Heat olive oil in a small dutch oven or fry pan over medium to medium high heat. Sauté onion until it just starts to soften. Add garlic and cook another minute. Stir in curry powder, paprika, cinnamon, sugar, ginger and bay leaf.
Move spices around pan cooking for about 2 minutes. Add a large pinch of salt. Add chicken, chopped tomato, tomato paste, yogurt and coconut milk.
Turn up heat and bring to a boil. Reduce heat and simmer for 25 minutes.
Add lemon juice and cayenne pepper and simmer another 5 minutes.