State to pay Fincorp K19mil

By BOURA GORUKILA
THE State has been ordered by the Supreme Court to pay Finance Corporation Ltd (Fincorp) over K19 million in damages for a breach of contract following the dismissal of its appeal yesterday.
Justice David Cannings on behalf of a three-man bench comprising himself, Chief Justice Sir Gibbs Salika and Justice George Manuhu, dismissed the appeal by the State and Education secretary Dr Uke Kombra. He affirmed the orders of the National Court (WS 1449 of 2018 and April 28, 2020) and dissolved any order of the Supreme Court staying the National Court order.
The State and Kombra appealed an order by the National Court which awarded Fincorp damages for a breach of contract.
The total judgment was K18,439,164.41 in damages plus K570,859.05 pre-judgment interest which amounted to a total of K19,010.023.46. Justice Cannings said in view of the substantial amount of public money involved, there was no appeal against the assessment of damages.
“The appellants ran an appeal that was found to be frivolous and misconceived.
“With respect, the State’s interest was poorly protected in the National Court and the lack of diligence has continued throughout the Supreme Court proceedings,” he said.
He held that under longstanding arrangements between the department and Fincorp, officers of the department entered into loan agreements with Fincorp, under the condition that they signed an irrevocable authority for the department to make fortnightly deductions from their salaries that would be remitted to Fincorp to repay their loans, and in return the department would be paid five per cent of each deduction.
It was held that apart from the loan agreements, there was a contract between the State and Fincorp under which those arrangements were in place.
The contract was breached when Kombra issued a circular instruction to the department’s payroll section that stopped those arrangements.
The State and Kombra were liable for damages for the loss of profits incurred by Fincorp.
Justice Cannings also ordered that the State and Kombra pay Fincorp costs of the appeal on a party to party basis.