The dispute has dragged through the courts for 15 years, with the court finding that the firm failed to justify the multibillion-shilling compensation it sought from the Fund.
An undated photo of the National Social Security Fund (NSSF) building in Nairobi. Photo Courtesy The National Social Security Fund (NSSF) has won a major court battle after the Supreme Court overturned a Ksh103.4 million compensation award to a private company over a cancelled security surveillance tender.
In a judgment delivered on Friday, October 30, the five-judge bench led by Chief Justice Martha Koome ruled that the firm at the centre of the dispute had failed to provide sufficient evidence to justify the amount it claimed as anticipated profits from the cancelled contract.
The ruling follows a prolonged legal dispute stemming from a Ksh244.8 million tender awarded to the company in 2011 for the installation of CCTV cameras and access control systems at Social Security House in Nairobi.
According to court documents seen by Kenyans.co.ke, NSSF awarded the company the contract in March 2011 before signing an agreement the following month. The contract also provided for an annual maintenance fee of Ksh15 million after the expiry of a two-year warranty period.
A photo of the Supreme Court of Kenya Photo The Judiciary However, the project never commenced after NSSF failed to hand over the site to the contractor. In May 2012, the Fund informed the company that it could not proceed with the project because of budgetary constraints, prompting the company to sue for breach of contract.
The High Court initially awarded the company Ksh16.06 million in April 2020 but rejected its claim for Ksh103.4 million in anticipated profits, finding that the financial projections presented were speculative and insufficiently supported by evidence.
The company challenged the decision at the Court of Appeal, which in April 2024 awarded it Ksh112.5 million in special damages, including Ksh103.4 million in anticipated profits and Ksh9.06 million in other costs. NSSF subsequently moved to the Supreme Court to challenge the award.
In its determination, the Supreme Court questioned inconsistencies in the company's financial evidence, noting that its managing director had estimated the expected profits at approximately Ksh26 million, while an accountant's report placed the figure at Ksh103.4 million without adequately explaining the difference.
The judges also found that the accountant's report relied on unverified financial information and projected five years of maintenance income without evidence that the company had been guaranteed work for that period.
They further noted that the contract allowed NSSF to terminate the agreement by issuing one month's written notice.
"The material before the Court did not provide a sufficiently reliable factual foundation for the specific award of Kshs.103,447,136," the judges ruled, adding that the absence of a competing expert report from NSSF could not remedy the deficiencies in the company's evidence.
The judges further clarified that businesses seeking compensation for anticipated profits following a breach of contract must provide reliable evidence showing that the profits would probably have been earned.
