Stanbic Bank to pay Sh32.4million to Kenya Haulage for negligence after losing appeal suit

The Stanbic Bank has lost a bid to evade paying a Sh32.4 million (US$ 250,860) payout as special damages to Kenya Haulage Agency Limited, which lost a lucrative tender at Kenya Ports Authority due to negligence by the bank.

In a ruling made by a three-judge bench of the Court of Appeal in Mombasa, Stanbic Bank was found to have breached its duty of care by issuing a bid bond valid for only 119 days instead of the required 120 days.

The bond was a mandatory requirement in Tender No. KPA/207/2010-11/AHM for the supply of rubber fenders. As a result, Kenya Haulage was disqualified from the tendering process.

The dispute dates back to July 2011, when Kenya Haulage requested Stanbic Bank to issue a US$250,000 tender security.

Despite explicit instructions, the bank issued a bond that fell short of the 120-day requirement by one day.

Kenya Haulage sued the bank in 2012, citing negligence and claiming it suffered a financial loss after pre-securing goods worth US$ 342,100, expecting to earn profits based on a declared tender price of US$ 592,960.

The High Court ruled in the company’s favor in 2021, awarding the claimed loss.

The lender appealed the High Court decision, arguing that the claim was based on negligence, not breach of contract, and that the loss of anticipated profits was speculative and too remote to be recoverable.

However, the Court of Appeal dismissed the bank’s arguments, affirming that a duty of care existed and was breached.

“In the present appeal, the loss of the actual tender was not only foreseeable but also a proximate loss… the bank was responsible for denying [Kenya Haulage] the opportunity to proceed,” the judges stated.

The court also ruled that pure economic loss, such as anticipated profits, could be recovered in negligence under specific circumstances, including where a special duty relationship and foreseeability exist.