Court name
High Court of Tanzania

Chapakazi Building Contractor vs Parokia Ya Kiwanja Cha Ndege () [1986] TZHC 2 (22 January 1986);

Law report citations
1983 TLR 252 (TZHC)
Media neutral citation
[1986] TZHC 2
Lugakingira, J.

Lugakingira, J.: This was an action for various disbursements following the rescission of a contract.  It was rather involved.
The plaintiff is a building construction firm under the sole proprietorship of Mr. Gislar D Macarius Kihaule and the defendant is a Catholic Church body, both based in Dodoma.  By a written agreement dated 24 September, 1981 the defendant engaged the plaintiff to construct a church building on Plot No. DO/1445/7 at Area 'C' in the Municipality of Dodoma.  In so far as this dispute is concerned the material parts of the agreement are E contained in Clauses 1 to 5 and state as follows:
    1.   That the contractor shall build the church on the plot and in accordance with the specifications and the terms and conditions hereto.
    2.   That the contractor shall provide all the material and labour for the building and do the F actual building.
    3.   That the contractor shall commence said building work on the 25th September, 1981 and complete the building work by he 25th July, 1982 the date on which the contractor shall hand over the completed church. G
    4.   That in carrying on the building work the  contractor  shall  be guided by the Architect Mr. Malangaho in so far as the design of  the buildings and materials to be used is concerned.
   5.   (a)That for the total work to be carried out by the said contractor in the said building he H shall be paid shillings one million and one hundred thousand only (Shs.1,100,000/=).
      (b)That the aforesaid payment shall be paid to the contractor  when he has built the church to reach the levels hereunder mentioned to the satisfaction of the Architect herein before named  to be expressed by him in writing. I

Then follows a table of twelve levels or stages and the sums payable at each stage A expressed in percentages of the entire price.  The stages material to this case are (i) and (ii) and state:
    (i)     Advance payment 15% 150,000/=
   (ii)    Foundation level 10% 100,000/= B
There is also Clause 6 which provides for retention money of 50,000/= payable "at the expiration of that period the church is found to be in good condition".  Clause 7 provides that the agreement is to be interpreted in accordance with the laws of Tanzania with such C terms and warranties ordinarily applicable to building contracts.
Construction began rather unsteadily.  This was attributed to the defendant's inability to provide approved building plans in time, but it was particularly due to the plaintiff's difficulties in finding building materials.  The plaintiff was initially provided with draft D building plans.  The approved plans were not made available until 6 November, by which time the plaintiff was already digging the foundation.  The approved plans also indicated amendments to the draft.  Whereas the draft plans included 8 additional  columns there was also provision for a beam all round the foundation.  By degrees the plaintiff proceeded with construction according to the approved plans.  But on 26 E March, 1982 some expert of the defendant's - not Mr. Malangahe - inspected the works and directed the addition of two more columns.  These were valued at 20,000/= and paid for separately.
Meanwhile, however, the works had been progressing slowly.  As early as 19 February F the defendant had written to the plaintiff (Ex. D1) expressing dissatisfaction, in fact inviting the plaintiff to appear and show cause why the contract should not be terminated.  The plaintiff replied on 20 April (Ex. P6) pleading difficulties in procuring building materials and raising the issue of the rise in prices.  It stated that it would be impossible G to complete the works on the agreed date.  This prompted a meeting of the parties on 25 May.  At this meeting it was agreed that the plaintiff would have building materials on the site by 30 June.  There was no change in the date of completion.  In fact at the time of the meeting building activity had completely ceased and never resumed.  The H foundation was still incomplete.
The plaintiff was unable to bring building materials as agreed. On 5 July the defendant wrote a letter (Ex. P7) suspending the contract. In the same month it awarded the contract to Messrs. Central Engineering Works. This prompted the plaintiff to engage a civil engineer, Mr. Mathias Malinga, to evaluate the existing works. Mr. Malinga's I evaluation was 316,785/=,

exclusive of the value of the unused materials at the site.  On 6 September the parties A met.  At the conclusion of the meeting a document (Ex. P10) was drawn up and signed by the both parties rescinding the contract.  The document also stated that the plaintiff would take half the bricks at the site.
By that time the plaintiff had been paid as stipulated in stages (i) and (ii), that is, a total of B 250,000/=, and had been paid 20,000/= for the two additional columns, making in all 270,000/=.  Having regard to Mr. Malinga's valuation, the plaintiff considered itself to have been underpaid by 46,785/=.  The plaintiff also valued the unused materials at the C site at 58,220/=.  It therefore brought this action claiming in all 105,005/= on a quantum meruit.
The defendant similarly valued the existing works.  The plaintiff had substantially laid the hard core (i.e. stones) in the floor but was yet to lay the concrete floor slab, the final stage in the making of a foundation.  According to Mr. Malangahe the existing works D were worth 210,000/=, which suggested an overpayment of 40,000/= on stages (i) and (ii).  Further, the plaintiff had not completed the two additional columns for which it was paid 20,000/= Mr. Malangahe estimated the completed work to be worth 10,000/= which also suggested an over payment of 10,000/=.  The defendant, therefore, E counter-claimed 50,000/= as money had and received after denying the plaintiff's claim.
The plaintiff was unrepresented while the defendants were represented by Mr. Geoffrey Alimwike.  The following issues, which I have taken the liberty to restructure, were agreed upon: F
   1.   Whether the plaintiff's failure to complete the works by the agreed date was for reasons beyond its control.
   2.   Whether the amendments to the building plans entailed extra work.
   3.   Whether the plaintiff is entitled to further payment on a quantum meruit. G
   4.   Whether any building materials were left at the site.
   5.   Whether the plaintiff was overpaid.
   6.   Reliefs. H
The first issue raises impossibility of performance or frustration.  The plaintiff relied on the defendant's delay in making approved plans available and on its own difficulties in obtaining building materials, and even seemed to blame the defendant in both aspects.  I think the blame should be settled first.  First of all, I do not see what harm was I occasioned by the absence of approved plans.  In fact, the plaintiff went ahead with

digging the foundation and making bricks before getting the approved plans.  There was A therefore a lot that could have been done without approved plans.  Regarding difficulties in obtaining building materials and the implied blame for lack of assistance, it seems that the plaintiff did not appreciate the terms of the agreement.  According to Clause 2, the obligation to find all the materials was the plaintiff's.  Any difficulty in the B matter did not have the effect of altering that clause.
Turning to impossibility of performance we find that the law does not take cognizance of matters that are within the parties' control.  (Although Tanzanian law was specifically declared applicable to the contract, I have found no authority for apprehension that it could be different from English law on the subject.  I will therefore feel free to refer to C English law and decisions where necessary.)  In building contracts it is not hardship or inconvenience or material loss which calls the principle of frustration into play: Davis Contractors Ltd. v Fareham U.D.C. [1956] A.C. 696.  That was a case where the plaintiffs pleaded bad weather and unforeseen shortage of labour resulting in delay in D performance with a consequential rise in costs.  The House of Lords held unanimously that the contract had not been frustrated so as to entitle the plaintiffs to claim their extra costs on a quantum meruit.  What would give rise to frustration is, for instance, the destruction of the works by fire: Appleby v Myers (1867) L.R. 2 C.P. 651, or Egovernment prohibition of, or restrictions on, building operations: Metropolitan Water Board v Dick, Kerr & Co., Ltd. [1918] A.C. 119.  In other words, what is relied on as causing frustration must be of a nature which the parties could not by any diligence have foreseen and provided for in their contract.  In the case before me, the plaintiff was F aware of the shortage of building materials in the country, that being a notorious fact.  It was therefore a factor which a prudent contractor could have provided for in the contract.  I hold that the contract was not frustrated.
It should indeed be mentioned that the termination of this contract did not proceed on G any notion of frustration.  What transpires is that both parties were apparently convinced of the plaintiff's inability to carry out the works and decided to rescind the contract.  Admittedly, the dealings and communications of the parties, having been mostly unprofessional, do not admit of easy interpretation.  When Ex. P7 of 7 July is looked at, H it is both a suspension and a termination of the contract.  In the first paragraph it says " umesimamishwa kazi ya ujenzi", which would mean a suspension, but in the third paragraph it informs Mr. Kihaule that he would be called to a meeting "ili muweze kuafikiana kuhusu gharama za ujenzi uliofanyika mpaka sasa", which would imply a I termination of the contract.  The latter position tends to be strengthened by the appointment of another

contractor immediately afterwards.  But then came the meeting of 6 September when ex. A P10 was drawn up.  The first paragraph states:
   Leo tarehe 6-9-1982 makubaliano kati ya Ndugu Chapakazi na Parokia ya Kiwanja cha Ndege ni kwamba Nd. Chapakazi si mjenzi wa Kanisa iliyotajwa hapo juu (my emphasis), kama B ilivyotajwa kwenye mkataba uliowekwa sahihi tarehe 24 Septemba, 1981.
This would mean that the contract was on that date rescinded.  But the second C paragraph goes on to state:
   Imekubaliwa kuwa kabla ya kufuta huo (my emphasis), Ndugu Chapakazi atachukua nusu ya matofali ya 'Block' yaliyopo kwenye Kanisa linalojengwa.
This would mean that rescission of the contract was in abeyance and contingent upon the D plaintiff's taking half the bricks.  It is common ground, however, that the parties' contractual relations ceased with the signing of Ex. P10.  I therefore take the view that the contract was bilaterally rescinded on 6 September, and in circumstances that E amounted to a dissolution impliciter.  All in all, I am satisfied that the issue of frustration did not arise.
In connection with the second issue, the plaintiff complained that the amendments to the building plans entailed extra work.  This is tied up with the complaint that apart from the F rise in prices, the plaintiff had to use the more expensive 25 mm. high tensile bars in lieu of the 20mm bars stipulated in the plans.  The latter were not available.
As stated earlier, the draft plans made provision for 18 columns only but the approved plans made provision for a further 8 columns.  There was also provision for a beam G skirting the foundation.  Two more columns were added in March.  It is settled that where a contractor has done work outside the contract he can recover for such extras although he had not completed the contract work: 3 HALSBURY'S LAWS, 3rd edn., para. 825.  I will begin with the 8 columns.  Did they entail extra work? The answer is to H be found in the evidence of Mr. Malangahe who said:
   These did not entail any additional work.  The reason is that there was a modification of the original columns to a smaller size.  As result, therefore, the same amount of concrete and I bars which were

   used in the 26 columns were the same as would have been consumed in the original 18. A
Mr. Malangahe illustrated this by reference to the plans - good to the eye but not easy to decipher - and Mr. Kihaule did not challenge the contention.  I am satisfied that the 8 B columns did not entail extra work.  On the other hand, it was conceded that the further two columns were duly paid for.  The only extra works, therefore, appears to be the beam in the foundation.  Ideally and according to practice, this should have been the subject of a separate agreement as was the case with the two extra columns.  There was no such agreement.  The matter will therefore fall for a consideration generally under the C issue of quantum meruit.
The question of prices and the use of superior materials will best be considered after settling the nature of this contract.  I will therefore pass on to the third issue.
The third issue raises a matter of considerable importance.  Accepting that the existing D works as valued by the plaintiff were worth 316,785/= the question is whether the plaintiff can recover 46,875/= on a quantum meruit.  To resolve this one has to turn to the nature of the contract.  It is now opportune to state that there are two types of building contracts: contracts entire and contracts not entire.  In Halsbury's Law (op.cit.), E para. 822, four varieties of contracts entire are listed, the first two of which are relevant, namely,
   (1)     a contract to construct the whole building or works in consideration of the payment of a fixed sum of money ... often called lumpsum contract's (and) F
   (2)     a contract to construct the building or works in consideration of a specified price made up of separate payments for each separate part of the building or works. G
Contracts not entire are those where there is no obligation on the contractor to construct the whole of a particular work.
It was common ground that the plaintiff was engaged to construct the whole of a H particular work.
It was common ground that the plaintiff was engaged to construct the whole church building at a fixed price of 1,100,000/=.  That amounted to a contract entire.  The question is whether it fell under category (1) or (2) above.  This turns on the construction of Clause 5 (b) of the agreement which makes provision for payment in instalments.  It is again stated in Halsbury's Law, para. 824, that "In most building and engineering I contracts, provision is made for the payment of instalments during the

progress of the work.  It depends on the construction of the particular contract whether A or not the effect of such a provision is to prevent the contract being entire."  Although the present contract provided for payment in instalments, it will now be recalled that the instalments were not the price for each separate stage; rather, they were percentages of B the entire price.  Stage (i), for instance, was an advance payment before any construction commenced.  The actual price for each separate stage could indeed be higher or lower than the instalments stipulated.  I am therefore of the view that this contract was a contract entire, or a lump sum contract, which falls under category (1).
Whether or not a plaintiff can recover on a quantum meruit in a lump sum contract has C long been settled.  Generally speaking a party who has failed completely to perform his part cannot recover payment for the work he has done, for his right to payment does not arise until he has carried out his part of the bargain.  An exception to this rule is that D where, as in the instant case, payment is to be made by instalments, he can only recover those instalments but not the cost of the work actually done, unless there is evidence of a fresh agreement entitling him to recover on a quantum meruit.  In Sumpter v Hedges [1898] 1 Q.B. 673, the plaintiff, a builder, contracted to build two houses and stables on the defendant's land for a lump sum.  When the buildings were still E in an unfinished stage the plaintiff informed the defendant that he had no money and was not going on with the work any more.  The plaintiff sued to recover payment for the work done partly on a quantum meruit.  Smith, L.J. said: F
   The law is that, where there is a contract to do work for a lump sum, until the work is completed the price of it cannot be recovered.  It is suggested however that the plaintiff was entitled to recover for the work he did on  a quantum meruit.  But in order that that may be so, G there must be evidence of a fresh contract to pay for the work already done.
What amounts to a fresh contract to pay for the work already done may be inferred from the conduct of the defendant, but not every conduct would sustain such an H inference.  Addressing himself to this aspect in the same case, Collins, L.J. said:
   There are cases in which, though the plaintiff has abandoned the performance of a contract, it is possible for him to raise the inference of a new contract to pay for the work on a quantum I meruit from the defendant's having taken the benefit of that work, but, in order

   that that may be done, the circumstances must be such as to give an option to the defendant A to take or not to take the benefit of the work done.  It is only where the circumstances are such as to give that option that there is any evidence on which to ground the inference of a new contract ....  The mere fact that a defendant is in possession of what he cannot help keeping, B or even has done work on it, affords no ground for such an inference.  He is not bound to keep unfinished a building which in an incomplete stage would be a nuisance on his land.
Admittedly, the above case was one where the plaintiff abandoned the work.  In the C instant case the plaintiff was willing to continue with the work, its obstacles notwithstanding, but contract was mutually rescinded.  I have no doubt, however, that the principles laid down in the above case apply with equal force to the case before me.  The agreement was to pay the plaintiff in instalments upon reaching certain stages of the D works, a normal practice even in lump sum contracts.  There was no agreement to pay for the work done based on the plaintiff's costs.  To imply such a term would be inconsistent with the express terms of the contract and I am precluded from doing so.  The fact that the contract was mutually rescinded raised no inference of a new agreement on payment either.  If it were the intention of the parties to enter into such an agreement E they could have done so in ex. P10.  Further, such an agreement cannot be inferred from the fact that the defendant took the benefit of the work done.  The defendant had no option to take or not to take the benefit of that work.  It could not keep unfinished a F church which in an incomplete stage would have been a very unchristian nuisance.  The proviso to s. 70 of the Contract Ordinance, Cap. 433, is also relevant in this regard.  I have therefore reached the conclusion that the plaintiff is not entitled to recover on a quantum meruit, but could possibly be entitled to recover the instalments in stages (i) and (ii) which have already been paid. G
The foregoing actually disposes of the question of the rise in prices and the use of superior materials, but something more could be said.  First of all, Mr. Kihaule's evidence on prices was most unsatisfactory.  He tendered documents which he said were for "illustration" only except for ex. 15 in relation to 200 bags of cement purchased H on 11 November.  But there was no evidence that the price of this cement was higher than the price prevailing at the signing of the agreement.  Be that as it may, the case of Davis Contractors cited above is also authority for the proposition that a builder who undertakes to perform a lump sum contract undertakes the commercial risk that delay would increase his costs.  Where it is intended to guard against this, the normal practice I is to insert an adjustment

clause in the contract to accommodate any fluctuation in prices: cf. Otis Elevator Co. A Ltd. v Bhajan Singh & Ors. [1967] E.A. 78.  There was no adjustment clause in the instant case and it is not open to the Court to add anything by way of an implied contract.  The same is true of the plaintiff's use of the 25mm high tensile bars in B substitution for the 20mm bars stipulated in the building plans.  First of all, Mr. Kihaule did not know their price and said: "I cannot tell what the price of the 25mm bars was in 1982".  Most significant is that the use of these superior bars was not agreed upon.  Clause 4 of the agreement required the plaintiff to be guided by Mr. Malangahe in, inter alia, the materials to be used.  Mr. Kihaule went ahead and made use of the 25mm bars C without reference to Mr. Malangahe.  In Forman & Co. Proprietary v The Liddlesdale [1900] A.C. 190, it was held that where, in an entire contract, the contractor without authority from the employer constructs the works of better materials than those stipulated in the contract, he can only recover the contract price without any D increase in price for the superior materials used.  In short, the rise in prices and the use of superior materials are irrelevant in a contract of this kind.
In the fourth issue we are required to decide whether any building materials were left at the site so as to entitle the plaintiff to payment of 58,220/=.  Once again, the evidence E was uncertain as to the type and quantity of materials left at the site.  The quantities alleged by Mr. Kihaule were greater than those admitted by Mr. Smittar Singh of Central Engineering Works.  Mr. Singh admitted finding about 400 to 500 concrete blocks, about half a lorry-load of stones, a store, one bag of cement, scattered sand, F one lorry-load of 1/4" aggregate, and scattered pieces of timber which he termed "takataka".  He said that if any more materials were left by the plaintiff, they might have been stolen before he took over.  Mr. Kihaule interjected to say: "Oh yes' there were a lot of thefts.  I suffered a lot too".  It was then in evidence that there was no watchman at the site from the end of May to the middle of July when the second contractor took G over.  If thefts could occur when the plaintiff was still at the site, it must have been a free for all during that interim.  On a balance of probabilities, therefore, I accept the quantities and state of the materials as admitted by Mr. Singh.
Without going into the value of the admitted materials, the important question is whether, H in principle, the defendant is liable to pay for the same.  Some building contracts contain a vesting clause giving over to the employer materials brought at the site but not fixed in the work.  In the absence of such a clause it is implied that such materials remain the property of the contractor.  There was no such clause in this case and that raises a I prima facie inference that the materials left at the site remained vested in

the plaintiff.  The position, however, is radically altered by the terms of Ex. P.10.  This A document mentioned bricks only, half of which the plaintiff was to take and did take.  The omission to mention other materials was not accidental.  In Mr. Kihaule's words:
   Ex. P10 talks of bricks only because I was then of the view that I could donate the rest of the B materials gratuitously to the Church, believing I was dealing with Christians.
It is evident, therefore, that the plaintiff elected to give up its rights over the other materials.  But it is not correct to say, as Mr. Kihaule did, that the election was C gratuitous.  I think it was supported by consideration.
In this case, time was of the essence of the contract.  The plaintiff was by Clause 3 required to complete and hand over the church by 25 July.  This date was never varied.  (Although the defendant awarded the contract to another contractor apparently before D that date, I think it was entitled to do so as by no miracle could the plaintiff have fulfilled the condition.)  When time is of the essence of the contract, performance must be completed upon the precise date specified, otherwise an action lies for breach.  In this case, therefore, the defendant could have repudiated the contract and sued the plaintiff for damages.  It did not take that course.  That, in my view, constituted sufficient E consideration for the materials left by the plaintiff.  As stated in Chitty on Contracts (General Principles), 24th Edn., para. 179.
   The parties to a contract may agree to rescind it at a time when each has outstanding rights F under the contract against the other.  In such a case each party generally provides consideration for the other's promise to release him by giving up his own rights under the contract. G
There was hence consideration in this case.  I therefore find the defendant not liable to make payment for the materials left at the site.
It follows from the foregoing that the whole of the plaintiff's claim must fail.
I come to the fifth issue, that is, whether the plaintiff was overpaid and whether the H defendant is entitled to recover the overpayment.  The defendant alleged overpayment of 50,000/= on the uncompleted foundation and the uncompleted two extra columns.  Assuming that the defendant's valuation was the correct one, there appears to be a case of overpayment.  The issue is whether the overpayment is recoverable.  Generally, any I money paid in pursuance of an abortive contract can be

recovered by an action for money had and received.  But that is generally speaking; A otherwise one has to turn to the class of the contract and the terms thereof.  In building contracts there is invariably a clause for payment upon certification by the employer's architect.  In the instant case, Clause 5(b) stipulated that payments would be made upon certification by Mr. Malangahe.  It was agreed on both sides that Mr. Malangahe B certified the payments although I was not shown written certificates.  The question, therefore, is whether the defendant was bound by Mr. Malangahe's certificates and this turns on the latter's appointment and the extent of his authority. C
In Gomes v Singh [1964] E.A. 756 it was held that the appellant's architect had limited authority because (1) he was appointed without reference to the contractor; (2) he was appointed when the building was substantially complete and the date of completion had almost arrived; and (3) he was not appointed under the terms of the contract, there being D no provision therein for such appointment.  That case is evidently distinguishable from the present one.  In this case Mr. Malangahe's appointment was from the beginning part and parcel of the contract.  Clause 5(b) also provided that payment would be made upon "certification of the Architect hereinbefore named".  This stipulation was not E qualified by another clause.  In the circumstances, I find that the appointment of Mr. Malangahe was not a super-added protection to the defendant, but he was clothed with full and unqualified authority to make decisions binding on the defendant.  In this view I am further strengthened by the fact that when, on 2 September, Mr. Kihaule met the defendant's representatives to discuss his valuation of the works, they refused to discuss F the matter because Mr. Malangahe happened to be absent.  I am therefore of the view that the defendant was bound by its architect's certificates.  If there was any error or negligence on the part of the architect, it is the architect, rather than the plaintiff, that is liable to the defendant for any overpayment.  It was held in Wisbech R.D.C. v Ward G [1927] All E.R. Rep. 486, that when an architect issues interim certificates, as Mr. Malangahe did, he is not an arbitrator or quasi-arbitrator but an agent and would be liable for any negligence in granting the certificates.
The matter may also be viewed from the point of view of equity.  Section 72 of the H Contract Ordinance provides for the repayment of sums paid under a mistake as to a matter of fact.  This provision is in pari materia with s. 72 of the Indian Contract Act, 1872 hither-to applicable in this country.  The latter provision was considered by the High Court of Uganda in Jamal Ramji & Co. Ltd. v Lint Marketing Board[1962] I E.A. 752 which stated, citing the Privy Council in Sri Shiba Prasad Singh v Maharaja Srish Chandra Nanli (1949), 761.A. 244, that it

was not to be implied (from the section ) that every sum paid under a mistake is A receivable no matter what the circumstances may be.  There may be in a particular case circumstances which may disentitle a claimant by estoppel or otherwise.  Similarly in K.M.P.R. v  The Official Assignee of Madras 1923 Mad. 17, it was observed that the Indian provision has to be qualified by the doctrine of equity in order to render it intelligible. B
On the strength of these authorities, I consider the application of our s. 72 to be subject to equity and I am again of the opinion that the plaintiff is not liable to repay the overpayment.  First, the defendant is estopped from denying Mr. Malangahe's authority with whom the plaintiff dealt in good faith.  Secondly, this was not a case of total failure C of consideration and there was neither allegation nor suspicion that the entire money was not utilised in the contract works.  In the words of Goff and Jones in The Law of Restitution (1966) at p. 25
   ... it is now established that money paid under a contract later brought to an end is D recoverable, provided that the consideration for the payment has wholly failed.
For the reasons I have endeavoured to state, I find that neither the claim nor the E counter-claim has been established.  I dismiss both.  The parties will bear their costs.
Order accordingly.