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Court of AppealDismissedCivil Appeal No. 137 of 2018· [2020] KECA 871 (KLR)

Bamburi Cement Limited v Dinesh Construction Limited [2020] KECA 871 (KLR)

Court of Appeal of Kenya
21 February 2020
3,949 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed Bamburi Cement must pay a certified construction debt plus interest, ruling that architects—not contractors—bear responsibility for approving variations.

What this practically means

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Executive summary

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The appellant, Bamburi Cement Limited, engaged the respondent, Dinesh Construction Limited, as contractor for the relocation of a ready-mix plant at Mavoko under a Joint Building Council standard-form contract. On completion the lead consultant issued Final Certificate No. 6 for Ksh.19,082,192.88; the appellant refused to pay, alleging unauthorised variations and errors. The High Court (O. Sewe, J.) entered judgment for the respondent with interest at court rates from 26th June 2010. On appeal, the Court of Appeal framed three intertwined issues: whether the works were carried out per the contract, whether Certificate No. 6 was payable, and whether the award of interest was proper. The Court held that under Clause 30.14 of the contract it was the architect's, not the contractor's, responsibility to obtain the employer's prior approval for variations exceeding 0.01% of the contract price; every variation had been approved by the architect, and the appellant, having alleged lack of authorisation, bore the burden of proving it but declined to call the project architect as its witness. The appellant itself procured a re-evaluation by a new quantity surveyor after the defects liability period, producing the revised Certificate No. 6, and had no basis to resist payment. The certified sum was a debt, and interest at court rates from 26th June 2010 was properly awarded despite the deletion of the contractual interest clause. All nine grounds of appeal failed and the appeal was dismissed with costs to the respondent.

Key legal issues

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01

Responsibility for obtaining the employer's prior approval for variations exceeding 0.01% of the contract price

Holding

Under Clause 30.14 of the contract, it was the architect's responsibility, not the contractor's, to seek and obtain the employer's prior approval for variations and additional works; the contractor complied with the contract by obtaining the architect's approval for each variation.

Reasoning

Clause 30.14 expressly places the obligation on the architect not to issue variation instructions exceeding 0.01% of the contract price without the employer's prior approval. The record showed every variation was approved by the architect with notice to the employer. The employer, alleging lack of authorisation, bore the burden of proving that assertion under Section 107(1) of the Evidence Act, and chose not to call the project architect as its witness.

p. 4
02

Conclusiveness and payment of Final Certificate No. 6

Holding

Once the employer procured a re-evaluation by a new quantity surveyor and a revised Final Certificate No. 6 was issued for Ksh.19,082,192.88, the employer had no basis to refuse payment of the certified sum.

Reasoning

The appellant raised issues only after the defects liability period had expired, then agreed at a meeting of 30th March 2010 to appoint a new quantity surveyor to re-evaluate the final accounts. That exercise produced the revised Certificate No. 6 dated 26th May 2010. The certified sum was a debt due to the respondent, and the works had been executed under the close supervision of the architect and project manager.

p. 5
03

Award of interest despite deletion of the contractual interest clause

Holding

The trial judge rightly exercised her discretion to award interest at court rates from 26th June 2010 on the certified sum, notwithstanding that the interest clause in the contract had been crossed out.

Reasoning

Award of interest is discretionary. The certified sum was a specific debt due from the appellant which it failed to pay after its own consultant issued the final revised certificate, forcing the respondent to sue. Interest compensates the creditor for deprivation of the money, and the judge was entitled to fix the accrual date. No ground for appellate interference with that discretion was established.

p. 5

Legal principles established

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  • On a first appeal the Court of Appeal reconsiders and re-evaluates the evidence and draws its own conclusions, while allowing for the fact that it neither saw nor heard the witnesses, and rules only on the evidence on record.
  • The Court of Appeal will not interfere with a discretionary decision of the judge below unless the judge misdirected himself in law, misapprehended the facts, took into account irrelevant considerations, failed to take into account relevant considerations, or the decision is plainly wrong.
  • Interest on a certified debt compensates the plaintiff for deprivation of money through the defendant's wrong act, and a court may award interest on a specific certified sum even where the contractual interest clause was deleted.

Court orders

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  1. 1.Dismissal of the appeal in its entirety
  2. 2.Costs of the appeal awarded to the respondent

Authorities

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Legislation

  • Evidence ActSection 107(1)
  • Civil Procedure Actprovisions on award of interest

Cases cited (5)

  • Abok James Odera t/a Odera & Associates v John Patrick Machira t/a Machira & Company Associates
    [2013] eKLR
  • Kenya Ports Authority v Kuston (Kenya) Limited
    [2009] 2 EA 212
  • United India Insurance Company Limited & Others v East African Underwriters (Kenya) Limited
    [1985] EA 897
  • Ajay Indravan Shah v Guilders International Bank Limited
    [2003] eKLR
  • Highway Furniture Mart Limited v Permanent Secretary Office of The President & Another
    [2006] eKLR
On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 300 of 2015
Jurisdiction invoked
First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (Constitution of Kenya, Article 164); the judgment does not cite a specific provision.

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Bamburi Cement Limited v Dinesh Construction Limited [2020] KECA 871 (KLR)", Case Analysis (2020). Civil Appeal No. 137 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/871/eng@2020-02-21

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.