Court orders Tanzania Ports Authority to pay two firms Sh15 billion

Wednesday August 10 2022
Court bar
By Bernard James

Dar es Salaam. The High Court (Commercial Division) has ordered the Tanzania Ports Authority (TPA) to pay a total of Sh15.1 billion to two construction companies for breach of contracts relating to the construction of container depots in Dar es Salaam and Tanga ports.

The court agreed with JV Tangerm Construction Company Limited and Technocombine Construction Limited that TPA breached the contracts in several aspects including delay in affecting payments and changing scope of the work.

Judge Mustapha Kambona Ismail said the delays by TPA in issuing approvals and effecting payments have caused the joint venture to suffer loss.

“The plaintiff has suffered prolonged period of anxiety and uncertainty of more than a decade, during which a chunk of their time and resources have been consumed in pursuit of the matter.

“As the result of the first defendant’s (TPA) procrastinated behaviour, the plaintiff had to dedicate a bigger part, if not all, of its efforts in the project, meaning that it was difficult to engage in other contractual undertakings,” said the judge in his 116-page decision.

At the heart of a suit that two companies brought against TPA in 2015 was the allegation that the port authority had reneged on its undertaking in contracts for design and construction of container stacking yards in Dar es Salaam and Tanga ports.

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The joint venture was a winner of two multibillion tenders floated by TPA for design and construction of the container depots.

The first contract that was executed on September 9, 2009 involved design and construction of container-storage facility at Zambia Yard, Tanga Port at a contract price of Sh3.7 billion.

Documents show that the contract was on September 21, 2011 altered to incorporate some technological changes in construction methodology and execution of works.

The changes attracted additional costs of Sh836 million to bring to total cost to Sh4.7 billion.

The two parties entered into another contract on December 10, 2009 for the design and construction of the container stacking yard at Dar es Salaam Port.

The Sh7.7 billion-Dar es Salaam project involved the design and construction of ex-AMI Yard and ex-Copper Yard. Like its sister project, the Dar es Salaam project too was subjected to some variations that were intended to factor in technological changes.

The two companies alleged at the hearing of the suit that it submitted to TPA Performance Bonds, followed by mobilisation of machinery, plant and equipment, and labour, requisite for executing their duties in all sites before implementing its contractual obligation.

The plaintiff claimed that despite implementing their contractual duties, the defendants failed to fulfil their part of the contract in several aspects.

It accused TPA, among other things, of unilaterally changing the design and construction methodology from Consolid to Lean Concrete despite the fact that their bid offered a specific methodology whose design and construction methodology was accepted by TPA.

They also accused TPA of denial to handover ex-Copper Yard, causing prolonged suspension of works such that it was impossible for them to continue with execution of the project.

The company also accused TPA of delaying a takeover of the completed portion of the ex-AMI site for more than five months and also delayed payment of most of the certified amounts in the construction agreement.

The plaintiff further accused TPA of refusing to settle Final Account Claim in respect of construction agreement, and as the result they were unable to completely dis-engage from TPA by refusing to allow payment of outstanding sums and mobilisation.

The plaintiff’s further complaint was that TPA acted negligently in the performance of the contract. According to the company, delays in approving change of technology from Consolid to Lean Concrete and execution of the addendum for more than two years have bene cited as some of such instances.

They lodged a claim of special damage of Sh10.6 billion and Sh815 million as a claim for damages arising from idle time for plant and equipment and labour while they were mobilized for ex-Copper site.

The joint venture further claimed Sh12 billion and Sh794.6 million for idle time for plant and equipment and labour after completion of ex-AMI yard up to the date of termination of Dar es Salaam port.

They were also demanding Sh241.4 million allegedly arising from office overheads incurred during the prolonged suspension of the Dar es Salaam project and another Sh18.4 billion spent from the time the variations were issued to the time of approval and actual implementation of the Dar es Salaam project.

The company was also claiming Sh850 million that constituted a loss of profit from works in respect of ex-Copper Yard.

TPA and the AG strongly disputed the claims as wild and unsubstantiated. They conceded there were variations of the original contracts but contended that the mutually accepted variation were proposed through prior notices.

Regarding the notice of termination of contract, the defendants were adamant that issuance of the notice conformed to the requirements of the contract, and that the plaintiff was given an opportunity to institute follow-up measures that included exhausting available remedies.

Regarding refusal to settle claims arising from the final account, the defendants’ position was that all justifiable claims due to them were settled.

The plaintiff were represented senior advocates Michael Ngalo and Semi Malimi while TPA and the AG enjoyed the service of a team of state attorneys led by the Solicitor General Gabriel Malata and Principal State Attorneys Ms Leticia Mutaki, and Ms Koku Kazaura who were assited by senior state attorneys Benson Hosea, Esther Matulie, Mwantumu Sele and Felix Chakila.

Three witnesses testified in support of the plaintiffs’ case and tendered 112 exhibits while the defendants called one witness and tendered one exhibit.

The judge awarded the plaintiff general damages of Sh5 billion, saying: “In my view, the testimony of perpetration of acts of breach and TPA’s negligent conduct are sufficient material upon which the award of general damages may be awarded.”