The Court of Appeal has reduced the amount payable to Equip Agencies Limited from the Sh127 billion that had been captured in the government's pending bills to Sh5.505 billion.

📋 Breaking It Down

Taxpayers have been spared a Sh120 billion payout after the Court of Appeal slashed a decades-old claim by a Moi-era supplier of insecticides and malaria control products.

In a judgment delivered on Friday, the appellate court reduced the amount payable to Equip Agencies Limited from the Sh127 billion that had been captured in the government's pending bills to Sh5.505 billion.

The dispute dates back to the mid-1990s when Equip Agencies supplied insecticides, agricultural chemicals and malaria control oil to the government.

📌 What You Need to Know

Following the supplies, the High Court in December 2011 awarded the company Sh1.862 billion, comprising the principal amount, special damages and interest. The court further directed that interest be calculated at 18 percent per annum from March 1, 1999, until payment in full.

Read:   Recovery of Sh4bn Uwezo loans unlikely: Auditor-General Nancy Gathungu reveals

However, the Court of Appeal held that compound interest cannot be awarded automatically and must be specifically pleaded and proved.

Justices John Mativo, Paul Lilan and Dr Johnson Okoth Okello said a claimant seeking compound interest must set out the claim as special damages and provide details of how the interest accrued, including the applicable borrowing rates and the intervals at which it accumulated.

The claimant must also show that it borrowed funds at commercially reasonable rates and that the loss was linked to the breach complained of.

“In the instant case, compound interest was never pleaded. The respondent (Equip Agencies Ltd) has not proved any link or causation between the delayed payment and the breach, neither is there anything to show that the appellant was aware that the respondent was relying on third-party financing to perform its obligation. Lastly, the respondent did not prove any loss that was within the contemplation of the appellant,” the judges said.

📰 Source: Nation Africa