Sun Sand Dunes Limited v Raiya Construction Limited [2018] KECA 548 (KLR)
The bottom line
#Kenya's Court of Appeal ruled a construction contractor had not substantially completed the works, dismissed its claim, and ordered it to hand over the premises.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the supplementary record of appeal was competent for want of a memorandum of appeal under Rule 82 of the Court of Appeal Rules
- 2.Whether the respondent substantially completed the works under the building contract
- 3.Whether the learned Judge erred in placing too much weight on the expert evidence of Mr. Wambua
- 4.Whether the appellant breached the contract by its payment conduct
- 5.Whether the respondent was entitled to the €15,000 additional sum and to security costs
- 6.What reliefs, if any, the appellant was entitled to in light of the respondent's breach, including the penalty clause
Key legal issues
#Competency of the supplementary record of appeal
The challenge to the supplementary record was out of time under the proviso to Rule 84 and could not be entertained; the initial record contained the memorandum of appeal.
The respondent attacked the supplementary record for lacking a memorandum of appeal under Rule 82. However, the proviso to Rule 84 bars strike-out applications brought more than thirty days after service of the record. The respondent's objection was raised in submissions filed on 17th March, 2018, outside the prescribed period, and the initial record of appeal contained the memorandum of appeal in any event.
Substantial completion of the works
The respondent had not substantially completed the works; completion was to be measured against the project drawings and specifications incorporated into the contract, and several scheduled works (servant quarters, storm water drainage, driveway and car parks) had not been done.
The respondent's quotation, incorporating the drawings and specifications, formed part of the agreement, so completion had to be measured by compliance with them. Uncontroverted evidence from a structural engineer showed the works varied with the drawings. Works set out in the drawings, including servant quarters, drainage, driveway and car parks, were admittedly not done, so the trial judge erred in finding substantial completion.
Credibility and weight of expert evidence
The trial judge erred in placing too much weight on the quantity surveyor's evidence, as his credibility and impartiality were compromised by his preparation of altered reports and a valuation that omitted uncompleted works.
The expert admitted preparing three reports, one of which was altered to suit the instructing party, which brought his credibility and partiality into question. Although the trial judge had discretion to accept expert evidence, that discretion was misused here; further, the report valued completed works only and left out uncompleted works.
Whether the appellant breached the contract
Having paid a total of Kshs.66,107,676, approximately three-quarters of the contract sum, the appellant had not breached the contract; deviations from the payment schedule were justified by the respondent's non-adherence and the parties' variation of the schedule.
Payments not in accordance with the payment schedule were justified because the respondent was not undertaking works per the schedule, carrying them out simultaneously rather than per section, and both parties had varied the schedule. By the time of suit the appellant had paid Kshs.66,107,676, leaving an outstanding contract sum of Kshs.11,592,324, so no breach by the appellant was established.
Entitlement to €15,000 and security costs
The respondent was not entitled to the €15,000, as clause 6 required any material price increment to be agreed in writing by both parties, and no such agreement existed; equally, no contractual term obliged the appellant to pay for security while the premises were in the respondent's possession.
Clause 6 of the contract permitted recovery of material price increments only if the contractor informed the client in writing and the increment was agreed by both parties. No such agreement was proved, so the trial judge erred in granting the sum. Similarly, no term imposed security costs on the appellant while possession remained with the respondent.
Penalty clause entitlement
The appellant was not entitled to the Kshs.50,000 weekly penalty because it was unclear whether a fresh completion date had been expressly agreed after the injunction, and subsequent agreements altered the completion date.
Clause 6 imposed a weekly penalty from the stated completion date, but the original completion date of 30th June, 2009 was disrupted by the second contractor's injunction. The evidence did not show whether a fresh timeframe was agreed upon resumption, and subsequent agreements on outstanding works altered the date, so the penalty was unavailable.
Legal principles established
#- On a first appeal, the court's primary role is to re-evaluate, re-assess and re-analyze the evidence on record and determine whether the conclusions reached by the trial court are to stand, while being cautious that it did not see or hear the witnesses.
- In the absence of an express provision in a construction contract stipulating the degree of completion required, an implied term arises that the works will be sensibly completed.
- Completion of works under a construction contract incorporating drawings and specifications is measured by the degree of compliance with those drawings and specifications.
- A contractor who undertakes to complete a design commenced by another agrees that the result will be prepared with reasonable skill and care, and bears a duty to inform the employer of substantial defects it is aware of in the previous contractor's works.
- An application to strike out a notice of appeal or an appeal shall not be brought after the expiry of thirty days from the date of service of the notice of appeal or record of appeal.
Court orders
#- 1.Judgment of the High Court dated 7th March, 2017 set aside in its entirety
- 2.The respondent's claim dismissed
- 3.A declaration issued that the respondent breached the terms of the contract dated 4th November, 2008
- 4.A mandatory injunction issued directing the respondent to unconditionally hand over the suit premises to the appellant
- 5.The respondent to refund all sums paid to it by the appellant on account of security on the suit premises in terms of the trial court's orders dated 17th November, 2014 and 27th April, 2015
- 6.The appellant to have costs of this appeal and the suit in the High Court
The bench
#One judgment of the whole court — no separate or dissenting opinions.
- On appeal from
- High Court of Kenya at Malindi
- H.C.C.C No. 179 of 2012
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal Rules (Rule 82 and the proviso to Rule 84 engaged on competency challenge)
Relief refused
#Penalty of Kshs.50,000 per week under clause 6 of the contract
It was unclear whether a specific completion date had been expressly agreed after the injunction and subsequent agreements altered the completion timeline
Costs
The appellant shall have costs of this appeal and the suit in the High Court.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Based on the foregoing, we find that the appeal herein succeeds and we hereby set aside the judgement dated 7 th March, 2017 in its entirety. We substitute the same with an order dismissing the respondent's claim and partially allow the appellant's counter-claim
The appellant shall have costs of this appeal and the suit in the High Court.
Whether or not a contractor has substantially completed the work is a question of fact in each case.
It follows therefore that completion of the works in question should be measured in terms of the degree of compliance with the said drawings and specifications thereunder.
The fact that Mr. Wambua prepared a subsequent report incorporating the alterations he alluded to, brought into question his credibility and partiality as an expert witness.
Such clauses provide for retention of a percentage of the contract sum by the employer as security for the due performance of the contract by the contractor and as a fund to be drawn upon either to complete the work or to rectify defects
Issues in the judgment
#Internal inconsistency in figures within the judgment: the trial judge's extracted award refers to a 'Balance of the contractual sum Kshs. 11, 592,234' while the accompanying text and the appellate court's computations refer to Kshs.11,592,324.
Internal inconsistency in dates: the judgment refers to a list of outstanding works 'dated 25 th May, 2012' in the account of Guiseppe's evidence, while earlier in the judgment the same list is described as 'dated 23 rd May, 2012'.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
Cite this brief
#Cite this brief
Caselaw, "Sun Sand Dunes Limited v Raiya Construction Limited [2018] KECA 548 (KLR)", Case Analysis (2018). Civil Appeal No. 26 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/548/eng@2018-05-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.