The government has been allowed to challenge a Sh3.1 billion payment to a contractor who was awarded a tender to repair major roads in Nairobi through verbal instructions.
The award of the billions of shillings to Kabuito Contractors Ltd in a High Court judgment had been contested by the Attorney-Geneal in a suit that tested whether verbal agreements can stand as valid contracts recognised by law.
The contractor objected to the appeal, arguing that it was time barred.
But judges William Ouko, Daniel Musinga and Gatembu Kairu allowed the appeal stating that the reasons for the delay had been explained sufficiently.
“Finally, it is ironical that the applicant should apply for the striking out of this appeal for failure to comply with rules, which it has itself violated in bringing this application,” the judges said.
In 2018, High Court judge Joseph Sergon awarded Kabuito Conntractors the Sh3.1 billion as compensation, following a 20-year battle between the firm and the government over works done on 13 roads in Nairobi during former President Daniel arap Moi’s regime.
The government maintains that the Moi-era contract and its extensions for the repairs of roads within Nairobi’s central business district cannot be enforced because they were issued verbally.
“It is not disputed that pursuant to the verbal instructions by the Permanent Secretary (PS), Ministry of Local Government, the plaintiff [Kabuito] proceeded to carry out the works which the defendant was unable to assess because of
lack of documentation since it was not in writing,” Justice Sergon noted.
The ministry insisted that verbal instructions given to Kabuito by its PS could not stand as a valid contract.
Kabuito, owned by tycoon Amip Rajendra Patel, insisted that the ministry owed it Sh115 million, but the amount ballooned to Sh1.12 billion when it sued owing to interest.
The amount stood at Sh3.17 billion when Justice Sergon delivered his judgment in 2018.
Court documents showed that the company was contracted in March 1997.
Mr Patel’s firm was initially contracted to recarpet a total of 9.5 kilometres cutting across Biashara Street, City Hall Way, Harambee Avenue, Kaunda Street, Kimathi Street, Koinange Street, Mama Ngina Street, Muindi Mbingu Street, Murang’a Road, Parliament Road, Ring Road, Taifa Road and University way.
But following flooding after the 1997 El Nino rains, the roads were destroyed and Kabuito was hired to do repairs.
The repair works were then extended to include Monrovia, Moktar Dadar, Utalii, General Kago, Short, Bank, Central, Maketer streets, Kigali Road, Tubman Road, Banda Street, Posta Road and Harry Thuku Road.
When Kabuito sought payment, the Local Government ministry said it was unable to assess the works done on the strength of verbal instructions issued by the PS.
Mr Patel in his court filings said that it was then normal for a PS to issue verbal instructions even in public procurement, because the government bureaucrats at the time were very powerful.
Justice Sergon said it was clear that the government was well aware of the ongoing works and approved the revamp.
“In my humble view, the defendant (government) is estopped from denying to settle the plaintiff’s claim for non-compliance of public procurement processes after benefitting from the services rendered by the plaintiff upon its inducement,” he said.
The judge said there was no evidence to show that the company was an accomplice to any breach of the internal government regulatory procedures that might have taken place.