The entrance to Moi University's main campus in Kesses, Uasin Gishu County on February 08, 2024.
On May 24, 1990 a contractor, Vishva Builders Limited submitted a bid in response to a tender call by Eldoret-based Moi University for the construction of a block of buildings to host the Faculty of Science at its main campus.
The tender submission was accepted by the varsity on May 25, 1990 and the contractor took over the site and commenced work on June 21, 1990 pending execution of a formal contract between the parties.
On July 4,1990 Vishva Builders informed Moi University that save for the revised tender sum of Sh476,371,024 and the contract period being 130 weeks from June 21,1990, all other terms and stipulated in the tender document remained unaffected.
The initial tender sum was Sh547, 702,753 but the parties negotiated and agreed to reduce it to Sh476,371,024.
The university accepted the revised tender and stated in a letter dated July 4, 1990: “We thank you for your letter of award for the above project. We hereby confirm that due to the deletion of General and Particular Preliminaries from the builder’s work, the revised tender sum is Sh476,371,024 … with contract period being 130 weeks as from June 21, 1990. All other terms and conditions stipulated in the tender document remain unaffected.”
The university in its letter also notified the contractor that “there may be delay in honouring interim payments but that when such delay occurs, the Plaintiff would be expected to proceed with work diligently without stoppage and the Plaintiff would not be expected to charge interest on delayed payments”.
In the deal, the varsity project’s appointed quantity surveyor (QS), Messrs Quants Consult would go to the ground to evaluate the work and issue a valuation which he would then submit to the project’s architect and departmental director (DR) Joel Nyaseme (now deceased) whom upon verification would issue an interim payment certificate to the university for payment with 14 days.
With this approval, the work got underway with Mr Nyaseme issuing a total of 13 interim certificates with instructions of payment after valuation of the completed works amounting to Sh242, 575,107.40.
Moi University honoured the first seven interim certificates issued by Mr Nyaseme and paid a total Sh63, 633,439.35.
Penalties
It, however declined to honour the remaining six totalling Sh185, 305,011.30 despite approvals and advice by the Treasury, the Education Ministry and the Attorney-General to pay up to save taxpayers wider penalties from contract breaches.
On November 11, 1999, a defiant Moi University repudiated the contract citing possible exaggeration of costs and financial constraints and ordered the contractor to leave site by November 18, 1999—triggering a lengthy suit that turns the spotlight on the varsity’s costly decisions even when all odds stood against it.
Last week, taxpayers suffered a blow after Justice John Robert Anuro Wananda ordered the university to pay the Sh185, 305,011.30 in addition to the interest chargers accrued since the suit was filed 25 years ago and at current bank interest rates until the payment is made in full.
Court filings show that Moi University claimed that Mr Nyaseme was aligned to the contractor and thus gave inaccurate cost estimations that favoured Vishva Builders—a claim Justice Wananda rejected.
“I do not agree. The defendant cannot probate and approbate at the same time. The consultants cannot be agents when it suits the defendant but independent entities when it does not. In any case, this argument is not based or anchored on any provision of the BQ (bill of quantity) the contract and no evidence has been adduced to support it,” said justice Wananda.
“It is a mere academic argument with no legs to stand on. From the contract herein, there is no indication that the roles of the consultants can be split or severed as alluded by the defendant. In the end, I find that under the terms of the contract herein, the DR, QS, Clerk of Works and other consultants were agents of the defendant whose acts bound the defendant,” the judge added.
The university also disputed an interest demand on the contractor’s delayed payments during the stalled work saying Vishva Builder waived the interest payments in its letter accepting the contract.
Justice Wananda, however, said the university wrongly interpreted the contract letter and was bound to pay interest on any late payments.
“Since the plaintiff’s letter never expressly mentioned acceptance of the waiver of the interest accrual, the defendant ought to have sought clarification from the plaintiff on the meaning of the uncertain or ambiguous wording used by the plaintiff. The defendant never did so,” he said.
Court filings showed that between July 24, 1990 and April 18, 1991, interim certificates No. 1-7 were issued by Mr Nyaseme for payment to Vishva Builders by Moi University. However, the payments were made in instalments and outside the 14 days payment stipulation on various dates between May 22, 1991 and January 14, 2000.
The National Treasury, the Education ministry and the Attorney-General’s (AG) office all warned Moi University officials against challenging the interest payments sought by the contractor, arguing the varsity had no basis to do so.
Submissions showed that at one point the Treasury approved and provided Sh185, 305,011.30 to settle the principal amount due. Moi University, however did not execute the payment and citied the dispute over a huge interest of Sh272,582,518 claimed by Vishva Builders.
The AG’s office said the university had the obligation to pay penalties for late payment irrespective of the reasons.
“The defence was that amount claimed was colossal, which in law cannot be a defence. The employer after the suit was instituted proceeded or purported to cancel the certificates, which the Court held was in bad faith and an attempt to defeat the claim and thus invalid ………” it added.
The AG also stated that: “Where contracts do not provide for interest to be paid for delayed payment, but in the appendix there is a time frame for the payment of certificates, if the employer delays in payment there is a breach of contract which must be remedied by damage (sic). Equity demands that the person in breach be condemned to damages for the breach.”
Justice Wananda backed the advisories by the AG and the Treasury on Moi University’s liabilities. “I therefore make the finding that under the contract, where a certificate issued by the DR was not honoured within the stipulated time – 14 days upon presentation - interest accrued and became payable to the Plaintiff.”
He also faulted Mr Nyaseme’s decision to cancel payment certificates No.8-13, terming it non-procedural.
“I would still hold that the manner and procedure adopted by the Architect in cancelling the certificates No. 8-13 was biased, irregular and against natural justice having been conducted in secrecy and with the exclusion of the Plaintiff who, despite being the party to be most affected by the action, was not notified or consulted before the cancellation and was not afforded an opportunity to be heard,” he said.
“ The Architect’s intention, in consultation with the Defendant, appears to have been deliberately aimed at frustrating this suit,” he added.
The judge said that certificates were issued professionally hence their cancellation was suspicious.
“I am not persuaded that the certificates were cancelled because they were issued in error. There must have been a different ulterior reason,” the judge further stated.
