The Supreme Court has overturned a Sh103.4 million compensation award granted to a private company following the cancellation of a security surveillance contract by the National Social Security Fund (NSSF), ruling that the firm failed to prove the profits it expected to make.

In a judgment delivered on Friday, October 30, 2026, a five-judge bench led by Chief Justice Martha Koome set aside the award, finding that the financial projections relied upon by the company were speculative and lacked a reliable evidential foundation.

The dispute arose from a Sh244.8 million contract awarded to the company in March 2011 to install CCTV cameras and access control systems at Social Security House in Nairobi.

The agreement was signed the following month, with NSSF also committing to pay an annual maintenance fee of Sh15 million after the two-year warranty period.

However, the project stalled after the Fund failed to hand over the site. In May 2012, NSSF informed the contractor that it could no longer proceed with the project due to budgetary constraints, prompting the company to sue for breach of contract.

In April 2020, the High Court awarded the company Sh16.06 million but rejected its claim for Sh103.4 million in anticipated profits, describing the financial projections as insufficiently supported.

The company appealed, and in April 2024, the Court of Appeal overturned that decision on the anticipated profits, awarding it Sh112.5 million in special damages, comprising Sh103.4 million in projected profits and Sh9.06 million in other costs.

NSSF challenged the appellate court's decision before the Supreme Court.

In overturning the award, the judges identified significant discrepancies in the company's own financial evidence.

The court noted that the company's managing director had estimated the anticipated profits at approximately Sh26 million, yet an accountant subsequently presented a report projecting Sh103.4 million without adequately explaining the substantial difference.

The judges also questioned the accountant's reliance on unverified financial information and the projection of five years of maintenance income despite the absence of evidence that NSSF had guaranteed the company such work.

The bench further observed that the contract expressly allowed NSSF to terminate the agreement through one month's written notice.

"The material before the Court did not provide a sufficiently reliable factual foundation for the specific award of Sh103,447,136," the judges ruled.

They added that NSSF's failure to present a competing expert report did not absolve the contractor of its responsibility to prove its financial claim.

The Supreme Court consequently set aside the Sh103.4 million anticipated profits award, reaffirming that businesses seeking compensation for lost profits must demonstrate, through credible evidence, that the projected earnings would probably have been realised.