NSSF Wins Supreme Court Appeal Over KSh244 Million CCTV Contract

The court found Micro-City Computers’ profit projections unreliable, citing conflicting estimates, unverified accounts, and five years of maintenance income unsupported by its contract. NSSF’s successful appeal, however, leaves intact a separate KSh9 million award for tender preparation and consultancy expenses.

The Supreme Court has overturned a KSh103.4 million compensation award against the National Social Security Fund (NSSF).

The decision followed a lengthy dispute over a cancelled security surveillance contract worth KSh244.8 million.

A five-judge bench led by Chief Justice Martha Koome delivered its judgement on October 30, 2026.

It found that Micro-City Computers Limited had failed to substantiate its anticipated profit claim.

The judges affirmed that businesses can recover profits lost through wrongful contractual termination.

However, claimants must first establish actual loss before courts estimate its financial value.

At the centre of the dispute was a contract covering surveillance systems at Social Security House, Nairobi.

The agreement provided for CCTV cameras, restricted access controls, and annual maintenance payments.

NSSF never handed over the site, preventing the project from commencing. The Fund later cited budgetary constraints in a letter dated May 21, 2012.

Contract Abandoned

The dispute began with a tender advertised by NSSF in September 2010. Micro-City emerged successful and received the award letter on March 2, 2011.

The parties executed their contract on April 8, 2011. It was valued at KSh244,825,708, with annual maintenance charges of KSh15 million after warranty expiry.

However, NSSF never facilitated Micro-City’s occupation of the project site.

Its subsequent cancellation prompted the company to seek compensation exceeding KSh214 million.

The claim included anticipated profits, consultancy expenses, engineers’ payments, and interest.

Micro-City maintained that NSSF had unlawfully terminated an executed agreement.

The dispute also attracted investigations by the Ethics and Anti-Corruption Commission.

The High Court found that investigations had absolved Micro-City of wrongdoing.

Courts Divided

On April 30, 2020, Justice Patrick Otieno found that NSSF had breached the contract. Clause 6.2 required one month’s written notice before termination.

The judge awarded Micro-City KSh16,056,378 in damages and expenses. However, he rejected its KSh103,447,136 anticipated-profit claim as speculative.

The company challenged that decision before the Court of Appeal. NSSF also appealed, seeking to overturn the compensation awarded.

On April 12, 2024, the appellate court delivered a divided judgement. Justices Pauline Nyamweya and George Odunga allowed the anticipated-profit claim.

They awarded Micro-City KSh103,447,136 in anticipated profits. The majority also upheld KSh9,056,378 for tender preparation and consultancy expenses.

The resulting KSh112,503,514 award attracted interest from the original filing date. However, the court set aside the separate KSh10 million general damages award.

Justice Gatembu Kairu dissented, questioning the reliability of the company’s financial projections. His concerns would later feature prominently in the Supreme Court proceedings.

NSSF subsequently secured permission to appeal on grounds of general public importance.

The Supreme Court narrowed the dispute to the legal test governing anticipated profits.

Strict Proof

The Supreme Court recognised anticipated profits as a legitimate contractual remedy. Such damages represent the net financial benefit lost through another party’s breach.

But businesses cannot claim gross contract revenue without accounting for performance expenses. Recoverable profits must also satisfy causation, remoteness, and mitigation requirements.

The judges stressed that contractual termination rights matter when assessing expected benefits. A claimant cannot assume performance beyond what the agreement actually guarantees.

The court then examined the evidentiary standard for anticipated-profit claims. It classified them as special damages requiring strict proof.

Crucially, strict proof does not demand mathematical certainty. The applicable civil standard remains the balance of probabilities.

Claimants must, however, provide cogent evidence supporting their financial projections. Courts must distinguish proof that loss occurred from calculating its amount.

Only after establishing actual loss can judges make reasonable financial estimates. Those estimates must account for commercial probabilities, contingencies, and contractual limitations.

The court also clarified that receipts are not always necessary. Expenses arising only under an unperformed contract cannot reasonably require payment receipts.

Nevertheless, claimants must produce available records capable of testing their projections.

These may include audited accounts, supplier quotations, banking records, and comparable contracts.

Projections Collapsed

Applying those principles, the Supreme Court identified serious weaknesses in Micro-City’s evidence. The most striking involved conflicting estimates from the company’s own witnesses.

Its managing director estimated anticipated profits at approximately KSh26 million. However, the accountants’ report calculated the figure at KSh103,447,136.

The company never adequately reconciled the substantial difference between those estimates. That inconsistency weakened the reliability of its entire financial claim.

The accountants also acknowledged that they had not independently verified supplied information. Their report offered no audit assurance and relied on company-provided material.

The court further questioned whether projected expenses related specifically to NSSF’s contract. Some appeared attributable to Micro-City’s wider business operations.

The company also failed to provide available historical financial records. Those documents could have helped establish whether its projected costs were reasonable.

A separate problem concerned the maintenance component of the claim. The accountants projected five years of maintenance income without adequate contractual support.

The agreement provided for KSh15 million annually after a two-year warranty. However, it did not guarantee Micro-City five years of maintenance work.

The Supreme Court rejected the accountant’s assumption that five years seemed reasonable. Expert opinion cannot create contractual entitlements unsupported by the agreement.

The judges also examined clause 6.2, which permitted termination upon notice. Under that provision, NSSF could terminate by giving one month’s written notice.

The clause limited liability upon lawful termination of supplied goods and services. It also excluded anticipated profits and consequential losses from such termination.

Although NSSF breached the notice requirement, the contractual limitation remained relevant. Micro-City could not calculate expected profits as though performance were guaranteed indefinitely.

In its decisive finding, the court stated:

“The material before the Court did not provide a sufficiently reliable factual foundation for the specific award of Kshs.103,447,136.”

The judges also rejected the suggestion that NSSF’s lack of competing expert evidence helped Micro-City. Unsupported projections do not become reliable simply because an opponent remains silent.

The court considered whether a smaller anticipated-profit award could survive. It recognised that such claims are not necessarily all-or-nothing.

However, Micro-City’s alternative KSh26 million estimate also lacked sufficient support. The judges therefore refused to substitute another figure.

READ ALSO: David Koross: Court Rejects Bid to Remove NSSF Boss Over Billions in Audit Queries

On October 30, 2026, the Supreme Court allowed NSSF’s appeal. It set aside the KSh103,447,136 anticipated-profit award entirely.

Importantly, the court preserved the KSh9,056,378 award for tender preparation and consultancy expenses. Each party would bear its own Supreme Court costs.

The ruling offers an important lesson for commercial disputes. Businesses must support projected profits with verifiable records and defensible contractual assumptions.

Courts can estimate the value of proven losses but cannot manufacture missing evidence.

PAY ATTENTION: Reach us at info@gotta.news.