A protracted dispute between the National Social Security Fund (NSSF) and a technology firm over a botched contract for the installation of security surveillance cameras will now be determined by the Supreme Court.
This is after the Court of Appeal allowed the NSSF Board of Trustees to file an appeal at the apex court, challenging the Court of Appeal's decision to award the firm, Micro City Computers Ltd, Sh112.5 million in damages for breach of contract.
Justices Agnes Murgor, Imana Laibuta, and Grace Ngenye-Macharia certified the petition as a matter of general public interest after finding that the issues the NSSF intends to argue at the Supreme Court were of broad implications.
"Our findings are that the proposed points of law proposed for determination by the Supreme Court transcend the parties’ private interest and are of considerable importance to the broader public," the judges said.
Among the issues the Supreme Court will examine is the award of speculative profits to an aggrieved party following cancellation of a contract.
"No doubt the subject dispute being one premised on a breach of contract, it is trite law that what is recoverable is mainly compensation for the work already done and nominal damages for the breach. In this instance, the respondent (Micro-City Computers Ltd) was awarded what were clearly speculative or anticipated profits. We think that this is also an issue on which the Supreme Court should pronounce itself," they added.
The dispute started after NSSF cancelled a Sh244 million contract awarded to Micro-City in 2011 because of alleged financial budgetary constraints.
Micro-City sued in 2017 at the High Court and sought Sh214 million for breaches of contract by the NSSF. The company successfully emerged as the winner of a tender advertised by NSSF through print media and its website in September 2010, for the design, supply, installation, and commissioning of an electric security surveillance system, closed-circuit television (CCTV), and restricted access control system for the NSSF’s Social Security House Complex in Nairobi.
The parties entered into a written agreement dated April 8, 2011.
It was agreed that NSSF would pay Micro-City Sh244.8 million as the cost of the contract. Further, after expiry of the warranty period of two years from the time of installation of the security equipment, Micro-City was to remain on site and carry out maintenance of the installed security system for Sh15 million per year with effect from 2013.
However, NSSF failed to facilitate Micro-City in taking up the site by giving an excuse that the performance of the contract was not possible because of budgetary constraints. The company alleged that this amounted to a breach, and it suffered loss of business.
The High Court judgment was in favour of Micro-City for Sh16 million in general damages for breach of contract and expenses.
Trial judge Patrick Otieno declined to award Micro-City the sum claimed in respect of loss of anticipated profit resulting from non-performance of the contract on the basis that the figures claimed were speculative.
The judge added that the payments made to engineers contracted for the performance of the contract on tender preparation and cost, and consultancies were not proved.
Micro-City sued in 2017 at the High Court seeking compensation of Sh214 million for alleged breaches of contract by the NSSF
The trial court also declined to award the claim under special damages and loss of profits resulting from non-performance of the main contract for want of proof.
At the court of appeal, a divided bench consisting of Justices Pauline Nyamweya, George Odunga, and Gatembu Kairu awarded the company a total sum of Sh112.5million in special damages. Justice Gatembu dissented.
The award comprised Sh103.4 million for loss of anticipated profits and Sh9 million for the costs in respect of the tender preparation and consultancies, comprising performance bond, tender security, tender preparation [architectural drawings], and accountants’ professional fees for preparation of audit report.
NSSF was aggrieved by the majority verdict dated April 25, 2025, and applied for leave to escalate the dispute to the Supreme Court, saying it was ready to raise three broader issues of general public importance.
Among the issues that the NSSF wants the Supreme Court to determine is the award of special damages.
Through its Corporation Secretary, Kellen Njue, NSSF said they want the apex court to settle the law as to whether a party can apply to amend pleadings after tendering evidence.
"It is trite law that a claim for special damages must be pleaded before the damages can be proved, which law is also anchored on the principle that a party is bound by its pleadings and the right to a fair hearing under Article 50 as read with Article 25 of the Constitution," he stated.
He said NSSF stood to suffer loss as "the respondent will be enriched unjustly in the sum of Sh112,503,514, which was speculative".
"The Court of Appeal departed from the well-settled principle of law that ‘special damages must be specifically pleaded and strictly proved’," said Mr Njue.
It was argued that the company amended its claim at the High Court after the close of the case to include particulars of special damages and that it did not recall its witness to adduce further evidence to support the new set of facts, being the particulars of special damages as pleaded in the amended plaint.
The trial court dismissed the claim of special damages under the amended plaint on the ground that no evidence was adduced in support of the same, but this Court of Appeal, by a majority decision, differed and allowed the claim of special damages.
"The scenario presented by the decision of this Court ultimately goes against the well-settled procedure and law; one of placing the horse before the cart. In other words, that a party can first adduce evidence, and upon realising that the evidence does not support its case, apply to amend the pleadings so as to support the evidence that is already adduced," said the judges while allowing the application.
