Njama Company Limited v Univeristy of Nairobi [2022] KEHC 14621 (KLR)

Njama Company Limited v Univeristy of Nairobi (Civil Case 175 of 2019) [2022] KEHC 14621 (KLR) (Commercial and Tax) (13 October 2022) (Judgment)

Neutral citation: [2022] KEHC 14621 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case 175 of 2019

WA Okwany, J

October 13, 2022

Between

Njama Company Limited

Plaintiff

and

Univeristy of Nairobi

Defendant

Judgment

1. The plaintiff herein, Njama Company Limited, sued the defendant through the Plaint dated 24th July 2019 and amended on 29th July 2021 seeking the following reliefs:-a.A declaration that the Defendant has breached the Contract between itself and the Plaintiffb.A declaration that the Defendant ought to pay the final Certificate amounting to Kshs. Forty Four Million Three Hundred and Eleven Thousand five Hundred and Seventy Six and Four Cents (Kshs. 44,311,576. 04) being the principle amount.c.Interest at Court's rates on (b) above.d.Costs of the Suit

2. The Plaintiffs claim is that on the 7th November 2011, the Defendant notified it of an award for proposed construction of Sewerage & Treatment Plant at its School of Business (Lower Kabete Campus) being Tender No. UON/T/42/2010 which award it accepted by signing a contract form constituting an Agreement as between them and fulfilled the conditions mentioned therein including providing a Bank Guarantee in readiness to commence the Works.

3. The Plaintiff stated that it commenced the works timeously according to the specifications designed by the Project Engineer appointed by the Defendant but that due to errors in the design, some facultative ponds collapsed at the tail end of the projects due to heavy rains thereby resulting in fresh designs being drawn to undertake remedial works at the instance of the Defendant.

4. The plaintiff claimed that as a result of the aforementioned collapse, the delays in the completion of the project and increased workload that was not in the original design, pressure mounted from the students due to lack of a proper sewer system and NEMA (National Environment Management Authority) with a threat to close the college due to spillage of the sewerage into nearby river, there was no time to go back for fresh bids.

5. The plaintiff explained that as result of aforesaid pressure, a meeting was held on 2nd April 2014 at Lower Kabete Campus boardroom involving the manager construction and maintenance, Resident Architect, Senior Capital Works Officer, Project Engineer and Contractor wherein it was agreed that the project be completed. It is alleged that the said meeting noted as follows:-a.That there was no time for retendering.b.That retendering will escalate the cost of the project since figures quoted as at 2010 had shot up in 2014. c.That since the Plaintiff is still on the site it should continue with the work.d.That the Project Engineer shall quantify and submit the total cost of the project including remedial works.

6. It is the plaintiff’s case that it proceeded to execute the works with the blessings of the Defendant until completion and that its interim certificates were paid. It added that after the completion of the project on 20th March 2017, there was a mandatory defects liability period of 180 days which ended on 19th September 2018 and it officially handed over the project after a formal inspection conducted on 23rd March 2018. After the handover, the Project Engineer handed over a report to the Vice Chancellor upon being satisfied that the works were executed satisfactorily.

7. The plaintiff claims that the Defendant has, since the completion of the project, taken it in circles and refused to pay it for the work done thereby precipitating the filing of this case.

8. The Defendant denied the Plaintiffs claim in its entirety through the Statement of Defence and dated 21st September 2021.

9. The matter was heard on 8th December 2021 when the Plaintiff presented the testimony of its sole witness Mr. Julius Kabuki Maina a Civil Engineer and the Plaintiff’s Director who relied on his witness statement as his evidence in chief and produced the plaintiff’s list of documents as exhibits. He attributed the collapse of the sewer construction to faulty drawings provided by the defendant. He testified that the dispute was referred to arbitration wherein the plaintiff was awarded Kshs. 31 Million for the work that it did before the collapse but that there was an outstanding amount of Kshs. 44 Million together with interest in respect of the final Certificate of Completion which the defendant had not settled.

10. On cross examination, PW1 testified that he is aware of the procurement laws governing state institutions and that tender forms and price schedule in the Bill of Quantities must be submitted before the award of tender. He confirmed that the Tender Form was not filed in court even though the initial price was Kshs. 139,770,680. 50 but that the plaintiff had so far been paid Kshs. 174 Million.

11. The defendant did not call any witnesses.

12. At the close of the case, parties filed written submissions in respect to their respective cases which I have considered. The main issues for determination are as follows: -a.Whether a contractual relationship existed between the Plaintiff and Defendantb.Whether the Defendant commissioned the Plaintiff to undertake the additional works?c.Whether the Defendant is in breach of the contract.d.Whether the Plaintiff is entitled to the orders sought.

13. It was not disputed that the parties herein entered into a contract as the Plaintiff submitted its Bill of Quantities marked as P Exhibit I and Notification of Award marked as P Exhibit 2. I note that the contract form was signed and executed by both parties. I find that the plaintiff provided sufficient and uncontroverted evidence to show the existence of a contractual relationship between it and the defendant.

14. On whether the Defendant engaged the Plaintiff to undertake the additional works, the plaintiff claimed that the faulty drawings by the Project Engineer appointed by the Defendant resulted in the collapse of the facultative ponds that required it to undertake remedial works. In this regard, the Plaintiff produced minutes of a technical meeting held by the Defendant on 2nd April 2014 as PExhibit 4 where, it alleged, the issue of the remedial works was discussed and agreed upon at an estimated cost of Kshs. 57,092,438. 66.

15. In its defence, the Defendant averred that the Plaintiff’s claim for additional works done was settled in an arbitration process.

16. The plaintiff however argued that the arbitration proceedings were in respect to the unpaid Certificates for works done before the collapse of the construction. It was further, the plaintiff’s case that the arbitration proceedings culminated in a settlement/award of Kshs.31, 513,195. 16. The plaintiff produced an Internal Memo marked Exhibit 5 to show that the defendant appointed it to complete the additional works and argued that it had sufficiently established that the Defendant commissioned it to undertake the additional works.

17. As I have already stated in this judgment, it was not disputed that the parties herein entered into a contract for the construction of a sewerage treatment plant. The dispute however revolves around the claim for payment in respect to alleged additional work done following the collapse of the construction. It is trite that he who alleges must prove and in this regard, the burden rested on the plaintiff to prove that not only did it carry out the additional works but that it is entitled to the prayers sought in the amended plaint.

18. Section 107(1) of the Evidence Act provides that:-“Whoever desires any Court to give Judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist",

19. Section 108 of the Evidence Act, on the other hand, states that the burden of proof in a suit or proceedings lies on that person who would fail if no evidence at all were given on either side.

What then was the plaintiff’s evidence/proof in this case? 20. I note that during cross examination, the plaintiff’s witness conceded that he was aware of the law governing procurement by public/state institutions such as the defendant. The law in question is the Public Procurement & Asset Disposal Act, No. 33 of 2015 stipulates as follows under Section 135(6) thereof on what constitutes a contract:a.Contract Agreement Form.b.Tender Form.c.Bills o Quantities.d.Schedule of Requirements,e.General Conditions of Contract.f.Special Conditions of Contract.g.Notification of Award.

21. Section 135(7) of the said Act states that it is an offence not to comply with the above requirements while Section 139 allows for amendments and variations of Contract on the following conditions set out in Sub-Section (4):-i.. Quantity Variation does not exceed 15% of the Original Contract Quantity.ii.Variation of Works does not exceed 20% of Original Contract Quantity.iii.Variation Agreement be executed within the Contract period.iv.Cumulative value of the Variations should not exceed 25% of the Original Contract Price.

22. The plaintiff testified as follows regarding the tender and the contract sum.“The tender form is not filed in court……the initial contract price was Kshs. 139,770,680. 50. So far Kshs. 174 Million has been paid to us. 44 Million is still pending. I will need to do calculation for the exact amount paid. The difference between 139 Million and 174 Million is an increment of 25% of the original contract amount. Contract provided for arbitration in case of a dispute. We had already gone on arbitration and the amount due agreed upon. Arbitration document has not been presented before this court…..Schedule of Payments has not been filed in court but are with the lawyer. Additional/Variation Contract is minuted. We were never given an award for the variation of the contract that is why we are in court.”

23. From the above extract of the plaintiff’s evidence it is clear that it not only admits having been paid by the defendant over and above the contract sum, but also concedes that it did not produce the Standard Form/General conditions of Contract, Variation of Contract and Statement/Schedule of Account. It was also curious to note that while the plaintiff admitted that their dispute had been resolved through arbitration, the arbitral award was not part of the documents that it presented in court and neither did the plaintiff explain why it did not revert back to the arbitrator for redress for the alleged unpaid value of the varied contract.

24. My finding is that the plaintiff’s claim leaves a lot to be desired and falls short of compliance with the provisions of the Public Procurement and Asset Disposal Act. Furthermore, it is trite that special damages must be both pleaded and proved, before they can be awarded by the Court. This was the holding by the Court of Appeal in Hahn vs Singh, Civil Appeal No. 42 of 1983 [1985] KLR 716, at P. 717, and 721 where the Learned Judges of Appeal - Kneller, Nyarangi JJA, and Chesoni Ag. J.A. - held:“Special damages must not only be specifically claimed (pleaded) but also strictly proved…. for they are not the direct natural or probable consequence of the act complained of and may not be inferred from the act. The degree of certainty and particularity of proof required depends on the circumstances and nature of the acts themselves.”

25. Courts have therefore insisted that that a party must present actual receipts of payments made to substantiate loss or economic injury. In the present case, the plaintiff argued that the Final Certificate dated 11th December 2017 was sufficient proof of the debt owing by the Defendant. I have perused the said Final Certificate and I note that it is addressed to the defendant’s Manager, Construction and Maintenance and it is worded as follows: -“Dear Sir,CERTIFICATE NO. 14NJAMA COMPANY LTDCONSTRUCTION ENGINEERS AND BUILDERSREF: FINAL CONTRACT AFTER JOINT MEASUREMENTSThis is I reference to the proposes Sewerage Treatment Plant at the School of business, Lower Kabete Campus. The Treatment Plant has been constructed and has been operational for now one year. Receive the Fourteenth certified certificate for the construction of the proposed Treatment Plant as the Final Certificate for Kenya Shillings Forty Four Million, Three Hundred and Eleven Thousand, Five Hundred and Seventy Six and Cents Four( Kshs 44,311,576. 04) only.The project is completed. The sewage flow to the ponds is treated as required by design. The ponds are functional as they should.Yours faithfullyEng Dr. Zablon Isaboke OongeProject Engineer/Resident Engineer andSenior Lecturer, Civil and Construction Engineering DepartmentThe University of Nairobi.”

26. I note that the defendant responded to the claim under the Certificate through their letter dated 6th March 2018 as follows: -“REF: UON/CA/CMD/5/776th March 2018Njama Company LimitedPO Box 17470NAIROBI-00100RE: COMPLETED CONSTRUCTION OF SEWERAGE TREATMENT PLANT AT SCHOOL OF BUSINESS- LOWER KABETE CAMPUS: TENDER NO. UON/42/10-11Your letter to the Deputy Vice Chancellor (A&F) of the UON dated 15/2/2018 refers.The approval variations for this project after the Arbitration was Kshs 24,045,856. 60 as per the copy attached. You agreed to carry out these works at Kshs 24,045,856. 60as per copies of Bill of Quantities hand written letter attached and as agreed in a meeting held in the boardroom of the DVC (A&F) in June 2017. The claim of Kshs 44,311,576. 04 is not substantiated and is not agreeable by the University of Nairobi. According to our records, we owe you a 2. 5% Penultimate Retention of Kshs 3,530,528. 82 exclusive 16% VAT.Attached, please find final account for your signature and return to us for further action.Arch, Jarrett O. OdwalloAG. MANAGER, CONSTRUCTION & MAINTENANCEEncl”

27. My finding is that the plaintiff’s claim under the Final Certificate is not sufficient proof of debt and does not meet the test of strict proof as the same was refuted the defendant’s claim through its letter dated 6th March 2018 wherein it insisted that they only owed the plaintiff the 2. 5% Penultimate Retention of Kshs. 3,530,528. 82 exclusive of VAT. In the plaintiff’s letter to the defendant dated 13th March 2018 the plaintiff presented its claim for Kshs. 4,095,413. 40 which it stated was the retention balance for the contract. It is also noteworthy that the plaintiff received certain payments from the defendant after the letter of 13th March 2018 as seen in the payment voucher of 4th August 2018 which shows that it was paid Kshs. 5,988,754. 28

28. Having regard to the above correspondence between the parties, I am unable to find that the plaintiff’s case meets the expected strict proof threshold. Consequently, and in the circumstances of this case, I find that the plaintiff’s claim was not proved to the required standards and the order that commends itself to me is the order to dismiss it with orders that each party shall bear its own costs.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 13TH DAY OF OCTOBER 2022. W. A. OKWANYJUDGEIn the presence of: -Mr. Korir for Kipkorir for Defendant.Ms Wachira for Ms Kosgey for Plaintiff.Court Assistant- Sylvia