Court orders Continental Services to pay Chinese firm Sh300m for Kijitonyama building

Dar es Salaam. Continental Services Limited must pay China Railway Jiang Engineering Company Sh300 million in outstanding debt for the construction of Leticia Tower at Kijitonyama along Ali Hassan Mwinyi road, court has ordered.

The High Court (Commercial Division) recently ordered Continental Services to pay China Railways the amount plus damages for the delay.

Continental Services entered into agreement with China Railway in March, 2008 for the construction of the seven-storey building at Sh4.2 billion, but failed to settle the remaining Sh289.1 million even after completion of the work.

Continental Services, however, is dissatisfied with the decision and has filed a notice of intention to appeal in the Court of Appeal.

Justice Haruna Songoro said recently that China Railway received less than the agreed amount of Sh4.2 billion by Sh289.1 million. “I find that the contractual outstanding amount is Sh289.1 million and the defendant is indebted and liable to pay the plaintiff,” he said.

He also ordered Continental Services to pay the contractor Sh35 million in general damages for retaining the amount, which the plaintiff would have invested and generate profit.

The Judge said the amount of Sh1 billion initially claimed by China Railway was over exaggerated because the company wrongly included claim for refund of VAT. Such claims, the court said, are supposed to be heard by the Tax Appeal Board (Trab).

“This court cannot entertain the VAT refund claim. Trab is the sole forum established to hear and determine tax disputes administered by TRA including VAT refund claims,” said the judge.

According to court documents, the mode of payment after commencement of the project was for Continental Services to pay China Railway for works certified by the architecture within 28 days from the day the former is serviced with certificate of payment from the architecture.

A witness told the court that certificates of payment number 1 to 16 were honoured accordingly, but certificates number 17 up to 21 were not fully paid.

Source: The Citizen

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