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Uganda National Roads Authority v Apollo Senkeeto and Others (Civil Suit 668 of 2016)

High Court · [2020] UGCOMMC 176 · 2020 Judgment for Plaintiff with Damages AI-generated summary ↓ Download Pin to watchlist Add to matter
Jurisdiction
Uganda
Case Type
First instance civil suit for recovery of money arising from alleged fraudulent procurement and misrepresentation in a road construction contract
Decision
Judgment entered for the Plaintiff with awards for recovery of advance payments, general damages, punitive damages, interest and costs against all Defendants jointly and severally

Observed later treatment

No later-treatment classification is recorded for this judgment.

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Holding

The High Court Commercial Division held that a contract procured through fraudulent misrepresentation by defendants who falsely represented themselves as agents of a United States company was invalid. The court found all defendants jointly liable to refund advance payments totalling UGX 20,433,069,938, awarded general and punitive damages, and held the contract was lawfully terminated when the plaintiff discovered the defendants had no connection to the company they claimed to represent and the contracting entity lacked capacity.

Outcome

Judgment entered for the Plaintiff with awards for recovery of advance payments, general damages, punitive damages, interest and costs against all Defendants jointly and severally

Facts

Uganda National Roads Authority issued an invitation to bid for upgrading the Mukono-Kyetume-Katosi-Kisoga-Nyenga road in November 2010. Eutaw Construction Company Inc (6th Defendant) submitted a bid using incorporation documents and work history of Eutaw Construction Inc Mississippi (Eutaw Mississippi), a different company. The 1st through 4th Defendants represented themselves as directors and agents of Eutaw Mississippi with authority to bind the 6th Defendant. On 15 November 2013, a contract was executed for UGX 165,272,156,814. UNRA paid an advance of UGX 24,790,863,022 into an account managed by the 1st, 4th and 5th Defendants. UNRA later discovered: (a) no relationship existed between the 6th Defendant and Eutaw Mississippi, (b) documents purporting to authorize creation of the 6th Defendant as a special purpose vehicle were forged, (c) the 6th Defendant had been administratively voided by Delaware for non-payment of taxes when the contract was signed, and (d) advance payment bonds were forgeries. On 15 July 2014, the 6th Defendant subcontracted 99% of works to CICO Construction without required consent. UNRA terminated the contract on 24 November 2014 for fraud and lack of capacity. Valuation showed actual works completed amounted to UGX 6,112,938,390, leaving UGX 18,677,879,632 unaccounted for.

Issues

  1. Whether the Plaintiff has a cause of action against the 1st, 2nd, 3rd and 4th Defendants.
  2. Whether the contract entered between the Plaintiff and 6th Defendant on 15th November 2013 was valid.
  3. Whether the 6th Defendant's contract with the Plaintiff was lawfully terminated.
  4. Whether there was a valuation of the work done by the 6th Defendant.
  5. Whether the sub-contract entered between the 6th Defendant and CICO on 15th July 2014 was valid.
  6. Whether the Plaintiff is entitled to recover UGX 18,677,879,632 from all the Defendants.
  7. Whether the Plaintiff is entitled to recover UGX 1,755,190,306 paid to Uganda Revenue Authority (URA) as Withholding tax from the 6th Defendant.
  8. What are the remedies available to the parties?

Orders

  • Award of UGX 20,433,069,938 against all Defendants jointly in favour of the Plaintiff.
  • The award in (i) to carry interest at 10% per annum from the date of default until payment in full.
  • Award of general damages of UGX 500,000,000 to the Plaintiff.
  • The general damages to carry interest at 6% per annum from the date of judgment until payment in full.
  • Award of punitive damages of UGX 1,000,000,000 to the Plaintiff.
  • Costs to the Plaintiff.

Rules and key headnotes

Contract Law — Misrepresentation — Effect on Validity of Contract — Contracts Act s.10(1) and s.13(d)
Where consent to enter a contract is procured through misrepresentation, the contract is voidable at the instance of the party whose consent was obtained by misrepresentation, and the representee may choose to treat the contract as rescinded.
Contract Law — Capacity to Contract — Effect of Corporate Voidance on Contractual Capacity
A corporation that has been administratively voided by its jurisdiction of incorporation for non-payment of taxes lacks capacity to enter into contracts during the period of voidance, and contracts executed during such period are invalid regardless of subsequent validation of corporate status.
Contract Law — Misrepresentation — False Representation of Authority and Corporate Identity
Where parties falsely represent that they possess authority to act on behalf of a reputable entity and use that entity's incorporation documents and work experience to secure a contract, such fraudulent misrepresentation negates free consent and renders the contract voidable under the Contracts Act s.16(1).
Contract Law — Restitution — Recovery of Advance Payments Following Rescission for Misrepresentation
Any party who has benefitted from a contract that has been rescinded or found void is bound to restore and pay compensation to the party from whom the advantage was received, and the law forbids unjust enrichment (Contracts Act ss.53 and 54(1)).
Contract Law — Joint and Several Liability — Participation in Fraudulent Scheme
All parties who participate in a coordinated fraudulent scheme to induce a contract, including those who act as signatories to fraudulent accounts, present staff of other entities as employees, and attend meetings under false pretenses, are jointly and severally liable for losses suffered by the defrauded party, notwithstanding that some may not have been formal parties to the contract.
Administrative Law — Public Procurement — Termination of Contracts Procured by Fraud
General principles of contract law governing misrepresentation and fraud apply equally to public contracts governed by the Public Procurement and Disposal of Public Assets Act 2003, and a procuring entity that discovers a contract was procured through fraudulent misrepresentation may lawfully terminate it upon proper notice, notwithstanding provisions for contractual termination procedures.
Damages & Quantum — Punitive Damages — Award Where Conduct Calculated to Profit Through Fraud
Punitive damages may be awarded where defendants' acts were calculated to make a profit through a sophisticated fraudulent scheme involving forged documents, false representations, and coordinated deception that caused grave harm to public funds and development projects.

Legislation cited (17)

Cases cited (12)

  • Eladam Enterprises Ltd v SGS (U) Ltd (High Court Civil Suit No. 187 of 1998)
  • Semakula v Sentongo (Civil Suit No. 187 of 2012)
  • Elig B Mugabi vs Nganza Textile Industries Ltd [1992-1990]
  • AZK Services Ltd v Crane Bank Ltd (Civil Suit No. 334 of 2016)
  • Uganda v Hon. Abraham Byandala, Apollo Senkeeto alias Mark Kalgesubula (High Court Civil Suit No. 72 of 2015)
  • Tweddle vs Atkinson (1861) IE & S 393
  • Wakiso Cargo Transporters Co. Ltd v Wakiso District Local Government Council and Attorney General (High Court Civil Suit No. 0070 of 2004)
  • Beswick vs Beswick [1968] AC 847
  • Makula International v His Eminence Cardinal Nsubuga & Another (Court of Appeal Civil Appeal No. 4 of 1981)
  • Coaster Construction Services v National Water and Sewerage Corporation (High Court Civil Suit No. 429 of 2012)
  • Rookes vs Bernard [1964] AC 1129
  • Oketta Dafala Valente v The Attorney General of Uganda (High Court Civil Suit No. 69 of 2004)

Full judgment

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

Uganda National Roads Authority v Apollo Senkeeto and Others (Civil Suit 668 of 2016) [2020] UGCommC 176 (5 November 2020)
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.