Sh300m plant case drags on
A payment wrangle pitting the Kenya Bureau of Standards and a contractor who constructed a Sh300 million bio-chemical plant at its headquarters in Nairobi is back in court.
Appellate judges dealt Kebs a severe blow after they rejected its objection to an appeal by Centurion Engineers and Builders Ltd challenging the setting aside of Sh385 million awarded by an arbitrator for breach of contract.
The parties entered into a contract in 2009 where Centurion was engaged by Kebs to carry out building works for alterations and extension of its biochemical laboratories for Sh80 million.
Centurion and Kebs later varied the contract to include additional work on the plant and both parties agreed that upon completion, the building would be measured and valued by consultants from the Ministry of Public Works and any necessary variations addressed.
The completed work was valued at Sh228 million but in an unexplained turn of events, Kebs declined to pay the contractor and the matter was referred to arbitration. The arbitrator, Mr Mwangi Gichuiri, on May 5, 2015, awarded Centurion Sh385 in full and final settlement.
However, Kebs moved to the High Court seeking to set aside the award. On December 9, 2016, Justice Tuiyot dismissed the award citing non-compliance with Section 47 of the Public Procurement and Asset Disposal Act.
The judge said the variation of the contract exceeded the percentage limit set out in the Act.
Aggrieved by the decision, Centurion moved to the Court of Appeal to have Justice Tuiyot's ruling reversed. The contractor's lawyer's poked holes in the High Court decision, saying it was erroneous and that it overlooked various sections of the law.
“The judge's decision failed to take into account the purposes and objectives of the Public Procurement and Disposal Act and ignored the procedural mechanism in the Act and the wider public interest it was intended to serve,” stated lawyer Alfred Nyandieka.
The Court of Appeal has now allowed Centurion lawyers Waweru Gatonye and Mr Nyandieka for to lodge the appeal for reversal of setting aside the award within 30 days from November 23.
Centurion lawyers argued that it would be an unjust enrichment for Kebs to vary a building works contract, get the works done, have the laboratories completed and then decline to pay.
Judges Asike Makhandia, Agnes Murgor and Otieno Odek concurred that the appeal against the High Court decision was merited and allowed it to be filed for hearing and determination.
“Centurion has identified several points of law allegedly falling within the ambit of general importance,” ruled the judges.