The High Court has ordered businessman Patrick Bitature to pay Finicon (U) Limited Shs 1.9 billion for consultancy services provided for two construction projects in Kampala.
The court found that Finicon performed its obligations under contracts entered into with Bitature in 2012, but was not fully paid for the services rendered.
The dispute arose from a contract entered into on July 6, 2012, for the provision of professional consultancy services for the construction of a high-end boutique hotel along Summit View Road, atop Kololo Hill in Kampala.
The project was estimated to have an investment value of between US$5 million (about Shs 18 billion) and US$6 million (about Shs 21.6 billion).
On August 24, 2012, Bitature entered into another contract with Finicon for the remodelling of his residential house on Plot 9 Malcolm-X Road, Kololo, Kampala.
According to Finicon, the first contract entitled it to a consultancy fee equivalent to five per cent of the locked project sum of US$6 million (about Shs 21.6 billion) if the project’s bills of quantities exceeded that amount.
Where the bills of quantities were lower than the locked sum, the consultancy fee was to be calculated at five per cent of the actual project cost.
Finicon told court that it carried out several activities under the contracts, including surveying, appraising and assessing the feasibility of the projects, designing schematic and production drawings, compiling project summaries and conducting the tendering process.
The company also secured clearance and approval from the National Environment Management Authority and commenced the process of obtaining development permission from Kampala Capital City Authority.
It further undertook technical modifications required by KCCA, but said Bitature did not take further steps to advance the project. Finicon also argued that under the August 24, 2012 contract, it was entitled to a consultancy fee of five per cent of the total construction cost.
The company said it had completed about 76 per cent of the consultancy services under the two contracts and was therefore entitled to US$228,000 (about Shs 820.8 million) under the July contract and US$63,136.20 (about Shs 227.3 million) under the August contract.
The total amount claimed was therefore US$291,136.20 (about Shs 1.05 billion).
Fiicon said Bitature had, by October 28, 2014, paid only US$23,538 (about Shs 84.7 million), leaving an outstanding balance of US$267,598.20 (about Shs 963.4 million), exclusive of VAT.
The company said Bitature’s failure to settle the outstanding amount forced it to use its own financial resources to pay subcontractors engaged during the execution of the two contracts, which affected its cash flow and operations.
Finicon subsequently sued for recovery of the outstanding contractual sum, damages for breach of contract, punitive damages, interest and costs.
In his defence, Bitature argued that the consultancy fee under the July 2012 contract was to be calculated based on the actual project cost if it turned out to be lower than the locked sum.
Regarding the August 2012 contract, he argued that the five per cent consultancy fee was to be agreed upon by the parties based either on the cost estimate reached after completion of the concept or the bills of quantities.
He said neither project reached the stage where bills of quantities were produced and, consequently, the construction costs were never ascertained.
“That being the case, in so far as the agreed consideration is incapable of ascertainment, the terms of either contract are vague and unenforceable,” Bitature argued.
He further contended that the US$23,538 (about Shs 84.7 million) he had paid was agreed to be full and final settlement because the projects had not proceeded to the development stage. Bitature also denied liability for the fees Finicon paid to its subcontractors.
Court rejects full settlement argument. The court, however, found that Finicon had performed its obligations under the two contracts.
The court also held that Bitature had failed to prove that Finicon had agreed to accept the amount already paid as full and final settlement.
“The absence of a clear and unambiguous agreement to that effect supports this conclusion. Therefore, this issue is answered in the negative; the part-payments made by the defendant were not in full and final settlement of the plaintiff’s claim,” the court observed.
The court consequently found that Finicon was entitled to an outstanding contractual sum of US$256,136.17 (about Shs 922.1 million), exclusive of VAT.
“Bitature not having furnished proof of any further payment, the court finds that the defendant has proved its entitlement to the outstanding contractual sum of US$256,136.17 exclusive of VAT, to the required standard,” the court ruled.
The court entered judgment for Finicon for US$256,136.17 (about Shs 922.1 million), exclusive of VAT, together with interest at nine per cent per annum from May 20, 2014, until payment in full.
Bitature was also ordered to meet the costs of the suit.
