Hydro Water Well (K) Limited v National Water Conservation & Pipeline Corporation [2017] KEHC 10072 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI LAW COURTS

COMMERCIAL AND TAX DIVISION

CIVIL CASE NO. 251 OF 2011

HYDRO WATER WELL (K) LIMITED.........................…PLAINTIFF

VERSUS

NATIONAL WATER CONSERVATION

& PIPELINE CORPORATION.....................................DEFENDANT

JUDGMENT

[1]The Plaintiff, Hydro Water Well (K) Limited, filed this suit on 21 June 2011, against National Water Conservation & Pipeline Corporation, the Defendant herein, praying for Judgment in the sum of Kshs. 8,706,450. 45, together with interest at commercial rates from the date of default until payment in full, as well as costs of the suit. The Plaintiff also prayed for any other relief the Court may deem fit to grant in the circumstances. Its cause of action was that, on diverse dates in 2005 and 2006, the Defendant contracted it to drill, inspect and commission boreholes in various parts of the country, at a total contract price of Kshs. 43,268,427. 05; and that all the projects were satisfactorily completed, inspected, acknowledged and handed over to the Defendant but were not fully paid for. According to the Plaintiff, the Defendant made a total payment of Kshs. 34,561,976. 60, leaving a balance of Kshs. 8,706,450. 45outstanding, hence this suit.

[2] The Defendant, a State Corporation established under the State Corporations Act, Chapter 446of theLaws of Kenya, denied the claim vide the Statement of Defence dated 9 August 2011. It denied having given instructions to the Plaintiff to drill boreholes as alleged, contending that any oral instructions to that effect, as set out in Paragraphs 4 and 5 of the Plaint, were improper and irregular, thus rendering the transactions illegal for want of compliance with the relevant procurement procedures. The Defendant averred therefore, that the sum of Kshs. 43,268,427. 05 pleaded in Paragraph 9 of the Plaint, is without any legal foundation whatsoever.

[3] The Defendant further denied that its servants acknowledged receipt of any completed borehole or at all, and added that if any of its servants or agents did so then those servants or agents were on a frolic of their own, and that their conduct is not binding on the Defendant. With regard to the payments made by it, it was the contention of the Defendant that those payments were only for projects whose instructions were given through valid Local Purchase Orders. Accordingly, it was the Defendant's contention that the sum of Kshs. 8,706,450. 45 claimed herein by the Plaintiff is unfounded and cannot therefore be paid by it. It, thus, prayed for the dismissal of the Plaintiff's suit with costs.

[4] The hearing of the case opened on 11 December 2014, when evidence was adduced on behalf of the Plaintiff by its Project Co-ordinator, Joyce Wanjiru Ndei (PW1). She adopted the Witness Statement she made and filed herein dated 20 June 2011. She testified that during the years 2005 to 2007, the Plaintiff was requested by the Defendant, both orally and in writing, to drill, inspect and commission boreholes as follows:

[a] On or about 16 September 2005, the Plaintiff was instructed to drill 3 boreholes in Nyeri District for a sum of Kshs. 3,463,487/=.

[b] On or about 5 December 2005, the Plaintiff was instructed by the Defendant to drill 5 boreholes in Laikipia District for a sum of Kshs. 7,321,426. 88. The documents in support are at Pages 1 to 34 of the Plaintiff's Bundle of Documents dated20 June 2011;

[c] On or about 24 March 2006, the Plaintiff was instructed to drill boreholes in Kitui District at a cost of Kshs. 460,000/=;

[d] On 30 March 2006, the Plaintiff was instructed to drill 3 boreholes in Nyandarua District pursuant to a Local Purchase Order No. 000185 for Kshs. 4,131,000/=(at page 126 of the Plaintiff's 1st Bundle of Documents).The pertinent letter of request is at page 125 of the Plaintiff's 1st Bundle of Documents dated 20 June 2011;

[e] On 27 November 2006 the Plaintiff was instructed vide LPO No. 695364 to drill 3 boreholes in Kiambu District for Kshs. 4,924,650/=;

[f] On 27 November 2006, the Plaintiff was instructed vide LPO No. 695363 to drill 3 boreholes in Uasin Gishu District for a sum of Kshs. 4,213,000/=;

[g] On 27 November 2006, the Plaintiff was awarded Tender No. NWC/HQ/35/2006-07 for the drilling of 6 boreholes in Taita Tavetaand Malindi Districts for a sum of Kshs. 7,654,000/= through LPONo. 698201;

[h] On 27 November 2006, the Plaintiff was awarded Tender No. NWC/HQ/36/2006-07 for the drilling of 7 boreholes in Laikipia District for a sum of Kshs. 11,481,500/= through LPO No. 698202. The Letter of Award was produced as part of the Plaintiff's Bundle of Documents dated31 October 2012atPages 28, 29and30;

[i] On 8 January 2007, the Plaintiff was instructed to drill 5 boreholes in Baringo District for a sum of Kshs. 6,996,000/= vide LPO No. 695360.

[5] It was further the evidence of PW1 that the works were accomplished and handed over, and that reports thereof were compiled, signed and forwarded to the Defendant along with Invoices, billing the works done. Thereafter on 11 March 2008, the Defendant prepared a reconciled Statement of Accounts acknowledging the outstanding sum to be Kshs. 13,104,975. 55 as at that date. PW1 added that, subsequently, the Plaintiff received payment as follows from the Defendant, leaving a balance of Kshs. 8,706,450. 45 unpaid:

On 14 April 2008 Kshs. 2,500,000/=

On 26 June 2008 Kshs. 1,898,525/=

[6] In support of her evidence, PW1 produced the Plaintiff's Bundles of Documents dated 20 June 2011, 14 December 2011 and 31 October 2012 as well as a Summary of the Projects dated 20 November 2014, thereby setting out the basis of the claim. The documents include Instruction Letters/Letters of Award, LPOs as well as Acceptance Letters by the Plaintiff. The Plaintiff also exhibited Invoices and Payment Vouchers at Pages 126, 127, 195-197 and 216 of the Plaintiff's Bundle of Documents dated 20 June 2011 and Page 27 of the Plaintiff's Bundle of Documents dated 31 October 2012. Also produced by PW1 were documents in proof of part payment by the Defendant. She was duly cross-examined by Counsel for Defendant and she accordingly refuted allegations of corruption and irregularities levelled against the Plaintiff in respect of the contracts.

[7] The Defendant had filed a List of 4 Witnesses on 27 July 2012, namely: Ezekiel K. Kapkiai, James Njeru, E Gachiri and Musyoka. However, Witness Statements were filed by it in respect only of Ezekiel K. KapkiaiandJames Njeruin reiteration of the averments set out by the Defendant in its Defence. Ultimately, none of these witnesses testified herein, for the reason that hearing proceeded ex-parte on 12 July 2017 pursuant to Order 12 Rule 2(a) of the Civil Procedure Rules, 2010, there having been no appearance by or for the Defence. That hearing date had been taken in the presence and with the concurrence of Counsel for the Defendant.

[8] The foregoing being the summary of the facts hereof, the issues for determination by the Court can be summarized to be as hereunder:

[a] Whether there was a valid contract between the parties for the drilling of boreholes in several parts of the country as alleged by the Plaintiff;

[b] Whether the 9 projects that are the subject of this suit were undertaken, completed and duly handed over to the Defendant by the Plaintiff;

[c] Whether the sum claimed herein of Kshs. 8,706,450. 45 is due to the Plaintiff as alleged.

[a] Whether there was a valid contract between the parties  for the drilling of boreholes in several parts of the  country as alleged by the Plaintiff:

[9] The Plaintiff adduced uncontroverted evidence herein through PW1and the three Bundles of Documents produced by her to show that it was contracted by the Defendant to drill boreholes in various parts of the country. The letter dated 5 December 2005, exhibited at page 1 of the Plaintiff's Bundle of Documents dated 20 June 2011. It states thus in part:

"We are pleased to inform you that your tender for the above works have been accepted.

The Award is as follows:

Item:  Drilling, casing, developing, test    pumping and erection of gantry

Quantity:  5 No. Boreholes

Area of Works: Laikipia District

Total Tender sum: Kshs. 7,321,426. 88

You are therefore urgently required to sign a formal contract before the commencement of the works.

Please confirm your acceptance as soon as possible..."

[10] Evidence was adduced by the Plaintiff to the effect that it accepted the award vide the letter dated 10 December 2005 exhibited at page 16 of the Plaintiff's Bundle of Documents dated 31 October 2012 and that the contract was duly performed as per the documents exhibited at pages 2 to 34 of the Plaintiff's 1st Bundle of Documents as well as pages 17 and 18 of the Plaintiff's 3rd Bundle of Documents. Similar evidence was adduced in support of the contracts for the drilling of boreholes in Nyeri, Nyandarua, Kiambu, Taita Taveta, Kwale, Kitui, Uasin Gishu and Baringo Districts. The Plaintiff's evidence in that regard is entirely unrebutted; and on the basis thereof, I would find that, indeed, the Plaintiff was contracted by the Defendant to drill boreholes in several parts of the country as contended by the Plaintiff, and in particular, that it was contracted to undertake the 9 projects that are the subject of this suit.

[b] Whether the 9 projects that are the subject of this suit were undertaken, completed and duly handed over to the  Defendant by the Plaintiff:

[11] The evidence of PW1, the Plaintiff's Project Coordinator, is that all the 9 projects were undertaken to completion and handed over to the Defendant. This evidence is buttressed by the Bundles of Documents produced by the Plaintiff herein. In those bundles are completion records, reports on chemical analysis of the water thus drilled, duly signed by the Government Chemist, as well as certificates of commissioning of the respective boreholes. Again, this evidence was entirely uncontroverted, and on the basis thereof, I find and hold that the various projects were undertaken to satisfactory completion, handed over and accepted by the Defendant as having been done to its satisfaction.

[12] Any allegation by the Defendant that its servants were on a frolic of their own in accepting the projects and signing the various certificates in connection therewith were entirely unsupported by evidence and must be discarded as mere allegations. In any event, Section 120 of the Evidence Act, Chapter 80 of the Laws of Kenya, is explicit that:

"Where one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed in any suit or proceeding between himself and such person or his representative, to deny the truth from that thing."

[13] In Combe -vs- Combe (1951) 2 KB 215, Denning L.J. explained this principle of estoppel thus:

“The principle as I understand it is that where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, one the other party has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had been made by him but he must accept that legal relations subject to the qualifications which he himself has introduced, even though it is not supported in a point of law by any consideration, but only by his word.”

[14] Moreover, the Defendant cannot rely on irregularities committed by its own officers in the procurement of the Plaintiff's services. This was aptly expressed in Alghussein Establishment vs. Eton College (1991) 1 AllER 267 as follows:

“The principle that in the absence of clear express provisions in a contract to the contrary it was not to be presumed that the parties intended that a party should be entitled to take advantage of his own breach as against the other party was not limited to cases where a party was relying on his own wrong to avoid his obligations under the contract but applied also where a party sought to obtain a benefit under a continuing contract on account of his breach."

[15]And inEquip Agencies Ltd vs the Attorney General Nairobi HCCC No. 1459 of 1999, Kuloba J, (as he then was) expressed the view, which I entirely agree with, that:

"The Government acts through its human agents. The human agents are its tool. The scope of the authority and powers of the Government servant and agent is set by the Government...An outside person is not party to the setting down of any of these things. He may not even know of them, unless aspects of them are incorporated in terms of agreements or contracts between him and Government. They cannot just be assumed to be known by the whole world and by everyone who does business with Government. Compliance with them when dealing with persons outside Government depends on Government servants. But if these internal policies and procedures are flouted by officials of Government who are supposed to protect Government and to act at all times in the interest of the Government and as a result commit the Government to contracts with other persons and those contracts turn out to be to the detriment of Government, then surely it is those officers to answer for any resultant loss to Government. In the meantime the Government must honour those contractual obligations into which its bad officers plunged it. A person dealing with the bad officers in a Ministry can only be denied any contractual benefits if it is shown that he was an accomplice to the breach of the internal Government regulatory procedures by the officers of the Government, or if it is shown that he had exercised undue influence or played fraud or tricks in the matter."

[16] The foregoing would apply with equal force to state corporations, which in any event are public bodies as envisaged by Sections 2 and 3 of the State Corporations Act. In the premises, the primary responsibility of ensuring compliance with the requirements of the Public Procurement and Asset Disposal Actrested with the Defendant as the procuring entity. It would accordingly be inequitable, in my view, for the Defendant to raise its own wrongdoing as a defence to resist the Plaintiff's claim, where, as has been demonstrated by the Plaintiff herein, it accepted services and has made part payment for those services.

[17] More importantly, the Plaintiff's allegations of misconduct or corruption on the part of its officers were not proved, and therefore remain mere allegations. I would thus find and hold that the 9 projects were indeed undertaken to completion and handed over by the Plaintiff to the Defendant; and therefore that the Plaintiff is entitled to be paid therefor.

[c] Whether the sum claimed herein of Kshs. 8,706,450. 45 is due to the Plaintiff as alleged:

[18]The Plaintiff relied on the Summary of Account in connection with the 9 projects, filed by it herein on20 November 2014. That Summary lists the 9 projects, the sums awarded, the invoice value, payments received and the balance outstanding in each case. The total outstanding amount comes to Kshs. 8,706,448. 80,which is Kshs. 1. 65less than the sum claimed in the Plaint of Kshs. 8,706,450. 45. The Plaintiff also attached to that Summary a Schedule of all the Payments made by the Defendant.

[19] In addition to the Summary aforementioned, the Plaintiff relied on the Defendant's letter dated 21 February 2008, exhibited at Page 265 of the Plaintiff's 1st Bundle of Documents. In that letter, the Defendant acknowledge that it had carried out a reconciliation of its account with the Plaintiff and that the status was as follows:

Total certified amounts due - Kshs. 41,737,627. 40

Total payments  - Kshs. 29,842,587. 35

Total outstanding as per the Plaintiff - Kshs. 11,895,040. 55

Difference   - Kshs.  2,209,936. 40

[20] Further to the foregoing, the Plaintiff adduced credible evidence to show that, after the acknowledgement aforementioned, the Defendant made two payments of Kshs. 2,500,000/= on 14 April 2008, and Kshs. 1,898,525/= on 26 June 2008, respectively. Accordingly, it is manifest that the Defendant is still indebted to the Defendant in the sum of Kshs. 8,706,448. 80as shown by the uncontroverted evidence adduced herein by the Plaintiff.

[21] In the result, I am satisfied that the Plaintiff has proved its case to the requisite standard, and I would thus enter Judgment in the proven sum of Kshs. 8,706,448. 80together with interest at commercial rates from the date of the filing suit till payment in full and costs of the suit.

It is so ordered.

DATED, SIGNED AND DELIVERED AT NAIROBI THIS 3RD DAY OF NOVEMBER, 2017

OLGA SEWE

JUDGE