Eco-Shelter & Environmental Consultants -Versus- Uganda Post Limited T/A Posta Uganda

Eco-Shelter & Environmental Consultants -Versus- Uganda Post Limited T/A Posta Uganda

Judgment in this case was delivered on the 12th day of July 2012 at the High Court (Commercial Division), it was entered for the plaintiffs (Architect Joel Katerega, Dr. Hannington Ssengendo T/A Eco-Shelter & Environmental Consultants) for whom our Senior Partner David S Kaggwa represented. In the result, judgment was entered for the plaintiff in the following terms;

  • It was declared that the Consultancy Services Agreement was partly performed by the plaintiffs.
  • It was declared that the Consultancy Services Agreement was breached by the defendant.
  • The plaintiffs are entitled to the 30% of the contract sum and to that end special damages, general damages were awarded. Additionally, interest and costs were awarded to the plaintiffs.

The defendant and the plaintiffs entered into a Consultancy Service Agreement on the 26th September 2005. The said agreement was for the provision of specific consulting services by the plaintiffs for the purposes of the refurbishment of the property of the defendant known as Postel Building comprised in Plots 67-75 Yusuf Lule Road, Clement Hill Road. The terms of the payment under the contract were that the plaintiffs were to be paid a contract sum of Ug. Shs. 296,109,082/= including Value Added Tax.

An advance payment of 20% of the contract sum was to be paid by the defendant to the execution of the contract as a mobilization and commitment fee, conditional on the plaintiffs supplying the defendant with a bank guarantee or security bond acceptable to the defendant.

In a separate arrangement, the defendant contracted the plaintiffs to supervise the refurbishment of the 2nd and 11th floors of the building and the plaintiffs were fully paid for their services. The defendant duly terminated the contract where upon the plaintiffs instituted this suit against the defendant claiming Ug. Shs. 128,066,655 inclusive of 30% of the contract sum, general damages, interest and costs.

The Commercial Court on the first issue of whether the consultancy Service Agreement dated 26th September 2005 was duly performed by both parties found that Posta Uganda had waived compliance with clause 6.1.1 (b) of the contract which required the plaintiff to pay the insurance bond or bank guarantee upon payment of the 20% advance and had instead varied the contract to provide for a new mode of implementation other than what was originally agreed. The defendant had instructed the plaintiffs to commence works on the 2nd and 11th floor which was part of the general refurbishment work in disregard of the express term in the contract.

However, Court questioned why the defendants would allege that the contract was ‘abandoned’ and not performed by either party yet the defendants issued a notice of termination of the Consultancy Services Agreement on 26th August 2009 three years and eleven months from the date of signing the contract. Court agreed with Counsel for the plaintiffs’ logically argument that the defendant couldn’t terminate a contract that they claim to have ‘abandoned’ and yet had made an unequivocal commitment to pay the sums due and owing to it by the plaintiff following the termination letter. They had as well included the plaintiff’s consultancy firm in the schedule where Posta Uganda’s debtors and creditors were invited for verification of amounts they owe and are owed in the New Vision.
Therefore, the court additionally found that the plaintiffs were entitled to 30% of the contract sum which was admitted by the defendants in its letter dated 22nd December 2007 and that the allegation that the contract was not performed was just an afterthought intended to unfortunately defeat the plaintiff’s lawful and just claim.

Important to note is that court cannot allow another to derive benefit from another unjustly and retain that benefit without compensation on grounds that it is outside the terms of the contract. In the instant case, the plaintiff had proved that the defendant had benefitted from its services yet it then in court changed its position and denied performance of the contract altogether.
It should be observed that a party waives its rights under a contract when it foregoes to rely on a term that it would otherwise enforce to claim a remedy for a breach of the term by the other party as in the instant case where the defendant waived compliance with clause 6.1.1 (b) of the Consultancy Service Agreement.

Counsel David Kaggwa was acting for the Plaintiff in the above suit.
For further information on this and other legal issues, please contact:
Mr. David Ssekigudde Kaggwa
Senior Partner
Kaggwa & Kaggwa Advocates
Tel: +256 772474695
Email; [email protected]

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