Mulago Hill Diagonostics Limited v National Water & Sewerage Corporation (Civil Appeal 38 of 2022) [2024] UGHCCD 73 (4 March 2024)

#### THE REPUBLIC OF UGANDA

#### IN THE HIGH COURT OF UGANDA AT KAMPALA

#### [CIVIL DIVISION]

#### **CIVIL APPEAL NO. 38 OF 2022**

[Arising from The Decision of the Public Procurement and Disposal of Public Assets Appeals Tribunal in Application No. 13 of 2022]

MULAGO HILL DIAGONOSTICS LTD =============== APPELLANT

#### **VERSUS**

NATIONAL WATER AND SEWERAGE CORPORATION== RESPONDENT

# **BEFORE: HON. JUSTICE EMMANUEL BAGUMA JUDGMENT.**

#### **Background.**

On 10th December 2021, the Respondent published bids for the supply of Hatch Chemical and Reagents. On 25th March 2022 the Respondent declared Palin Corporation Limited to be the best evaluated bidder and published a notification for the award of the Contract arising from the bidding process to Palin Corporation Limited.

Upon issuance of the Best Evaluated Bidder notice displayed on 25th March 2022, the appellant was aggrieved and applied for administrative review to the Respondent's Accounting Officer.

In a letter dated 7 th April 2022, the Respondent communicated to the Appellant that following the report and recommendation of the Administrative Review Team, the procurement process had been cancelled and the Appellant's administrative review funds were to be refunded.

On 4th May 2022, the PPDA tribunal confirmed cancellation of the procurement process when it held inter alia that, the Tribunal cannot compel the Respondent to continue with the procurement process that it is no longer interested in.

The appellant being dissatisfied with the decision and orders of the PPDA appeals tribunal, it appealed to this court and faulted the Tribunal for confirming cancellation of the Procurement Process.

The notice of appeal had 13 grounds however, at hearing, both parties agreed and framed 4 issues out of the grounds of appeal to wit; -

- *1. Whether the Tribunal erred in law when it cancelled the procurement?* - *2. Whether the Tribunal erred in law when it found that no fraud had been proven against the best evaluated bidder?* - *3. Whether the Tribunal erred in law when it failed to order the continuation of the procurement process?* - *4. Whether the Tribunal erred in law when it failed to award the Appellant costs?*

#### **Representation.**

Counsel Ojambo Robert Mugeni represented the Appellant while counsel Amos Masiko represented the Respondent.

At hearing both counsel agreed to file written submissions.

#### **Submissions by counsel for the Appellant.**

Counsel for the Appellant abandoned issue No. 2 and submitted on issue 1 and 3 jointly and issue no. 4 separately.

#### **Issue 1 and 3**

#### *1 Whether the Tribunal erred in law when it cancelled the procurement?*

### *3 Whether the Tribunal erred in law when it failed to order the continuation of the procurement process?*

Counsel submitted that the bids of the subject procurement opened on 25th January 2022 as per the advert in Daily Monitor for the supply of Hach Chemicals and Reagents Reference No. NWSC-HQ/SUPLS/21-22/172693, the date and time for bid opening was stated as 25th January 2022 at 10:30am and it was the procurement Act of 2021 in effect and the same did not give powers to the Accounts Committee to cancel a procurement process.

Counsel submitted that under section 911 of the 2021 Act, the mandate, authority or power earlier vested in the Tribunal to direct the concerned procuring entity, with respect to anything to be done or redone in the procurement or disposal process and or to order that the procurement or disposal process be terminated had been omitted, removed and or deleted pursuant to regulation 2 of the 2021 of the Procurement Regulations.

Counsel submitted that it was accordingly wrong for the tribunal to rely on the old decision of **Preg Tech Communications** which was issued under the old law where the tribunal had express power to order for termination of a procurement or disposal process.

# **Issue No. 3; Whether the Tribunal erred in law when it failed to order the continuation of the procurement process?**

Counsel submitted that the procuring entity having found that the Appellant's complaint had merit, and that the decision to award Palin Corporation the contract was erroneous, they ought to have awarded the contract to the Appellant instead of cancelling the whole procurement process.

Counsel contended that there was no law the allowed the procuring entity and the tribunal to terminate a procurement process and that that move was illegal. Counsel referred to the case of **Makula International Limited Vs Cardinal Nsubuga & Anor CA NO. 4 of 1981 HCB 11.**

# **Issue No. 4; Whether the Tribunal erred when it failed to award the Appellant costs.**

Counsel submitted that since the Appellant's complaint to the procuring and disposing entity and before the Tribunal was a success save for the cancellation of the procurement, the Appellant was consequently entitled to costs.

Counsel referred to section 91K of the 2021 Act which gives the tribunal powers to award costs to a party and the same shall be enforceable like an order of High Court. He contended that it was wrong for the tribunal to deny the Appellant costs without a justification.

#### **Submissions by counsel for the Respondent.**

### *1 Whether the Tribunal erred in law when it cancelled the procurement?*

# *3 Whether the Tribunal erred in law when it failed to order the continuation of the procurement process?*

Counsel submitted that the Tribunal's decision to affirm cancellation of the procurement process was premised on the fact that the Respondent had already communicated to the Appellant cancelling the procurement process. In effect the Respondent was no longer interested in the procurement process and it could not be forced by the Tribunal to continue with the same.

Counsel submitted that by a letter dated 7th April 2022 which is attached to the respondent's list of document tendered before the Tribunal, the Respondent communicated to the Appellant that the procurement had been cancelled on grounds that the Respondent was no longer interested in the process.

Counsel submitted that the Respondent's decision to cancel the procurement process was based on the report from the Administrative Review Committee dated 6th April 2022 which is also attached to the respondent's list of document tendered before the Tribunal. The report established unethical traits on the part of the Appellant and recommended cancellation, since on the face of it, the procurement process was compromised.

Counsel submitted that since the procurement process was cancelled, this makes this appeal a moot. He referred to the case of **Minex Karia Vs Attorney General HCCS No. 208 of 2022** where court held that; -

*"The doctrinal basis of mootness is that courts do not decide cases for academic purposes because court orders must have a practical effect and be capable of enforcement..... courts cannot issue orders where the issue in dispute have been removed or merely no longer exist.......... a court may decline to decide a case which raises merely a hypothetical or abstract question".*

Counsel stated that ordering the Respondent to continue with the procurement process is impractical and incapable of being enforced as there is no longer any procurement process in existence and the same would mean forcing the Respondent to enter into a transaction/contract it is not interested in contrary to the doctrine of freedom of contracts enshrined in section 10 of the contracts Act.

Counsel submitted that section 91 l of the procurement and disposal of Public Assets Act as amended give powers to the Tribunal to review decisions of the procuring and disposing entity.

Further section 91K provided that the Tribunal shall have power to among others, take evidence on oath, adjourn the hearing of the proceedings, make an order as to costs, request to examine a witness who is outside Uganda, and to summon witnesses.

Counsel contended that it was not the intentions of the Legislature to give powers to the Tribunal to hear matters, take evidence and summons witnesses but not make a decision. The intentions of the legislature was to confer powers on the Tribunal either to vary or dismiss the decision of the procuring entity and to make logical conclusions on the Appeal filed before it.

### Counsel referred to the case of **Kansai Piascon Uganda Limited Vs Uganda Revenue Authority, HCCA No. 037 of 2021** which cited the case of **Minister for Immigration and Ethics Affairs Vs Pochi (1980) 31 ALR 666 at 671.**

Counsel concluded that the Tribunal could not force the Respondent to continue with the procurement process it is no longer interested in.

# **Issue 4; Whether the Tribunal erred when it failed to award the Appellant costs.**

Counsel submitted that costs are discretionary and not mandatory. The powers of the Tribunal to award costs are discretionary and the Tribunal exercised its discretion not to award costs to the Appellant. The Appellant has not shown any good reasons as to why this court should interfere with the discretion of the Tribunal.

#### **Determination of court.**

### *1 Whether the Tribunal erred in law when it cancelled the procurement?*

# *3 Whether the Tribunal erred in law when it failed to order the continuation of the procurement process?*

**Section 75 (1) of the PPDA Amendment Act 2021** provides for Cancellation of procurement and disposal processes and rejection of bids, it states that

# *"(l) A procuring and disposing entity may. on the approval of the Contracts Committee. cancel a procurement process or a disposal process at any time. before a contract is awarded to the best evaluated bidder, as may be prescribed".*

From the above provision of the law, it is clear that the procuring entity has powers to cancel a procurement or disposal process before award of the contract to the best evaluated bidder. In case, the procuring entity cancelled the procurement process before signing of the contract and as which it was no longer interested in the whole process.

### **Section 10(1) of the contract Act of 2010** provided that; -

# *"A [contract](https://ulii.org/akn/ug/act/2010/7/eng@2010-05-28#defn-term-contract) is an [agreement](https://ulii.org/akn/ug/act/2010/7/eng@2010-05-28#defn-term-agreement) made with the free [consent](https://ulii.org/akn/ug/act/2010/7/eng@2010-05-28#defn-term-consent) of parties with capacity to [contract,](https://ulii.org/akn/ug/act/2010/7/eng@2010-05-28#defn-term-contract) for a lawful [consideration](https://ulii.org/akn/ug/act/2010/7/eng@2010-05-28#defn-term-consideration) and with a lawful object, with the intention to be legally bound".*

From the above section of the contracts act, it embodies the doctrine of freedom of contract. It implies that an entity is free to contract as and when they want and they cannot be compelled or forced to enter into a contract/transaction they are not interested in.

In the instant case, the Respondent published bids for supply of reagents. The Appellant and other bidders participated in the biding process, before the signing of a contract with the highest bidder, the Respondent cancelled the whole procurement process. The Appellant then contested the decision by the Respondent to cancel the procurement process and appealed to the tribunal which upheld the decision of the Respondent.

The appellant contended that the Tribunal had no power to cancel a procurement process. While the Respondent contended that the Tribunal has powers under section 91 l and 91K of the procurement Act to review the decision of the entity and make logical conclusions, that it was only logical that the Tribunal upholds a cancellation by the entity since it could force a party to continue in a transaction where they already lost interest.

It is a settled principle of law that courts do not exist to make contracts to the parties but rather to enforce contracts made by parties and where there is none, courts cannot force a party to enter into a contract as that would amount to breach of the doctrine of freedom of contract.

This court equally cannot force an entity to continue with a procurement process where it has already lost interest.

The tribunal had powers under section 91 l and 91K of the Public Procurement and Disposal of Public Assets Act to review the decision of the procuring entity and make a logical decision.

The legislatures did not have to categorically state the nature of decisions that can be made by the Tribunal. It sufficed that the tribunal reached a logical decision.

I agree with the decision of the Tribunal that an entity cannot be compelled to continue with a procurement process where they lost interest and cancelled the same.

Accordingly, issue No. 1 and 3 are resolved in the negative.

### **Issue 4; Whether the Tribunal erred when it failed to award the Appellant costs.**

It is a settled principle of law that it is the discretion of the trial court to award costs. The discretion like any other discretion, must, of course, be exercised judicially, and the court ought not exercise it against successful party, except for some reason connected with the case. Similarly, the exercise of this discretion must not be affected by questions of benevolence or sympathy. *See Roko Construction Company v Uganda Cooperative Transport Union S. C. Civ. App No. 32 of 1997*

Costs follow the event, and a successful party should not be deprived of his costs unless for good reasons and must have reasonable bases. The essence of costs is to compensate the successful party for part of the loss incurred in litigation. Costs cannot cure all the financial loss sustained in the litigation. It is not a meant to be a bonus to a successful party and not to awarded on sentiments. See *Amalgamated Bank v Fraga Oil Ghana Ltd & 5 Ors [2012] 48 GMJ 149 C. A*

Where the discretion to award or not to award costs has been exercised in an arbitrary or illegal manner without due regard for all the necessary considerations or with unnecessary factors or *mala fide*, the appellate court is entitled to interfere. The award of costs involves judicial discretion which must be exercised on fixed principles, that is according to rules of reason and justice, not according to private opinion.

The appellant has not shown any arbitrary denial of costs by the tribunal and since it is an exercise of discretion, this court would not interfere with exercise of discretion as exercised by the Tribunal.

### **Conclusion**.

In the final analysis, this appeal fails with the following orders

- **1. The appeal is hereby dismissed.** - **2. The ruling and orders of the Public Procurement and Disposal of Public Assets Tribunal is upheld.** - **3. Basing on the nature and circumstances of this appeal, I will make no orders as to costs.**

Dated**,** signed, sealed and delivered by email at Kampala this **4 th** day of **March 2024**

**Emmanuel Baguma**

**Judge**