The Court of Appeal has ordered the National Social Security Fund (NSSF) to pay a tech firm Sh103.4 million for breach of contract after it unprocedurally terminated an agreement with it.
The NSSF will pay Sh103.4 million to a contracted company, for loss of anticipated profits after termination of a contract, the Court of Appeal has ruled.
In a majority decision by Justices Pauline Nyamweya and George Odunga, the Court of Appeal ruled that Micro City Computers Ltd, based on evidence on record, was entitled to an award of loss of business and anticipated profits.
“It is my view that a claimant should not be penalised for the uncertainty surrounding proof of loss of business and profits as a claim of special damages, especially where (the uncertainty) has been caused by the wrongdoing of another party,” ruled the Court of Appeal.
Presented evidence
Micro City Computers Ltd had been contracted for the design, supply, installation, and commissioning of an electric security surveillance system closed circuit television before the contract was terminated.
Justice Gatembu Kairu, however, dissented in his decision, saying evidence presented in support of its claim for loss of profits fell short of establishing the claim with any reasonable degree of certainty.
The High Court in 2020 entered judgment for Micro City Computers Ltd for a total of Sh16 million, with general damages for breach of contract assessed at Sh10 million and expenses at Sh6 million. It had also ruled that there was in existence a valid contract between the parties and that there was no reason for terminating it on the ground that the tender was floated by NSSF beyond its allowed budget.
On its part, the Court of Appeal further ruled that the contract was not terminated by the terms of the contract and that Micro City Computers Ltd was properly entitled to claim loss of anticipated profits and consequential loss.
The Court of Appeal allowed the appeal and set aside the award of the special damages by the High Court.
In its appeal, Micro City Computers Ltd argued that the High Court erred in law and fact in failing to uphold its (Micro City Computers Ltd) claim for loss of profits as prayed or at all on the basis that it had not been proved.
Micro City Computers Ltd also argued that the High Court erred in its treatment of evidence relative to its claim for loss of profit and in treating the claim for loss of business and profit which was like special damages.
On its part, NSFF’s appeal was based on the grounds that the High Court erred in entering judgment for Micro City Computers Ltd based on pleadings contained in an amended plaint when no evidence was led and tendered in support of the allegations in it.
NSFF further argued that the High Court erred in law in entering judgment for Micro City Computers Ltd based on speculation rather than evidence on record.
