Kaddu v Maruben Corporation (Civil Suit No. 108 of 1993) [1993] UGHC 95 (18 October 1993)

Full Case Text

THE REPUBLIC C? UGV'DA IN THE HIGH COURT OF UC-.. NDA AT KAMPALA CIVIL SUIT MO, 108 OF 1993

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J. H. K. KADDU PLAINTIFF VRS. i MARUBEN CORPORATION ::: i :::::::: : DEFENDANT BEFORE; THE HON, MR\* MR. JUSTICE G. M, OKELLO

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u The Plaintiff brought this action against Jhe defendant for payment^of U. S dollars 55:598.43 being the outstanding sum under the contract, and^general damages for breach of contract. The pliantiff, a lo\*al limited liability qompapy, had sub-^ contracted with the defendant., a Japanese Corporation carrying on business in Uganda. The PlainJiff subcontracted for two jobs:- One for cables laying and the other for conduit pipes laying. In both contracts the plaintiff agreed to lay the cables/pipes in a given area, Under the contract, the defendant was to sHPPly the cables/pipes but the Plaintiff was to complete the work within the .schedule given. T]ie estimated value of the cable laying contract was 58,629>84 and^of the pipes laying w^s put at S 2§,649.75• The actual amount payable in each contract \* depended o» the actual work done\* All these were to be completed within the schedule because even the defendant the main contractor w^s expected to coQijlete the ©ain contract within agreed period. So the plaintiff contracted tn deploy a certain minimum number of workers in order to keep Jo the schedule of work.

The plaintiff did the work in beth contracts but did not complete. ^He flamed the^defendant for the breach which resulted into the n^ni.c^mpletfnn qf the worLt in enchk contract. It Alleged th%t the defendant took over Jhe Suites without the plaintifffs knowledge and completed the work by themselves\* The palaintiff

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argue • thatv>the taking over of the sites by, the defendant ^hile the contracts wore still subsisting aircunte^l to a bn^ach of contract. It \$lso accused the defendant of failure t«o pay the. plaintiff fully for the work done. Consequently the plaintiff claimed the balance of the value of the work done by them and the value of%<the work^which tfre Plaintiff would have done if there had been n° breach of the coptract. The plaintiff also claim general damages for breach of. contract.

The defendant denied that it was guiltyvof breach^of the contract. It counter accused the plaintiff of breach of t|i£ coptracts. The defendant alleged that th? Plaintiff wa§ too slow and not keeping to the schedule o£ work. It abandoned tfie sites. The defendant also denied owing t^e plaintiff any money under the contracts. In view of the above disputes, this suit was instituted.

•At the beginning of t'pe hearing of Showcase, the following three issues were framed for determination of the cnurt;-

(1) whether there V£as a breach of contract between the parties." If so by which party.

(2) whether the Plaintiff %»as properly remunerated as per the terms of the contract.

(5) what remedy is the innocent party entitled to for breach.

The first issue is whether^there was a breach of the contracts. between the parties. If so^by which party. Mr.^Musisi submitted for the plaintiff that there igas a breach of the contracts and by the defendant. The defendant,committed the breachjwhen its representatives entered agd took oveg the sites without first giving to the^plaintiff notice as provided for under the agreements. Such Notice wag to he given in a^ registered m^il. The defendant did not d.o nat (Clause 50 of Axpl & P2 relied on).

Mr. Shenubi refuted the above contention and submitted for the defendant that the terms of the contract was altered by agreement of the parties. This was contained in letters of intents which the plaintiff confirmed. The letters of intent which the Plaintiff accepted suggested that the defendant had the right to terminate the contracts without notice or compensation if it was disatisfied with performance of the plaintiff.

Mr. Musisi replied that the term of the agreement as to termination provided in the Agreement superseded that in the letter of intent. The letters of intent were accepted by the Plaintiff before the Agreements Exp1 & Exh P2 were signed. Further that the letters of intent were not included on the list of documents which form part of the Agreement.

Upon listening to the above arguments, Iam of the view that the sque raised in these arguments is whether the plaintiff agreed to forgo their Hight to Notice before termination. The defendant\_cruld then terminate the contracts without Notice or compensation provided it was not satisfied with the plaintiff's performance. It is trite law that a party may agree to waive his right under the centract.

In the instant case, the letters of intent which the defendant arrned have altered the term of both contracts with regard to termination read in part thus;

We require your written acceptance to this letter of intent and for you to sign a formal sub-contragt with ourselves. Upon receipt of the required guarantee bond. for 10 (ten) percent of the value of the sub-contract price, we will arrange for payment of the down payment to be made to you.

You appreciate that we have the right to terminate this sub-contract without motice or compensation if we are not satisfied with your performance".

The response of the plaintiff to the above went in part as follows:-

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"We are pleased to confirm your letter of intent and fully understand our obligations set out in the contract Agreement.

It is clear from the above quotations that the defendant in their letters of intent requested the plaintiff to confirm that they (the defendant) have the right to terminate the contract without notice or compensation if they were not satisfied with the Plaintiff's performaneg. It is to be noted that when these letters were sent, the contract document had already been sent to the plaintiff to study but had not yet been signed. Whether, the. plaintiff understand those letters or not, it confirmed them.

It thus confirmed the right of the defendant to terminate the contract without Notice. The effect of this is that the plaintiff agreed to for go his right to notice before termination.

Having found as above, the next imposing question is whether there is evidence that the defendant was not satisfied with the Plaintiff's performance.

It was contended for the plaintiff that the defendant was satisfied with the plaintiff's performance in the 1st contract. The crntract of cables laying. The plaintiff(PW1) testified that in that contract, he worked well until the defendant ran out of cables. He received no complaint from the defendant. When the cables get finished, the defendant gave him another contract for pipes laying while they agait the arrival of cables. The plaintiff argued that the seonnd contract was given in appreciation of the plaintiff's work in the first contract. Without that the second contract would not have been signed.

the plaintiff congeded however, that they received complaint from the defendant about their performance in the second contract. This complaint was contained in a letter Exh. D1. But that the weakness complained of in their performance was mutually remedied when it was mutually agreed that a portion of the work

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assigned to the Plaintiff in the second contract be allocated to another sub-contractor to over come the delay complained of. This would speed up the work.

Mr. Shonubi rejected the above micw and contended for the defendant that the defendant was not satisfied with the plaintiff's performanee in both contracts. Consequently the defendant entered the sites and took over. He relied on the evidence of DW1 the quantity surveyor who works with the defendant corporation. He testified that,

$\mathfrak{g} \mathfrak{g} =$ During the period, they had worked, the plaintiff company should have covered 14000 meters. But they covered only 5543 meters. We were not satisfied with the plaintiff's work progress. But we also ran out of cables. Then we gave them alternative work to do in the meantime. To lay conduit pipes and to dig man holes. This was the second contract.

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But the plaintiff company also did not perform well on this contract. They had only 20 labourers instead of 400 on the site. I wrote to the plaintiff company (ExhD1) pointing out to them about the inadequancy of their labourers and asked them to correct that ------- As I have said, the plaintiff company's performance was still net satisfactory. So we told him to do part of the inb and we would do the other part. Even in this 2nd contract, the plaintiff was very slow and did little work. We then decided that he could not continue with the job".

The above evidence tend to show that the plaintiff's performance was not satisfactory to the defendant in both contracts. He was of his work force. This evidence slrw due to inadequancy/is an cath against that Cf PW1. But I am more inclined to believe DW1. He appeard more credible and gave his evidence in straight forward manner. Secondly the Plaintiff himself admitted in cross examination that for the pipes laying gentract he had deployed 75 casual labourers. That was abvirusly inadequate number of workers since he had intimated that he would raise up to 200 work force. Without sufficient work force, the plaintiff was bound to be slow in the permance of his work. In a contract where time is of essence, progress in one's work can be considered unsatisfactory perslow $L$ $\bullet$ formance. That was sufficient ground to justify the defendant's entry into and taking over the site.

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1-71 further testified that they enraged the plaintiff in ;-he J second c^ntrait tn keep him busy while- they await the arrival nf the cables. But when thevtables arrived, the plaintiff was . w still struggling with segond cpntr&c£.%. He hadtnot ye.t completed and eventually abandoned the j^b«So they could not give him baok the nob of cables laying. r

The plaintiff denied that they abandoned the sit^s. But they concede that the defendant did not chase them from the site. The above apparent contradiction suggests that wh\$n the defendant came tn take o£er^the s^te, the5plaintiff or tjieir representatives were nov-longer on the site. Yet the work in the pipe laying was ^nt completed. The defendant denied that jshe^pipes ever got finished when the plaintiff^abandonee? the site. doubt the plaintiff was expect©funder the contract to do bis nob diligently and within tfe© given.schedule. He coujd ^nly keep within schedule as.provided for%under clause 35, the Agreement^if he had sufficient work-force. Failure to do so amounted t\a breach of the contract.

The next question is whether thg plaintiff was properly l remunerated as.per the term of the contract. This is issue No. 2. v

w It was contended for thg plaintiff that thp defendant did not pay the the plaintiff properly as per the contract. This was denied by thg defendant \vho contended thatv,the plaintiff was fully paid for all the work he did under both contractsT He was in fact paid in excess. v

The plaintiff (PW1) testified that the contract for cables layingjvas valued at US 3 55,00\*.- The Plaintiff did work under this contract but was paid only US & 12,9^\*57.\* The-defendant still owed the Plaintiff US \$ 685\*25 -

The contract for pipes laying was valued at US & 28.060. Under this contract the plaintiff did work worth US \$ 17861. But he was paid only US \$ 12,0004.83. There was a balanes of payment of US \$ 9,900. Work worth US \$ 6000 under this orntraot was by agreement allocated to other persons. The defendant owes the plaintiff a total of US $$5,585.27.$

According to DW1, the value of both contracts were mere. estimates. The actual value payable which could be more or less than the estimated value depended on the work actually done. Only the price of the unit was firm. In both contracts the plaintiff did not complete the work. They did only part. The plaintiff lacked transport. So the defendant assisted them to deliver certain materials like sand. The cost of the delivery was to be deducted from the Plaintiff's payment. DW1 further testified that the defendant made to the plaintiff down payment, progress and advance payments. Then when the defendant decided that the plaintiff cruld not continue, the plaintiff submitted their final invoice for the work done. On comparision, the defendant discovered some errors in the invoice. According to DW1, the Plaintiff did in the Ist contract total work worth US \$ 8880.75. In the 2nd contract the Plaintiff did work worth US \$ 16581.83 but not 17861.

Mr. Shenubi submitted that under cause 45.1 of the Agreements Exh. P1 and Exh. P2, the value of both contracts as stated were only estimate. The actual valve depended on the value of the actual work done. With that interpretation I agree. The relevant cause reads.

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"45.1 The quentities get out in the bills of quentities are the estimated quentities of the works, they are not to be taken as the actual and correct quentities of the work to be executed by the sub-contractor this sub-contracts". in the fulfilment of his obligations under

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It follows that the contract prices quoted in the letters of intents were merely estimated value. The proval value of the contract depended on the actual work done. The unit price was however firm and there is no dispute over those rates. The plaintiff is therefore entiled to payment for the work he did on the quontum mercit beasis. But there is a disparity in the measurement of the work done. This resulted in the disparity in the amount of pay as well. I think this was unnecessary because clause 45.2 empowers Marubeni if it required to measure any work done by a sub-contractor to sent a notice to the latter who will have to attend or sent a qualified representative at the measurement. Conly when the sub-contractor fails to attend or to sent alrepresentative that MARMBENI'S measurement cruld be taken to be the correct one. Not otherwise.

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In this case, there was no evidence that such a notice was gent to the plaintiff nor that the Plaintiff failed to attend or to send a representative at the measurement exercise. It was not proper for Marubeni to omit that essential step which in my view was intended to ensure fairness in the agreement.

According to DW1 the Plaintiff refused to submit to test as required under clause 30 of the Agreement. Upon that refusal the defendant corrected the plaintiff's measurement in the invoice the plaintiff submitted.

That clause 30 of the Agreement talks about testing equipment and materials. This is not the same with refusing to exercise participate in the measurement Lof the work done. If the plaintiff refused to submit to his equipment and material being tested that is different. He was still entitled to notice to attend or send a representative when his work was being mearswred. For those reasons I find that the Plaintiff was nrt paid in accordance with the Agreement. The work done by him was not measured in accordance with the Agreement. The

meas rement taken by MARUBENI in the abser a of the Plaintiff or his Agent when Notice was not sent can not be taken to be the correct measurement for payment. Payment based on that measurement is not according to Agreement.

Mr. Shenubi submitted that the Plaintiff claim should be dismissed with cost. It involved a claim for the total value of the contracts yet the plaintiff was in breach and did not perform all the work in both contracts.

True the evidence on record shows that the plaintiff did not perform all the work im both contracts. He defaulted. He therefore can not claim for the total value of the contracts. However as I had said earlier in this judgment, the plaintiff is entitled to payment on quantum meruit basis. But there are hrwever disparities in the measurement of the work done by the plaintiff. The plaintiff's measurement do not agree with the measurements taken by Marubeni. Yet 1, was up to Marubeli to notify the plaintiff to attend or sent a qualified Agent to attend the exercise of measuring the work done by the Plaintiff. Marubeni did not give the Notice as required under the Agreement. (Marubeni's) measurement can not therefore be taken to be the correction. In those circumstances it must pay the plaintiff according to the plaintiff's measurement.

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In centract Ne.2, the plaintiff did work worth US \$ 17861. defference between this amount and the amount $\mathbf{U}$ The paid should be topped up by the defendant. As recards to cost, it is a matter of discretion of the court. Thrugh it is normally awarded to a successful party this is a case where I consider it proper, to order each party to bear its costs. Each party was successful in part.

> l miliano G. M. OKELLO $JUD. F.$

$18/10/9$ 4.

$.1/10.$

Judament delivered in the presence of Mr. Maisi for the Plaintiff. Mr Shenubi for the Defendant.

$10$

Mr. Ekwanya Court Clerk.

G. M. CKELLO

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$18/10/94.$

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