The High Court of Malawi Commercial Division has dismissed a K31.8 billion claim Road Engineering Contractors Limited filed against Blantyre Water Board (BWB) following termination of its two contracts in August 2024.
BWB on August 22 2023 engaged the company to supply, deliver, install, train its staff, commission a water bottling plant and supply its accessories.
Delivering judgement in Lilongwe, Judge Trouble Kalua said the claimant was in breach of his obligations under the contract and that BWB was entitled to terminate the contract, as well as entitled to damages, specifically being the costs incurred on the trip to China.
He said: “In the same vein and having made a finding of breach of contract on the claimant’s part, the defendant [BWB] succeeds in its counterclaim and is hereby awarded damages in the sum of K62 871 338 being the costs incurred for the trip to China.
breached contract. |
Nation
“Damages for breach of contract to be assessed by the Assistant Registrar if not agreed upon by the parties and a reimbursement of legal practitioners’ collection costs at 15 percent of the sums due.”
Kalua has also awarded BWB interest on the above sums at five percent above the commercial bank’s base lending rate, as well as legal costs.
Court records show that BWB terminated the contract due to non-compliance, dishonesty, fraudulent practices, and failure to provide the performance security by Road Engineering Contractors Limited.
BWB also said the supplier falsely claimed to have procured the water bottling plant and misled the water utility to send a delegation to China for a factory assessment, incurring K62.87 million in transport costs.
The supplier demanded K119.8 million for plant purchase and interest, K2.8 billion for lost profits, damages for breach of contract, defamation and loss of business totalling K28.87 million for the terminated contract and K4 million for legal fees.
In court, Road Engineering Contractors Limited managing director Wavisanga Silungwe argued that the parties had agreed that his company would not submit a performance security until it gets a Local Purchase Order (LPO) from BWB.
He said the LPO was meant to notify his company that BWB had finished construction of a factory, and further that his company should proceed with the procurement of a water bottling plant, hence paying 30 percent deposit of K119 million to supplier, Kings Machine of China.
Silungwe also claimed that BWB officers visited China, allegedly for a “business discussion” instead of Factory Acceptance Test (FAT), which was supposed to be conducted in China at his company’s expense, as per clause 24.1 of the General Conditions of Contract (GCC).
But one of BWB witnesses, Mavuto Chiipanthenga, the director of technical services, said the contract required the procuring entity to conduct a FAT before delivery of the plant.
Meanwhile, BWB chief executive officer Yeremiya Chihana has said the water utility has already spent about K6 billion on the project and requires extra K800 million to complete the works
