The High Court has ordered Kampala Capital City Authority (KCCA) to pay Bisons Consult International more than Shs1.3 billion after finding that the city authority breached its contract for the construction of drainage channels in the city.
The dispute goes back to May 2, 2016, when Bisons signed a contract with KCCA worth Shs 4.2 billion to update the designs and build eight drainage channels around Kampala.
These included St Dennis, Nalweyiso, Kabaluka, Nakinyuguzi, Nabunya, Kimera, Luwombo and Nyanama. The work was supposed to start on June 20, 2016, and finish within 12 months.
Three months into the project, KCCA dropped two of the eight channels, Luwombo and Nyanama, and replaced them with new ones.
Around the same time, Bisons discovered that the original bill of quantities, the document that estimates how much work and material a project needs, had been inflated by more than Shs 1.4bn.
This meant the money set aside for the project could not even cover the advance payment KCCA had already given the contractor.
Bisons also complained that KCCA was slow to hand over the survey control points needed to update the drainage designs, and that when the points did arrive, they came only as coordinates on paper rather than pegs fixed on the actual ground.
Further disagreements followed over rejected quarry stone, a forced change to a stronger and costlier concrete mix, delays in approving designs, and difficulties accessing some of the sites because of disputes with landowners nearby.
KCCA granted three extensions of time, stretching the deadline to January 12, 2018, but the court found these extensions fell far short of what the delays actually required, leaving a shortfall of roughly nine months against the seven months granted.
Then, between January and April 2018, work stopped completely on all eight channels. KCCA had repeatedly complained in writing about the standstill, at one point noting that a channel had been abandoned for more than the maximum allowable 28 days.
Bisons never explained the stoppage. By the time the extended deadline lapsed in June 2018, KCCA terminated the contract and cashed both the advance payment and performance guarantees that Bisons had put up as security.
Bisons argued in court that KCCA’s own failures, including the inflated bill of quantities, delayed approvals and the channel swap, had wrecked the project timeline, and that the authority had no right to blame the contractor or seize the guarantees.
The company’s lawyers from Kalenge, Bwanika, Kisubi and Company Advocates, told the court that KCCA’s inflated figures had forced Bisons to take out bank guarantees far bigger than the real contract value required, and that by termination the company had actually completed 80% of the works, not the 56.7% KCCA claimed.
KCCA, represented by its own in-house lawyers, argued that payment simply followed the amount of work actually measured and done, so any overestimate in the bill of quantities was not a breach.
The authority insisted it gave the survey data on time, that Bisons submitted poor and incomplete designs, and that the channel changes had been agreed to by both sides through a signed change order. It maintained that termination was justified because performance remained poor even after three extensions.
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In his ruling, Justice Stephen Mubiru found merit in both sides. He ruled that KCCA had indeed misrepresented the bill of quantities and breached the contract in several ways, including failing to provide proper control points early enough, delaying design approvals, changing the scope of work, and unfairly rejecting the quarry stone.
He wrote that a party to a contract “cannot make reckless inaccurate representations to induce another to sign a contract and thereafter avoid or escape the consequences.”
However, he also found that Bisons had no justification for the total stoppage of work between January and April 2018, describing this as an abandonment amounting to “a total breach of the contract” on the contractor’s part.
Because of this, he ruled that KCCA’s decision to terminate the contract was lawful. Even so, he said this did not wipe out KCCA’s earlier breaches, and Bisons remained entitled to compensation for the losses those breaches caused.
He also criticised KCCA for cashing the guarantees without first issuing a proper termination account showing the value of work done, as its own contract rules required, saying the unexplained failure to do so suggested the accounting would not have supported its position.
In the end, judgment was entered for Bisons.
Justice Mubiru awarded Shs1.3 billion in special damages, made up of Shs348 million for the cost of the guarantees, Shs220 million for the channels that were swapped, Shs187 million over the forced change in concrete mix, Shs230 million for delays caused by KCCA, Shs136 million for unmeasured work, and Shs178 million as a refund of wrongly deducted liquidated damages.
He also awarded interest at 20% per year from September 18, 2020, when the suit was filed, until the money is paid in full, plus the costs of the case.
However, Justice Mubiru dismissed Bisons’ claims for general damages, lost profit on the unfinished works, and exemplary or punitive damages, ruling that the law does not allow punitive damages in ordinary breach of contract cases, and that the lost profit claim could not stand once termination had been found lawful.
