University of Nairobi Enterprises Limited v Eco Friendly Contractors & General Suppliers Limited

final figure indicated in the completion certificate after the works executed had been measured then subtracting a discount of KShs 50,000/= and a 5% retention sum of KShs 134,960/=. 3. The respondent pleaded further that in the course of execution of the works as per the LPO, the appellant’s director and engineer approved execution of additional works which the respondent duly executed at a cost of KShs 1,100,000/= making the total cost of the works executed KShs 3,868,750/ =. According to the respondent, the appellant only paid KShs 600,000/=, leaving a balance of KShs 3,064,240/= unpaid and thereby breaching the contract. 4. The appellant filed suit to recover the unpaid money for the works executed. 5. The respondent filed a statement of defence dated 29th November 2021 and denied the respondent’s claim in toto. It pleaded further that it, University of Nairobi Enterprises Limited (UNES) had entered into a consultancy agreement with the Nairobi Metropolitan Services (NMS) for Architectural, Conceptualization, Innovation, Construction and Maintenance of Covid 19 Makeshift Isolation Centre at Mbagathi hospital for a total sum of KShs 64,936,158.80 inclusive of 14% VAT based on the schedule of payment broken down as: 6. a. 40% lumpsum payment upon commissioning of the works. b. Additional 40% lumpsum payment to secure construction materials. c. Final 20% on successful completion of the construction works. The appellant pleaded that the said terms bound the respondent herein. It subcontracted the respondent to undertake part of the works. The works were executed but not satisfactorily because of the following reasons: a. Major defects. b. Poor quality materials. c. Poor workmanship. d. Poor quality items and fittings. e. Failure to seek prior approval of materials and fittings before installation. f. Delays in completion. 7. The appellant pleaded that as a result of the aforesaid the final 20% payment it was expecting from NMS upon completion of the project had been delayed and the respondent could not be considered for payment at all. 8. The appellant therefore prayed that the respondent’s suit be dismissed or struck out with costs. 9. At the hearing, the appellant called one witness, PW 1, Muretihi Kariuki, its director. He adopted his witness statement dated 13th October 2021 as his evidence in chief and produced the documents in the list of documents dated 13th October 2021, as exhibits. The witness statement essentially reiterates the averments in the plaint. The exhibits were: a. LPO dated 3rd November 2020. b. Report dated 17th November 2020 of summary of completed works and value of the work done. c. Demand letter dated 21st November 2020. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 2

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d. Invoice dated 11th January 2021. e. Copy of cheque dated 6th January 2021 for KShs 600,000/=. f. E-mail communication between the parties, g. Demand letter dated 23rd March 2021. h. Demand letter dated 3rd May 2021. i. Demand letter dated 11th August 2021 for release of retention funds. 10. In his testimony in court, PW 1 stated that the balance of the money not paid was KShs 2,999,312,548/ =. He said that during execution of the works the respondent was supervised by the appellant’s engineers and clerk of works at every stage of work which was completed within two weeks as per the contract period and it was issued with the completion certificate. Further, that there was no complaint about the works it had undertaken and there was correspondence by e-mail between the parties confirming that the works had been carried out diligently and the appellant requested for time to pay. 11. In cross-examination, PW 1 said that after the works were completed, the clerk of works, an employee of the appellant prepared as certificate of completion (Exh. 2) dated 17th November 2020 to show the works done and the same is used to help invoice the client/employer. He said that the hand-over report was not given to the respondent. He said that at the time of signing the contract there was no indication that NMS was involved but the respondent came to realize later this in the course of carrying out the works. 12. In re-examination, PW 1 stated that the respondent was not contracted to execute any works on the floor of the project and the e-mail referred to by the clerk of works mentioning defects on the floor must have been for a different project as their work was confined to the doctors’ toilets. 13. PW 1 was emphatic that the respondent executed all the works as per the contract between the parties. 14. DW 1, Seth Odiwuor Abeka, the managing director of the appellant, gave evidence for the respondent. He also adopted his witness statement dated 24th June 2024 as his evidence in chief and also produced the documents as per the list of documents dated 4th July 2022 and supplementary list of documents dated 24th October 2022 as exhibits. The appellant’s exhibits were as follows by chronology and not as appearing in its lists: a. Contract dated 26th June 2020 between NMS and UNES. b. Implementation Budget dated 3rd August 2020 for NMS Covid 19 Makeshift Isolation Centre approved by the Respondent (this should be appellant). c. Professional opinion dated 2nd November 2020. d. Respondent’s (should be appellant’s) letter dated 24th November 2020 to the Principal Secretary/Deputy Director NMS. e. Claimant’s invoice dated 10th December 2020. f. Project Clerk of Works letter to the managing director of the respondent (should be the appellant) dated 6th January 2021. g. Project Minutes dated 29th March 2021. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 3

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h. NMS letter dated 23rd March 2021 Ref eop/nms/hs/7/vol.1/160. i. Respondent’s (should be appellant’s) letter dated 10th May 2022 Ref. UNES/HQ/1/25/VOL 5 (321) 15. DW 1 said that the works under the project with NMS were not completed and NMS was yet to pay. He said that the facility could not be used for isolation because of the floor finish which included the washrooms due to levels of hygiene and the toilets were part of the hygiene. He said that the minutes of the meeting of 29th March 2021 confirm that the works were done poorly due to poor flooring. However, the appellant was yet to have a meeting with the respondent over the issue. The minutes were between NMS and UNES. Some of the issue raised at the meeting on the works undertaken were that “after taking over the project for use in January 2021 the floor could not contain the cleaning with water due to peeling off and also during movements of beds and lockers: that UNES did a shoddy job to the extent that the facility could not be put into use despite claims that they had completed the project.” This information has no reference to the works undertaken by the respondent on construction of toilets. Clearly, toilets floor could not be a place where beds and lockers were also placed. The report also indicated that the contract between NMS and UNES be and was mutually terminated and MNS technical departments would take corrective measures to repair the floor without reference to UNES. 16. DW 1 also said that the works undertaken by the respondent were out of the timelines provided for in it’s (the appellant’s) contract with NMS whose timelines were between 26th June 2020 and 15th September 2020. But the contract between the appellant and the respondent was only issued on 3rd November 2020 and so the respondent could not be bound as alleged by DW 1. DW 1 confirmed that the completion was required on 17th November 2020 and there is evidence by way of the completion report that the works were indeed executed and a completion certificate was issued. 17. DW 1 said that the 2nd and 3rd payment installments were pending due to lack of completion. 18. DW 1 further said that the appellant was not aware of any additional costs for the project. He also said that the retention amount was only payable upon expiry of the defects liability period. 19. DW 1 confirmed that the LPO was dated 3rd November 2020 and the completed work was to be delivered to the NMS on 17th November 2020. He said that the final completion was to be signed by the engineer but this had not been done. 20. DW 1 alleged that there was a collusion between the respondent and the appellant’s Clerk of Works, Burt Odhiambo as the work was not completed as there were some snags. 21. DW 1 maintained that the project was not completed and so there cannot be final accounts between the parties as there was poor workmanship. 22. In cross-examination, DW 1 said that the respondent was the main contractor while the others were suppliers of materials. 23. With reference to the professional opinion dated 2nd November 2020, DW 1 said that the respondent was not copied therein. This was the opinion of the appellant’s tender evaluation team that led to the respondent being awarded the contract through the LPO produced herein. It reinforces the evidence by the respondent on the scope of its contract which was limited to supply and building staff washroom including 2 No. showers, 2 No. Toilets English type for gents and ladies in between the Donning and Dofing tents including all necessary plumbing and electrical connections at KShs 2,750,000/= inclusive of all taxes from Eco-Friendly Contractors & General Suppliers Ltd. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 4

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24. DW 1 was also referred to the letter dated 6th January 2021 addressed to the MD UNES from Burt Odhiambo, Project Clerk of Works. This letter apparently identified some snags in the full project execution between NMS and UNES and the clerk of works was requesting for some pre- financing to support some vendor’s pro-forma invoice towards attendance to some defects to facilitate final hand over on 11th January 2021. Some of the snags identified were: a. Repair of cracking floors. b. Repair of main fence to separate patients from doctors. c. Installation of additional security lights. d. Reinforcement of ward partitions. 25. There is no indication that the above issues were meant to address the works undertaken by the respondent herein. 26. Upon considering the evidence and submissions of the parties, the learned trial magistrate in her judgment dated 12th October 2023, found that the appellant was in breach of the contract for failure to pay the respondent and was liable to pay to the respondent the balance of KShs 2,150,000/=. She also found that the special damages of KShs 300,290.50 claimed by the respondent as retention fee was not payable as it was part of the contract sum. The learned trial magistrate also found that the claim for KShs 1,100,000/= had not been proved as there was no evidence of variation of the contract between the parties. 27. Consequently, the learned trial magistrate entered judgment for the respondent against the appellant in the sum of KShs 2,150,000/= together with interest from the date of filing suit until payment in full. 28. The appellant now appeals against that decision, raising some twelve grounds in its memorandum of appeal dated 10th October 2023. 29. The appellant proffers arguments in his grounds of appeal that the appellant puts forth against the judgment of the trial court, which is contrary to the express provisions of Order 42 Rule 1(2) of the CPR. The rule provides that the memorandum of appeal shall set forth concisely and under distinct heads the grounds of objection to the decree or order appealed against, without any argument or narrative. I will summarize the grounds as follows: a. The learned trial magistrate failed to properly analyse the evidence of the parties and arrived at an erroneous decision that was against the weight of the evidence as the respondent had not proved its case on a balance of probability. b. The learned trial magistrate failed to properly apply the law to the evidence tendered and thereby arrived at an erroneous decision. c. That the learned trial magistrates award of damages of KShs 2,676,033/= or KShs 2,150,000/ = was not based on verified facts as per the evidence tendered by the parties. 30. In short, it is the appellant’s case that the learned trial magistrate failed to properly apprise herself of the evidence tendered before her, to correctly apply the law and precedent and thereby arrived at a wrong decision. 31. The appeal was heard by way of written submissions, which learned counsels for the appellant and the respondent respectively filed. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 5

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32. In listing the issues for determination, learned counsel for the appellant merged the grounds of appeal into three and argued them as such. Consequently, the appellant argued the appeal on grounds that first, the learned trial magistrate made an error in finding that there was no privity of contract between the respondent and NMS, second, that the learned trial magistrate made an error in not finding that there was a problem with the quality of works executed by the respondent and finally that the learned trial magistrate erred in finding that the appellant’s request for settlement of the outstanding debt with NMS KShs 24,838,793.86 and the judgment for the sum of KShs 2,676,033/= for the respondent was a misapprehension and to the detriment of the appellant. 33. Learned counsel for the respondent also argued the appeal on three grounds, more or less as those adopted by learned counsel for the appellant. 34. This being a first appeal, the duty of the court is to consider the evidence re-evaluate, re-analyze it and draw its own conclusions, bearing in mind that it did not see witnesses testifying and therefore give due allowance for that. See for example Selle & another vs. Associated Motor Boat Co. Ltd & others [1968] E.A at page 126 where it was held as follows: “ An appeal to this Court from a trial by the High Court is by way of retrial and the principles upon which this Court acts in such an appeal are well settled. Briefly put they are that this Court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect. In particular, this court is not bound necessarily to follow the trial judge’s findings of fact if it appears either that he has clearly failed on some point to take account of particular circumstances or probabilities materially to estimate the evidence or if the impression based on the demeanor of a witness is inconsistent with the evidence in the case generally (Abdul Hameed Saif v Ali Mohamed Sholan (1955), 22 E.A.C.A. 270)”. 35. See similar holding in Peters vs. Sunday Post Limited (1968) EA 123. (1956) E.A page 424. 36. In the present case, on the first issue for determination as raised by the appellant, learned counsel for the appellant has strongly argued on the issue of privity of contract between the respondent and NMS. 37. The learned trial magistrate considered the issue of privity of contract between these two parties only in relation to the issue of jurisdiction of the court to determine the suit before the dispute was referred to Alternative Dispute Resolution through what was termed as good faith negotiations as was provided for in the contract between NMS and UNES signed on 26th June 2020 and that DW 1 had confirmed in his evidence that the respondent was not aware of the terms of that contract. She found that in that case the respondent could not be bound by that contract to resolve the case herein by way of negotiations. The learned trial magistrate found that there was no such provision in the contract, basically the LPO, between the appellant and the respondent. and so the court had jurisdiction to determine the case. 38. The learned trial magistrate then went ahead to consider the relationship amongst the three parties, the appellant UNES, the respondent and NMS with respect to the issue of who was liable to pay the respondent for the works undertaken by it. In this case, it is apparent that UNES was acting as an agent of NMS, the two having entered into the contract dated 26th June 2020, part of which was subcontracted to the respondent herein. The learned trial magistrate therefore found that there was no direct link between NMS and the respondent and that the appellant was to pay the respondent under the LPO dated 3rd November 2020. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 6

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39. Learned counsel cited the case of Aineah Liluyani Njirah v Agha Khan Health Services [2013] KECA 481 (KLR) to support the appellant’s argument on the issue of privity of contract, submitting that there are various exceptions that would enable a third party enforce a contractual obligation even when it was not party thereto. 40. The position in the present case was that there was a principal, the NMS, the agent NES and the third party, the respondent. The position in law on abundance of decided authorities, is that where a principal is disclosed and known, his/her agent should not be sued in the same cause as a co- defendant. So that where there is a disclosed principle, the agent cannot be sued as was held in the case of City Council of Nairobi v Wilfred Kamau Githua t/a Githua Associates & another [2016] eKLR the Court of Appeal held that: “ In the circumstances of this case, the 2nd respondent cannot be sued as agent where there is a disclosed principal [the appellant]. There is therefore no cause of action against the 2nd respondent. The principle of common law is that where the principal is disclosed, the agent is not to be sued. In the circumstances of this case, the principal (the appellant) is disclosed and the agent (the 2nd respondent) cannot therefore be sued. There are no factors vitiating the liability of the disclosed principal. Accordingly, the enjoinment of the 2nd respondent in this case is unwarranted.” 41. However, there are exceptions to this general rule, which are (1) if the agent is undisclosed or partially disclosed, (2) if the agent lacks authority or exceeds it, or (3) if the agent entered into the contract in a personal capacity. From the facts of this case, the respondent argued that it was never made to know that NMS was the principal until later when it was executing the works. In those circumstances, I would find that exceptions 1 and 2 are not applicable herein. 42. In my considered view, even as NMS was a disclosed principal, the case falls within exception 3, that is, where the agent enters into a contract with a third party in its personal capacity. 43. In the present case, reading the provisions of the contract between the appellant, UNES and NMS dated 26th June 2020, clause 4 gave UNES the authority to enter into contracts with third parties without reference to NMS except to the extent that UNES was the main contractor. I do not find any chance in this contract for the respondent to pass any bills emanating from third parties, such as the respondent herein, with which it had engaged in its execution of the contract, to NMS. In the circumstances, it can only be concluded that the appellant, although executing the works on behalf of NMS, its engagement with the respondent was in its personal capacity as per the terms of its contract with NMS. 44. It is apparent that the appellant issued the subject LPO in its own name and capacity, provided its own engineers and clerk of works, and accepted the subsequent invoice from the respondent and was therefore liable to pay. There is no gainsaying that the LPO was a contract on its own, and in this case, the contract was between the appellant and the respondent. 45. Further, it promised to pay for the materials in its correspondence with the respondent. However, it failed to make the payments as expected even after the respondent had executed its part of the bargain. 46. There were communications between the appellant and the respondent on the settlement of the balance and as found by the trial court this communication was an indication that the funds were to be made available to the respondents and the appellant would make payment to the appellant. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 7

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47. In the case of Carol Construction Engineers Limited & another v National Bank of Kenya [2019] KEHC 95 (KLR) where the English case of Pickard v Sears 112 E.R. 179 is cited and where Lord Denman CJ stated thus: “ The rule of law is clear that where one, by his words or conduct, willfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is precluded from averring against the latter a different state of things as existing at the time…” 48. That even upon being invoiced, the appellant never denied liability nor requested that the invoice be raised against NMS for the reason that payment was dependent on payment from NMS but went ahead to promise to clear the payments. Under those circumstances, where an agent accepts liability and makes a promise, then it is held liable for the performance of the contract. 49. The learned trial magistrate was guided by the case of Zenith Steel Fabricators Limited v Continental Builders Limited & Eltex (EPZ) Limited [2018] KECA 215 (KLR) where the Court of Appeal was considering the issues of the true meaning of a nominated sub-contractor in the building construction industry, who between the employer and the main contractor is bound to pay the sub- contractor and the issue of privity of contract between the parties. The Court of Appeal held that in the absence of express provisions, a subcontractor, whether or not nominated by the employer, is responsible to the contractor and the contractor is responsible for the subcontractor''s payments. That is the position obtaing in the present case. 50. On basis of the foregoing, I am satisfied and find that the learned trial magistrate was correct in her finding that the appellant and not NMS was to pay the respondent. 51. The submissions in support of grounds 3 to 7 address the quality of works undertaken by the respondent. 52. I have read the contract between NMS and UNES dated 26th June 2020 and the contract between UNES and the respondent and it would appear that DW 1 was not properly briefed about execution of the project because his claim that the respondent was the main contractor of the NMS project with UNES is not correct for several reasons. This assertion is not supported by the contract or any correspondence between the parties. In fact, considering the Implementation Budget for the NMS Covid-19 Makeshift Isolation Centre produced as exhibit by the appellant, one can see that the contractor therein was mentioned as Homeland Events Limited and not Eco Friendly Contractors and General Suppliers Ltd, the respondent herein. To the contrary, the contract between the appellant and the respondent was for a specific job and for a specified sum of money, a very small part of the project the appellant had with NMS. 53. The contract signed between the respondent and the appellant was of a very limited scope for a small sum of KShs 2,700,000/= against the contract signed between NMS and UNES for the sum of KShs 64,936,138.80. The contract between NMS and UNES was commencing on 26th June 2020 and ending on 15th September 2020 whereas the one between UNES and the respondent was starting on 3rd November 2020 and ending on 17th November 2020. It follows that the respondent was not and could not have been the main contractor for the NMS project with UNES in provision of consultancy services for Architectural, Conceptualization, Design, Innovation, Construction & Maintenance of Covid 19 Makeshift Isolation Centre at Mbagathi hospital. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 8

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54. Further, relying on the letter dated 6th January 2021 to point out alleged defects in the respondent’s works was really misleading for DW 1. All the alleged defects or snags identified in that letter do not refer to the works executed by the respondent. 55. In any case case, there was no evidence that the appellant had brought the alleged defects to the respondent’s attention, an indication that they were not in relation to the works executed by the respondent. The appellant raised the same as a defence to the respondent’s case. 56. Interestingly, the appellant failed to make available Burt Odhiambo, its own Clerk of Works to support its case in any way. It can only be presumed that if he had been called, he would have given evidence that would be adverse to the appellant’s case. 57. The allegation that there was collusion between the said Burt and the respondent was not supported by any evidence at all and the learned trial magistrate was correct not to believe it. 58. Therefore, the submission that the failure to pay the respondent arose from poor quality of works has no basis at all. I have found above that the defects pointed out were not in relation to the works executed by the respondent and so the respondent’s execution of its works had nothing to do with the NMS withholding payments. 59. The submission that the respondent’s case was not supported by evidence is not correct at all. The respondent produced a completion certificate showing all the works it had executed and signed by itself and the appellant. There was no dispute at all about the completeness of that certificate. 60. I am satisfied and find that the learned trial magistrate thoroughly analysed the evidence presented before her and correctly applied the law. The charge that she misapprehended the facts and misapplied the law is therefore not correct. 61. In totality, I find that the appellant breached the terms of the contract by failing to make the payments due to the respondent. 62. Sir Charles Newbold P in Damondar Jihabhai and Co Ltd and another v. Eustace Sisal Estates Ltd [1967] EA 153 emphasised that the function of courts is to enforce and give effect to the intention of the parties as expressed in their agreement. 63. Further in the case of National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another [2001] KECA 362 (KLR) it was held that, “A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved.” And this was reiterated in the case of Pius Kimaiyo Langat v Co- operative Bank of Kenya Limited [2017] KECA 152 (KLR) that: “ … it is not the business of courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved.” 64. I am satisfied that the trial court properly considered all the evidence adduced before it in arriving at its judgment dated 8th March 2024. 65. I therefore find that the learned trial court was correct in her findings and conclusion that the respondent had proved its case on a balance of probability and proceeded to allow the claim to the extent that she did. 66. Consequently, I find the appeal to be without merit and dismiss the same. The judgment of the trial court allowing the respondent’s claim is hereby afirmed. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 9

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67. The respondent gets the costs of the appeal. DATED, SIGNED AND DELIVERED ON THE VIRTUAL PLATFORM TEAMS THIS 20TH DAY OF NOVEMBER, 2025. ANDAYI W. F. JUDGE In the presence of: Omondi for the Appellant. Maina h/b for Ms Waliaula for the Respondent. Ummu h/b for Amina: Court Assistant. SIGNED BY/FOR: HON. JUSTICE ANDAYI W.F. THE JUDICIARY OF KENYA. MILIMANI HIGH COURT HIGH COURT CIVIL APPELLATE DIVISION DATE: 2025-11-21 10:56:27 https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/18293/eng@2025-11-20 10

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