The appellate court has directed a contractor and subcontractor to share the losses in the Kampala Capital City Authority (KCCA) shillings two billion street lighting venture.

A panel of three justices, led by Catherine Bamugemereire (now Supreme Court Judge), directed that Kiboko Enterprises Ltd bears 80% of the loss for its failure to perform on the execution of the civil works while Philips Lighting Egypt accounts for 20%.

Other justices on the panel, include the deputy chief justice Richard Buteera and justice Christopher Gashirabake.

Besides that, KCCA also raised concerns about the origin of the imported products, which were not from China, but India. This prompted KCCA to terminate the contract and seek compensation, which the respondents refused to pay, leading to the lawsuit.

In a ruling dated March 28, 2024, the justices agreed with trial judge David Wangutusi, the then head of the Commercial Court, that Kiboko Enterprises breached the contract by importing the products from India and not from Phillips factories in China.

“If a party does not receive the benefit of the contract by reason of the other party's breach, the innocent party has a legal right to recover money that it advanced to the contractor,” Bamugemereire explained.

She observed that Kiboko Enterprises was under obligation to abide by the terms of the agreement and produce lighting on Kampala streets to the standard required under the contract.

The justices also ordered Kiboko Enterprises to pay Philips East Africa Ltd, the main contractor and subcontractor Philips Lighting Egypt costs of the appeal.

Court documents indicate that given Philips East Africa status as a foreign entity, it requested Kiboko Enterprises to submit and execute the bid on its behalf. However, failure by Kiboko Enterprises to complete works on time, prompted Philips East Africa to relinquish its obligations to Philips Lighting Egypt to complete the works.

The court heard that KCCA had awarded Phillips East Africa a two-month contract worth sh6.9b to install 750 streetlights on selected roads within Kampala, but first made an advanced payment of sh2.1b, which was received by Kiboko Enterprises, the subcontractor.

“This appeal is herewith dismissed with costs to the respondents and I agree that the appellant was more to blame for non-performance on the contract and for procurements which were below the pale,” Bamugemereire ordered.

The justices noted that Kiboko Enterprises prepared bid documents, which provided that the country of origin of supplies was China but also provided that 27% and 42% (lighting centre pole, complete raw materials, and Iabour for the electrical and civil works) were of Ugandan origin.

The justices rejected a claim by Kiboko Enterprises that it was not aware of the specifications required by KCCA at the time of availing the quotation.

“The appellant did not disclose to the respondents its intention to procure from India. This does not exonerate responsibility for mis-procurement of products but rather constitutes a breach of contract,” Bamugemereire ruled.

She added: “It is no doubt that the appellant omitted shipment of goods from China and instead, without disclosure or clearance, shipped goods from India”.

The justices also rejected Kiboko Enterprises' assertions that their representative only witnessed the main contract that was signed on October 22, 2015, between KCCA and Philips East Africa Limited, but did not have knowledge of the contents of the agreement.

They observed that Praveen Kumar Kasula, was acting as the appellant's representative during the signing of the main contract and thus his role was to have an in-depth understanding of the contract's contents.