High Court Clarifies Contractor Liability for Design and Construction Defects, Employer Prevention of Timely Completion Bars Damages, and the Admissibility of Expert Evidence in Construction Disputes
- Waboga David
- Sep 9
- 10 min read
Introduction
Construction defects are a recurring source of disputes in the building and infrastructure sector. They encompass any flaws or deficiencies in the design, materials, or workmanship of a structure that prevent it from satisfying contractual obligations, established industry standards, or applicable building codes. Such defects may appear in varying degrees of severity , from seemingly minor aesthetic imperfections, such as uneven finishes or poor paintwork, to major structural failures that threaten the safety, stability, or functionality of a project.
In construction law, liability for defects becomes particularly complex where the contractor assumes both the design and build responsibilities. In such arrangements, the contractor bears a dual duty: not only to execute the construction with skill and diligence but also to ensure that the design meets professional and contractual standards. Employers, on the other hand, must avoid conduct that hinders performance, as the law recognizes the doctrine of employer prevention, preventing a party from benefiting from its own actions or omissions that cause delay or defects.
Disputes over defects often require the input of expert evidence to clarify technical issues, industry standards, and customary practices. The admissibility and weight of such evidence can decisively influence the outcome of litigation, especially where one party fails to challenge an opposing expert’s opinion at trial.
Against this backdrop, the recent High Court decision of Fabrication Systems Uganda Limited v Zeus Agro Limited (Civil Suit No. 115 of 2022) [2025] UGCommC 316 (9 September 2025) provides important clarification on three key areas:
Contractor liability for design and construction defects;
Employer prevention as a bar to delay-related claims; and
The admissibility and treatment of expert evidence in construction disputes.
Facts
The plaintiff, a private limited company specializing in turnkey civil fabrication and construction of prefabricated structures, entered into a contract with the defendant, a private limited liability company engaged in large-scale commercial rice farming, on or about December 4, 2018. The contract required the plaintiff to construct six prefabricated structures (a paddy shed, workshop, canteen, multiple accommodation units, a supervisor’s accommodation, and an office) at the defendant’s site in Bunambutye sub-county, Bulambuli District, Uganda, for a contract price of US $118,000 (equivalent to UGX 436,600,000, inclusive of VAT).
Under the contract, the defendant was responsible for constructing the foundation slabs based on specifications provided by the plaintiff, who was tasked with designing and installing the prefabricated superstructures. The plaintiff was also responsible for procuring materials, while the defendant handled transportation from Kampala to the site. Payment was to be made in three installments: 40% as an advance, 40% when materials were ready for dispatch, and 20% upon completion, with a 2% monthly surcharge for delayed payments.
The plaintiff received payments totaling US $93,000 (UGX 344,100,000), leaving an outstanding balance of US $25,000 (UGX 92,500,000). The defendant took possession of the structures and began using them. However, starting in March 2019, the defendant raised concerns about defects, including leaking roofs, leaking panels, leaking floors, non-level wall panels, non-level door frames, lopsided construction, and structures not being air- and water-tight.
The plaintiff offered to repair leaking floors ex gratia but requested an additional US $15,000 to facilitate these repairs, which the defendant did not pay. The defendant withheld the outstanding US $25,000, claiming the cost of rectifying the defects exceeded this amount, leading to the plaintiff’s lawsuit.
The defendant counterclaimed, alleging that independent engineers found the plaintiff omitted certain works and installed structurally flawed prefabs, seeking reimbursement for repair costs, general damages, interest, and costs. The plaintiff countered that it rectified all defects, that the defendant’s poor foundational work and premature occupation caused the issues, and that the withheld amount was not agreed upon as retention.
Issues
The court identified the following issues for determination:
Whether the defendant was indebted to the plaintiff for US $25,000.
Whether the plaintiff was negligent in executing the works.
Whether the plaintiff breached its contractual obligations.
What remedies were available to the parties.
Submissions of the Parties
Plaintiff’s Submissions
Counsel for the plaintiff argued that the plaintiff fulfilled its contractual obligations by completing the six structures, as evidenced by photographic proof and a final certificate. The defendant’s immediate occupation of the structures indicated their fitness for purpose.
The plaintiff attributed defects to the defendant’s negligence, including poor foundational work by a third party, premature occupation against advice, and careless use by the defendant’s agents.
The plaintiff claimed it rectified defects beyond the agreed scope and that the defendant frustrated further repairs by occupying the structures prematurely. Under the doctrine of substantial performance, the plaintiff argued it was entitled to the full contract price, as any minor defects were due to the defendant’s actions.
Defendant’s Submissions
Counsel for the defendant argued that the plaintiff, despite receiving most of the contract sum, delivered substandard and defective structures unfit for peaceful use. The defendant relied on the plaintiff’s expertise to adhere to industry standards and approved drawings, but the plaintiff failed to meet these standards, as evidenced by defects such as leaking roofs, non-level panels, and lopsided construction.
The defendant notified the plaintiff of these issues, but the plaintiff did not fulfill promises to rectify them. The defendant disputed the validity of the handover certificate and argued that the plaintiff’s poor workmanship and design omissions constituted negligence and breach of contract.
Citing Section 60(1) of The Contracts Act, the defendant claimed entitlement to compensation for repair costs, estimated at US $27,800.46, which exceeded the withheld amount. The defendant sought dismissal of the plaintiff’s claim and judgment on the counterclaim.
Court’s Findings
The court addressed the plaintiff’s alleged negligence and breach of contract, particularly the defendant’s counterclaim that the works were substandard.
On Negligence and Breach of Contract
The court found that construction defects fall into four categories: design deficiencies, material deficiencies, specification problems, and workmanship deficiencies. The plaintiff, as a design-and-build contractor, was responsible for defects in design, materials, and workmanship, while the defendant was responsible for the foundation slabs.
Substructure (Foundations):
The contract explicitly assigned responsibility for the foundation slabs to the defendant. The court found that any deterioration in the foundations, observed years later, was attributable to the defendant’s failure to properly assess soil conditions or execute the slabs according to specifications. The plaintiff had no contractual duty to supervise or warn about foundation-related risks, and thus was not liable for these defects.
Superstructure (Design):
The plaintiff provided and the defendant approved the design drawings. The court found design defects, particularly in the warehouse roof and eaves. The plaintiff failed to consider wind effects, as required by Regulation 14 of The National Building (Structural Design) Code, 2019, and used inadequate eave lengths (200 mm in drawings, 90 mm in practice, against an industry standard of 300–600 mm). These omissions constituted a serious deviation from industry standards, making the plaintiff liable for design defects.
Specifications and Workmanship:
The court found that the plaintiff omitted the bar/living area from the canteen, a clear breach of contract, as it deviated from the agreed drawings. However, the use of silicone for wall panel joints and 0.08 mm binding wire for ceilings, while criticized, was not proven to violate codified standards or established industry practice. The court found no evidence of material deficiencies, as the iron sheets met the specified 26-gauge standard.
Quality Standards and Fitness for Purpose:
In a design-and-build contract, the plaintiff warranted that the structures would be fit for their ordinary purpose (efficient, cost-effective accommodation). The defendant’s immediate occupation of the structures indicated they were fit for purpose at completion. However, patent defects (leaking roofs, non-level panels, etc.) emerged during construction, and the plaintiff failed to rectify them adequately. The court classified the warehouse roof defect as major due to its impact on structural integrity, while others were minor, not rendering the structures uninhabitable.
2. Responsibility for Defects
The court found that the plaintiff was liable for design defects (e.g., inadequate roof and eave design) and the omission of the bar/living area, constituting a breach of contract. However, the defendant’s premature occupation and failure to maintain the structures contributed to some defects, such as panel misalignment due to rusting channels.
The plaintiff’s offer to repair floors ex gratia was not fulfilled due to non-payment, but this did not absolve the plaintiff of its primary obligations.3. Financial Implications The plaintiff substantially performed the contract, but the defendant was entitled to set off the cost of rectifying defects against the outstanding US $25,000. The defendant’s estimated repair cost of US $27,800.46 was accepted as reasonable, exceeding the withheld amount.
Causation and Identification of Faults
The Court emphasized a systematic approach to causation. It compared the “is” state (current condition) with the “should be” and “is not” states to pinpoint the root causes.
The Court adopted the “but for” test and principles from key authorities (Ide v. ATB Sales Ltd [2008] PIQR P13; Barnett v. Chelsea & Kensington Management Committee [1956] AC 613; Cork v. Kirby MacLean Ltd [1952] 2 All ER 402) to determine factual causation.
Multiple potential causes were evaluated to determine which materially contributed to the faults, with intervening acts by the employer or natural events considered in the analysis.
Defects vs Maintenance Issues
Defects were defined as deviations from contractual specifications, poor workmanship, faulty materials, or improper design, leading to reduced functionality, unsafe structures, or buildings unfit for their intended purpose.
Maintenance issues arose from normal wear and tear, misuse, or failure to upkeep the premises. The Court clarified that defects originate during creation, while maintenance issues result from post-construction use.
Findings on Specific Structures
a) Foundations:
Deterioration primarily resulted from waterlogged soil, not faulty construction. The defendant assumed risk by constructing slabs on a waterlogged site, so the plaintiff was not liable.
b) Floors: Leakage and seepage were linked to failure to waterproof concrete and rushed construction before slabs set. While some responsibility rested with the contractor, remedial steps such as tiling proved effective.
c) Roofs: Defects were primarily due to poor design failing to account for environmental factors, notably strong winds, and insufficient eaves. The plaintiff was liable under professional standards and the National Building (Building Standards) Code, 2019, which requires design to account for live loads, environmental loads, and wind forces.
d) Walls: Lopsided and leaking walls resulted from rusting of channels due to short eaves and absence of verandas in the design, attributable to the plaintiff. Foundation movement was ruled out as a primary cause.
e)Ceilings: Missing boards in hostel units were attributed to misuse by the defendant’s workers (hanging clothes/mosquito nets) rather than defective materials or workmanship.
f) Doors: Uneven and damaged doors primarily arose from wind effects and usage rather than structural defects.
The court reaffirmed
Liability Principles Applied
Contractors are liable for defects arising from:
Materials they supply.
Deviation from contractual specifications.
Workmanship not meeting professional standards.
Contractors are not liable for:
Defects from employer-supplied materials or instructions unless they failed to notify the employer of known deficiencies.
Damage resulting from misuse, poor maintenance, or acts of third parties.
Wear and tear or natural aging of materials beyond the defect liability period.
Liability may be established even where multiple causes exist, provided the contractor’s contribution materially increased the risk of the fault (Bonnington Castings Ltd v. Wardlaw [1956] AC 613; Rhesa Shipping Co SA v. Edmunds (The Popi M) [1985] 1 WLR 948; Wilsher v. Essex Area Health Authority [1988] AC 1074).
Professional Standard and Negligence
The Court held that contractors must exercise reasonable care expected of a competent professional (Bolam v. Friern Hospital Management Committee [1957] 1 W.L.R. 582).
For the roofs, failure to account for environmental conditions, wind forces, and lack of structural support constituted substandard design and poor workmanship.
Contractor liability was established for the roof and walls, but not for foundations or floors where risk was assumed by the defendant.
Impact of Early Possession by the Employer
Taking possession of structures prior to completion without a formal certificate or agreement could exacerbate maintenance issues. However, liability for defects remained with the contractor only for faults present at the point of handover.
1. Practical Completion and Taking-Over
The court observed that refusing to accept the entire work may contradict the principle of good faith if the work can be divided into parts. Acceptance of part of the work, without significant defects, does not harm the employer’s rights.
If work is defective and the employer cannot cancel the contract, they can claim compensation rather than refuse to issue a Taking-Over Certificate.
Occupation or use of the works by the employer before formal issuance of a Taking-Over Certificate can deem the certificate to have been issued. Such occupation is interpreted as the employer certifying the work as complete and functional.
In this case, the defendant is deemed to have taken full possession of the structures on 31st May, 2019.
Breach of Contract and Negligence
The plaintiff was negligent in:
Failing to account for live load and environmental loads in designing and constructing the roofs.
Constructing short eaves and failing to provide verandas.
Omitting the bar/living area of the canteen despite it being included in the architectural drawings.
These omissions constituted a breach of contract.
Payment Obligations and Practical Completion
The contract stipulated final payment of 20% upon “completion.”
Completion does not require perfection; it requires practical completion—i.e., readiness for the employer to occupy and use the works for their intended purpose (Jarvis & Sons Ltd v Westminster Corporation [1969] 1 WLR 1448).
Defects
The court observed that patent defects prevent issuance of a practical completion certificate.
De minimis defects that do not interfere with occupation do not prevent practical completion.
Fitness for Purpose:
Contractors guaranteeing fitness for purpose must ensure works are reasonably fit for the intended use, irrespective of negligence (Greaves & Co Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095; IBA v EMI [1980] 14 BLR 1).
In this case, the defendant’s occupation triggered the plaintiff’s entitlement to final payment.
Defects Liability and Retention
Contractors may be required to rectify defects during the defects liability period at their own risk and cost.
Evidence showed the defendant retained US $25,000 to address lingering defects.
The Court found no contractual or legal basis for retaining this sum, except as set-off against proven defects and omissions.
Defendant’s Counterclaim and Set-Off
Defendant’s counterclaim covered defective and omitted works:
Omitted works: US $15,408.44
Defective works: US $3,362.02
Associated professional fees: US $2,000
Total: US $20,770.46
Outstanding balance owed to plaintiff: US $4,229.54
Court applied set-off principles: obligations between parties arising from the same transaction were offset to avoid double liability.
Employer’s Conduct and Prevention Doctrine
Acts by the employer that hinder the contractor, such as rushing construction or taking possession prematurely, can limit or extinguish claims for damages (Turner Corporation Ltd v Coordinated Industries Pty Ltd [1995] 11 BCL 202).
Here, the defendant contributed to the plaintiff’s shortcomings; thus, no general damages were awarded.
Interest and Costs
Interest:
6% per annum from 31st May 2019 until full payment, compensating the plaintiff for deprivation of use of funds.
Costs:
Apportioned due to mixed outcome: plaintiff awarded 20% of costs, reflecting partial success.
Final Orders
Outstanding Contractual Sum: US $4,229.54
Interest: 6% per annum from 31st May 2019 until payment in full
Costs: 20% of the costs of the suit and counterclaim
Read the full decision
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