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Concorp, according to Tumwesigye, had a lower bid thus qualifying as suitable candidate for the contract. He further blasted Alcon for not honouring its terms of the contract before accusing it of altering a draft Letter of Credit from NSSF. It took over one month for the contractor to mobilize at site and he immediately failed on the co-financing agreement. It is also clear that the contractor failed in his very first year of operations.
The cancellation of the contract sparked a huge legal battle, with Alcon winning on several fronts. How He Disappeared Business January 13, January 13, January 12, Related Articles. January 11, Learned counsel pointed out that apart from the building contract, there was a co-financing agreement between NSSF and the same Alcon International incorporated in Kenya. He argued that the thrust of the plaint was for breach of contract and orders sought for damages for wrongful termination of contract.
These were the same grounds argued during the arbitration and the contracts provided the basis upon which the arbitrator gave his award. He submitted that the issue then was whether at the time the Court of Appeal heard the appeal, Alcon International Uganda did have any cause of action in the circumstances.
The answer according to learned counsel was no because they were never a party to the contract. They could only have had a cause of action by pleading assignment because that is where they would have derived their right. According to Clause 17 of the building contract, any assignment would have required the consent of NSSF.
He pointed that the holding in the case was that where an assignment is done ,first of all as a point of law there is a prohibition on assigning the burden of a contract, secondly that where an assignment is done where there is a prohibition in contravention of a clause, then there cannot be an effective assignment, and thirdly on that point it also gives the rationale of why there is that prohibition because simply a party has contracted to deal with party A and it has contract with party A because of the expertise or the skills.
He argued that if that party has got to bring another party then it is only critical that its consent must be sought because you cannot know whether the other party brings to the table the same skill and experience that this other party is coming with.
He concluded that the only means through which they would have had a cause of action, the assignment, was contrary to the signed contract and was never pleaded, and was never proved.
Tumusiime for the respondent, submitted that at all times Alcon International Ltd referred to as a private limited liability company. This was the same description used in the High Court Civil Suit of and in the arbitration. It never described itself as Alcon International Kenya.
To counsel that is where the cause of action is derived from. In Civil Application No. Furthermore he contended that,. Counsel for the respondent maintains that there is a lot of evidence to corroborate the evidence of the assignment of the construction contract.
Learned counsel admitted that contrary to what was stated in High Court Civil Suit of , it was not Alcon Uganda that had signed the construction contract but it was assigned to them.
The assignment was made before the first brick was laid. There was a co-financing agreement that was also signed by Alcon International Kenya before construction commenced and a supplementary agreement in that was signed by Alcon Kenya and equally assigned to Alcon Uganda.
Despite the fact that the company in Uganda did not have the track record in construction, the Managing Director of the Kenyan company was the same person who moved to Uganda and started the company here therefore as far as experience and resources are concerned, it was the same human being who had that experience in Kenya who was translating that experience that was needed in Uganda. These were confiscated by the appellant and have never been returned.
Counsel also submitted that this ground should not have been brought as a ground of appeal as it had never been brought before the court before. After the decision in Civil Application No 50 of , the appellants had the opportunity to challenge the decision but they did not do so.
The Court of Appeal could not deal with the matter because it was functus oficio and rule 22 of Court of Appeal Rules was not applicable. The appellant therefore slept on their rights, he concluded. He prayed that the first ground of appeal should fail. In response to arguments made by learned counsel for the respondent, counsel for the 1 st appellant maintained that the contract was signed between themselves and Alcon Kenya and all letters were addressed to Alcon International which had an address in Kampala, but this is the norm for any company doing business within the country.
There is also nothing within the contract that denotes that the word contractor would refer to assignees, administrators or successors in title.
The co-financing agreement was between Alcon International Kenya and NSSF, the contract termination letter was sent to the Alcon address in Kampala because any company doing business in the country will have a local address. Counsel pointed out that Mr. Kultar Singh himself stated in his affidavit that the Government of Uganda insisted that they wanted a company with a track record in construction which is why the contract was executed by Alcon International Ltd of Enterprise Road, Nairobi.
Counsel asserted that if there is evidence that counsel for the respondent was aware that Alcon Uganda was the ones actually doing the construction then the respondent would not have gone ahead to file pleadings that portrayed the plaintiff and subsequently the claimant as Alcon International Kenya because the plaint was based on breach of contract, which was executed by Alcon International Kenya. Counsel for the appellant maintained that NSSF was not privy to any of this information at the time.
The appellants contend that the respondent Alcon International Limited, Uganda has no cause of action because the basis of this suit is the contract that was signed between the first appellant NSSF and Alcon International Limited, Kenya, of which Alcon Uganda was not a party. The arbitration was based on various clauses within the contract such as Clause 25 which set the grounds and procedures for the termination of the contract by the employer.
Based on the available evidence, both the High Court in Miscellaneous application No. This finding was based on the evidence that it was Alcon International Limited Uganda that had constructed Workers House. Counsel for the respondent, Alcon International Limited Uganda , admitted that it was indeed Alcon International Limited Kenya that signed the contract, the co financing agreement and the supplementary agreement.
Taking into account the above facts, I am of the view that the cause of action is derived from the contract and therefore it is the Alcon International Limited Kenya that can make a claim in this regard. It should be noted that Alcon International Limited Uganda then changed its case and pleaded assignment instead of performance instead.
A valid assignment would give them locus standi to bring this claim. The issue of assignment of contract was dealt with in Civil Application No 50 of and the conclusion of the Court of Appeal was that the Alcon which signed the contract is not the Alcon that performed the contract. The respondent explains this by stating that there was an assignment of the contract, following an agreement within the Hanspal family that despite not having been successful during the tendering process, Alcon Uganda would perform the contract.
What is clear from this quotation is that while assignment or indeed novation is permitted by law, there still has to be a fulfillment of the elements necessary for a valid contract. There must be offer and. All these require both parties to be aware of whom they are contracting with.
According to this authority, the assignment did not fulfill the requirements necessary in order to be construed as legal assignment. Counsel for the respondent also maintained that they had a cause of action because they performed the contract.
The respondent relies on the affidavits of Rajesh and Ranjit Kent as proving the assignment as well as the finding of the court in Civil Application No 50 of that it is established beyond doubt that it is not a Kenya company but the Uganda company which performed the construction contract with NSSF.
Counsel also submitted while Alcon International Limited Uganda may have constructed the building, legally, they have no cause of action since they did not sign the contract. They might be able to bring a case against Alcon International Kenya for the money owed, based on whatever internal agreement they claim they had.
The respondent contended further that it has a cause of action based on the money it loaned to NSSF which includes 1. It has since then come to light, and been acknowledged by counsel for the respondent that it was in fact Alcon Kenya that signed the Co-Financing Agreement as well as the contract.
For that reason, Alcon Uganda is not entitled to that money. NSSF did not dispute or rebut the claim regarding around the plant machinery and materials. Since it has been proved that it was Alcon Uganda that built Workers House, it is likely that material they used was theirs.
Rajesh Kent in his affidavit stated that NSSF had promised to hand over the equipment once the work was done but has never done so. Since there has been no evidence presented to disprove this, Alcon Uganda could claim the cost for their plant machinery and materials. The respondent also argues that this ground should not have been brought as a ground of appeal as it had never been brought before the Court of Appeal. After the decision in Civil Application No 50 of , the appellants had the opportunity to challenge the court but they did not do so.
They would have been able to raise some of the issues before in the Court of Appeal before that Court became functus officio and Rule 2 2 of Court of Appeal Rules was not applicable. The appellants slept on their rights. The appellants on the other hand maintain that this issue was already brought up in the Court of Appeal Civil Application No of but was dismissed because the matters were subjudice in the Supreme Court and.
The Court of Appeal found that it was functus officio and therefore Rule 2 2 of the Court of appeal rules did not apply. Taking these matters into consideration, I am of the opinion that in the interest of justice and taking into account the fact that the matter could not be heard the Court of Appeal as it was subjudice in the Supreme Court, it is important that it is heard here in this Court.
It must be emphasized that the matter could not be raised earlier because of the fraud and misrepresentation perpetrated by the respondent as we shall see later in this judgment. The second ground of appeal is that the learned Justices of Appeal erred in law in upholding an arbitration award that was obtained illegally or contrary to public policy.
Mutesi for the 1 st Appellant. She cited Section 34 of Arbitration and Conciliation Act which provides:. She contended that the record shows that the respondent in obtaining the arbitral award conducted itself in a manner that was improper and which amounted to fraudulent conduct and which is an illegality in the eyes of the law. She argued that there were two main aspects of this ground of appeal, namely that;.
The Court in that case also cited the definitions provided in Blacks Law Dictionary, 6 th edition, page on the issue of fraud as follows:. A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which deceives and it is intended to deceive another so that he shall act upon it to his legal injury.
Anything calculated to deceive, whether by single act or combination, or by suppression of truth, or suggestion of what is false, whether it is by direct falsehood or innuendo by speech or silence, word of. As distinguished from negligence, it is always positive, intentional.
It comprises all acts, omissions and concealments involving a breach of a legal or equitable duty and resulting in damage to another. And includes anything calculated to deceive, whether it be a single act or combination of circumstances, whether the suppression of truth or the suggestion of what is false whether it be by direct falsehood or by innuendo, by speech or by silence, by word of mouth, or by look or gesture As these are findings of a Court they are no longer at the level of allegations but are findings of fact that have never been appealed against in that application.
On the basis of these findings by the Court of Appeal, Ms. Mutesi submitted that the arbitral award should be set aside having been obtained by fraud. Crane Bank Ltd. Tumusiime for the respondent disagreed with the submissions of learned counsel for the 1 st appellant. He maintained that an arbitral award can only be challenged under S. Cap 55 or under S. He submitted that the appellant proceeded under S. This is erroneous because under S 12 the award can be set aside only where: the award is improperly procured or; the arbitrator has misconducted himself and by extension where there is an error of law, on the face of the record.
He argued that counsel for the 1 st appellant had made no reference whatsoever to the words error of law on the face of the record. Even if the appellants had a right under s. He pointed out that it has been 11 years and under S 34 of Cap 4 they would have had 30 days. Counsel submitted further that the appellants had attempted to bring a similar argument in Misc.
On the issue of whether the respondent obtained and sustained the contract through corruption and bribery and whether it can be allowed to take any advantage of the claim, counsel submitted that the learned arbitrator agreed with the respondent and relied on Order 6 Rule 2 of the Civil Procedure Rules. He decried the lack of particulars, pleading and evidence to confirm these allegations of fraud, corruption and bribery and therefore dismissed the issue.
Counsel maintained that appellants had the opportunity to amend their pleadings and plead fraud but they did not do so. He submitted that in Stephen Lubega vs Barclays Bank. Civil Appeal No. Counsel contended that the appellant has never alleged that he lost anything. He submitted that fraud is a serious allegation and the particulars must be pleaded and proved.
Order 6 Rule 3 goes into detail about what must be shown: time, place etc. None of these have been pleaded. He prayed that the second ground be allowed.
In reply, learned counsel for the 1 st appellant argued that though the respondent claims they never described themselves as Alcon Kenya, the plaint presented shows that the respondent was a party to the contract. She reiterated her submissions that no evidence has been provided of the assignment apart from the affidavits of the Directors who have been proved to be not credible. On the issue of whether the conduct of the respondent amounts to what is contrary to public policy, counsel cited the Kenya case of Christ for All Nations vs Apollo Insurance Co.
With regards to morality the Judge said 7 would again without seeking to be exhaustive include such consideration as whether the award was induced by corruption or fraud whether it was founded on a contract contrary to public morals. Counsel argued further that all the various misrepresentations by the respondent amount to fraud. This was a material fact that was concealed in order to obtain a benefit and was therefore fraudulent.
She submitted further that the Court of Appeal in its ruling. She pointed out that the Penal Code criminalizes the action of false pretence and in as far as the definition of public policy includes anything that is contrary to the laws whether written or unwritten, then by going to court and withholding information that misleads a judicial officer into giving you a benefit that conduct is contrary to public policy.
She submitted that as far as the pleadings are concerned the respondent specifically claimed to be a party to the contract which it later on in the Court of Appeal admitted that it was not. She contended that this would amount to the offence of perjury which is criminalised under S.
Learned counsel submitted further that although certain issues were raised about the ground of appeal not falling within S. Therefore an allegation of illegality in procuring that award falls squarely within S. She concluded that as regards the standard of proof required for fraud, what was presented was based on findings fact of a court which have not been appealed against and are therefore not reversible.
She contended that there is no higher authority than the court. Therefore the appellant was relying on findings of fact of a court on who signed the contract and who instituted the suit, and the court itself found that the contract tender was fraudulently won. She prayed that the award be set aside as it was obtained by fraud and fraud vitiates everything. The complaint in this ground of appeal is that the learned Justices of Appeal erred in law in upholding an award that was obtained illegally and contrary to public policy.
Section 34 of the Arbitration and Conciliation Act Cap 4 provides inter alia,. An application for setting aside the arbitral award may not be made after one month has elapsed from the date on which the party making that application has received the arbitral award or if a request has been made under Section 33, from the date on which that request had been disposed of by the arbitral award. Under the old arbitration Act Cap. The first issue that must be dealt with is whether this appeal is barred by limitation.
Under the above Section counsel for the respondent submitted that Under S. Arbitration rules gave them only 8 weeks to apply to set aside the award. It has been 11 years. Under S 34 of Cap 4 they would have had 30 days. The arbitral award was dated 21 March But for the appellant it is contended that this situation is different as once a matter is on appeal then time cannot be said to be running against something that was not even pleaded, as was stated in Makula International supra.
This is in reference to Misc. Application No of of the Court of Appeal which was also referred to by counsel for the respondent who maintains that the issue was not addressed. Counsel for the 1 st appellant argues that the reason why this happened was because the matter was pending before the Supreme Court and was therefore subjudice. In Makula International Case the Court stated that as long as there is some matter of illegality discovered it can be raised at any time even if the appeal itself is totally incompetent.
Counsel further submitted that all these facts came to the knowledge of the 1 st appellant after the Court of Appeal had made a judgment and it was late in the proceedings in that these facts first came to light. Therefore there was no opportunity for this challenge to be made in the lower Court. It is for this Court allowed this ground to be added on the amended Memorandum of appeal. I agree and hold that due to the fact that the fraud was discovered on appeal, the appellants were not barred from raising it in this Court.
The Alcon Managers and Directors knew this fact which is why they concealed it. This conduct cannot be anything other than a deliberate concealment of pertinent information. The appellants also proved this allegation by reference to admissions made by the Directors of Alcon that assignment was made after a discussion within the family members only.
Civil Application No 50 of , the Court of Appeal made the following serious remarks regarding the conduct of the respondent:.
A few examples include the manipulation of the names of their companies in a manner calculated to confuse tax authorities and those individuals and entitles they deal with and the manner in which they contrived to fraudulently win the Workers House construction tender bid.
Under the laws of Uganda, these practices would be considered criminal. The worst culprits of them are Kultar and Davinder Hanspal. The two since crookedly registered and manipulated dubious companies variously called.
The activities and the demise of their other companies, namely Allied Concrete Works and allied Contractors Limited are not known. Nevertheless, we hold the view that these men are not credible at all and they can only tell some truths by accident. The evidence of Rajesh and Ranjit Kent as corroborated by numerous documents attached to the various affidavits of all the witnesses is preferable. The issue of fraud or illegality in this case revolves around the identity of Alcon International Ltd.
As it became apparent in Civil Application No 50 in the Court of appeal, the Alcon that signed the contract is not the Alcon that performed the contract. However, while assignment or indeed novation are permitted by law, there still has to be a fulfillment of the elements necessary for a valid contract.
I agree with counsel for the 1 st appellant that there must be offer and acceptance between the parties, and there must be an intention to create legal relations. All these require both parties to be aware of who they are contracting with. Therefore to create a legal assignment, notice in writing of the assignment must be given to the debtor, or other person liable to make the payment in order to entitle the assignee to bring an action for the money or the debt.
This principle upholds the doctrine of the privity of contract which states that a contract cannot confer rights, or impose obligations on. In this case it was necessary to have consent from both parties, which makes the arrangement within the Hanspal family, without the knowledge of NSSF fraudulent. The identity of Alcon is at the crux of the issue because according to the 1 st appellant, Alcon fraudulently misrepresented itself not only at the contracting stage but also during the performance of the contract, and throughout the subsequent legal proceedings.
A representation is fraudulent not only when the person making it knows it to be false, but also when he ought to have known or must be taken to have known that it was false.
In this case, there has been an admission by the respondent that the decision to have Alcon Uganda do the actual construction of Workers House despite Alcon Kenya having won the tender was made exclusively within the Hanspal family. The reason why this information was hidden from NSSF was because NSSF had already evaluated Alcon Uganda during the tendering process and had deemed it incapable of fulfilling the contract to the required standard.
This was not just a case of work being delegated to another capable company under the same umbrella group of companies. In this situation, the second company had been deliberately rejected in the award of the contract. The Alcon managers and directors knew this fact which is why they. This therefore cannot be anything other than a deliberate concealment of pertinent information. They also proved this allegation with reference to admissions by the directors of Alcon for example over the assignment that was made after a discussion within the family members only.
The respondent rightly mentions that Under S. However, it is also a well settled principle of law that if a transaction has been originally founded on fraud, the original vice will continue to taint it, however long the negotiation may continue, or to whatever ramifications it may extend.
Not only is the person who has committed the fraud precluded from deriving any benefit under it, but an innocent person is so affected, unless there has been some consideration moving from himself. Therefore, although the issue is raised in relation to the arbitral award, it actually applies to the whole which contract is tainted having been based on fraudulent misrepresentation. The Arbitration Act allows for 30 days in which to appeal an arbitral award.
However it should be noted that in law, fraud or fraudulent. Ltd 2 EA indicated that public policy would cover anything that was either inconsistent with the Constitution or the Laws of Kenya whether written or unwritten that was against the national interest of Kenya was contrary to justice and morality.
In this case, it is not enough to simply show that a party was misled. Court must be satisfied that some form of reprehensible or unconscionable conduct has contributed substantially to the award being obtained. The arbitral award was then given on the basis of fraudulent information which might not have otherwise happened. The award was obtained contrary to public policy.
Accordingly, I would allow this ground of appeal. The appellants contend that the learned Justices of Appeal erred in law in holding that the learned Judge did not err in law in staying the suit and referring the matter to Arbitration. Lule for the 1 st Appellant submitted that the learned trial Judge erred in sending the matter to arbitration as this reference was made without jurisdiction and therefore anything out of it is a nullity.
Counsel pointed out that when the matter came up for trial, the trial Judge considered the plaint and the defences and having regard to a provision in defence that the suit was premature on the ground that it should have been referred to arbitration, the trial Judge then said that is where it should go. He contended that the trial Judge did not take into account the provisions of law which give her the jurisdiction.
The Judge made the orders that temporary injunction should not be issued against the respondents but that the main suit be stayed and the matter referred to arbitration.