Tetu Housing Co-operative Society Limited v Peter Njoroge Ngahu t/a Ngahu Associates [2013] KECA 18 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that an exchange of appointment letters creates a binding contract, so a co-operative had to pay its quantity surveyor even though the building project was abandoned.
What this practically means
#Executive summary
#Key legal issues
#Formation of contract by correspondence
The invitation to apply, the application, the letter of appointment and the letter of acceptance constituted an offer and acceptance creating a written contract, confirmed by part performance.
The court traced the sequence: invitation to treat of 16th February 1999, application of 22nd February, interview of 17th March, appointment letter of 19th March and acceptance of 26th March. Subsequent performance - attending management meetings and submitting cost estimates - corroborated the existence of the contract. The appointment was therefore founded on a written agreement embodied in the correspondence, not on an oral or implied agreement, and the first ground of appeal failed.
Authority and ratification by conduct
The architect's letter of 7th May 1999 giving the 'go ahead' bound the appellant, which neither repudiated it nor denied the executive committee meeting, and was estopped from denying it.
The appointment letter required the quantity surveyor to work with the architect, an agent of the appellant. The architect's letter confirmed that the Society's executive committee gave the 'go ahead'. The appellant never repudiated the letter, continued meeting the consultants, and never denied the meeting took place. Its conduct amounted to ratification and confirmation, and it was estopped from denying the letter after the respondent acted upon it. The second ground of appeal failed.
Applicable schedule for a quantity surveyor's fee under Cap 525
The Fifth Schedule, not the Fourth Schedule, governs a quantity surveyor's fees; where works are abandoned or stopped during preparation of bills of quantities, the fee is calculated under paragraph B.1(iii) at 2 1/2% of the estimated cost of the work.
Paragraph 38 of the By-laws applies the Fourth Schedule to architects and paragraph 39 applies the Fifth Schedule to quantity surveyors. A literal and plain reading made the Fifth Schedule applicable since the respondent was a quantity surveyor. The court compared the schedules, upheld the trial judge's formula of 2 1/2% of the estimated cost of Kshs. 68,000,000/= less the agreed 15% discount, and found no evidence controverting the estimated cost.
Special damages for travelling and lithography expenses
The claims of Kshs. 60,000/= for travelling and Kshs. 17,000/= for lithography were special damages that were not pleaded and proved, and were deducted with proportionate VAT from the judgment sum.
The appellant contended, and the respondent did not address the trial judge or the appellate court on the point, that these expenses were unproved special damages. Applying the trite rule that special damages must be both pleaded and proved, the court agreed the sums were not proved and directed their deduction, with proportionate VAT, from the award of Kshs. 1,739,450/=.
Legal principles established
#- On a first appeal, the Court of Appeal is duty-bound to re-evaluate the evidence and reach its own conclusions, while making allowance for the fact that it neither saw nor heard the witnesses.
- An exchange of letters constituting offer and acceptance, followed by part performance, creates a binding written contract even without a single formal instrument.
- A party which, with knowledge, allows another to act on a letter without repudiating it is estopped from denying its contents and is bound by it through ratification by conduct.
- Any claim for special damages must be pleaded and proved; unproved heads of special damages must be deducted from any award.
- A new issue raised for the first time from the bar on appeal, not argued before the trial court and unsupported by evidence, is not tenable.
Court orders
#- 1.Deduction of the sum of Kshs. 77,000/= (Kshs. 60,000/= travelling expenses and Kshs. 17,000/= lithography expenses) and the proportionate VAT thereon from the judgment sum
- 2.Dismissal of the appeal with costs
- On appeal from
- High Court of Kenya at Nyeri
- HCCC No. 87 of 2003
- Jurisdiction invoked
- First appeal to the Court of Appeal under the appellate structure of the Kenyan courts (the judgment does not cite a specific constitutional or statutory provision for jurisdiction)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (3)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Paragon Electronics Limited v Fatma Muses [2022] KEELC 444 (KLR)[2022] KEELC 444 (KLR)20 Apr 2022
- Suresh C. Kapila Practicing As Archplan Associates Africa Architects v Manu Shah & another [2020] KECA 640 (KLR)[2020] KECA 640 (KLR)22 May 2020applied
- Mimamo & Associates (architects) & Another v Co-operative Society (Professional Fees Suit)[2015] KEHC 8244 (KLR)28 May 2015applied
Cite this brief
#Cite this brief
Caselaw, "Tetu Housing Co-operative Society Limited v Peter Njoroge Ngahu t/a Ngahu Associates [2013] KECA 18 (KLR)", Case Analysis (2013). Civil Appeal No. 242 of 2008. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/18/eng@2013-06-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.