The Court of Appeal in Kampala has dismissed an appeal by Uganda National Roads Authority – UNRA against Dott Services Limited and Professional Engineering Consultants Ltd – PEC.
The appeal is against the decision of the High Court dismissing, with costs, a suit filed by UNRA against Dott Services Limited and PEC.
Background
In 2010, UNRA entered two road services agreements with Dott Services Ltd for the development and maintenance of Tororo-Mbale Road (49 km) and Mbale-Soroti Road (103 km).
The signing of both contracts took place on 22nd October, 2010 and the agreed commencement date for their execution was 21st November, 2010. The road works were expected to be concluded within 18 months, i.e by 21st May, 2012.
UNRA was required, under the relevant contracts, to take certain steps to ensure that the road works commenced as soon as possible, either of the agreed commencement date, or shortly thereafter by, for example, promptly ensuring that Dott obtained possession of the road construction sites; providing the strip maps for the road works; promptly issuing construction drawings, among other things.
Dott felt that UNRA delayed to effect the requirements and on 1st November, 2013, they made a claim for compensation to the tune of Ugx 17,766,930,850/= and Ugx 27,789,880,200 for delay occasioned by UNRA to the commencement of the road works on Tororo-Mbale Road and Mbale-Soroti Road respectively. The combined amount under both claims was Ugx 45,556,811,050/=. Dott claimed that each of the road works had been delayed by 509 days.
UNRA subsequently contracted CPEC, to evaluate Dott’s claims. PEC substantially agreed with Dott’s delay claims but recommended that lower amounts be paid, namely, Ugx12,865,025,357/= for the Tororo-Mbale Road and Ugx 20,339,809,243/= for the Mbale-Soroti Road, totaling to Ugx 33,204,834,600/=.
However, UNRA would later pay Ugx11,526,323,154/= for Tororo-Mbale Road and Ugx18,332,208,914/= for Mbale-Soroti Road, totaling to Ugx29,858,532,068/= which Dott accepted.
In 2016, UNRA initiated an internal audit into the amount of compensation money paid to Dott. The findings, embodied in the report by Mr. Moses Kasakya, UNRA’s Director Internal Audit, were that Dott was over paid and was entitled to lesser compensation amount of Ugx 8,833,252,755.67/=.
UNRA, basing on the Audit Report, instituted proceedings against the Dott and PEC seeking to recover the balance of Ugx21 billion of the paid amount, which Justice Henry Peter Adonyo of the Commercial Court rejected and dismissed the cases for lack of merit and ordered UNRA to pay Dott Services and PEC costs of the suit.
Adonyo ruled that Dott Services suffered prolongation costs of 509 days as provided in their contract with UNRA and hence entitled to the money it received from UNRA.
He said Dott Services and PEC did not commit any acts of fraud or cause any loss to UNRA. The judge also ruled that PEC was not professionally negligent or in breach of the terms of the consultancy contract.
The judge noted that UNRA sought an independent financial assessment from the Solicitor General and advice of a legal expert, which recommended the contractor’s claim to be reduced to sh29.9b
The judge said UNRA paid the money to Dott Services as a result of incurred financial losses such as the depreciation of plant, machinery, equipment and the cost of managing idle personnel at road sites.
Ugandan enterprises urged to explore regional oil and gas opportunitiesHowever, dissatisfied with the decision of the Judge, UNRA ran to the court of appeals on the following grounds:
That the Judge erred in law and fact when he misconstrued the evidence on progress of works and made a finding that the 1st respondent suffered delay and was entitled to prolongation costs of UGX 29,858,532,069/= for 509 delay days.
That Justice Adonyo erred in law and fact when he misconstrued the meaning and application of the construction principles of variation, price adjustment, acceleration and prolongation and thus reached a wrong conclusion.
UNRA also claims that the Judge erred in law and fact when he failed to make a finding that having paid Dott for accelerating works, could not pay it again for prolongation costs for the same period of acceleration.
They say that the Judge erred when he failed to make a finding that Dott committed of fraud in causing payment of the suit funds.
According to UNRA, there was no prolongation to the relevant road projects at all.
Giving her ruling, Justice Elizabeth Musoke said that the allegation that the monies paid to Dott were not payable cannot be sustained.
“I earlier stated that UNRA, upon its own voluntary evaluation, deemed that Dott was entitled to the payment of Ugx29,858,532,069/= for the relevant delays. It could not thereafter assert otherwise.”
“I would also dismiss the allegation that PEC acted fraudulently when it approved the payment made to UNRA. My assessment of the evidence revealed that UNRA acted independently from PEC when it approved the payment to Dott. Whereas PEC recommended the payment of Ugx33,204,834,600/=, UNRA paid lesser amount of Ugx29,858,532,069/-. This means that the final computation of the money paid to Dott was done by UNRA and cannot have been due to the fraudulent acts of PEC whose evaluation was overlooked,” she noted.
“In conclusion, I would disallow all grounds and dismiss the appeal with costs to the respondents,” she ruled.
Her judgement was seconded by her colleagues; Justice Muzamiru Mutangula Kibeedi and Justice Christopher Gashirabake who respectively noted that;
“I have had the advantage of reading in draft the Judgment prepared by my sister, Hon. Justice Elizabeth Musoke, JA. agree with the reasoning, conclusion and orders proposed.”
“I have had the benefit of reading in draft, the judgment prepared by learned sister Musoke, JA and I am in agreement with the analysis and conclusions contained therein. I have nothing useful to add.”
