Maru Piling & Geotechinical Contractors Limited v Tunasco Insaat Taahhut Turisim Ticaret Anonim Sirketi (Civil Case E063 of 2021) [2023] KEHC 25741 (KLR) (Civ) (28 November 2023) (Judgment)

Key Facts

Transaction Type

Issues

• Whether the plaintiff is entitled to remedies including payment for work done, standing charges, and interest, or if claims for delay charges and interest were unreasonable.
• Whether the suit should have been referred to arbitration under the subcontract agreement's terms, given the defendant's failure to apply for arbitration before filing pleadings.
• Whether the defendant breached the subcontract by failing to make required advance and interim payments, delaying equipment transport, and not resolving disputes per contractual terms.

Holdings

• The court determined that the defendant is estopped from raising the arbitration clause as a defense because they failed to apply for a stay of proceedings under the Arbitration Act before filing their pleadings. The court found that the parties subjected themselves to its jurisdiction by proceeding with the lawsuit.
• The plaintiff is entitled to payment for work completed (74 piles) and 216 days of standing/delay charges at Kshs. 96,691 per day, totaling Kshs. 40,524,887.68 (including VAT). Claims for interest, general damages, and additional remedies (b, d, f, h) were dismissed.
• The court found the defendant in breach of the subcontract for delayed payments and failing to transport the plaintiff's equipment to the site as stipulated in the agreement. The defendant did not dispute these delays or their obligations under the contract.

Remedies

• The court awarded the plaintiff a total sum of Kshs.40,524,887.68, which includes the actual work done (Kshs.14,049,992) and standing charges for 216 days (Kshs.20,885,256) plus 16% VAT (Kshs.5,589,639.68).
• The court awarded the plaintiff the costs of the suit.
• The court ordered interest at court rates from the time of filing the suit until payment in full.

Contract Value

Monetary Damages

Legal Principles

• The judgment relied on the principle that contractual obligations must be honored, including the defendant's failure to make required advance payments and transport equipment as stipulated in the subcontract agreement.
• The court emphasized that the plaintiff must prove their case on a balance of probabilities, a foundational principle in civil litigation requiring the plaintiff to demonstrate that their claims are more likely true than not.
• The judgment applied the standard of proof requiring the plaintiff to establish their case with a preponderance of evidence, as opposed to the higher criminal standard of proof beyond a reasonable doubt.
• The court held the defendant estopped from raising the arbitration clause as a defense after they voluntarily submitted to the court's jurisdiction by filing pleadings without prior objection to judicial proceedings.

Key Disputed Contract Clauses

• Section 3 of the subcontract required the defendant to issue a 20% advance payment immediately upon signing and make interim payments after completing each 27 piles. The court found the defendant breached this clause by failing to make the required advance and subsequent payments.
• Clause 7 of the subcontract incorporated the Bill of Quantities, which set a daily rate of Kshs. 96,691 for standing/delay charges. The court addressed disputes over the plaintiff's calculation of 878 days of delay charges and ultimately awarded 216 days of charges at this rate.
• Section 5 of the subcontract stipulated the defendant's duty to transport all plant, tools, and equipment from the plaintiff's headquarters to the site and back. The court found the defendant breached this obligation by delaying equipment delivery and failing to transport the plaintiff's machinery.

Cited Statute

Judge Name

Passage Text

• I find that Defendants were in breach of the terms of the subcontract in terms of delaying in making payments and also in failing to transport the plaintiff's equipment to the site.
• I award Standing charges from 11th October 2016 to 17/5/2017(216 days @ 96,691 per day) pursuant to the plaintiff's Bill of quantities and section 5 of the plaintiff's standard terms and conditions which were agreed to and signed by the defendant.
• Judgment be and is hereby entered in favor of the plaintiff against the Defendant in the sum of Kshs.40,524,887.68 plus costs and interest at court rates from the time of filing suit until payment in full.

Damages / Relief Type

• Costs of the suit awarded.
• Interest at court rates from filing until full payment.
• Awarded Kshs.40,524,887.68 for work done (74 piles) and 216 days of standing charges.