1. By way of a plaint dated 5th October 2020, the Plaintiff sued the Defendant for breach of a construction agreement. Consequently, the Plaintiff prays for judgment against the Defendant for:
a.) Kshs. 20,268,109. 13
b.) Interest on (a) at the prevailing commercial bank rates from 8th January 2017.
c.) Costs of the suit
d.) Interest on (a), (b) and (c) above at court rates.
e.) Any other or further relief which this Honourable court deems fit and just to grant.
2. The Plaintiff alleged that it engaged the Defendant to construct a lodge to be known as “Sintoiya Lodge” on L.R. No. 14757/29, Mavoko Municipality, within Machakos County. The Plaintiff further averred that it contracted the services of Messrs. Ranarch Limited, an architectural firm, to prepare the architectural drawings and designs for the project and to supervise the construction works. The Plaintiff stated that the Defendant advised that the project would cost a total sum of Kshs. 36,687,820.00, and that the parties agreed that construction of the project would commence on 8th January 2017. According to the Plaintiff, several meetings were held between the Defendant, the architect, and other consultants to discuss the execution and progress of the project.
3. The Plaintiff further averred that it paid the Defendant a total sum of Kshs.11,321,222.18 towards the construction of the lodge in furtherance of its obligations under the agreement. However, the Plaintiff contends that the Defendant failed to carry out the construction works in accordance with the architect’s drawings or with the level of skill and care expected of a contractor of his experience.
4. The Plaintiff asserted that the Defendant executed the works unsatisfactorily, unprofessionally, and incompetently, resulting in substandard construction with material and workmanship defects. In particular, the Plaintiff alleged that the entire foundation required reconstruction, the walling of the structures was weak, the ring beams in all the units lacked adequate steel reinforcement, and the plaster works were peeling and required redoing.
5. The Plaintiff further stated that the architect raised concerns with the Defendant on several occasions regarding the quality of the works and afforded him sufficient time to rectify the defects. According to the Plaintiff, the Defendant failed to remedy the defects, prompting the architect to terminate his services and to instruct that the works already undertaken be measured and certified.
6. The Plaintiff contended that the works carried out by the Defendant could not be salvaged and had to be demolished, necessitating the reconstruction of the project from the foundation. Consequently, the Plaintiff engaged M/s Milicon Limited to demolish the structures that had allegedly been poorly constructed by the Defendant, thereby incurring additional costs amounting to Kshs.8,946,886.95. The Plaintiff has therefore instituted the present suit seeking to recover the losses allegedly incurred as a result of the defective construction works undertaken by the Defendant.
7. In response to the claim, the Defendant filed a Defence and Counterclaim dated 20th November 2020, the Defendant denied the averments in the plaint. He asserted that the initial cost of the project as per the submitted priced bill of quantities and agreed upon by the Plaintiff was for Kshs.43,320, 329/= and which in the course of the contract was varied down to Kshs.38,687,820/= at the Plaintiff’s request. He averred further that in accordance with the oral agreement with the Plaintiff for construction of the then proposed Kitengela Cottages, on or about May 2017 on L.R No. 14757/4, he moved to the site in June 2017 and started depositing necessary materials and clearing the site while waiting for the drawings. The construction work commenced at around January 2018.
8. In admitting that the parties herein had routine meetings, the Defendant stated that the meetings held once every two weeks were to check on the progress of work and to ensure quality and conformity to contract terms (as per drawings provided by the architect, bill of quantities, instructions and directions given by the architect).
9. The Defendant stated that he only received from the Plaintiff a sum of Kshs.8,471,382.24 on account of 4 interim certificates issued and which was for material supplied, work and services rendered under the project. That he undertook to work regularly, professionally, diligently above board and in accordance with the drawings provided by the architect, bill of quantities, instructions and directions given by the architect. He averred that the architect closely supervised and inspected the work done by him at every stage to confirm that they were in accordance with the drawings and specifications given in the various meetings held between all parties involved and that the architect never raised any issue on defective workmanship or unmerchantable materials used as alleged.. He added that in the course of the work, he was never issued with any notice of defects whatsoever or informed of any concerns over his work that required rectification that he would be said to have failed to act on.
10. The Defendant denies that the termination of the contract was accompanied by instructions that the existing works be measured and certified. He states that the termination was effected solely on the ground of delay, which delay he denies. In the alternative, the Defendant averred that any delay that may have occurred was occasioned by heavy rains which rendered the construction site inaccessible and waterlogged. He states that this situation was communicated to the Plaintiff and the architect in a timely manner.
11. The Defendant further contends that delays in obtaining the necessary drawings and approvals also contributed to the slowdown of the project and that such delays were not attributable to him. He maintains that the letter of termination merely required him to hand over the site and furnish the final account for the works done.
12. The Defendant states that he complied with this requirement by submitting the final account and informing the Plaintiff to arrange for a site handover. However, according to the Defendant, no response was received from the Plaintiff and the site was therefore never formally handed over. The Defendant further asserts that the works which were allegedly demolished had previously been inspected and approved by both the Plaintiff and the project architect. He contends that the Plaintiff failed to mitigate its losses and maintains that he is not indebted to the Plaintiff, as the payments made to him were in respect of materials supplied and services rendered under the contract.
13. In his counterclaim, the Defendant restates his averments as already set out Above. He states that the drawings prepared by Ranarch Limited engaged by the Plaintiff were amended from time to time by the architect at the instance of the Plaintiff, and that the architect was also responsible for supervising the works carried out by the Defendant. The Defendant further contends that the drawings were never formally approved despite several reminders and follow-ups made by him requesting the architect to provide the approved drawings.
14. He further averred that routine meetings were held regularly to review the progress of the works and ensure quality and compliance with the contractual terms. The Defendant maintains that he undertook the construction works diligently and in good faith, in accordance with the drawings provided, the Bill of Quantities and the instructions and directions issued by the architect, which he stated constituted the framework within which the works were to be executed.
15. The Defendant stated that payments under the contract were made periodically. That, upon executing portions of the works, he would submit applications for interim valuation to the architect, who would then review and assess the work done. Upon being satisfied with the valuation, the architect would issue interim certificates authorizing payment by the Plaintiff. The Defendant stated that this arrangement was followed throughout the duration of the contract and that it represented the parties’ agreed mode of payment. He further stated that he received payment pursuant to four interim certificates, the last of which was issued on 18th July 2018. The Defendant avers that he executed the works diligently and within reasonable time, and that he was only unable to work during the periods of October to November 2017 and March 2018 due to heavy rains that rendered performance impossible, as earlier captured.
16. The Defendant further stated that he was surprised to receive a letter dated 5th October 2018 from Ranarch Limited, acting on the instructions of the Plaintiff, terminating the contract on the sole ground of an alleged slow rate of work. He contends that the termination was effected without fault on his part and maintains that no work schedule had been issued to him against which any alleged delay could be measured. He therefore asserts that the allegation of a slow work rate was unfounded.
17. The Defendant further stated that following the termination of the contract, he furnished the architect with the final account dated 19th November 2018 in the sum of Kshs.7,110,595 in respect of works executed up to the date of termination, and requested the architect and the Plaintiff to arrange for a formal handover of the site. However, according to the Defendant, neither the Plaintiff nor the architect made any arrangements for the handover despite his request, and the site was therefore never formally handed over by him.
18. The Defendant therefore blamed the Plaintiff for failure to pay him for work done within reasonable time and for failure to refund the money retained being 10% of money paid for work done under the contract. He therefore prayed for a declaration that the termination of the contract was wrongful and incompetent; that the payment to the Defendant on account of the final account for work done being Kshs. 7,110,595/= as per the Defendant’s application; Kshs.939,235.09 being amount retained by the Plaintiff on account of the 4 interim certificates issued; interest on the foregoing at the prevailing commercial bank rates from the date of termination until payment in full; general damages for wrongful termination and breach of contract and costs of the counterclaim.
19. The suit was heard, the Plaintiff relied on two witnesses the Defendant’s only witness testified.
20. At the trial, PW1, Ashish Bains, a Director of the Plaintiff, adopted his witness statement dated 5th October 2020 as his evidence in chief. He produced documents numbers 1,(Copy of title document L.R No 14757/29 Mavoko Municipality) 6,(copies of payment cheques) 7,(photographs of the substandard work undertaken by the defendant) 8,(copy of termination letter dated 5th October 2018) 10, (copy of the quotation by M/S Millicon Limited) and 11(photograph’s of the demolition) from the Plaintiff’s list of documents filed on 5th October 2020 as plaintiff exhibits No 1, 6, 7, 8, 10 and 11. The documents numbers 2,(approved drawing plans/designs by Ranarch Limited) 3,(Bill of quantities) 4, (Approved structural drawings) 5(Copies of interim certificates and directions) and 9 (copies of Ranarch Limited letters dated 21st February 2019 and 5th May 2019) were marked for identification. The documents contained in the supplementary list of documents dated 8th December 2020 were also marked for identification, as they were said to have originated from the architect and PW1, not being their author, could not produce them. Similarly, the documents in the Plaintiff’s further supplementary list of documents dated 24th February 2022 were marked for identification as MFI 16 and MFI 17. With regard to the Plaintiff’s further supplementary list of documents dated 12th November 2023, PW1 produced the documents therein, including video footage, which were admitted in evidence as Exhibits 18 and 19.
21. PW1 testified that the dispute arises from a construction contract which, according to the Plaintiff, was not properly executed by the Defendant. He stated that upon discovering defects in the construction works, the Plaintiff decided to terminate the contract and demolish the structure that had been erected. He further testified that following the termination, the Plaintiff issued a termination notice to the Defendant. PW1 also clarified that the date appearing on the notice contained an error, explaining that the correct date ought to have been 5th October 2019 rather than 5th October 2018. He confirmed that the termination letter was received by the Defendant.
22. During cross-examination, PW1 confirmed that he signed the verifying affidavit and adopted the entire contents of the Plaint. He testified that at the time the project commenced, the Plaintiff company had two directors, although it currently has three. PW1 stated that the basis of the Plaintiff’s claim is that the works undertaken by the Defendant were not professionally executed. He testified that the construction project was located on Parcel L.R. No. 14757/29, Mavoko Municipality. However, he acknowledged that Exhibit 1 relates to L.R. No. 14757/4, whose registered owner is Stephen Kaloi Koylet, a person unrelated to the Plaintiff company. PW1 further testified that he did not have any acknowledgment demonstrating that the Defendant had been formally supplied with the architectural drawings or the Bill of Quantities, nor did he have minutes evidencing the meetings allegedly held between the parties during the execution of the project. He confirmed that the agreement between the Plaintiff and the Defendant was oral in nature and that the Plaintiff had engaged Ranarch Limited as the project architect.
23. PW1 maintained that the works undertaken by the Defendant were unsatisfactory. He acknowledged that interim certificates were issued by Ranarch Limited, explaining that prior to the issuance of each certificate, valuations of the works completed were conducted. He further testified that concerns regarding the quality of the works were raised during the course of the project, both verbally and through a letter issued by the architect. According to PW1, the Plaintiff terminated the Defendant’s contract through the architect by a letter dated 5th October 2018, and upon termination the Defendant was given 14 days to hand over the site. He stated that following a site visit it was decided that the structures would be demolished. PW1 also referred to a letter dated 5th October 2019 which indicated that the termination was to take immediate effect and that no materials were to be removed from the site until valuation and accounting had been undertaken. He acknowledged, however, that these letters were not included in his bundle of documents before the court. He reiterated that the grounds for termination were poor workmanship and delays.
24. PW1 further testified that prior to the termination there had been several site visits, some of which he attended. He stated that there had also been joint measurements of the works completed, conducted in the presence of the contractor. He further indicated that the contractor had notified them of certain defects. PW1 admitted that his witness statement did not contain any allegation that the contractor had failed to comply with the Bill of Quantities specifications.
25. He testified that the demolition costs amounted to Kshs. 8,946,886.95, and that the demolition was undertaken by M/s Millicon Limited, as reflected in Plaintiff Exhibit No.10. However, he acknowledged that there was no receipt from Millicon Limited to support the payment. When referred to Plaintiff Exhibits Numbers 11, 18 and 19, PW1 testified that the photographs related to the construction site but conceded that it was not possible to determine when they were taken. With regard to the video footage admitted as Plaintiff Exhibits 18 and 19, he stated that it contained no identifiable timeframe and had not been referenced. He further confirmed that the drawings marked as MFI 2 had been prepared by Ranarch Limited.
26. During re-examination, PW1 testified that he is a Director of the Plaintiff company and his co-director is the one who signed the verifying affidavit. He stated that the architectural drawings were issued by the architect to the contractor. He further stated that the minutes of the site visits were taken by the Defendant. PW1 reiterated that the contract between the Plaintiff and the Defendant was terminated on account of delay and poor workmanship.
27. He also stated that the interim certificates were issued in advance. According to him, the Defendant experienced financial difficulties and did not have sufficient funds to pay suppliers. PW1 further testified that the video footage and photographs produced in evidence depicted instances of poor plastering and unstable walls at the construction site. He also explained that the Plaintiff company purchased a portion of the property from the registered owner and that the land was subsequently subdivided into several portions. According to him, the Plaintiff company owns one of those portions, although the mother title remains the same.
28. PW2, Amritpal Singh Matharu, an architect stated that his work was to develop the architectural plan and ensure that it is implemented. He adopted his witness statement dated 5th October 2020. In the plaintiff’s list of documents, he produced Exhibit 4 the approved structural drawings and Exhibit No. 9 copies of Ranarch Limited dated 21st February2019 and 5th May 2019. In the Further Supplementary Bundle of Documents dated 24th February2022, he produced the Certificate of Membership dated 23rd May2012 and practicing certificates for architects for the period between 2016 and 2021 which were marked as Exhibit 16 and 17 respectively. He also produced as Exhibit 12 to 15 (copy of email dated 17th January 2019; defects report dated 26th January 2019; copy of email dated 19th March 2019 and final project account September 2019) which were the documents marked as MFI 12 to 15 in the supplementary list of documents dated 8/12/2020.
29. During cross examination, he stated that he is the director of Ranarch Limited appointed as architect. He explained the contractor was under his supervision and that he closely supervised the work; he approved invoices at intervals and issued approximately three to four certificates although he could not recall the exact number. He confirmed that he issued the certificates after being satisfied with the examination of the work.
30. He stated that he does not know whether the minutes of the site meetings were submitted. He further confirmed that he has not challenged any of the certificates that he issued to the Defendant and acknowledged that the value of the work increased with each certificate issued. He admitted that the defendant is due for payment under the last approved certificate.
31. He stated that he later realized that the construction was not conforming though he did not indicate the date in the paragraph 9 of his statement. He referred to a letter dated 21st February 2019, allegedly sent via email, but admitted that proof of email was not before the court. Regarding the sub-standard workmanship defects, he acknowledged that his statement did not specify when these were discovered. He clarified that structural drawings are prepared by the engineer while he only submitted architectural drawings and noted that he has not seen the structural drawings in court.
32. He confirmed that the report dated 26th January 2019 is part of the record and that Paragraph 3.0 of the report stated the weak wall is not part of the foundation. He admitted issuing a termination notice dated 5th October 2019 although the letter erroneously bore the date 5th October 2018 which was later corrected. He acknowledged that there is no evidence in the court record showing that the termination notice was served upon the Defendant. He further admitted that the termination letter did not mention defective works, but only termination.
33. He stated that he advised the Plaintiff via email that the Defendant’s works could not be rectified or salvaged but conceded that the email is not in the court’s record. Regarding the defective works identified by the new contractor, he explained that on 21st February 2019, another contractor was appointed after the Defendant termination. He added that once a contractor is terminated, a joint measurement is required, but this did not take place. Instead, the Defendant was asked to provide a final account without a joint meeting, which he did.
34. When referred to interim valuations dated 11th November 2017 and 19th October 2018, he stated that he was unsure whether he issued a valuation based on those interim valuations. When shown interim valuation application Nos. 3 and 4, he explained that they were not signed, issued as a draft and therefore not binding. He added that they were prepared after the Defendant’s termination and reflected different gross valuation of works. He clarified that while valuation can change if remeasured, it is not possible for the value to decrease.
35. He emphasized that there was no joint measure conducted to support the interim certificate. He also stated that he is not the plaintiff and that he has not seen the contract with Millicon Limited or any payment made to Millcon Limited. He confirmed that Ranarch Limited prepared the plans but did not develop the final report titled “Proposal Kitengela Cottages.” That the only document authored by Ranarch Limited is the report dated 26th January 2019 as Ranarch Limited is registered solely as an architectural firm.
36. Finally, when referred to the letter from the Board of Registration of Architect & QS dated 13th November 2020 at Entry No. 3, he confirmed that it stated that Ranarch Limited is not authorised to practice as such.
37. During re-examination, he stated that the procedure for interim certificates is that a contractor submits interim valuation for approval after which the architect assesses the payments due based on the physical works carried out. He confirmed that he issued approved structural drawings to the Defendant. He further stated that he communicated to the Defendant. He stated that the letter from the Board does not bear any stamp.
38. DW1, Satwant Sing Kallah (the Defendant), adopted his witness statement dated 12th February 2021 as his evidence-in-chief. He produced his list and bundle of documents dated 8th July 2021 and the documents were marked as Defendant Exhibits 1 to 36, and another list of documents dated 14th January 2022 whosedocuments were marked as Defendant Exhibits 37 to 39.
39. The production of Defence Exhibit 39 was objected to by the Plaintiff on the ground that it is a letter addressed to the Defendant’s firm of advocates, and therefore the recipient of the document ought to produce it. The court directed that parties submit on this issue and the said document was marked for identification.
40. Upon cross examination, DW1 stated that he was supplied with approved drawings from the architect. He admitted that he has not filed proof showing that he built professionally or that the construction was carried out in accordance with the bill of qualities. He further stated that there was delay during construction due to rains and the need to wait for the amended drawings. He added that the plaintiff refused to refund 10% which was to be paid upon completion.
41. DW1 confirmed that he did not complete the project as he was terminated by the client. He stated that he received Kshs.8,471,382. 24 and cheques totaling Kshs11,229,951/=. He maintained that the termination was not on his part explaining that he called for a handover but no one attended.
42. Upon re-examination, DW1 stated that the project was terminated on 5th October 2018. After termination, he was required to furnish accounts within 14 days and the parties were to take possession or conduct a joint hand over. He explained that it is at the joint handover that the issue of bill of quantities would arise. He clarified that the termination was communicated by a letter and was due to the rate at which the works were being carried out and not because of poor performance or quality of material.
43. He further stated that cheques were issued but that Kshs 2.9 million advanced to him was deducted in the following manner; In certificate No. 1, Kshs.2,000,000/=, Certificate No.2, Kshs.400,000/=, Certificate No. 3, Kshs. 900, 000/= and in Certificate No. 4, Kshs. 800, 000/=.
44. He explained that these deductions were for money advanced to him. He confirmed that in his statement, the Plaintiff paid him Kshs. 2,000,000/= for mobilization and later Kshs.900,000/= given when he had an emergency following the death of his father and the money was deducted from every certificate.
45. After hearing the evidence of the parties, this court directed the filing of written submissions. Both parties’ filed their respective submissions summarized hereunder;
Plaintiff’s submissions
46. The Plaintiff commenced its submissions with a summary of both its case and that of the Defendant as per the documents filed in court. According to the Plaintiff, the brief facts are that it engaged the Defendant to construct a lodge known as Sintoiya Lodge on L.R. No. 14757/29 within Mavoko Municipality, Machakos County. The Plaintiff also engaged Ranarch Limited as the project architect responsible for preparing the architectural drawings and supervising the construction works. The Defendant advised that the project would cost Kshs. 38,687,820 and construction was expected to commence on 8th January 2017. The Plaintiff averred that it paid the Defendant a total of Kshs. 11,321,222.18 towards the project. However, the Defendant allegedly executed the works in a substandard, unprofessional and incompetent manner. The Plaintiff contended that the works carried out by the Defendant were defective, including defective foundations, structurally weak walling, inadequate steel reinforcement in the ring beams and defective plastering that was peeling off.
47. The Plaintiff submitted that despite several communications and opportunities given to the Defendant to rectify the defects, the Defendant failed to do so. Consequently, the architect terminated the Defendant’s services and directed that the works done be measured and certified. The Plaintiff maintained that the works carried out by the Defendant were incapable of salvage and had to be demolished entirely. It subsequently engaged Millicon Limited to demolish the defective structures at a cost of Kshs.8,946,886.95. On account of the defective works and the costs incurred, the Plaintiff instituted the present suit seeking to recover a total sum of Kshs. 20,268,109.13 being the amounts paid to the Defendant and the demolition costs.
48. The Plaintiff framed five issues for determination, that is: whether a binding construction agreement existed between the parties; whether the Defendant breached that agreement by carrying out defective and substandard works; whether the Plaintiff was entitled to the reliefs sought in the Plaint dated 5th October 2020; whether the Defendant had proved his Counterclaim for Kshs. 8,049,830.09; and who should bear the costs of the suit.
49. On the existence of a contract, the Plaintiff submitted that it was common ground that the parties had entered into an oral construction agreement for the development of Sintoiya Lodge. The Defendant had been provided with architectural drawings, structural designs and bills of quantities prepared by Ranarch Limited. The total contract sum was agreed at Kshs. 38,687,820 and the works were to be undertaken under standard industry practice whereby the contractor executes works under the supervision of the architect and payments are made through interim certificates. The Plaintiff further pointed out that the Defendant admitted during the hearing, that a contract existed between the parties. On this basis, the Plaintiff submitted that there was no dispute regarding the existence of a valid contract.
50. On whether the Defendant breached the contract, the Plaintiff submitted that it had paid the Defendant Kshs.11,321,222.18 for the execution of the construction works. The Plaintiff noted that the Defendant admitted during the hearing that he had received and signed cheques reflected in the Plaintiff’s trial bundle thereby contradicting the Defendant’s Defence which stated that he had only received Kshs.8,471,382.
51. The Plaintiff further relied on the testimony of the supervising architect, who stated that the works carried out by the Defendant were substandard and failed to comply with the design specifications. The Plaintiff submitted that numerous warnings and directions had been issued to the Defendant requiring him to rectify the defects but he failed to do so, leading to the termination of his services.
52. The Plaintiff disputed the Defendant’s contention that no notice of defects had been issued, submitting that documentary evidence demonstrated otherwise. In particular, the Plaintiff referred to letters from the architect dated 21st February 2019 and 5th May 2019 demanding compliance and rectification of the defective works. As a result of the Defendant’s failure to remedy the defects, the Plaintiff was compelled to engage Millicon Limited to demolish the defective structures at a cost of Kshs. 8,946,886.95. The Plaintiff therefore submitted that the losses it incurred flowed directly from the Defendant’s breach of contract.
53. On the question whether the Plaintiff was entitled to the reliefs sought, the Plaintiff submitted that damages for breach of contract are compensatory in nature and intended to place
[...truncated]
a.) Kshs. 20,268,109. 13
b.) Interest on (a) at the prevailing commercial bank rates from 8th January 2017.
c.) Costs of the suit
d.) Interest on (a), (b) and (c) above at court rates.
e.) Any other or further relief which this Honourable court deems fit and just to grant.
2. The Plaintiff alleged that it engaged the Defendant to construct a lodge to be known as “Sintoiya Lodge” on L.R. No. 14757/29, Mavoko Municipality, within Machakos County. The Plaintiff further averred that it contracted the services of Messrs. Ranarch Limited, an architectural firm, to prepare the architectural drawings and designs for the project and to supervise the construction works. The Plaintiff stated that the Defendant advised that the project would cost a total sum of Kshs. 36,687,820.00, and that the parties agreed that construction of the project would commence on 8th January 2017. According to the Plaintiff, several meetings were held between the Defendant, the architect, and other consultants to discuss the execution and progress of the project.
3. The Plaintiff further averred that it paid the Defendant a total sum of Kshs.11,321,222.18 towards the construction of the lodge in furtherance of its obligations under the agreement. However, the Plaintiff contends that the Defendant failed to carry out the construction works in accordance with the architect’s drawings or with the level of skill and care expected of a contractor of his experience.
4. The Plaintiff asserted that the Defendant executed the works unsatisfactorily, unprofessionally, and incompetently, resulting in substandard construction with material and workmanship defects. In particular, the Plaintiff alleged that the entire foundation required reconstruction, the walling of the structures was weak, the ring beams in all the units lacked adequate steel reinforcement, and the plaster works were peeling and required redoing.
5. The Plaintiff further stated that the architect raised concerns with the Defendant on several occasions regarding the quality of the works and afforded him sufficient time to rectify the defects. According to the Plaintiff, the Defendant failed to remedy the defects, prompting the architect to terminate his services and to instruct that the works already undertaken be measured and certified.
6. The Plaintiff contended that the works carried out by the Defendant could not be salvaged and had to be demolished, necessitating the reconstruction of the project from the foundation. Consequently, the Plaintiff engaged M/s Milicon Limited to demolish the structures that had allegedly been poorly constructed by the Defendant, thereby incurring additional costs amounting to Kshs.8,946,886.95. The Plaintiff has therefore instituted the present suit seeking to recover the losses allegedly incurred as a result of the defective construction works undertaken by the Defendant.
7. In response to the claim, the Defendant filed a Defence and Counterclaim dated 20th November 2020, the Defendant denied the averments in the plaint. He asserted that the initial cost of the project as per the submitted priced bill of quantities and agreed upon by the Plaintiff was for Kshs.43,320, 329/= and which in the course of the contract was varied down to Kshs.38,687,820/= at the Plaintiff’s request. He averred further that in accordance with the oral agreement with the Plaintiff for construction of the then proposed Kitengela Cottages, on or about May 2017 on L.R No. 14757/4, he moved to the site in June 2017 and started depositing necessary materials and clearing the site while waiting for the drawings. The construction work commenced at around January 2018.
8. In admitting that the parties herein had routine meetings, the Defendant stated that the meetings held once every two weeks were to check on the progress of work and to ensure quality and conformity to contract terms (as per drawings provided by the architect, bill of quantities, instructions and directions given by the architect).
9. The Defendant stated that he only received from the Plaintiff a sum of Kshs.8,471,382.24 on account of 4 interim certificates issued and which was for material supplied, work and services rendered under the project. That he undertook to work regularly, professionally, diligently above board and in accordance with the drawings provided by the architect, bill of quantities, instructions and directions given by the architect. He averred that the architect closely supervised and inspected the work done by him at every stage to confirm that they were in accordance with the drawings and specifications given in the various meetings held between all parties involved and that the architect never raised any issue on defective workmanship or unmerchantable materials used as alleged.. He added that in the course of the work, he was never issued with any notice of defects whatsoever or informed of any concerns over his work that required rectification that he would be said to have failed to act on.
10. The Defendant denies that the termination of the contract was accompanied by instructions that the existing works be measured and certified. He states that the termination was effected solely on the ground of delay, which delay he denies. In the alternative, the Defendant averred that any delay that may have occurred was occasioned by heavy rains which rendered the construction site inaccessible and waterlogged. He states that this situation was communicated to the Plaintiff and the architect in a timely manner.
11. The Defendant further contends that delays in obtaining the necessary drawings and approvals also contributed to the slowdown of the project and that such delays were not attributable to him. He maintains that the letter of termination merely required him to hand over the site and furnish the final account for the works done.
12. The Defendant states that he complied with this requirement by submitting the final account and informing the Plaintiff to arrange for a site handover. However, according to the Defendant, no response was received from the Plaintiff and the site was therefore never formally handed over. The Defendant further asserts that the works which were allegedly demolished had previously been inspected and approved by both the Plaintiff and the project architect. He contends that the Plaintiff failed to mitigate its losses and maintains that he is not indebted to the Plaintiff, as the payments made to him were in respect of materials supplied and services rendered under the contract.
13. In his counterclaim, the Defendant restates his averments as already set out Above. He states that the drawings prepared by Ranarch Limited engaged by the Plaintiff were amended from time to time by the architect at the instance of the Plaintiff, and that the architect was also responsible for supervising the works carried out by the Defendant. The Defendant further contends that the drawings were never formally approved despite several reminders and follow-ups made by him requesting the architect to provide the approved drawings.
14. He further averred that routine meetings were held regularly to review the progress of the works and ensure quality and compliance with the contractual terms. The Defendant maintains that he undertook the construction works diligently and in good faith, in accordance with the drawings provided, the Bill of Quantities and the instructions and directions issued by the architect, which he stated constituted the framework within which the works were to be executed.
15. The Defendant stated that payments under the contract were made periodically. That, upon executing portions of the works, he would submit applications for interim valuation to the architect, who would then review and assess the work done. Upon being satisfied with the valuation, the architect would issue interim certificates authorizing payment by the Plaintiff. The Defendant stated that this arrangement was followed throughout the duration of the contract and that it represented the parties’ agreed mode of payment. He further stated that he received payment pursuant to four interim certificates, the last of which was issued on 18th July 2018. The Defendant avers that he executed the works diligently and within reasonable time, and that he was only unable to work during the periods of October to November 2017 and March 2018 due to heavy rains that rendered performance impossible, as earlier captured.
16. The Defendant further stated that he was surprised to receive a letter dated 5th October 2018 from Ranarch Limited, acting on the instructions of the Plaintiff, terminating the contract on the sole ground of an alleged slow rate of work. He contends that the termination was effected without fault on his part and maintains that no work schedule had been issued to him against which any alleged delay could be measured. He therefore asserts that the allegation of a slow work rate was unfounded.
17. The Defendant further stated that following the termination of the contract, he furnished the architect with the final account dated 19th November 2018 in the sum of Kshs.7,110,595 in respect of works executed up to the date of termination, and requested the architect and the Plaintiff to arrange for a formal handover of the site. However, according to the Defendant, neither the Plaintiff nor the architect made any arrangements for the handover despite his request, and the site was therefore never formally handed over by him.
18. The Defendant therefore blamed the Plaintiff for failure to pay him for work done within reasonable time and for failure to refund the money retained being 10% of money paid for work done under the contract. He therefore prayed for a declaration that the termination of the contract was wrongful and incompetent; that the payment to the Defendant on account of the final account for work done being Kshs. 7,110,595/= as per the Defendant’s application; Kshs.939,235.09 being amount retained by the Plaintiff on account of the 4 interim certificates issued; interest on the foregoing at the prevailing commercial bank rates from the date of termination until payment in full; general damages for wrongful termination and breach of contract and costs of the counterclaim.
19. The suit was heard, the Plaintiff relied on two witnesses the Defendant’s only witness testified.
20. At the trial, PW1, Ashish Bains, a Director of the Plaintiff, adopted his witness statement dated 5th October 2020 as his evidence in chief. He produced documents numbers 1,(Copy of title document L.R No 14757/29 Mavoko Municipality) 6,(copies of payment cheques) 7,(photographs of the substandard work undertaken by the defendant) 8,(copy of termination letter dated 5th October 2018) 10, (copy of the quotation by M/S Millicon Limited) and 11(photograph’s of the demolition) from the Plaintiff’s list of documents filed on 5th October 2020 as plaintiff exhibits No 1, 6, 7, 8, 10 and 11. The documents numbers 2,(approved drawing plans/designs by Ranarch Limited) 3,(Bill of quantities) 4, (Approved structural drawings) 5(Copies of interim certificates and directions) and 9 (copies of Ranarch Limited letters dated 21st February 2019 and 5th May 2019) were marked for identification. The documents contained in the supplementary list of documents dated 8th December 2020 were also marked for identification, as they were said to have originated from the architect and PW1, not being their author, could not produce them. Similarly, the documents in the Plaintiff’s further supplementary list of documents dated 24th February 2022 were marked for identification as MFI 16 and MFI 17. With regard to the Plaintiff’s further supplementary list of documents dated 12th November 2023, PW1 produced the documents therein, including video footage, which were admitted in evidence as Exhibits 18 and 19.
21. PW1 testified that the dispute arises from a construction contract which, according to the Plaintiff, was not properly executed by the Defendant. He stated that upon discovering defects in the construction works, the Plaintiff decided to terminate the contract and demolish the structure that had been erected. He further testified that following the termination, the Plaintiff issued a termination notice to the Defendant. PW1 also clarified that the date appearing on the notice contained an error, explaining that the correct date ought to have been 5th October 2019 rather than 5th October 2018. He confirmed that the termination letter was received by the Defendant.
22. During cross-examination, PW1 confirmed that he signed the verifying affidavit and adopted the entire contents of the Plaint. He testified that at the time the project commenced, the Plaintiff company had two directors, although it currently has three. PW1 stated that the basis of the Plaintiff’s claim is that the works undertaken by the Defendant were not professionally executed. He testified that the construction project was located on Parcel L.R. No. 14757/29, Mavoko Municipality. However, he acknowledged that Exhibit 1 relates to L.R. No. 14757/4, whose registered owner is Stephen Kaloi Koylet, a person unrelated to the Plaintiff company. PW1 further testified that he did not have any acknowledgment demonstrating that the Defendant had been formally supplied with the architectural drawings or the Bill of Quantities, nor did he have minutes evidencing the meetings allegedly held between the parties during the execution of the project. He confirmed that the agreement between the Plaintiff and the Defendant was oral in nature and that the Plaintiff had engaged Ranarch Limited as the project architect.
23. PW1 maintained that the works undertaken by the Defendant were unsatisfactory. He acknowledged that interim certificates were issued by Ranarch Limited, explaining that prior to the issuance of each certificate, valuations of the works completed were conducted. He further testified that concerns regarding the quality of the works were raised during the course of the project, both verbally and through a letter issued by the architect. According to PW1, the Plaintiff terminated the Defendant’s contract through the architect by a letter dated 5th October 2018, and upon termination the Defendant was given 14 days to hand over the site. He stated that following a site visit it was decided that the structures would be demolished. PW1 also referred to a letter dated 5th October 2019 which indicated that the termination was to take immediate effect and that no materials were to be removed from the site until valuation and accounting had been undertaken. He acknowledged, however, that these letters were not included in his bundle of documents before the court. He reiterated that the grounds for termination were poor workmanship and delays.
24. PW1 further testified that prior to the termination there had been several site visits, some of which he attended. He stated that there had also been joint measurements of the works completed, conducted in the presence of the contractor. He further indicated that the contractor had notified them of certain defects. PW1 admitted that his witness statement did not contain any allegation that the contractor had failed to comply with the Bill of Quantities specifications.
25. He testified that the demolition costs amounted to Kshs. 8,946,886.95, and that the demolition was undertaken by M/s Millicon Limited, as reflected in Plaintiff Exhibit No.10. However, he acknowledged that there was no receipt from Millicon Limited to support the payment. When referred to Plaintiff Exhibits Numbers 11, 18 and 19, PW1 testified that the photographs related to the construction site but conceded that it was not possible to determine when they were taken. With regard to the video footage admitted as Plaintiff Exhibits 18 and 19, he stated that it contained no identifiable timeframe and had not been referenced. He further confirmed that the drawings marked as MFI 2 had been prepared by Ranarch Limited.
26. During re-examination, PW1 testified that he is a Director of the Plaintiff company and his co-director is the one who signed the verifying affidavit. He stated that the architectural drawings were issued by the architect to the contractor. He further stated that the minutes of the site visits were taken by the Defendant. PW1 reiterated that the contract between the Plaintiff and the Defendant was terminated on account of delay and poor workmanship.
27. He also stated that the interim certificates were issued in advance. According to him, the Defendant experienced financial difficulties and did not have sufficient funds to pay suppliers. PW1 further testified that the video footage and photographs produced in evidence depicted instances of poor plastering and unstable walls at the construction site. He also explained that the Plaintiff company purchased a portion of the property from the registered owner and that the land was subsequently subdivided into several portions. According to him, the Plaintiff company owns one of those portions, although the mother title remains the same.
28. PW2, Amritpal Singh Matharu, an architect stated that his work was to develop the architectural plan and ensure that it is implemented. He adopted his witness statement dated 5th October 2020. In the plaintiff’s list of documents, he produced Exhibit 4 the approved structural drawings and Exhibit No. 9 copies of Ranarch Limited dated 21st February2019 and 5th May 2019. In the Further Supplementary Bundle of Documents dated 24th February2022, he produced the Certificate of Membership dated 23rd May2012 and practicing certificates for architects for the period between 2016 and 2021 which were marked as Exhibit 16 and 17 respectively. He also produced as Exhibit 12 to 15 (copy of email dated 17th January 2019; defects report dated 26th January 2019; copy of email dated 19th March 2019 and final project account September 2019) which were the documents marked as MFI 12 to 15 in the supplementary list of documents dated 8/12/2020.
29. During cross examination, he stated that he is the director of Ranarch Limited appointed as architect. He explained the contractor was under his supervision and that he closely supervised the work; he approved invoices at intervals and issued approximately three to four certificates although he could not recall the exact number. He confirmed that he issued the certificates after being satisfied with the examination of the work.
30. He stated that he does not know whether the minutes of the site meetings were submitted. He further confirmed that he has not challenged any of the certificates that he issued to the Defendant and acknowledged that the value of the work increased with each certificate issued. He admitted that the defendant is due for payment under the last approved certificate.
31. He stated that he later realized that the construction was not conforming though he did not indicate the date in the paragraph 9 of his statement. He referred to a letter dated 21st February 2019, allegedly sent via email, but admitted that proof of email was not before the court. Regarding the sub-standard workmanship defects, he acknowledged that his statement did not specify when these were discovered. He clarified that structural drawings are prepared by the engineer while he only submitted architectural drawings and noted that he has not seen the structural drawings in court.
32. He confirmed that the report dated 26th January 2019 is part of the record and that Paragraph 3.0 of the report stated the weak wall is not part of the foundation. He admitted issuing a termination notice dated 5th October 2019 although the letter erroneously bore the date 5th October 2018 which was later corrected. He acknowledged that there is no evidence in the court record showing that the termination notice was served upon the Defendant. He further admitted that the termination letter did not mention defective works, but only termination.
33. He stated that he advised the Plaintiff via email that the Defendant’s works could not be rectified or salvaged but conceded that the email is not in the court’s record. Regarding the defective works identified by the new contractor, he explained that on 21st February 2019, another contractor was appointed after the Defendant termination. He added that once a contractor is terminated, a joint measurement is required, but this did not take place. Instead, the Defendant was asked to provide a final account without a joint meeting, which he did.
34. When referred to interim valuations dated 11th November 2017 and 19th October 2018, he stated that he was unsure whether he issued a valuation based on those interim valuations. When shown interim valuation application Nos. 3 and 4, he explained that they were not signed, issued as a draft and therefore not binding. He added that they were prepared after the Defendant’s termination and reflected different gross valuation of works. He clarified that while valuation can change if remeasured, it is not possible for the value to decrease.
35. He emphasized that there was no joint measure conducted to support the interim certificate. He also stated that he is not the plaintiff and that he has not seen the contract with Millicon Limited or any payment made to Millcon Limited. He confirmed that Ranarch Limited prepared the plans but did not develop the final report titled “Proposal Kitengela Cottages.” That the only document authored by Ranarch Limited is the report dated 26th January 2019 as Ranarch Limited is registered solely as an architectural firm.
36. Finally, when referred to the letter from the Board of Registration of Architect & QS dated 13th November 2020 at Entry No. 3, he confirmed that it stated that Ranarch Limited is not authorised to practice as such.
37. During re-examination, he stated that the procedure for interim certificates is that a contractor submits interim valuation for approval after which the architect assesses the payments due based on the physical works carried out. He confirmed that he issued approved structural drawings to the Defendant. He further stated that he communicated to the Defendant. He stated that the letter from the Board does not bear any stamp.
38. DW1, Satwant Sing Kallah (the Defendant), adopted his witness statement dated 12th February 2021 as his evidence-in-chief. He produced his list and bundle of documents dated 8th July 2021 and the documents were marked as Defendant Exhibits 1 to 36, and another list of documents dated 14th January 2022 whosedocuments were marked as Defendant Exhibits 37 to 39.
39. The production of Defence Exhibit 39 was objected to by the Plaintiff on the ground that it is a letter addressed to the Defendant’s firm of advocates, and therefore the recipient of the document ought to produce it. The court directed that parties submit on this issue and the said document was marked for identification.
40. Upon cross examination, DW1 stated that he was supplied with approved drawings from the architect. He admitted that he has not filed proof showing that he built professionally or that the construction was carried out in accordance with the bill of qualities. He further stated that there was delay during construction due to rains and the need to wait for the amended drawings. He added that the plaintiff refused to refund 10% which was to be paid upon completion.
41. DW1 confirmed that he did not complete the project as he was terminated by the client. He stated that he received Kshs.8,471,382. 24 and cheques totaling Kshs11,229,951/=. He maintained that the termination was not on his part explaining that he called for a handover but no one attended.
42. Upon re-examination, DW1 stated that the project was terminated on 5th October 2018. After termination, he was required to furnish accounts within 14 days and the parties were to take possession or conduct a joint hand over. He explained that it is at the joint handover that the issue of bill of quantities would arise. He clarified that the termination was communicated by a letter and was due to the rate at which the works were being carried out and not because of poor performance or quality of material.
43. He further stated that cheques were issued but that Kshs 2.9 million advanced to him was deducted in the following manner; In certificate No. 1, Kshs.2,000,000/=, Certificate No.2, Kshs.400,000/=, Certificate No. 3, Kshs. 900, 000/= and in Certificate No. 4, Kshs. 800, 000/=.
44. He explained that these deductions were for money advanced to him. He confirmed that in his statement, the Plaintiff paid him Kshs. 2,000,000/= for mobilization and later Kshs.900,000/= given when he had an emergency following the death of his father and the money was deducted from every certificate.
45. After hearing the evidence of the parties, this court directed the filing of written submissions. Both parties’ filed their respective submissions summarized hereunder;
Plaintiff’s submissions
46. The Plaintiff commenced its submissions with a summary of both its case and that of the Defendant as per the documents filed in court. According to the Plaintiff, the brief facts are that it engaged the Defendant to construct a lodge known as Sintoiya Lodge on L.R. No. 14757/29 within Mavoko Municipality, Machakos County. The Plaintiff also engaged Ranarch Limited as the project architect responsible for preparing the architectural drawings and supervising the construction works. The Defendant advised that the project would cost Kshs. 38,687,820 and construction was expected to commence on 8th January 2017. The Plaintiff averred that it paid the Defendant a total of Kshs. 11,321,222.18 towards the project. However, the Defendant allegedly executed the works in a substandard, unprofessional and incompetent manner. The Plaintiff contended that the works carried out by the Defendant were defective, including defective foundations, structurally weak walling, inadequate steel reinforcement in the ring beams and defective plastering that was peeling off.
47. The Plaintiff submitted that despite several communications and opportunities given to the Defendant to rectify the defects, the Defendant failed to do so. Consequently, the architect terminated the Defendant’s services and directed that the works done be measured and certified. The Plaintiff maintained that the works carried out by the Defendant were incapable of salvage and had to be demolished entirely. It subsequently engaged Millicon Limited to demolish the defective structures at a cost of Kshs.8,946,886.95. On account of the defective works and the costs incurred, the Plaintiff instituted the present suit seeking to recover a total sum of Kshs. 20,268,109.13 being the amounts paid to the Defendant and the demolition costs.
48. The Plaintiff framed five issues for determination, that is: whether a binding construction agreement existed between the parties; whether the Defendant breached that agreement by carrying out defective and substandard works; whether the Plaintiff was entitled to the reliefs sought in the Plaint dated 5th October 2020; whether the Defendant had proved his Counterclaim for Kshs. 8,049,830.09; and who should bear the costs of the suit.
49. On the existence of a contract, the Plaintiff submitted that it was common ground that the parties had entered into an oral construction agreement for the development of Sintoiya Lodge. The Defendant had been provided with architectural drawings, structural designs and bills of quantities prepared by Ranarch Limited. The total contract sum was agreed at Kshs. 38,687,820 and the works were to be undertaken under standard industry practice whereby the contractor executes works under the supervision of the architect and payments are made through interim certificates. The Plaintiff further pointed out that the Defendant admitted during the hearing, that a contract existed between the parties. On this basis, the Plaintiff submitted that there was no dispute regarding the existence of a valid contract.
50. On whether the Defendant breached the contract, the Plaintiff submitted that it had paid the Defendant Kshs.11,321,222.18 for the execution of the construction works. The Plaintiff noted that the Defendant admitted during the hearing that he had received and signed cheques reflected in the Plaintiff’s trial bundle thereby contradicting the Defendant’s Defence which stated that he had only received Kshs.8,471,382.
51. The Plaintiff further relied on the testimony of the supervising architect, who stated that the works carried out by the Defendant were substandard and failed to comply with the design specifications. The Plaintiff submitted that numerous warnings and directions had been issued to the Defendant requiring him to rectify the defects but he failed to do so, leading to the termination of his services.
52. The Plaintiff disputed the Defendant’s contention that no notice of defects had been issued, submitting that documentary evidence demonstrated otherwise. In particular, the Plaintiff referred to letters from the architect dated 21st February 2019 and 5th May 2019 demanding compliance and rectification of the defective works. As a result of the Defendant’s failure to remedy the defects, the Plaintiff was compelled to engage Millicon Limited to demolish the defective structures at a cost of Kshs. 8,946,886.95. The Plaintiff therefore submitted that the losses it incurred flowed directly from the Defendant’s breach of contract.
53. On the question whether the Plaintiff was entitled to the reliefs sought, the Plaintiff submitted that damages for breach of contract are compensatory in nature and intended to place
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