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Case Brief · caselaw.co.ke
Court of AppealPartially AllowedCivil Appeal No. E053 of 2022

Attorney General v Equip Agencies Limited

Court of Appeal
25 September 2026
6,142 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~25 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal upheld a Kshs 1.15 billion payment owed to a supplier by government but struck out the massive compound interest award.

What this practically means

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Executive summary

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The Court of Appeal (Mativo, Lilan & Okello, JJ.A.) partially allowed the Attorney General's appeal against the High Court judgment (Muga Apondi J, 2nd December 2011) awarding Equip Agencies Limited Kshs 1,862,302,792 with compound interest at 18% per annum for insecticides and anti-malarial chemicals supplied to the Ministry of Health under two framework contracts. On limitation, the court affirmed the trial court's finding that the cause of action accrued on 23rd August 1996 when the Ministry cancelled three LPOs after the goods had been supplied, accepted and distributed; the suit filed on 22nd July 1999 was therefore within the three-year period under section 3(2) of the Public Authorities Limitation Act. The court held that 'as and when required' supply contracts comprise a series of individual obligations, and that the Government could not invalidate the LPOs for want of AIE-holder signatures or budgetary allocation, invoking the Turquand rule and ostensible authority. On interest, the court set aside the compound interest award, holding that compound interest must be specifically pleaded and proved as special damages, with proof of causation, foreseeability and commercially reasonable borrowing; the respondent pleaded only simple interest and failed to prove the link between the breach and its bank borrowings. The judgment was varied: the appellant to pay the principal sum of Kshs 1,157,846,150 with interest at court's rate from 26th June 1995 until payment in full, with each party bearing its own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the contractual claims before the superior court were time barred by dint of Section 3(2) of the Public Authorities Limitation Act
  2. 2.Whether the trial court was justified in awarding the respondent compounded interest at the rate of 18% per annum from 1st March, 1999 until payment in full

Key legal issues

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01

Limitation under section 3(2) of the Public Authorities Limitation Act

Holding

The cause of action accrued on 23rd August 1996 when the LPOs were cancelled, so the suit filed on 22nd July 1999 was within the three-year period

Reasoning

The court held that 'as and when required' supply contracts comprise a series of individual obligations within a framework agreement, so limitation runs from breach of each individual supply. The breach occurred when the Ministry cancelled the LPOs after the goods had been supplied, accepted and distributed. The trial court's finding on accrual was affirmed, and the government could not rely on unsigned LPOs or lack of budgetary allocation to invalidate the contracts.

p. 32
02

Validity of LPOs not signed by AIE holders and without budgetary allocation

Holding

The LPOs and contracts were valid despite internal procedural irregularities

Reasoning

Relying on the Turquand rule and ostensible authority, the court held that outsiders dealing with a government body in good faith may assume internal approvals were completed. Section 34 of the Companies Act gives the Turquand rule statutory backing. A government institution cannot rely solely on its internal process failures to deny an otherwise binding contract.

p. 32
03

Award of compound interest at 18% per annum

Holding

The award of compound interest was set aside; compound interest must be specifically pleaded and proved as special damages

Reasoning

The contract contained no express interest provision, so interest was not a contractual right. The court laid down a four-part test: proof of causation and actual loss, foreseeability, specific pleading as special damages with details of compounding intervals and rates, and commercially reasonable borrowing. The respondent pleaded only simple interest, and its expert evidence of bank facilities did not prove causation or loss within the appellant's contemplation.

p. 41

Legal principles established

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  • A cause of action on an 'as and when required' supply contract accrues on breach of individual supplies, not continuously; cancellation of LPOs after supplies were made and accepted marks the accrual date
  • A government entity cannot rely on its own internal procedural failures to escape a contract entered with a private party; the Turquand rule and ostensible authority bind it
  • Compound interest is not automatic; it must be specifically pleaded and proved as special damage with proof of causation, foreseeability and commercially reasonable borrowing

Court orders

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  1. 1.The appellant shall pay the respondent special damages in the sum of Kshs. 1,157,846,150/= being the principal sum for the invoiced goods
  2. 2.Interest thereon at court's rate from 26th June, 1995 until payment in full
  3. 3.Each party shall bear its costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

majority

Wrote the judgment

majority

Wrote the judgment

On appeal from
High Court of Kenya at Nairobi
HCCC No. 159 of 2006
Jurisdiction invoked
Appellate jurisdiction of the Court of Appeal over the High Court judgment (first appeal on facts and law)

Relief refused

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Compound interest at 18% per annum from 1st March, 1999 until payment in full

Compound interest was never specifically pleaded or proved; no causation between breach and borrowing was established

p. 41

Costs

Since the appeal is partly successful, each party shall bear its costs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Thus, as long as the supply is made within the terms of the framework agreement, cause of action accrues from the time there is breach of individual supplies.
p. 28Accrual of cause of action in framework supply contracts
The government cannot escape its obligation simply because its own officials failed to follow internal protocols, bureaucratic steps or administrative circulars.
p. 32Government bound by contracts despite internal irregularities
For compound interest, the party must specifically plead it and prove their claim for compound interest. It is not an automatic right.
p. 38Pleading and proof of compound interest
Since the appeal is partly successful, each party shall bear its costs.
p. 44Final orders - costs
The appellant shall pay the respondent special damages in the sum of Kshs. 1,157,846,150/= which is the principal sum for the invoiced goods
p. 44Final orders - varied judgment

Issues in the judgment

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minor

Inconsistent pleaded totals for the interest component

minor

Consent letter dispensing with hearing dated 2026 though submissions were filed in 2022

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Attorney General v Equip Agencies Limited", Case Analysis (2026). Civil Appeal No. E053 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2026/1762/eng@2026-09-25

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.