1. Whether there was breach of contract, and if so, by whom?
  2. Whether the defendant is indebted to the plaintiff in the sums claimed?
  3. Whether the defendant is entitled to the sums claimed in the counterclaim?
  4. Whether the defendant is entitled to indemnity/contribution from the third party?
  5. What remedies are available, if any?

Orders

  • The defendant shall pay the plaintiff a total sum of UGX 348,826,497 being its outstanding entitlement.
  • Interest is awarded at the rate of 22% per annum from the date of filing the suit until payment in full.
  • The plaintiff is awarded costs of the suit.
  • Costs are not awarded to the third party.

Rules and key headnotes

Waiver and Estoppel — Right to Liquidated Damages
Where an employer takes possession of premises after a certificate of practical completion is issued, without invoking the contractual provision for liquidated damages for delay, the employer waives its right to claim such damages and is estopped from raising the issue subsequently.
Building Contracts — Practical Completion — Effect on Liquidated Damages
Once a certificate of practical completion is issued under a building contract, the liquidated damages liability for delay comes to an end and the defects liability period commences. Work is deemed completed subject only to the requirement that the contractor rectify identified defects during the defects liability period.
Building Contracts — Defects Liability Period — Breach
Defects identified during the defects liability period and contemplated under the contract do not per se amount to breach of contract. Failure to rectify such defects entitles the employer to refuse to release retention moneys but does not give rise to a claim for breach of contract.
Building Contracts — Payment Certificates — Irregularity
A final certificate issued by an architect before defects have been made good and verified through inspection is irregular and outside the contemplation of the contract. The employer is justified in refusing payment on the basis of such a certificate.
Unjust Enrichment — Building Contracts — Compensation for Work Performed
Where a contractor has completed performance of a building contract and the employer has retained the benefit of the works, the common law principle of unjust enrichment requires the employer to compensate the contractor even where payment certificates were irregularly issued.
Building Contracts — Architect's Independence — Duty of Care
An architect acting as certifier under a building contract must act fairly, independently and impartially. An architect who issues certificates without inspecting the works fails in this duty, though such failure does not automatically give rise to a claim for indemnity by the employer against the architect.
Cross-Examination — Failure to Cross-Examine — Effect
Failure to cross-examine a witness does not prevent the court from evaluating all evidence on record and reaching a just and fair decision. The rule is displaced where there has been clear prior notice of an intention to impeach the credibility of the relevant testimony.

Legislation cited (1)

Cases cited (16)

  • B.Malik's Practical Hints on Cross Examination 5th Edition at page 72
  • Phipson on Evidence, 10th Edition at paragraph 1542
  • Aiyar and Aiyar's: The Principles and Precedents of the art of Cross Examination 10th Edition at page 1747
  • Brown v Dunn (1893) 6 R.(H.L)
  • Uganda Breweries Ltd v Uganda Railways Corporation (SCCA No. 6 of 2001)
  • Kasibante v Shell Uganda Limited (HCCS No. 542 of 2006)
  • Agri-Industrial Management Agency Ltd v Kayonza Growers Tea Factory Ltd (HCCS No. 819 of 2004)
  • Three Way Shipping Services (Group) Ltd v China Chongqing International Construction Corporation (HCCS No. 538 of 2005)
  • Westminister Corp. v. Jarvis [1970] 1 W.L.R. 637
  • British Westinghouse v Underground Electronic Railways (1912) AC 673
  • Fibrosa Spolka v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
  • Stanbic Bank (U) Ltd v Sino Africa Health Ltd (HCCS No. 137 of 2004)
  • Alfa Insurance Consultants Ltd v Empire Insurance Group (Civil Appeal No. 9 of 1994)
  • Busoga Growers Co-operative Union Ltd v Non-Performing Assets Recovery Trust (HCCS No. 240 of 2004)
  • Beaufort Developments Ltd v Gilbert Ashni Ltd and Another [1998] All ER 778 at 786
  • Sutcliffe v Thackrah [1974] AC 727 at 759

Full judgment

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

Pioneer Construction Co. Ltd v British American Tobacco (HCCS 209 of 2008) [2013] UGCommC 107 (31 May 2013)
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.