Court name
Commercial Court of Uganda
Judgment date
24 August 2012

Comtel Integrators Africa Ltd v National Social Security Fund (HCT-00-CC-MA-2009/15) [2012] UGCommC 102 (24 August 2012);

Cite this case
[2012] UGCommC 102

THE REPUBLIC OF UGANDA

IN THE HIGH COURT OF UGANDA IN KAMPALA

(COMMERCIAL DIVISION)

 

HCT - 00 -CC - MA - 15 - 2009

IN THE MATTER OF AN APPLICATION FOR JUDICIAL REVIEW

AND

IN THE MATTER OF

 

COMTEL INTERGRATORS AFRICA LTD.  ::::::::::::::::::::                                                                                                                                                     APPLICANT

VERSUS

NATIONAL SOCIAL SECURITY FUND       :::::::::::::::::::                                                                                                                                                     RESPONDENT

 

BEFORE:  THE HON. MR. JUSTICE GEOFFREY KIRYABWIRE

 

R U L I N G

This is an application brought under the Judicature (Judicial Review) Rules 2009 and the Judicature Act (Cap 13).  The application seeks;

 

  1. An order of certiorari to quash, a bid notice for consultancy services for the maintenance and support of the Respondent’s Integrated Management Information System (IMIS) which appeared in the New Vision of June 4th 2009.

 

  1. An order of prohibition to prohibit the Respondent from continuing with the said procurement process.

 

  1. An injunction to restrain the Respondents from procuring the services of another consultant to undertake maintenance and support of the IMIS under the said bid notice.

 

  1. An order to pay US$ 1,238,390.48 being the value of technical supportsmaintenance and oracle license support services.

 

  1. General and aggravated damages.

 

  1. Costs.

 

  1. Interest

 

 

The grounds of the application are that the Respondents in 2007 invited bids for the technical support of its IMIS system to which the Applicant was the successful bidder and was awarded the contract on the 28th August, 2007.

 It is the case of the Applicant that the contract was one project involving 3 phases

  1. Diagnostic study of IMIS
  2.  Implementation of the recommendations of the Diagnostic study
  3.  Technical support of the IMIS

 

It is the case for the Applicants that they undertook and completed the first two phases for which two sums namely; US$ 1,142,857.68 and US$ 95,532.80 are due and payable to the Applicant.

As to the third phase, the terms and conditions of a service level agreement were agreed to and only awaited the signing of a formal contract.

 

However, the Respondents readvertised this third phase by inviting public bids for maintenance and support of IMIS contrary to the public procurement procedures.

 

It is the case for the Applicants that the orders sought are justified because the Respondent’s decision to readvertise violated the Applicant’s rights including

 

  1. The right to be heard before a decision is made against it
  2. The right to carry out lawful trade or business
  3. The right to just and fair treatment in administrative decisions
  4. The right to protection of deprivation of contract property

 

The application is supported by various affidavits of Mr. Kenneth Lubega the Executive Chairman of the Applicant company.

 

The Respondents oppose the application and rely an affidavits in reply by Mr. Martin Bandebire the Corporation Secretary of the Respondent fund and Mr. Peter Kahiigi the Chief Information Systems officer of the Respondent fund.

 

At the hearing the Applicants were represented by Mr. Fred Muwema and Masembe Kanyerezi while the Respondents were represented by Dr. J. Byamugisha.

 

The evidence

 

The evidence presented to court by way of affidavit was quite voluminous and bulky.  I will none the less summarise it as best as I can.

 

Main evidence of the Applicant by affidavit

 

It is the case of the Applicant that it was the successful bidder for support services for the Respondent’s IMIS system which was one project but divided into 3 phases.  It duly completed phases 1 and 2.

 

It is also the case of the Applicants that the Respondent did request additional services from the Applicant to support and maintain IMIS between September 2008 – March 2009 at the cost of US$ 1,142,856.68 broken down as follows

 

  1. US$ 926,310 for technical support and maintenance service
  2. US$ 216,872.39 being reimbursable expenses for consultant travel, accommodation and per diem.

 

The Applicant (being an authorized oracle agent) also at the request of the Respondent renewed the Respondent’s oracle license installed on IMIS at the cost of US$ 216,872.39.  It is the case of the Applicants that these said sums remain unpaid. 

 

As to phase 3, the Applicant and Respondent agreed on the terms and conditions of an outline agreement but the Respondent instead of concluding this agreement on the 4th June 2009 readvised it in the newspapers for open bidding.

 

It is the case of the Applicant that the new bids are contrary to their contract of 2007 and the Public Procurement and Disposal of Assets Act (PPDA Act) for which the procurement should be quashed.

 

Main evidence of the Respondent by affidavit

 

The Respondent concedes to the following contracts namely;

 

i)       Contract for Diagnostic review and analysis of the NSSF IMIS dated 13th June, 2007.

 

ii)      Contract for rectification and fix of NSSF IMIS dated 28th August 2007

 

iii)     Amendment No. 2 to (ii) above dated 1st November, 2008.

 

These contracts were however not sanctioned by The Attorney General as required under the law.

 

The Respondents deny that the 3 phases were one project and that the Applicant was invited to make a proposal for phase one only.  There after the Respondent again engaged the Applicants this time by direct procurement (No. NSSF/SRVCS/0708/00023) to fix and stablise the IMIS system.  A contract for this additional purpose only was then awarded by the Respondent to the Applicant.

 

The Respondent denies knowledge of an outline agreement for phase 3 and states that the Applicant’s proposal in respect of phase 3 was not accepted by the fund.

 

The Respondent also contests documentation relied upon the Applicant from the Respondent fund which it states were obtained by the Applicant without authority and unethically.

 

It is the case for the Respondent that the work contracted to the Applicant was completed for which the Applicant made a project closure report dated 31st January, 2009 to the Respondent.  It is also the case for the Respondent that the bids that were advertised in the New Vision newspaper dated 4th June, 2009 were made in accordance with the law.

 

As to the claims of nonpayment by the Applicant for additional services, it is the case for the Respondent that the sums claimed were those required to be done by the Applicant under the two contracts it was given. 

Furthermore, the said claims were not separate contracts but constituted work to be performed under warranty pursuant to clause 7.9.2 of the contract signed between the parties at no additional cost.

The Respondent also denies that it requested the Applicant to renew its oracle license for which they required proof.

 

Applicant’s affidavit evidence in rebuttal

 

The Applicant denies any knowledge that its contracts with Applicant were not approved by the Attorney General.

 

The Applicant insists that the 3 phases were one contract project.  It is also the case for the Applicant that the Respondent asked the Applicant in respect of phase 3 to draw up a service level agreement based on the Applicant’s proposal that had been accepted by the Respondent’s Board of Directors based on a waiver given by PPDA.

 

The Respondent further insists that the sums of money claimed by them were not remedial corrective work and are billable.  Furthermore, the oracle license was indeed renewed and there is proof of the renewal.

 

 

 

 

 

The legal arguments

 

Legal arguments for the Applicant

 

Counsel for the Applicant submitted that the Respondents could not invalidate the agreements between the parties because the said agreements had not been approved by The Attorney General as that was internal matter that did not affect outside third parties.  In this regard he relied on the principle in Turquand’s case [1856] 6E & B 327.

 

Counsel for the Applicant also submitted that the 2009 bid notice was issued when the Applicants were preparing to do the work yet they were not consulted nor given an opportunity to be heard.  This was injurious  to the Applicant’s business and offended the principles of natural  justice.

Whereas Counsel for the Applicant conceded that the Applicant’s signed contracts were to end in 2008, the Respondents continued to contract other jobs also to be done.

 

Counsel for the Applicant submitted that according to the contract signed between the parties in August 2007 (no specific date was mentioned in the recitals at P. 27 of the contract or P. 38 of the bundle to the affidavit of Mr. Lubega dated 26th October 2009) it was envisaged that the Applicant would do both phase 2 and 3 so it was one contract.  He further submitted that it would make technical sense for the Applicant to do both phase 2 and 3 as opposed to introducing a new party altogether.

 

Counsel for the Applicant noted that expectations had been created in this relationship and the Applicant had done some of the maintenance and support work in anticipation of a formal agreement for phase 3.  He further observed that the conduct of the parties showed an intention to conclude a contract for phase 3 and that is why a service level agreement was reached the terms of which had been agreed to between the Applicant and the management of the Respondent Fund.

 

Counsel for the Applicant submitted that whether the documents relied upon contemplate the execution of a further contract is a question of construction and in this case there was nothing to negative that intention.

 

As to the monetary claims counsel for the Applicant submitted that the sums had been particularized and broken down.  He submitted that the work had been requested for by the Respondent, done by the Applicant and invoiced.  Counsel for the Applicant submitted that there were supporting documents to the monetary claim like e-mails and time sheets.  Furthermore the Respondents had not contested the invoices so the claims should be awarded.

 

Legal arguments of the Respondent

 

Counsel for the Respondent submitted that though the application was one for the grant of prerogative orders it had been argued as action for breach of contract.  He submitted that the parties only signed two contracts.  One in June and the other in August 2007 (amended twice).

 

Counsel for the Respondent submitted that the Respondent had to comply with the PPDA Act while carrying out procurements such as this one.

 

Counsel for the Respondent submitted that if there was any claim by the Applicant not based on contract as in this case, then the claim must fail.

 

He further submitted that in order to extend the second contract Reg. 262 of the PPDA Regulation would have to apply.  These regulations prohibit an extension of a contract where the total price would go up by more than 15% of the contract price and 25% if the contract has been amended more than once.

 

He submitted that even the second contract should not have been given to the Applicant who had done a diagnostic study as this would amount to a conflict of interest on their part.

 

Counsel for the Respondent also pointed out that the management minutes of the Respondent Fund relied upon by the Applicant showed that any maintenance agreement for IMIS had to be procured in line with PPDA regulations.  If this was not done then such an Act would be void and a nullity in law.

 

In this regard Counsel for the Respondent submitted that if the money claimed by the Applicant was procured outside the law on the basis of the second contract, then it was unrecoverable.  Alternatively, if it was procured without a contract then there is nothing to recover.

 

With regard to judicial review Counsel for the Respondent submitted that the Applicant had to prove illegality, irrationality and procedural impropriety which had not been done here.  All that the Applicant had tried to do is show breach of contract.

 

Counsel of the Respondent also submitted that the Applicant should have first exhausted other remedies available to him before bringing an action for judicial review which had not been done.  He referred me to the case of

 

          Micro Care V Uganda Insurance Commission M.A No. 218 of 2009

 

where it was held judicial review is not available where an alternative remedy exists and that the practice to do so otherwise, is undesirable and should be checked.

 

Resolution of Dispute

 

I have addressed my mind to the motion and the affidavits for and against it.  I have also addressed my mind to the submissions of counsel for both parties for which I am grateful.

 

I must observe that this application presented court with a bit of a challenge at the beginning.  This so because it came “hot on the heels” of the new Judicature (Judicial Review) Rules, 2009.  The previous Rules (S. I. 79-1) did not provide for a relief of damages which the current ones do in rule 8.  This introduction of a relief of damages creates hybrid rules that import into it characteristics of a regular suit.  This led to a significant amendment to the original motion in order to establish the case for damages.  That is the reason why counsel for the Respondent then raised the query that the prayers for prerogative orders had been argued as though it was an action for breach of contract.

 

The innovation of the relief of damages notwithstanding the core character of an application for judicial review does not change.  Judicial review is not concerned with the decision as such but rather making process.  Judicial review is not an appeal and its jurisdiction is exercised in a supervisory manner not to vindicate rights but to ensure that public power is exercised in accordance with the basic standards of legality, fairness and rationality.  In my view, it only when a case for judicial review is made in the first place that a claim for damages under rule 8 can be upheld and not the reverse.

 

In this matter the impunged decision is bid advertisement of 4th June 2009.  A lot of evidence has been adduced by affidavit to suggest on the one hand, that this advert was actually in respect of phase 3 which already been promised or contracted out the Applicant while on the other hand no such contract existed and so a procurement in accordance with the PPDA Act had to be made.  From the lenses of judicial review the core complaint of the Applicant is that; it was not accorded a right to be heard before a decision was made against it.

 

The right to be heard was discussed in the case of

 

          Mpungu & Sons Ltd V Attorney General & Anor CA 17 of 2001.

 

In that case the Supreme Court held that

 

“… the Audi Alteram Partem rule is a cardinal rule in our administrative law and should be adhered to.  Simply put the rule is that one must hear the other side.  It is derived from the principle of natural justice that no man should be condemned unheard.  (See Black’s Law Dictionary) 4th edition.  However, one would have to prove that one had a right to be heard which had been breached and that the decision arrived at by the administrative authority had either deprived him of his rights or unfairly impinged on those rights thereby causing damage to the individual concerned.  Most cases involving the right to be heard have dealt with situations where a person was deprived of his property or livelihood.  But each case has to be looked at on its own merits …”

 

In the case of

          Ridge V Baldwin [1963] 2 WLR 935 HL

 

Lord Reidfound that a decision given without regard to the principles of natural justice is void.  That is the position of the law.  The primary test according to the Mpungu case (supra) is whether one had a right to be heard which had been breached.  The rest will flow from that.

 

In this case the Applicants argue that the bid notice of 2009 was actually the same as phase 3 of their contract and that they should have been consulted before a new competitive bid was made.

 

A look at the phase 2 agreement of August 2007 may shed some light on this.  Appendix (Description of the services) to that agreement (Page 27 or P. 38 of the affidavit bundle of Mr. Lubega) states

 

“Phase 3     Support services:  The consultant shall provide a basis for the establishment of future support to the improved IMIS system on an annual basis by way of a service level (SCA) on such terms and conditions as shall be agreed to by the parties hereto …”

 

 

 

 

 

The Appendix goes on to provide

 

          Scope of Services

This consultant will in this contract commence with and perform only phase 2 of the proposed assignment …”

 

To my mind the August 2007 agreement was only in respect to phase 2 and simply said that the Applicant could provide a proposal for phase 3.  The evidence on record also shows that this phase 2 agreement was directly procured but there was no guarantee that phase 3 would also be directly procured and not put to open tender.  In any event there did not exist a contract/agreement between the parties for phase 3.  Would that give the Applicant a right to be heard with regard to the procurement of a phase 3 service contract?  I find not.

 

I find that the Respondent Fund was under a legal obligation to follow the PPDA Act and if they were not doing so, I agree with counsel for the Respondent that the PPDA Act itself has remedies to deal with that open to the Applicant.  I must however, observe (conceded to even by their own counsel) that the Respondent Fund was a bit clumsy in the manner in which it handled the IMIS contracts to the extent that they even signed them off without the approval of The Attorney General as required by law.  This can lead to Fund losses especially where goods and services are supplied. 

 

That notwithstanding orders for judicial review are discretionary in nature and in this matter no case has been made out for the grant based on the grounds in the motion.  I so find.

 

As to the claim for damages, I have already stated that such damages should be awarded where a case for judicial review has been made and up held.  This is not the case here.  Without such orders for judicial reviews what remains is a claim for alleged non payment for services rendered which is a vindication of the parties rights.  This is not what judicial review is about and must be done by separate suit.  I accordingly decline to grant the award of damages.

 

Those being my findings I dismiss this application with costs.

 

 

……………………………………

Justice Geoffrey Kiryabwire

JUDGE

 

Date:  24/08/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24/08/12

3: 57 p.m.

 

Ruling read and signed in open court in the presence of;

 

  • Bwogi h/b  for Masembe for Applicant
  • Ms. Kintu h/b  for Muwema for Applicant

In Court

  • None of the parties
  • Rose Emeru – Court Clerk

 

 

 

…………………………………

Geoffrey Kiryabwire

JUDGE

 

Date:  24/08/2012