A long-running dispute between the National Social Security Fund and a technology firm over a cancelled contract for security system installation is now headed to the Supreme Court.

This follows a decision by the Court of Appeal allowing the NSSF Board of Trustees to challenge the court’s earlier ruling that awarded Micro City Computers Ltd Sh112.5 million in compensation for breach of contract.

Appellate judges Agnes Murgor, Imana Laibuta and Grace Ngenye-Macharia allowed the appeal, noting that the issues raised by NSSF were of major public importance.

“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 stated.

One of the key issues to be determined by the Supreme Court is whether an aggrieved firm can be awarded anticipated profits following termination 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,” the bench added.

The row dates back to 2011 when NSSF cancelled a Sh244 million contract it had awarded to Micro-City Computers, citing lack of funds. Micro-City took the matter to the High Court in 2017 and demanded Sh214 million in damages.

The company had won the tender after a competitive bidding process that started with an advertisement by NSSF in September 2010.

The contract involved designing, supplying, installing and commissioning a CCTV and restricted access control system for the Social Security House Complex in Nairobi.

A written agreement signed on April 8, 2011, indicated that Micro-City would be paid Sh244.8 million for the work. After the installation and a two-year warranty period, the firm was to remain on site for system maintenance at a cost of Sh15 million per year from 2013.

However, NSSF failed to hand over the site to the contractor, claiming the project could not proceed due to budgetary limitations. Micro-City considered this a breach and claimed it had lost expected business.

The High Court later ruled partly in favour of the firm, awarding it Sh16 million in general damages and expenses. But trial judge Patrick Otieno rejected the claim for lost future profits, terming the figures speculative. He also dismissed claims on payments allegedly made to engineers and consultants, saying there was no evidence to support them.