Introduction and Background
1. This judgment is in respect of the dispute between Imperium Business Solutions Limited (the Plaintiff) and Rural Electrification and Renewable Energy Corporation (the Defendant) arising from a contract dated 1st February 2017 for the supply, installation, and commissioning of the Systems Applications Products-Supplier Relations Management System (SAP-SRM).
2. The facts leading to this dispute are that the Defendant, a statutory body established under Section 43 of the Energy Act, 2019, invited bids in 2016 through open tender for the supply, installation, and commissioning of SAP-SRM.
3. The Plaintiff, in joint venture with SAP East Africa Limited, emerged as the successful bidder, having submitted the lowest evaluated responsive bid. The parties subsequently executed a contract on 1st February 2017 at a contract price of Kshs. 76,084,400 inclusive of VAT. It was further agreed between the parties that payment was to be effected in phases as follows: -
i. Project preparation – 20 per cent
ii. sign off – 20 percent
iii. Blueprint sign off – 20 per cent
iv. Realization sign off – 20 per cent
v. Go Live Support – 20 per cent
vi. Run after three (3) months – 10 per cent
vii. Run after Six (6) months – 10 per cent
4. Delays, however, beset the Implementation of the project. The agreed “Go-Live” date was extended several times due to unresolved issues. In February 2018, the Steering Committee resolved to allow a conditional partial Go-Live, on the understanding that the Plaintiff would close all outstanding deliverables during the support period. The Defendant further resolved in August 2018 that pending payments would be withheld until full completion.
5. The Plaintiff contended that during Phase 3 of implementation, it became apparent that the Defendant’s existing SAP ECC 6.0 system (operating on version EHP0) was incompatible with the SRM integration, necessitating an upgrade to version EHP8. The Plaintiff maintains that this upgrade was outside the original scope, but was sanctioned by the Steering Committee, and was documented in the closure report. The Plaintiff, therefore, seeks payment of Kshs. 12,500,000 for the variation, together with the withheld balance of Kshs. 664,056.
6. The Plaintiff maintained that the project was successfully completed, which is evidenced by the Defendant’s continued use of the system and its nomination for the SAP Quality Awards in 2019. It argues that the Defendant has derived substantial benefit from the upgraded system and is estopped from denying liability for the variation costs.
7. The Defendant on the other hand took the position that the Plaintiff failed to close all the outstanding issues, which then necessitated the Defendant’s action of withholding the sum of Kshs. 664,056, and applying the same as liquidated damages for delay.
8. The Defendant further disputed the Plaintiff’s claim for Kshs. 12,500,000 as variation costs, arguing that the alleged hardware upgrade fell within the original scope and that no valid variation was approved under the Public Procurement and Assets Disposal Act.
Hearing and Submissions
9. The matter proceeded for hearing on various dates between 23rd October 2024 and 6th March 2025. The Plaintiff called one witness, Masakali Silas Simiyu, founder and Managing Director of the Plaintiff, who testified as PW1 and relied on as his written statement dated 9th December 2020 as his evidence in chief. He also produced in evidence the documents in the list of documents dated the same date, which were produced as PEXH 1-9.
10. The Defendant on their part called Festus Kasonzo, a Principal Supply Chain Management Officer of the Defendant who testified as DW1, and relied on his written statement dated 17th May 2021 as his evidence in chief. He also produced in evidence, the bindle of documents in the list documents dated the same day.
The Plaintiff’s Case
11. The Plaintiff’s case captured in the Plaint dated 9th December 2020, Reply to Statement dated 20th May 2021, the testimony of Masakali Silas Simiyu, founder and Managing Director of the Plaintiff (PW1) and the Plaintiff’s written submissions dated 28th March 2025.
12. The Plaintiff averred that it lawfully entered into a binding contract with the Defendant on 1st February 2017 for the supply, installation, configuration, and commissioning of SAP Supplier Relationship Management (SAP-SRM) modules under Tender No. REA/2016-2017/OT/034. The contract price was agreed at Kshs. 76,804,400 inclusive of VAT.
13. The Plaintiff averred that the contract was duly formed through a transparent procurement process, involving advertisement, competitive bidding, notification of award, and formal acceptance. The Plaintiff fulfilled all pre-contractual requirements, including provision of performance security, and thereafter executed the contract with the Defendant.
14. The Plaintiff, through Mr. Simiyu averred that the project was structured in multiple phases, each contingent upon the successful completion of the preceding stage. However, during Phase 3, it became apparent that the Defendant’s existing system was at level EPH level 0, which needed to be upgraded to EHP level 8 to ensure successful integration the system.
15. The Plaintiff maintained that the said incompatibility within the Defendant’s then existing version of system and the new system, as well as the need for the upgrade was neither foreseeable at the time of tender nor attributable to the Plaintiff. It was however the Plaintiff’s case that this upgrade was approved by the project’s Steering Committee, which included the Defendant’s senior members of staff of the Defendant during its meeting of 30th May 2017. The upgrade, according to the Plaintiff, involved:
i. Implementation and upgrade of Solution Manager to version 7.2;
ii. SAP ECC 6.0 upgrade from EHP0 to EHP8;
iii. Single Sign-On implementation; and
iv. Installation and configuration of Web Dispatcher for enhanced security.
16. According to the Plaintiff, the above activities consumed 162 man-days at a cost of Kshs. 12,500,000 exclusive of VAT, which was documented in the Project Closure Report signed by representatives of both parties.
17. The Plaintiff asserted that Clause 14 of the contract expressly permitted variations, and the Steering Committee’s resolutions of 13th April 2017, together with the closure report, constituted valid approval.
18. It was further the Plaintiff’s case that the project was successfully completed, as evidenced by the closure report, the Defendant’s continued use of the system, and the Defendant’s nomination of the project for the SAP Quality Awards in South Africa in 2019.
19. In the premises, the Plaintiff urged this Court to allow its claim as pleaded in its plaint dated 9th December 2020. In particular, the Plaintiff sought the following reliefs: -
a) An amount of Kenya Shillings Seven Million, Six Hundred and Eight Thousand, Four Hundred and Forty. (Kshs 7,608,440.00) as of 22nd August, 2018.
b) Interest on Kenya Shillings Seven Million, Six Hundred and Eight Thousand, Four Hundred and Forty. (Kshs 7,608,440.00) at the prevailing commercial rate as from 22nd August, 2018.
c) An amount of Kenya Shillings Twelve Million, Five Hundred Thousand. (Kshs. 12,500,000.00) and 16% VAT thereon as at the Prevailing Commercial Rate as from 31st July,2017.
d) General damages.
e) Costs of this suit
f) Interest on (a), (b) and (c) above at Court rates until payment in full.
The Defendant’s Case
20. The Defendant’s case is captured in the Statement of Defence dated 22nd March 2021, the testimony of Mr. Festus Kasonzo (DW1) and the written submissions dated 24th July 2022 filed herein
21. The Defendant denied liability and contended that it is the Plaintiff who failed to fully execute the contract and close outstanding deliverables.
22. According to the Defendant, the contract price was expressly agreed at Kshs. 76,084,400 inclusive of VAT, as set out in the written contract, and not the sum Kshs. 76,804,400 claimed by the Plaintiff.
23. The Defendant contended that it had paid to the Plaintiff a total sum of Kshs. 75,420,344 – comprising of Kshs. 68,475,960/= being direct payments to the Plaintiff, and a further sum of Kshs. 6,944,384/=being payments made to SAP South Africa for SAP-SRM Academy training and certification, a cost that was the contractual responsibility of the Plaintiff, as confirmed in the Plaintiff's Project Handover Report.
24. It was further the Defendant’s case that the balance (Kshs. 664,056) of the agreed contractual price was withheld by the Defendant due to the Plaintiff’s failure to close outstanding deliverables, and was subsequently applied as liquidated damages pursuant to clause 18 of the General Conditions of the Contract.
25. The Defendant maintained that the Plaintiff failed to meet the agreed timelines and deliverables, necessitating several extensions of the Go-Live date. That in February 2018, the Steering Committee permitted a conditional partial Go-Live, on the express understanding that the Plaintiff would close all open issues during the support period. The Defendant asserted that the Plaintiff did not fulfill this obligation, and the unresolved issues remain outstanding to date, necessitating the Defendant to withhold the balance - Kshs. 664,056.
26. On the Plaintiff’s claim for variation of the contract occasioned by the need to upgrade version EHP 0 to EHP 8, the Defendant took the position that the upgrade was part of the original scope of works, was contemplated within the realization phase of the contract and did not constitute additional scope. The Defendant maintained that Clauses (b) and (d) of the contract required installation and configuration of SRM and SLC modules, tightly integrated with the Defendant’s existing SAP ECC system, including hardware sizing.
27. The Defendant further argued that no valid variation of the contract was ever effected. Under sections 135 and 139 of the Public Procurement and Disposal Act, any variation must be in writing, approved by the tender awarding committee, and executed by the accounting officer.
28. It was further the Defendant’s case that section 139(3) expressly prohibits upward variation of contract price within twelve months of signing. The Plaintiff’s alleged variation request was neither formally submitted nor approved, and no variation agreement was executed. Any purported variation would therefore be unlawful, null, and void ab initio.
29. The Defendant asserted that it is not the business of the courts to ratify illegality or rewrite contracts between parties, and further cited the cases of D. Njogu & Company Advocates v National Bank of Kenya Ltd [2016] KECA 85, Royal Media Services Ltd v IEBC [2019] KEHC 8239, and Lordship Africa Ltd v Public Procurement Administrative Review Board [2018] KEHC 7978, among others, to underscore that contrary to the Plaintiff’s contentions, estoppel cannot override statutory procurement requirements and that contracts contrary to statute are unenforceable.
30. On the allegation of unjust enrichment, the Defendant submits that all services rendered by the Plaintiff were within the scope of the contract and were duly paid for. Even if additional works were executed, they were undertaken without lawful approval and in contravention of the PPADA. The Defendant therefore denies deriving any benefit outside the contract that would impose liability upon it.
31. In the premises, the Defendant urged this Court to dismiss the Plaintiff’s claims since the Defendant maintained that it had performed its obligations under the contract, paid all sums lawfully due, and withheld only the balance applied as liquidated damages.
Analysis and Determination
32. Having carefully analyzed the pleadings, the evidence, the submissions submitted by the parties, and the applicable law, I find the following issues arising for this Court’s determination:
i. What was the Contract Price and whether the same has been fully paid by the Defendant?
ii. Whether the Hardware Upgrade was an additional scope of works, and if yes, whether the Contract was lawfully varied
The Contract Price and whether the same has been fully paid for by the Defendant
33. The Plaintiff, at paragraph 3 of its Plaint, stated the contract price was Kshs. 76,804,400/=. The Defendant countered this, submitting that the price expressly specified in Clause B of the Contract dated 1st February 2017 was Kshs. 76,084,400/= inclusive of VAT.
34. The Defendant further submitted that the total sum paid under the contract is Kshs. 75,420,344/=, which comprises Kshs. 68,475,960/= paid directly to the Plaintiff and Kshs. 6,944,384/= paid directly to SAP South Africa for SAP-SRM Academy training and certification, a cost that was the contractual responsibility of the Plaintiff.
35. It is a settled principle of law that the burden of proof lies on a party who asserts the existence of a fact, and desires to have a judgment given in his favour. This is on the basis of Sections 107-109 of the Evidence Act, Cap 80 Laws of Kenya, which provides that:
“107. (1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
108. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”
36. The question as to what amounts to proof on a balance of probabilities was discussed by Kimaru, J (as he then was) in William Kabogo Gitau v George Thuo & 2 Others [2010] 1 KLR 526 as follows:
“In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case are more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51% as opposed to 49% of the opposing party is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegations that he made occurred.”
37. In the present case, a perusal of the contract in question reveals that Clause B of the contract dated 1st February 2017 executed between the parties herein provided that the contract price was Kshs. 76,084,400/= inclusive of VAT, and not the Kshs. 76,804,400/= pleaded by the Plaintiff at paragraph 3 of the Plaint. The Plaintiff’s claim for Kshs 7,608,440.00 under prayer (a) of the orders sought, is not supported by any evidence, and is therefore erroneous. Parties are bound by the express terms of their written contract – see Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] KECA 152 (KLR), where the Court of Appeal stated that:
“We are alive to the hallowed legal maxim that it is not the business of courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved. See National Bank of Kenya Ltd vs Pipeplastic Samkolit (K) Ltd [2002]2 EA 503. The primary task of the court is to construe the contract and any terms implied in it. See Megarry, J. in the case of Coco vs A. N. Clark (Engineers) Ltd. - [1969] RPC 41.”
38. Secondly, the fact that the defendant has paid to the Plaintiff a sum of totaling Kshs. 75,420,344 (out of which Kshs. 6,944,384 was paid directly to SAP South Africa on behalf of the Plaintiff as SAP training costs) is not seriously controverted on the evidence. What is contested is the balance of Kshs. 664,056/-.
39. The record shows (see the minutes of the Steering Committee meeting of 27th August 2018 – Pages 496 to 501 of the Defendant’s Trial Bndle) that the parties agreed that pending payments could be held until all deliverables were met and defects remedied. In particular, the minutes at “Min 27082018/3: Status Update of Post-Go-Live-Issues” stated in part that:
“2. The Team agreed that the next 10% will be held until all deliverables have been met. It was made clear that this payment will not be tied to “time”.”
40. Further, the Plaintiff’s own project handover/closure materials acknowledge certain open issues at the time of partial go-live. On this evidence, the Court finds that the Plaintiff has not proved that the issues that remained open as at the date of partial Go-Live had been closed.
41. Consequently, the Court agrees with the Defendant’s submissions that the payment of Kshs. 664,056/= is currently not due and payable to the Plaintiff until full contractual obligations are met or until the claim for liquidated damages is adjudicated.
Whether the Hardware Upgrade was an additional scope of works, and if yes, whether the Contract was lawfully varied
42. The Plaintiff contended that the upgrade of SAP ECC 6.0 from EHP0 to EHP8 was outside the original scope, necessitated by the technical incompatibility of the Plaintiff’s then-existing system, and that the upgrade was sanctioned by the Steering Committee, duly constituted by the Defendant. The Plaintiff stated that this additional work/scope, which was approved by the Defendant, consumed 162 man-days at a cost of Kshs. 12,500,000, for which it seeks to be paid by the Defendant.
43. According to the Plaintiff, Clause 14 of the contract permitted variations of the contract. The Plaintiff maintained that the Steering Committee, in its meeting of 30th May 2017approved the upgrade. The Plaintiff asserted that the said variation was documented in the closure report and that the Defendant is estopped from denying liability, particularly bearing in mind that the Defendant continued to use and derive substantial benefit from the system. The Plaintiff pointed out the Defendant’s nomination of the project for the SAP Quality Awards in South Africa in 2019 as a testament to the system’s excellence.
44. Citing, among others, the case of Carol Construction Engineers Limited & another vs National Bank of Kenya (2020) eKLR, the Plaintiff asserted that the Defendant is estopped from reneging on the representations made to the Plaintiff regarding approval of the additional scope. The Plaintiff reiterated that it needed to be paid for all the works undertaken (including the additional scope) since the project was completed successfully and a benefit in respect thereof, transferred to the Defendant
45. The Defendant, on its part, argued that the alleged hardware upgrade was part and parcel of the contracted services. The Defendant relies on the original scope of work, which required the Plaintiff to install, configure, and carry out tight integration of the contracted services to the Defendant's existing SAP ECC System. The Defendant cited minutes of January 2017, which it asserts were part of the Contract, where it was expressly agreed that the Plaintiff would undertake hardware sizing to accommodate the proposed system.
46. It is settled law that contractual scope is determined by the express terms of the contract and agreed deliverables and that it is not within the province of the Court to rewrite contracts. The Court of Appeal in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd [2001] eKLR, stated that:
“This, in our view, is a serious misdirection on the part of the learned judge. A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.”
47. Having duly considered the parties' arguments, the evidence, particularly the contract executed between the parties on 1st February 2027. While I note that Clauses (b) and (d) of the contract required installation and configuration of SRM and SLC modules, tightly integrated with the Defendant’s existing SAP ECC system, including hardware sizing, the specific requirement to upgrade ECC from EHP0 to EHP8 was not expressly envisaged. This, in my view, formed an additional scope of work. The question remains whether the contract was validly/lawfully varied.
48. In the present case, it is common ground that the Defendant is a public entity whose procurement processes (contract formation, amendment, and variation) are governed by the Public Procurement and Asset Disposal Act. Section 135 (of the Act are clear that no contract arises until it is signed. The provisions provide as follows: -
“(1) The existence of a contract shall be confirmed through the signature of a contract document incorporating all agreements between the parties and such contract shall be signed by the accounting officer or an officer authorized in writing by the accounting officer of the procuring entity and the successful tenderer.
(4) No contract is formed between the person submitting the successful tender and the accounting officer of a procuring entity until the written contract is signed by the parties.”
49. Further, Section 139 (1) of the PPAD Act provides that “(A)n amendment or a variation to a contract resulting from a procurement proceeding is effective only if: (a) the variation or amendment has been approved in writing by the respective tender awarding authority within a procuring entity; and (b) any contract variations or amendments for goods, works and services shall be as prescribed.”
50. Additionally, the Act at Section 139(4) makes it clear that any variation of a contract shall only be considered if;
(a) the price variation from the original price is based on the prevailing consumer price index obtained from Kenya National Bureau of Statistics;
(b) the quantity variation for goods does not exceed fifteen per cent of the original contract quantity;
(c) the price or quantity variation is to be executed within the period of the contract;
(d) the cumulative value of all contract variations for goods do not result in an increment of the total contract price by more than twenty-five per cent of the original contract price; and
(e) the cumulative value of professional services does not result in an increment of the total contract price by more than twenty-five per cent of the original contract price.
51. Again, Regulation 132 of the Public Procurement and Asset Disposal Regulations, 2020, prohibits upward variation of contract price within 12 months of signing, and that any additional funding required must be secured and committed prior to a variation of contract under section 139(1)(a) of the Act.
52. In this case, the Plaintiff did not produce a variation instrument executed in line with sections 135 and 139 PPADA or written approval by the tender-awarding authority satisfying Regulation 132. This Court, being a court of law, is bound by the law governing public procurement. The prohibition against upward variation of the contract price within the first year is unequivocal under Section 139(3) of the PPADA. Since the contract was signed on 1st February 2017 and the variation became necessary in May 2017, any upward variation of the contract price, even if approved as alleged by the Plaintiff, would have been unlawful and void.
53. Furthermore, the lack of written approval by the requisite authority and the absence of a signed variation contract violates the mandatory requirements of Sections 135 and 139 of the PPADA.
54. Accordingly, it is the finding of the Court that even if the upgrade of the system from upgrade of SAP ECC 6.0 from EHP0 to EHP8 appeared to be outside the original scope as established in the foregoing paragraphs, above, the Court agrees with the Defendant’s argument that no valid variation occurred, and therefore, any purported variation is void ab initio.
55. The Court aligns with the view expressed in the case of Royal Media Services v Independent Electoral & Boundaries Commission & 3 others [2019] KEHC 8239 (KLR) by Tuiyott J (as he then was) that a contractor (as the Plaintiff herein) is equally under a duty to enquire whether that the provisions of the PPADA have been complied with by a procuring entity.
“It is the duty of the Contractor as it is of the procuring entity to observe the provisions of Statute and the Regulations thereunder. Section 27 imposes an unequivocal responsibility on any contractor, supplier or consultant intending to supply goods or services to a public entity to comply with all the provisions of the Act and the Regulations. This duty, in my view, extends to the Contractor making due enquiries as to whether the procuring entity has complied with its side of the law and declining to enter into a contract which is procured in apparent disregard of the law. For that reason a contractor or supplier cannot find refuge in the argument that compliance was an internal matter of the public entity when s[he] has not to done enough to enquire about compliance or s[he] is herself or himself guilty of infringement.”
56. Regarding the Plaintiff’s argument that the Defendant legally bound to pay for the alleged additional works under the doctrine of estoppel or unjust enrichment, I would do no more than to cite the case of Lordship Africa Ltd v PPARB [2018] KEHC 7978; Royal Media Services Ltd v IEBC [2019] KEHC 8239 cited by the Defendant, where it was held that statutory procurement requirements override common law doctrines of estoppel.
57. This Court (Gikonyo J), in dismissing a similar claim in Mweha Enterprises Limited v Kenya Trade Network Agency & another [2025] KEHC 12665 (KLR) stated as follows: -
“The doctrine the doctrine of estoppel, as pleaded by the plaintiff, cannot be applied to openly circumvent the provisions of statutes and regulations.
There was no tender or contract for the inter-related works or permitted variation of the original contract to support the claim. Accordingly, I find that the plaintiff has not proved its claim to the required standard. Each party shall bear their costs because the suit is against a public entity.”
58. From the foregoing analysis, it is evident that the Plaintiff has failed to establish its claim for the recovery of the alleged outstanding balance and the cost of the alleged contract variation.
59. Accordingly, the suit is hereby dismissed. On costs, I direct that each party to bear their own costs because the suit is against a public entity and taking into account that the Defendant equally failed to comply with the provisions of PPADA as to contract variation.
60. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH DECEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
.…………..for the Plaintiff
….……………. for the Defendant
1. This judgment is in respect of the dispute between Imperium Business Solutions Limited (the Plaintiff) and Rural Electrification and Renewable Energy Corporation (the Defendant) arising from a contract dated 1st February 2017 for the supply, installation, and commissioning of the Systems Applications Products-Supplier Relations Management System (SAP-SRM).
2. The facts leading to this dispute are that the Defendant, a statutory body established under Section 43 of the Energy Act, 2019, invited bids in 2016 through open tender for the supply, installation, and commissioning of SAP-SRM.
3. The Plaintiff, in joint venture with SAP East Africa Limited, emerged as the successful bidder, having submitted the lowest evaluated responsive bid. The parties subsequently executed a contract on 1st February 2017 at a contract price of Kshs. 76,084,400 inclusive of VAT. It was further agreed between the parties that payment was to be effected in phases as follows: -
i. Project preparation – 20 per cent
ii. sign off – 20 percent
iii. Blueprint sign off – 20 per cent
iv. Realization sign off – 20 per cent
v. Go Live Support – 20 per cent
vi. Run after three (3) months – 10 per cent
vii. Run after Six (6) months – 10 per cent
4. Delays, however, beset the Implementation of the project. The agreed “Go-Live” date was extended several times due to unresolved issues. In February 2018, the Steering Committee resolved to allow a conditional partial Go-Live, on the understanding that the Plaintiff would close all outstanding deliverables during the support period. The Defendant further resolved in August 2018 that pending payments would be withheld until full completion.
5. The Plaintiff contended that during Phase 3 of implementation, it became apparent that the Defendant’s existing SAP ECC 6.0 system (operating on version EHP0) was incompatible with the SRM integration, necessitating an upgrade to version EHP8. The Plaintiff maintains that this upgrade was outside the original scope, but was sanctioned by the Steering Committee, and was documented in the closure report. The Plaintiff, therefore, seeks payment of Kshs. 12,500,000 for the variation, together with the withheld balance of Kshs. 664,056.
6. The Plaintiff maintained that the project was successfully completed, which is evidenced by the Defendant’s continued use of the system and its nomination for the SAP Quality Awards in 2019. It argues that the Defendant has derived substantial benefit from the upgraded system and is estopped from denying liability for the variation costs.
7. The Defendant on the other hand took the position that the Plaintiff failed to close all the outstanding issues, which then necessitated the Defendant’s action of withholding the sum of Kshs. 664,056, and applying the same as liquidated damages for delay.
8. The Defendant further disputed the Plaintiff’s claim for Kshs. 12,500,000 as variation costs, arguing that the alleged hardware upgrade fell within the original scope and that no valid variation was approved under the Public Procurement and Assets Disposal Act.
Hearing and Submissions
9. The matter proceeded for hearing on various dates between 23rd October 2024 and 6th March 2025. The Plaintiff called one witness, Masakali Silas Simiyu, founder and Managing Director of the Plaintiff, who testified as PW1 and relied on as his written statement dated 9th December 2020 as his evidence in chief. He also produced in evidence the documents in the list of documents dated the same date, which were produced as PEXH 1-9.
10. The Defendant on their part called Festus Kasonzo, a Principal Supply Chain Management Officer of the Defendant who testified as DW1, and relied on his written statement dated 17th May 2021 as his evidence in chief. He also produced in evidence, the bindle of documents in the list documents dated the same day.
The Plaintiff’s Case
11. The Plaintiff’s case captured in the Plaint dated 9th December 2020, Reply to Statement dated 20th May 2021, the testimony of Masakali Silas Simiyu, founder and Managing Director of the Plaintiff (PW1) and the Plaintiff’s written submissions dated 28th March 2025.
12. The Plaintiff averred that it lawfully entered into a binding contract with the Defendant on 1st February 2017 for the supply, installation, configuration, and commissioning of SAP Supplier Relationship Management (SAP-SRM) modules under Tender No. REA/2016-2017/OT/034. The contract price was agreed at Kshs. 76,804,400 inclusive of VAT.
13. The Plaintiff averred that the contract was duly formed through a transparent procurement process, involving advertisement, competitive bidding, notification of award, and formal acceptance. The Plaintiff fulfilled all pre-contractual requirements, including provision of performance security, and thereafter executed the contract with the Defendant.
14. The Plaintiff, through Mr. Simiyu averred that the project was structured in multiple phases, each contingent upon the successful completion of the preceding stage. However, during Phase 3, it became apparent that the Defendant’s existing system was at level EPH level 0, which needed to be upgraded to EHP level 8 to ensure successful integration the system.
15. The Plaintiff maintained that the said incompatibility within the Defendant’s then existing version of system and the new system, as well as the need for the upgrade was neither foreseeable at the time of tender nor attributable to the Plaintiff. It was however the Plaintiff’s case that this upgrade was approved by the project’s Steering Committee, which included the Defendant’s senior members of staff of the Defendant during its meeting of 30th May 2017. The upgrade, according to the Plaintiff, involved:
i. Implementation and upgrade of Solution Manager to version 7.2;
ii. SAP ECC 6.0 upgrade from EHP0 to EHP8;
iii. Single Sign-On implementation; and
iv. Installation and configuration of Web Dispatcher for enhanced security.
16. According to the Plaintiff, the above activities consumed 162 man-days at a cost of Kshs. 12,500,000 exclusive of VAT, which was documented in the Project Closure Report signed by representatives of both parties.
17. The Plaintiff asserted that Clause 14 of the contract expressly permitted variations, and the Steering Committee’s resolutions of 13th April 2017, together with the closure report, constituted valid approval.
18. It was further the Plaintiff’s case that the project was successfully completed, as evidenced by the closure report, the Defendant’s continued use of the system, and the Defendant’s nomination of the project for the SAP Quality Awards in South Africa in 2019.
19. In the premises, the Plaintiff urged this Court to allow its claim as pleaded in its plaint dated 9th December 2020. In particular, the Plaintiff sought the following reliefs: -
a) An amount of Kenya Shillings Seven Million, Six Hundred and Eight Thousand, Four Hundred and Forty. (Kshs 7,608,440.00) as of 22nd August, 2018.
b) Interest on Kenya Shillings Seven Million, Six Hundred and Eight Thousand, Four Hundred and Forty. (Kshs 7,608,440.00) at the prevailing commercial rate as from 22nd August, 2018.
c) An amount of Kenya Shillings Twelve Million, Five Hundred Thousand. (Kshs. 12,500,000.00) and 16% VAT thereon as at the Prevailing Commercial Rate as from 31st July,2017.
d) General damages.
e) Costs of this suit
f) Interest on (a), (b) and (c) above at Court rates until payment in full.
The Defendant’s Case
20. The Defendant’s case is captured in the Statement of Defence dated 22nd March 2021, the testimony of Mr. Festus Kasonzo (DW1) and the written submissions dated 24th July 2022 filed herein
21. The Defendant denied liability and contended that it is the Plaintiff who failed to fully execute the contract and close outstanding deliverables.
22. According to the Defendant, the contract price was expressly agreed at Kshs. 76,084,400 inclusive of VAT, as set out in the written contract, and not the sum Kshs. 76,804,400 claimed by the Plaintiff.
23. The Defendant contended that it had paid to the Plaintiff a total sum of Kshs. 75,420,344 – comprising of Kshs. 68,475,960/= being direct payments to the Plaintiff, and a further sum of Kshs. 6,944,384/=being payments made to SAP South Africa for SAP-SRM Academy training and certification, a cost that was the contractual responsibility of the Plaintiff, as confirmed in the Plaintiff's Project Handover Report.
24. It was further the Defendant’s case that the balance (Kshs. 664,056) of the agreed contractual price was withheld by the Defendant due to the Plaintiff’s failure to close outstanding deliverables, and was subsequently applied as liquidated damages pursuant to clause 18 of the General Conditions of the Contract.
25. The Defendant maintained that the Plaintiff failed to meet the agreed timelines and deliverables, necessitating several extensions of the Go-Live date. That in February 2018, the Steering Committee permitted a conditional partial Go-Live, on the express understanding that the Plaintiff would close all open issues during the support period. The Defendant asserted that the Plaintiff did not fulfill this obligation, and the unresolved issues remain outstanding to date, necessitating the Defendant to withhold the balance - Kshs. 664,056.
26. On the Plaintiff’s claim for variation of the contract occasioned by the need to upgrade version EHP 0 to EHP 8, the Defendant took the position that the upgrade was part of the original scope of works, was contemplated within the realization phase of the contract and did not constitute additional scope. The Defendant maintained that Clauses (b) and (d) of the contract required installation and configuration of SRM and SLC modules, tightly integrated with the Defendant’s existing SAP ECC system, including hardware sizing.
27. The Defendant further argued that no valid variation of the contract was ever effected. Under sections 135 and 139 of the Public Procurement and Disposal Act, any variation must be in writing, approved by the tender awarding committee, and executed by the accounting officer.
28. It was further the Defendant’s case that section 139(3) expressly prohibits upward variation of contract price within twelve months of signing. The Plaintiff’s alleged variation request was neither formally submitted nor approved, and no variation agreement was executed. Any purported variation would therefore be unlawful, null, and void ab initio.
29. The Defendant asserted that it is not the business of the courts to ratify illegality or rewrite contracts between parties, and further cited the cases of D. Njogu & Company Advocates v National Bank of Kenya Ltd [2016] KECA 85, Royal Media Services Ltd v IEBC [2019] KEHC 8239, and Lordship Africa Ltd v Public Procurement Administrative Review Board [2018] KEHC 7978, among others, to underscore that contrary to the Plaintiff’s contentions, estoppel cannot override statutory procurement requirements and that contracts contrary to statute are unenforceable.
30. On the allegation of unjust enrichment, the Defendant submits that all services rendered by the Plaintiff were within the scope of the contract and were duly paid for. Even if additional works were executed, they were undertaken without lawful approval and in contravention of the PPADA. The Defendant therefore denies deriving any benefit outside the contract that would impose liability upon it.
31. In the premises, the Defendant urged this Court to dismiss the Plaintiff’s claims since the Defendant maintained that it had performed its obligations under the contract, paid all sums lawfully due, and withheld only the balance applied as liquidated damages.
Analysis and Determination
32. Having carefully analyzed the pleadings, the evidence, the submissions submitted by the parties, and the applicable law, I find the following issues arising for this Court’s determination:
i. What was the Contract Price and whether the same has been fully paid by the Defendant?
ii. Whether the Hardware Upgrade was an additional scope of works, and if yes, whether the Contract was lawfully varied
The Contract Price and whether the same has been fully paid for by the Defendant
33. The Plaintiff, at paragraph 3 of its Plaint, stated the contract price was Kshs. 76,804,400/=. The Defendant countered this, submitting that the price expressly specified in Clause B of the Contract dated 1st February 2017 was Kshs. 76,084,400/= inclusive of VAT.
34. The Defendant further submitted that the total sum paid under the contract is Kshs. 75,420,344/=, which comprises Kshs. 68,475,960/= paid directly to the Plaintiff and Kshs. 6,944,384/= paid directly to SAP South Africa for SAP-SRM Academy training and certification, a cost that was the contractual responsibility of the Plaintiff.
35. It is a settled principle of law that the burden of proof lies on a party who asserts the existence of a fact, and desires to have a judgment given in his favour. This is on the basis of Sections 107-109 of the Evidence Act, Cap 80 Laws of Kenya, which provides that:
“107. (1) Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.
(2) When a person is bound to prove the existence of any fact it is said that the burden of proof lies on that person.
108. The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
109. The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”
36. The question as to what amounts to proof on a balance of probabilities was discussed by Kimaru, J (as he then was) in William Kabogo Gitau v George Thuo & 2 Others [2010] 1 KLR 526 as follows:
“In ordinary civil cases, a case may be determined in favour of a party who persuades the court that the allegations he has pleaded in his case are more likely than not to be what took place. In percentage terms, a party who is able to establish his case to a percentage of 51% as opposed to 49% of the opposing party is said to have established his case on a balance of probabilities. He has established that it is probable than not that the allegations that he made occurred.”
37. In the present case, a perusal of the contract in question reveals that Clause B of the contract dated 1st February 2017 executed between the parties herein provided that the contract price was Kshs. 76,084,400/= inclusive of VAT, and not the Kshs. 76,804,400/= pleaded by the Plaintiff at paragraph 3 of the Plaint. The Plaintiff’s claim for Kshs 7,608,440.00 under prayer (a) of the orders sought, is not supported by any evidence, and is therefore erroneous. Parties are bound by the express terms of their written contract – see Pius Kimaiyo Langat v Co-operative Bank of Kenya Limited [2017] KECA 152 (KLR), where the Court of Appeal stated that:
“We are alive to the hallowed legal maxim that it is not the business of courts to rewrite contracts between parties. They are bound by the terms of their contracts, unless coercion, fraud or undue influence are pleaded and proved. See National Bank of Kenya Ltd vs Pipeplastic Samkolit (K) Ltd [2002]2 EA 503. The primary task of the court is to construe the contract and any terms implied in it. See Megarry, J. in the case of Coco vs A. N. Clark (Engineers) Ltd. - [1969] RPC 41.”
38. Secondly, the fact that the defendant has paid to the Plaintiff a sum of totaling Kshs. 75,420,344 (out of which Kshs. 6,944,384 was paid directly to SAP South Africa on behalf of the Plaintiff as SAP training costs) is not seriously controverted on the evidence. What is contested is the balance of Kshs. 664,056/-.
39. The record shows (see the minutes of the Steering Committee meeting of 27th August 2018 – Pages 496 to 501 of the Defendant’s Trial Bndle) that the parties agreed that pending payments could be held until all deliverables were met and defects remedied. In particular, the minutes at “Min 27082018/3: Status Update of Post-Go-Live-Issues” stated in part that:
“2. The Team agreed that the next 10% will be held until all deliverables have been met. It was made clear that this payment will not be tied to “time”.”
40. Further, the Plaintiff’s own project handover/closure materials acknowledge certain open issues at the time of partial go-live. On this evidence, the Court finds that the Plaintiff has not proved that the issues that remained open as at the date of partial Go-Live had been closed.
41. Consequently, the Court agrees with the Defendant’s submissions that the payment of Kshs. 664,056/= is currently not due and payable to the Plaintiff until full contractual obligations are met or until the claim for liquidated damages is adjudicated.
Whether the Hardware Upgrade was an additional scope of works, and if yes, whether the Contract was lawfully varied
42. The Plaintiff contended that the upgrade of SAP ECC 6.0 from EHP0 to EHP8 was outside the original scope, necessitated by the technical incompatibility of the Plaintiff’s then-existing system, and that the upgrade was sanctioned by the Steering Committee, duly constituted by the Defendant. The Plaintiff stated that this additional work/scope, which was approved by the Defendant, consumed 162 man-days at a cost of Kshs. 12,500,000, for which it seeks to be paid by the Defendant.
43. According to the Plaintiff, Clause 14 of the contract permitted variations of the contract. The Plaintiff maintained that the Steering Committee, in its meeting of 30th May 2017approved the upgrade. The Plaintiff asserted that the said variation was documented in the closure report and that the Defendant is estopped from denying liability, particularly bearing in mind that the Defendant continued to use and derive substantial benefit from the system. The Plaintiff pointed out the Defendant’s nomination of the project for the SAP Quality Awards in South Africa in 2019 as a testament to the system’s excellence.
44. Citing, among others, the case of Carol Construction Engineers Limited & another vs National Bank of Kenya (2020) eKLR, the Plaintiff asserted that the Defendant is estopped from reneging on the representations made to the Plaintiff regarding approval of the additional scope. The Plaintiff reiterated that it needed to be paid for all the works undertaken (including the additional scope) since the project was completed successfully and a benefit in respect thereof, transferred to the Defendant
45. The Defendant, on its part, argued that the alleged hardware upgrade was part and parcel of the contracted services. The Defendant relies on the original scope of work, which required the Plaintiff to install, configure, and carry out tight integration of the contracted services to the Defendant's existing SAP ECC System. The Defendant cited minutes of January 2017, which it asserts were part of the Contract, where it was expressly agreed that the Plaintiff would undertake hardware sizing to accommodate the proposed system.
46. It is settled law that contractual scope is determined by the express terms of the contract and agreed deliverables and that it is not within the province of the Court to rewrite contracts. The Court of Appeal in National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd [2001] eKLR, stated that:
“This, in our view, is a serious misdirection on the part of the learned judge. A Court of law cannot re-write a contract between the parties. The parties are bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded and proved. There was not the remotest suggestion of coercion, fraud or undue influence in regard to the terms of the charge.”
47. Having duly considered the parties' arguments, the evidence, particularly the contract executed between the parties on 1st February 2027. While I note that Clauses (b) and (d) of the contract required installation and configuration of SRM and SLC modules, tightly integrated with the Defendant’s existing SAP ECC system, including hardware sizing, the specific requirement to upgrade ECC from EHP0 to EHP8 was not expressly envisaged. This, in my view, formed an additional scope of work. The question remains whether the contract was validly/lawfully varied.
48. In the present case, it is common ground that the Defendant is a public entity whose procurement processes (contract formation, amendment, and variation) are governed by the Public Procurement and Asset Disposal Act. Section 135 (of the Act are clear that no contract arises until it is signed. The provisions provide as follows: -
“(1) The existence of a contract shall be confirmed through the signature of a contract document incorporating all agreements between the parties and such contract shall be signed by the accounting officer or an officer authorized in writing by the accounting officer of the procuring entity and the successful tenderer.
(4) No contract is formed between the person submitting the successful tender and the accounting officer of a procuring entity until the written contract is signed by the parties.”
49. Further, Section 139 (1) of the PPAD Act provides that “(A)n amendment or a variation to a contract resulting from a procurement proceeding is effective only if: (a) the variation or amendment has been approved in writing by the respective tender awarding authority within a procuring entity; and (b) any contract variations or amendments for goods, works and services shall be as prescribed.”
50. Additionally, the Act at Section 139(4) makes it clear that any variation of a contract shall only be considered if;
(a) the price variation from the original price is based on the prevailing consumer price index obtained from Kenya National Bureau of Statistics;
(b) the quantity variation for goods does not exceed fifteen per cent of the original contract quantity;
(c) the price or quantity variation is to be executed within the period of the contract;
(d) the cumulative value of all contract variations for goods do not result in an increment of the total contract price by more than twenty-five per cent of the original contract price; and
(e) the cumulative value of professional services does not result in an increment of the total contract price by more than twenty-five per cent of the original contract price.
51. Again, Regulation 132 of the Public Procurement and Asset Disposal Regulations, 2020, prohibits upward variation of contract price within 12 months of signing, and that any additional funding required must be secured and committed prior to a variation of contract under section 139(1)(a) of the Act.
52. In this case, the Plaintiff did not produce a variation instrument executed in line with sections 135 and 139 PPADA or written approval by the tender-awarding authority satisfying Regulation 132. This Court, being a court of law, is bound by the law governing public procurement. The prohibition against upward variation of the contract price within the first year is unequivocal under Section 139(3) of the PPADA. Since the contract was signed on 1st February 2017 and the variation became necessary in May 2017, any upward variation of the contract price, even if approved as alleged by the Plaintiff, would have been unlawful and void.
53. Furthermore, the lack of written approval by the requisite authority and the absence of a signed variation contract violates the mandatory requirements of Sections 135 and 139 of the PPADA.
54. Accordingly, it is the finding of the Court that even if the upgrade of the system from upgrade of SAP ECC 6.0 from EHP0 to EHP8 appeared to be outside the original scope as established in the foregoing paragraphs, above, the Court agrees with the Defendant’s argument that no valid variation occurred, and therefore, any purported variation is void ab initio.
55. The Court aligns with the view expressed in the case of Royal Media Services v Independent Electoral & Boundaries Commission & 3 others [2019] KEHC 8239 (KLR) by Tuiyott J (as he then was) that a contractor (as the Plaintiff herein) is equally under a duty to enquire whether that the provisions of the PPADA have been complied with by a procuring entity.
“It is the duty of the Contractor as it is of the procuring entity to observe the provisions of Statute and the Regulations thereunder. Section 27 imposes an unequivocal responsibility on any contractor, supplier or consultant intending to supply goods or services to a public entity to comply with all the provisions of the Act and the Regulations. This duty, in my view, extends to the Contractor making due enquiries as to whether the procuring entity has complied with its side of the law and declining to enter into a contract which is procured in apparent disregard of the law. For that reason a contractor or supplier cannot find refuge in the argument that compliance was an internal matter of the public entity when s[he] has not to done enough to enquire about compliance or s[he] is herself or himself guilty of infringement.”
56. Regarding the Plaintiff’s argument that the Defendant legally bound to pay for the alleged additional works under the doctrine of estoppel or unjust enrichment, I would do no more than to cite the case of Lordship Africa Ltd v PPARB [2018] KEHC 7978; Royal Media Services Ltd v IEBC [2019] KEHC 8239 cited by the Defendant, where it was held that statutory procurement requirements override common law doctrines of estoppel.
57. This Court (Gikonyo J), in dismissing a similar claim in Mweha Enterprises Limited v Kenya Trade Network Agency & another [2025] KEHC 12665 (KLR) stated as follows: -
“The doctrine the doctrine of estoppel, as pleaded by the plaintiff, cannot be applied to openly circumvent the provisions of statutes and regulations.
There was no tender or contract for the inter-related works or permitted variation of the original contract to support the claim. Accordingly, I find that the plaintiff has not proved its claim to the required standard. Each party shall bear their costs because the suit is against a public entity.”
58. From the foregoing analysis, it is evident that the Plaintiff has failed to establish its claim for the recovery of the alleged outstanding balance and the cost of the alleged contract variation.
59. Accordingly, the suit is hereby dismissed. On costs, I direct that each party to bear their own costs because the suit is against a public entity and taking into account that the Defendant equally failed to comply with the provisions of PPADA as to contract variation.
60. It is so ordered.
SIGNED, DATED, and DELIVERED IN VIRTUAL COURT THIS
11TH DECEMBER 2025
ADO MOSES
JUDGE
In the presence of: -
C/A – Moses
.…………..for the Plaintiff
….……………. for the Defendant