[2022] KEHC 15315 (KLR)

Kitolo v Housing Finance Company Limited (Civil Suit 10 of 2020) [2022] KEHC 15315 (KLR) (20 June 2022) (Ruling)

Neutral citation: [2022] KEHC 15315 (KLR)

Republic of Kenya

In the High Court at Kajiado

Civil Suit 10 of 2020

SN Mutuku, J

June 20, 2022

Between

Austin Salmon Kitolo

Plaintiff

and

Housing Finance Company Limited

Defendant

Ruling

1. This ruling emanates from a partial consent recorded by the parties on September 21, 2021 and adopted by the court on February 17, 2022 as a court order. The consent is worded as follows:i.That this matter be and is hereby marked as settled as between the parties.ii.That the Honourable Court do determine, upon submissions by the parties, the party to bear costs of the suit.iii.That the parties be at liberty to file an affidavit setting out the circumstances in which the matter was settled.

2. Pursuant to order 3 of that consent, parties filed respective affidavits. The Defendant’s affidavit is dated October 12, 2020. It is sworn by Christine Wahome, the Litigation Manager at the Defendant Bank. She deposed that the instant suit is related to or is similar to Kajiado ELCSuit No. 819 of 2017 Juliana Muthoni Kitolo-vs- Housing Finance Company of Kenya Ltd where the validity of the charge was challenged on similar grounds as in this case; that during the pendency of this suit, the Plaintiff’s advocate in ELC 819 of 2017, in a letter dated March 1, 2021, offered to settle the matter out of court and proposed to pay a sum of Kshs. 13,500,000/-.

3. She deposed that the offer was accepted by the Bank subject to the payment of the proposed sum within 60 days from March 12, 2021 and consents being executed in the instant suit and ELC 819 of 2017 marking the matters settled subject to payment of costs of each suit to the Defendant.

4. She deposed that the Plaintiff settled the amount and this suit and ELC No. 89 of 2017 were marked as settled partially with the only pending issue being who should bear the costs of this suit.

5. The Plaintiff filed his affidavit dated 19th April, 2022 wherein he deposed that this was necessitated by of the illegalities perpetuated by the Defendant and the Trustees in charging L.R No. Ngong/2725 without the plaintiff’s consent.

6. The Plaintiff argues that at the time the property was being charged the Plaintiff and his brother were minors and had no knowledge of the encumbrances registered against their title. Further that since the bank sought to exercise its statutory power of sale without following the due process, he had justifiable cause of action against them and therefore it was not a frivolous claim.

7. He has argued that the issue of out of court settlement was mooted by the bank’s representatives Ms. Mary Gathongo and Ms. Christine Wahome who met with his mother Juliana Muthoni Kitololo, as affirmed by letter dated March 15, 2021 and therefore costs should be shared by parties considering the settlement was negotiated.

Submissions 8. Parties were directed to file written submissions.

9. The Defendant filed submissions dated October 15, 2021 in which it is argued that Section 27 of the Civil Procedure Act gives this court ultimate discretion to determine who bears costs and that in exercising that discretion, the court must consider both the outcome of the suit and the circumstances of the case.

10. The Defendant reiterated the contents of the affidavit on the events that led to the institution of these proceedings, the events which eventually led to the termination and the manner in which the instant proceedings were terminated and for that reason the Defendant is entitled to costs of the suit. It was submitted that the compromise in this matter and the matter before the ELC resulted in settlement of outstanding loan amounts which were advanced vide charge instrument and that this settlement vindicated the Defendant’s position and in the circumstances the suit was determined in its favour.

11. It was their argument that the settlement of a matter by consent is not a bar to costs. The Defendant relied on the case of Morgan Air Cargo Limited –vs- Evrest Enterprises Limited[2014] eKLR, where the court stated as follows:“But does it not necessarily mean that, where parties have entered into consent to settle a proceeding, no costs should be awarded, or there is no successful party in the matter.The incidence of settlement by consent of the parties, to my mind, is just but a vital factor the court should consider, within the circumstances of each case, in deciding whether costs are payable or not. A consent recorded in settlement of a proceeding is not an automatic disentitlement of costs and I, would, therefore, hesitate profoundly to make any generalized propositions on the law that consent is an automatic disentitlement of costs without referenced to the context of the particular case.”

12. The Defendant furher relied on the case of Cecilia Karuru Ngayu –vs- Barclays Bank of Kenya & Another [2016] eKLR, where the court expressed itself as follows:“To my mind, in determining the issue of costs, the court is entitled to look at, inter alia, (i) the conduct of the parties, (ii) the subject of litigation, (iii) the circumstances which led to the institution of the proceedings, (iv) the events which eventually led to their termination, (v) the stage at which the proceedings were terminated, (vi) the manner in which the proceedings were terminated, (vii) the relationship between the parties, and (viii) the need to promote reconciliation amongst the disputing parties pursuant to Article 159 (2) (c) of the Constitution. In other words, the court may not only consider the conduct of the party in the actual litigation, but the matters which led to the litigation, the eventual termination thereof and the likely consequences of the order for costs.”

13. The Plaintiff filed their submissions dated April 25, 2022. It is the submission of the Plaintiff that since the settlement was a culmination of negotiations, motivated by give and take between the parties, then each party should bear its own costs. He reiterated the contents of his affidavit on the circumstances of the case and stated that there are no winners per se as both parties ceded something in exchange of the settlement.

14. The Plaintiff relied on a number of authorities all on the point that this court has discretion in directing that each party bears its own costs. These are Rufus Njuguna Miringu 7 Another – versus- Martha Muriithi & 2 others [2012] eKLR, Jesse Mburu Gitau & 3 others v. Attorney General [2003]eKLR and Little Africa Kenya Limited v. Andrew Mwiti Jason [2014] eKLR.

Determination 15. I have read the affidavits filed by both parties in respect to order 3 of the partial consent filed herein. I have also read and understood the rival submissions and cited authorities relied on by each party. The starting point is always the law. Section 27 (1) of the Civil Procedure Act provides that: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.

16. The “the event” referred to in Section 27 was defined in Judicial Hints on the Civil Procedure Act 2nd Edition Page 99 provides thus:“The words “the event” means the result of all the proceedings to the litigation…… Thus the expression ‘the costs shall follow the event’ means that the party who on the whole succeeds in the action gets the general costs of the action”

17. The court of Appeal in Supermarine Handling Services LtdvKenya Revenue Authority [2010] eKLR analyzed this issue and stated that 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.

18. Further, in Devram Dattan v Dawda [1949] EACA 35 it was held that:“It is well established that when the decision of such a matter as the right of a successful litigant to recover his costs is left to the discretion of the Judge who tried his case, that discretion is a judicial discretion, and if it be so its exercise must be based on facts....If, however, there be, in fact, some grounds to support the exercise by the trial Judge of the discretion he purports to exercise, the question of the sufficiency of those grounds for this purpose is entirely a matter for the Judge himself to decide, and the Court of Appeal will not interfere with his discretion in that instance.”

19. The gist of the defendant’s submissions is that settlement of a case by consent does not mean there is no successful party and therefore costs ought to be awarded to the, while the Plaintiff prefers that each party bears own costs.

20. It is not in dispute that the parties’ herein entered into a partial consent that led to settling the matter. The parties did not however consent on the issue of costs. Nothing, in my view, could have been easier that the parties settling this issue on costs at the time they entered into the partial consent. They did not do so for reasons better known to them. To my mind the fact that they did not settle on the issue of costs is because they may have felt that this required the intervention of the court to settle.

21. It is the duty of this court, therefore, to exercise its discretion and determine the issue of who bears the costs of this matter. Having considered the circumstances of the case, the parties’ submissions and the various authorities cited and/or relied on, it is my view that the compromise of this matter and the ELC case resulted in settlement of the outstanding loan amounts. As submitted by the Defendant, that settlement vindicated the defendant’s position and to resulted in the determination of this matter in the defendant’s favour.

22. To settle this matter, my considered view is that the defendant is entitled to costs of this suit. Consequently, I hereby award costs of this suit to the Defendant. The same shall be subjected to taxation by the deputy registrar of this court upon filing of a Bill of Costs. It is so ordered.

DATED, SIGNED AND DELIVERED THIS 20TH JUNE 2022. S. N. MUTUKUJUDGE