Moi-era contractor loses Sh3bn pay for verbal deal

A Moi-era contractor lost a Sh3.1 billion payment claim for repairing roads in the Nairobi central business district. FILE PHOTO | DIANA NGILA | NMG

A Moi-era contractor lost a Sh3.1 billion payment claim for repairing roads in the Nairobi central business district in 1997 after the Court of Appeal ruled it was difficult to prove the job offered to the firm verbally.

Kabuito Contractors claimed that it was granted the works to re-carpet city roads verbally by the Permanent Secretary (PS) in the Ministry of Local Government in 1997.

The government had opposed the payment after questioning the existence of the contract and whether the job was done.

A bench of three judges of the appellate court ruled that Kabuito Contractors failed to prove the existence of the contract by tabling evidence, like paperwork to support its claim.

“Oral contracts are hard to prove. An oral contract is not legally enforceable unless it is provable in court. This means that in the event of a breach, it is up to the plaintiff to prove the existence of the oral contract by adducing the necessary evidence,” Justices Hannah Okwengu, Mohammed Warsame and John Mativo said.

The judges said the contractor should have called the PS who authorised the works as a witness to support his case.

The court further noted that there was no proper documentation, including a contract or certificates, showing the completion of the works.

The company’s managing director Amip R. Patel said the firm won other contracts for the upgrade of city roads, adding that the PS extended the contract verbally for the emergency repairs on CBD routes that had just been damaged by the El Nino rains.

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High Court judge Joseph Sergon had in May 2018 ruled in favour of the contractor, saying it was not disputed that there were verbal instructions by the PS and the contractor proceeded to carry out the works.

The government refused to pay on grounds that the central tender board, which was to approve payments, said the award of contracts breached regulations.

Court documents showed that the company was contracted in March 1997 through the Ministry of Local Government to carry out repair works on Kenyatta Avenue and various roads within the city centre measuring 4.4km.

After completing the works, the roads were destroyed by the rains, prompting the need for emergency repairs.

The company was then contracted to re-carpet Biashara Street, City Hall Way, Harambee Avenue, Kaunda Street, Kimathi Street, Koinange Street, Mama Ngina Street, Muindi Mbingu Street, Murang’a Road, Parliament Road, Ring Road, Taifa Road and University Way, which are about 9.5km long.

The repair works were then extended to include Monrovia, Moktar Dadar, Utalii, General Kago, Short, Bank, Central, and Mokhtar streets, Kigali Road, Tubman Road, Banda Street, Posta Road and Harry Thuku Road.

When the contractor sought payment, the government said it was unable to review the works on the strength of verbal instructions issued by the PS.

The Attorney-General argued that the contractor failed to prove the existence of a legally binding extension of the contract.

The court heard that the fact that the contractor produced documents to show that the work was done does not prove the existence of a valid contract.

The Court of Appeal judges noted that the contractor only produced selected pages of the contract and not the entire agreement.

The judges said it was also necessary for the court to satisfy itself that the oral extension met the approval of the Central Tender Board and that it was obtained in accordance with the ministry’s regulations.

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“We say so because, under the law of contract, a contract is the source of primary legal obligations upon which each party ensures that whatever has been promised is done,” the judges said.

Politically well-connected contractors have been linked with clever schemes for making money from the government without doing any work at all towards the end of former President Daniel arap Moi’s reign.

If, as a contractor, you had a government project that was for one reason or another cancelled, you were considered to be sitting on a goldmine.

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