Micro-City Computers Limited & another v National Social Security Fund Board of Trustees & another (Civil Appeal 49 & 59 of 2020 (Consolidated)) (12 April 2024) (Judgment) (with dissent) [2024] KECA 444 (KLR)
The bottom line
#Kenya's Court of Appeal awarded a contractor over Kshs 112 million in lost profits after NSSF wrongly cancelled its contract, confirming that anticipated profits are recoverable if properly evidenced.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the trial Judge erred in awarding Kshs. 10,000,000/= as general damages for breach of contract
- 2.Whether the claim for loss of profits (special damages) was specifically pleaded and strictly proved
- 3.Whether the evidence of the auditor (PW2) was wrongly rejected by the trial court
- 4.Whether the further amended plaint could found judgment without the recall of witnesses
- 5.What orders should be made as to costs
Key legal issues
#Availability of general damages for breach of contract
The award of Kshs. 10,000,000/= as general damages for breach of contract was erroneous and was set aside; the proper remedy is special damages proved by the claimant.
The court held that the trial Judge treated damages as synonymous with general damages, when damages are of many types. Where the loss claimed is a quantifiable monetary loss, it is in the nature of special damages which must be proved. Following NSSF vs Sifa International and Kenya Commercial Bank vs Charles Otiso Otundo, general damages cannot be awarded for breach of contract in addition to, for example, loss of profits.
Proof of loss of anticipated profits as special damages
Loss of anticipated profits is recoverable upon breach of contract, and proof of the hypothetical non-breach position requires a flexible, not strict, evidentiary approach; the audit report of PW2 was sufficient.
The court drew on Ratcliffe v Evans, Parabola Investment, MSK Projects India and McGregor on Damages to hold that where uncertainty is created by the defendant's breach, courts make reasonable assumptions generous to the claimant. The strict-proof requirement still obtains but flexibility lies in the manner and methods of proof, which need not be traditional receipts and payment vouchers. The uncontroverted expert report, supported by the contract and Bills of Quantities, met the threshold.
Effect of the further amendment of the plaint after the plaintiff closed its case
The further amended plaint related back to the filing of the original plaint and could properly found judgment without recalling witnesses, since the ruling allowing amendment was not appealed.
Applying Allah Ditta Qureshi and Eastern Radio Services, the court held that amendment may be made at any stage and an amended plaint speaks from the commencement of the action. Evidence on record could support the further amended plaint, and NSSF had the option of seeking recall of witnesses, which it did not exercise.
Exclusion of unproved heads of special damages
Claims for travel and accommodation costs, photocopying and communication costs, payments to engineers, and the 10% interest on the claim were properly disallowed for want of documentary support or contractual basis.
These heads were actual costs allegedly incurred before breach but were not supported by any documents annexed to the audit report, and no contractual basis was provided for the 10% interest rate charged on the various heads of loss. The court, however, added the architect's invoice of Kshs. 3,000,000/= which the trial Judge had overlooked.
Legal principles established
#- General damages are not recoverable for breach of contract; damages in contract are compensatory and a claimant must prove the loss claimed.
- A claimant for loss of anticipated profits is not penalised for uncertainty caused by the other party's breach; proof of the non-breach position is an approximation, not strict proof of past facts, though the claimant must still deploy the best evidence reasonably available.
- Once pleadings are amended, the amended pleading speaks from the commencement of the action and the prior pleading is no longer material; a trial court cannot ignore a further amended plaint where the ruling allowing the amendment was not appealed.
- An uncontroverted expert opinion must not be rejected except on firm grounds; the court must analyse its relevance, reliability and credibility.
Court orders
#- 1.The award of general damages of Kshs. 10,000,000/= by the trial court is set aside (NSSF's appeal partially allowed)
- 2.The trial court's award of special damages is set aside and substituted with an award of Kshs. 103,447,136/= being loss of anticipated profits (Micro-City's appeal allowed)
- 3.Award of Kshs. 246,128/= performance bond, Kshs. 10,250/= tender security, Kshs. 3,000,000/= tender preparation (architectural drawings) and Kshs. 5,800,000/= accountant's professional fees, aggregating Kshs. 9,056,378/=, bringing total special damages to Kshs. 112,503,514/= with interest at court rates from the date of filing of the suit
- 4.No order as to the costs of the two appeals
The bench
#Judges wrote separately. A dissent does not bind; a concurrence may narrow the ratio.
Wrote the judgment
Wrote the judgment
Wrote a separate concurring judgment agreeing with Nyamweya JA, emphasising that because clause 6.2 excluded loss of anticipated profits on lawful termination, the parties contemplated that such loss was claimable on unlawful termination, and that hypothetical losses are not proved on the same plane as actual losses.
By expressly excluding the claim for loss of anticipated profits or consequential loss in the event of lawful termination, the parties clearly contemplated that in the event of unlawful termination, the appellant may well claim for loss of anticipated profits or consequential loss.p. 19
Dissented on loss of profits: agreed the general damages award must be set aside, but would have upheld the trial court's rejection of the loss-of-profits claim as speculative, disallowed engineers' and architects' fees, and awarded only nominal damages of Kshs. 1,000,000 plus the performance bond and tender security, with the accountants' fees left to taxation as costs of the suit.
In the end, beyond an award for nominal damages for breach of contract, which I would peg at Kshs. 1,000,000.00 and an award for the performance bond of Kshs. 246,128.00 and the tender security of Kshs. 10,250.00 I would disallow the other claims all together.p. 29
- On appeal from
- High Court of Kenya at Mombasa
- Mombasa High Court Civil Case No. 41 of 2017
- Jurisdiction invoked
- First appellate jurisdiction under the Court of Appeal Act over appeals from the High Court (Court referred to its mandate to review and analyse the evidence on record)
- Consolidated with
- Civil Appeal No. 59 of 2020
Relief refused
#NSSF's appeal in so far as it sought dismissal of Micro-City's entire suit
The court found the claim for loss of anticipated profits was proved on the evidence of the uncontroverted audit report
Heads of special damages comprising local travel and accommodation costs, photocopying and communication costs, payments to engineers, and interest claims
These were not supported by any documents annexed to the audit report and no contractual basis was provided for the 10% interest rate
Costs
No order as to the costs of the two appeals - 'In light of my findings, I will make no order as to the costs of the two appeals.'
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
I accordingly allow the appeal by Micro-City, set aside the award of special damages by the trial Court and substitute therefore an award of Kshs. 103,447,136/=, being loss of anticipated profits.
Accordingly, the total sum of special damages awarded to the Appellant is Kshs. 112, 503, 514/=, and it shall attract interest at court rates from the date of filing of the suit in the trial Court.
I also partially allow the NSSF's appeal as regards the award of general damages of Kshs. 10,000,000/= which I hereby set aside. In light of my findings, I will make no order as to the costs of the two appeals.
it was held that there can be no general damages for breach of contract, in addition to, for example loss of profits.
a claimant should not be penalized for the uncertainty surrounding proof of loss of business and profits as a claim of special damages, especially where that uncertainty has been caused by the wrongdoing of the other party
Once pleadings are amended, what stood before amendment is no longer material before the court and no longer defines the issues to be tried.
Issues in the judgment
#Conflicting dates for the letter of cancellation of the tender: the lead judgment states it was dated 21st May 2012 and elsewhere refers to 'the letter of 21st May, 2021', while the dissenting judgment dates it 21st May 2011.
Conflicting figures for the performance bond: the judgment elsewhere records 'a performance bond of Kshs. 24,128/=' while the award uses Kshs. 246,128/=.
The judgment states the letter cancelling the award did not comply with clause 6.2 as it gave no one-month notice, yet clause 6.2 would itself have excluded loss of anticipated profits had termination been lawful; the interplay is noted but the majority did not explain the tension explicitly.
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (3)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Doric Industries Limited v Aksharap Real Estate Limited (Environment and Land Case 686 of 2017) [2026] KEELC 1427 (KLR)[2026] KEELC 1427 (KLR)12 Mar 2026
- Doric Industries Limited v Aksharap Real Estate Limited (Environment and Land Case 686 of 2017) [2026] KEELC 1427 (KLR)[2026] KEELC 1427 (KLR)12 Mar 2026applied
- Kiiru t/a Kinamba General Supplier's & Transport v Kenya Ferry Services & another (Civil Appeal E209 of 2023) [2025] KECA 664 (KLR)[2025] KECA 664 (KLR)11 Apr 2025followed
Cite this brief
#Cite this brief
Caselaw, "Micro-City Computers Limited & another v National Social Security Fund Board of Trustees & another (Civil Appeal 49 & 59 of 2020 (Consolidated)) (12 April 2024) (Judgment) (with dissent) [2024] KECA 444 (KLR)", Case Analysis (2024). Civil Appeal No. 49 of 2020 (consolidated with Civil Appeal No. 59 of 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/444/eng@2024-04-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.