[2024] KEHC 12426 (KLR)

KCB Bank Kenya Limited v Morris Mugendi Karigi t/a Mugendi Karigi & Co. Advocates & another (Civil Appeal E038 of 2023) [2024] KEHC 12426 (KLR) (16 October 2024) (Ruling)

Neutral citation: [2024] KEHC 12426 (KLR)

Republic of Kenya

In the High Court at Embu

Civil Appeal E038 of 2023

LM Njuguna, J

October 16, 2024

Between

KCB Bank Kenya Limited

Appellant

and

Morris Mugendi Karigi t/a Mugendi Karigi & Co. Advocates

1st Respondent

African Merchant Assurance Co.Ltd

2nd Respondent

Ruling

1. The parties herein negotiated and settled the appeal and the court marked it as settled. The 1st respondent prayed for the costs of the appeal while the 2nd respondent prayed that each party bears its own costs. The court directed the parties to file brief submissions on costs and who is liable to pay the costs.

2. The parties filed their brief written submissions.

3. The 1st respondent submitted that the appeal was settled through an out-of-court settlement hence it has been overtaken by events. That he held a decree against the appellant as a garnishee for money held on behalf of the 2nd respondent in accordance with Order 23 of the Civil Procedure Rules. That in as much as the moneys held by the appellant were allegedly insufficient to satisfy the decree, it would remain his right to execute against a lawful decree held against the appellant. He relied on the case of Rai & 3 others v Rai & 4 others [2013] KESC 20 (KLR) and argued that costs should follow the event as held by the Supreme Court in that case. He urged that since the respondents saved the appellant from arguing the contested appeal, each party should bear its own costs.

4. The appellant submitted that when the court issued a garnishee order absolute against it in Embu CMCC No. E075 of 2022, the 2nd respondent’s account held with the appellant had funds that were locked in by other garnishee decrees, leaving a balance of Kshs.1,090. 16/=. That it appealed against the decision and then moved the court for temporary stay of execution and the 1st respondent filed a replying affidavit seeking that the stay order be vacated and the garnishee nisi be made absolute. That the appellant got ready for the appeal through research and preparing pleadings but the 2nd respondent approached the 1st respondent with a view to settle the decretal sum, including the amount set to be enforced against the appellant.

5. That this compromise between the respondents is what necessitated withdrawal of the appeal thus the 2nd respondent wants to be exonerated from incurring the costs of the appeal. It relied on section 27 of the Civil Procedure Act and the case of Haraf Traders Limited v. Narok County Government [2022] eKLR, Rai & 3 others v Rai & 4 others [2013] KESC 20 (KLR) and Joseph Oduor Anode v. Kenya Red Cross Society (2012) eKLR. It argued that costs follow the event and when the court has to depart from this rule, sufficient reasons have to be provided. It was its argument that it has incurred costs preparing for the appeal which never took off, thus it should be compensated through costs.

6. The issue for determination is who should be awarded the costs of the appeal?

7. The appeal was marked as settled, parties having reached an out-of-court settlement. The 2nd respondent, who holds a bank account at the appellant bank, reached out to the 1st respondent, the decree holder, and settled the decretal amount. The appellant claims that it has incurred costs preparing for the appeal and filing stay applications to halt execution for the decretal sum. On his part, the 1st respondent submitted that the appellant has been saved from the appeal process through the settlement which rendered the appeal unnecessary.

8. Costs are awarded through discretion of the court, which discretion must be applied judiciously. Section 27 of the Civil Procedure Act provides:“(1)Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers:Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order.”

9. In the case of Republic v. Rosemary Wairimu Munene, Ex-Parte Applicant Ihururu Dairy Farmers Co-operative Society Ltd Judicial Review application no 6 of 2014 court held as follows: -“The issue of costs is the discretion of the court as provided under the above section. The basic rule on attribution of costs is that costs follow the event.....It is well recognized that the principle costs follow the event is not to be used to penalize the losing party; rather it is for compensating the successful party for the trouble taken in prosecuting or defending the case.”

10. In the case of Haraf Traders Limited v. Narok County Government [2022] eKLR, the court considered the fact that the parties had agreed to compromise the case thus a consent was recorded. The court also noted that series of events that took place since filing of the suit and stated thus:“Considering the entire chain of events from filing this suit up to the time the parties left the issue to the court to determine, the numerous court attendances cited above I find no reason to deny the plaintiff costs. In exercise of my discretion in order to meet the interests of justice for both parties, I award costs to the plaintiff.”

11. In the present case, the 1st respondent was awarded a decretal sum of Kshs.1,654,563. 70/= against the 2nd respondent. The 1st respondent initiated garnishee proceedings against the appellant for the moneys held on behalf of the 2nd respondent and when the garnishee orders were issued, the appellant contested the same through this appeal. Since the appeal was not determined on its merits, the appellant feels shortchanged by the 1st and 2nd respondents’ decision to have the decretal amount settled out of court. Since initiation of the garnishee proceedings against the appellant, the 1st respondent has been pursuing payment and he even testified at the trial and called a witness. The 2nd respondent did not call any witnesses.

12. In fact, it seems as though the 1st respondent’s move to pursue execution is what prompted the 2nd respondent and the appellant to move with haste. The appellant sought stay of execution at the various courts and at this point in time, it has been discharged from liability since the 2nd respondent confirmed to the court that the amount was paid to the 1st respondent. It is my view that the 1st respondent deserves the costs of the appeal given his efforts to recover the decretal amount. The 2nd respondent is liable for the costs given its conduct throughout the suit. I do agree with the general rule that costs follow the event and, in this case, the appeal was rendered unnecessary due to the 2nd respondent’s move to settle the decretal amount out of court.

13. Therefore, the 2nd respondent is hereby ordered to pay the appellant’s and the 1st respondent’s costs of the appeal. For the avoidance of doubt, the appellant and the 1st respondent are entitled to costs at the ratio of 50%:50%.

14. It is so ordered.

DELIVERED, DATED AND SIGNED AT EMBU THIS 16TH DAY OF OCTOBER, 2024. L. NJUGUNAJUDGE………………… for the Appellant/Applicant………………… for the 1st Respondent……………… for the 2nd Respondent