[2022] KEHC 15996 (KLR)

Manjothi v Aster Holdings Ltd (Civil Appeal 314 of 2018) [2022] KEHC 15996 (KLR) (Civ) (1 December 2022) (Judgment)

Neutral citation: [2022] KEHC 15996 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 314 of 2018

CW Meoli, J

December 1, 2022

Between

Naushad Manjothi

Appellant

and

Aster Holdings Ltd

Respondent

(Being an appeal from the ruling of Hon. D.W Mburu (Mr.) (PM) delivered on 8th June 2018 in Nairobi Milimani CMCC No. 9415 of 2017)

Judgment

1. This appeal emanates from the ruling delivered on June 8, 2018 in Nairobi Milimani CMCC No 9415 of 2017. The events leading to the instant appeal are as follows. Aster Holdings Limited the Plaintiff in the lower court (hereafter the Respondent) filed a suit in the lower court in December 2017. The suit was accompanied by an interlocutory motion dated December 22, 2017 seeking orders against Patrick Osero, Richard Nyariki, Peter Onyango, Billy Graham, Auto Gallery M Limited, Nureez Iqbal, John King’ori, Naushad Manjothi (hereafter the Appellant), Zaheer Khatua and A-One Plus Auto Limited listed respectively as the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, 8th 9th & 10th Defendants.

2. The prayers in the suit were replicated in the motion which sought a declaration that the said Defendants’ continued occupation of the properties known as LR No 1870/V/247 (hereafter the suit property) situate in the City of Nairobi was unlawful and constituted illegal trespass; an order compelling the Defendants by themselves, servants, agents and or legal representatives to vacate or be evicted from the Respondent’s property LR No 1870/V/247.

3. On December 29, 2017, the Respondent’s interlocutory application motion came up for inter partes hearing and proceeded exparte. The trial court granted orders to the effect that the Defendants’ continued occupation of the suit property was unlawful and constituted illegal trespass; that pending the hearing and determination of the suit, the Defendants were to vacate the suit property ; and failing which Siuma Auctioneers were authorized to evict the Defendants in the lower court under security and assistance provided by the officer commanding (OCS) Kileleshwa Police Station.

4. On January 5, 2018 Peter Onyango, Billy Graham, Auto Gallery M Limited, Nureez Iqbal, John King’ori, Naushad Manjothi (hereafter the Appellant), Zaheer Khatua and A-One Plus Auto Limited the 3rd, 4th, 5th, 6th, 7th, 8th 9th & 10th Defendants in the lower court entered appearance. However, on January 15, 2018 the Respondent filed a notice of withdrawal of the suit which notice was endorsed by the court on even date. On January 19, 2018 the Appellant filed a statement of defence and counterclaim dated 18. 01. 2018, followed by a motion filed and dated April 4, 2018 seeking inter alia that the order allowing the Respondent’s withdrawal of the suit allowed be set aside ex debito justitiae and that the withdrawn suit be reinstated and or adjusted so as to deem the Appellant’s defence and counterclaim as properly filed within time.

5. The motion was supported by the affidavit sworn by the Appellant who swore that the Respondent irregularly evicted him and other Defendants before the lower court on the basis of falsified service of the plaint and accompanying motion dated December 22, 2017. That the Appellant had duly instructed the firm of Meyo & Nyarapa Co Advocates who filed a memorandum of appearance on January 5, 2018 but that the Respondent, with the intention of stealing a march on the defendants had filed a notice of withdrawal of suit that was irregularly allowed on January 15, 2018. He asserted that he subsequently instructed a different firm of advocates who filed a notice of change, statement of defence and counterclaim on January 19, 2018. That he had been unable since then to trace the lower court file until March 29, 2018.

6. He further contended that the order withdrawing the suit against him and his co-Defendants before the lower court was a nullity in law, as the notice of withdrawal was not served upon him, his co-Defendants, or his counsel. He asserted that the Respondent maliciously filed the lower court suit for the sole purpose of unlawfully evicting the Defendants in the lower court and thereafter sought to defeat any cause against him by unilaterally and un-procedurally purporting to withdraw the suit. He therefore urged that the withdrawal order be set aside ex debito justiciae.

7. Similarly, April 4, 2018 the 6th and 9th Defendants in the lower court filed a motion seeking inter alia the setting aside of the withdrawal order, reinstatement of the withdrawn suit and leave for the said applicants to amend their defence and to file a counterclaim. The Respondent opposed both motions by way of grounds of opposition dated May 21, 2018. On May 25, 2018 the two motions by the Appellant on one hand, and the 6th & 9th Defendant on the other hand, were orally argued simultaneously. By a ruling delivered on June 8, 2018 the lower court dismissed both motions with no orders as to costs but awarded costs of the suit to all the Defendants in the lower court who had entered appearance as of January 15, 2018.

8. The ruling provoked the instant appeal by the Appellant which is based on the following grounds in the memorandum of appeal dated July 9, 2018: -“1. That the learned trial magistrate erred in law and in fact by failing to appreciate that the trial court had inherent powers to set aside orders obtained ex parte.2. That the learned magistrate misdirected himself in finding that failure to serve a notice of withdrawal did not invalidate the orders premised upon the impugned notice.3. That learned trial magistrate erred in law and in fact in failing to adjust the terms of withdrawal of suit to allow prosecution of the Appellant’s counter-claim.4. That the learned trial magistrate erred in law and in fact in failing to appreciate that dismissing the Appellant’s application would countenance abuse of the court process.5. The learned magistrate erred in law and in fact in failing to appreciate that the failure to serve the notice of withdrawal and the withdrawal order exposed the Appellant to incur costs of defending itself and filing a counterclaim.” (sic)

9. The appeal was canvassed by way of written submissions. Submitting on the second ground of appeal, counsel for the Appellant cited Order 25 Rule 1 of the Civil Procedure Rules and the decision in Acqualine Distributors Limited v Coastal Bottlers Limited [2016] eKLR. He asserted that the fact of non-service of the notice of withdrawal of suit was not contested by the Respondent and hence the withdrawal order was voidable. That failure to serve the Appellant had occasioned him prejudice despite expending resources on the filing a statement of defence and counter-claim. Addressing the first ground of appeal, counsel cited several decisions including Macfoy v United Africa Co Ltd [1961] 3 All E.R 1169 as cited with approval in the decision in Omega Enterprises (K) Limited v Kenya Tourist Development Corporation Limited & 2 others [1998] eKLR, Tatu City Limited v Stephen Jennings & 6 Others [2016] eKLR, to submit that upon the lower court finding at the notice of withdrawal ought to have been served on the Appellant, it had inherent power to set aside the withdrawal order to prevent the abuse of the process of the court.

10. Concerning grounds three and four of the memorandum of appeal, counsel contended that the Respondent abused the process of the court to achieve an ulterior outcome. That the Appellant had filed a counterclaim oblivious of the withdrawal of suit as neither the notice of withdrawal nor order allowing the withdrawal were served. He asserted that it offends equity for the Respondent as the party who breached the law to assert that the notice had taken effect and that right of withdrawal could not be taken away. The decision in Beijing Industrial Designing & Researching Institute (supra) was cited in bolstering the submission that the trial court ought to have considered all the relevant circumstances attending the motion.

11. On the final ground of appeal, counsel relied on Project Kenya International v Peter Wanjohi Kamau [2013] eKLR and Pacis Insurance Company Ltd v Francis Njeru Njoka [2018] eKLR to argue that the lower court erred. First, by limiting the award of costs in disregard of the Appellant’s additional costs incurred with the lodging of a counterclaim , and secondly, by not allowing the counterclaim to proceed as an independent action despite the withdrawal of the Respondent’s suit. The court was urged to allow the appeal else the Appellant would suffer prejudice without remedy.

12. The Respondent defended the trial court’s decision. On the second ground of appeal, counsel for the Respondent cited Order 25 Rule 1 of the Civil Procedure Rules and the decisions in Kofinaf Company Limited & Another v Nahashon Ngige Nyagah & 20 Others [2017] eKLR and Macfoy (supra). It was his submission that the lower court properly exercised its discretion in finding that failure to serve the notice of withdrawal of the suit did not invalidate the notice. That pleadings filed after the notice of withdrawal of the suit were of no legal consequence there being no live suit before the court. Hence, the lower court correctly awarded costs to parties that had filed pleadings by the time of the withdrawal of suit.

13. Concerning the third and fourth grounds of appeal, the Respondent’s counsel cited the decision in Thendu Gitau & Another v John Nginga Agecha [2020] eKLR in support of the submission that upon withdrawal of the suit, nothing remained for the court’s determination and the Appellant could not file a counterclaim on a non-existent suit. It was further submitted that there was nothing bar to the Appellant from filing his own independent suit against the Respondent for redress of any perceived grievances. Counsel was of the view that the facts in Beijing Industrial Designing & Researching Institute (supra) cited by the Appellant differed from those herein and the said decision was therefore inapplicable.

14. On the final ground of appeal, counsel relied on Section 27 of the Civil Procedure Act, and cited several decisions including Telkom Kenya Limited v John Ochanda And 996 Others [2015] eKLR, Nicholas Kiptoo Korir Arap Salat v IEBC and 7 Others [2014] eKLR, Little Africa Kenya Limited v Andrew Mwiti Jason [2014] eKLR, Beijing Industrial Designing & Researching Institute (supra) and Church Road Development Co Ltd v Barclays Bank of Kenya Ltd & 2 Others [2007] eKLR. He asserted, based on the decisions that the exercise of awarding of costs is matter of judicial discretion and the lower court was entitled to disallow costs to the Appellant for pleadings filed after the suit had been withdrawn. Counsel defending the decision of the lower court described the appeal as an abuse of the court process and a waste of judicial time. He urged the court to dismiss the appeal with costs.

15. The court has perused the record of appeal as well as the original record and considered the material canvassed in respect of the appeal. The duty of this court as a first appellate court is to re-evaluate the evidence adduced in the lower court and to draw its own conclusions, but always bearing in mind that it did not have opportunity to see or hear the witnesses testify. See Peters v Sunday Post Ltd (1958) EA 424; Selle and Anor v Associated Motor Boat Co Ltd and Others (1968) EA 123; William Diamonds Ltd v Brown [1970] EA 11 and Ephantus Mwangi and Another v Duncan Mwangi Wambugu (1982) – 88) 1 KAR 278.

16. The Court of Appeal stated in Abok James Odera t/a A J Odera & Associates v John Patrick Machira t/a Machira & Co Advocates [2013] eKLR that:“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.

17. The lower court in dismissing the motions before it expressed itself in part as follows:“I have carefully considered the submissions made in support of and against the two applications. The withdrawal of suit is provided for by Order 25 Rule 1 of the Civil Procedure Rules. In the case of Church Road Development Co Ltd v Barclays Bank of Kenya Ltd & 2 Others [2007] eKLR it was stated thus:-“It is clear to my mind that a party is entitled to withdraw and/or discontinue its case any time but the consequence for such an action is the payment of fees and expenses incurred by the opposite party”The Defendants argue that they ought to have been served with the notice of withdrawal. I entirely agree with this submission. Nevertheless, I do not think that failure to serve the Defendants invalidated the notice of withdrawal of suit. The withdrawal would still have been allowed as the Plaintiff is entitled to withdraw suit under the law. The Defendants who had already entered appearance are entitled to costs of the suit under Order 25 Rule 3 of the Civil Procedure Rules.The court has not been give any specific authority, which would empower it to order reinstatement of the suit. Order 25 Rule 3 however empowers the court to order an award of costs.Consequently, I find no merit in the two applications dated April 4, 2018. Both are hereby dismissed but with no order as to costs. All the Defendants who had entered appearance as at January 15, 2018 are hereby awarded costs of the suit”. (sic)

18. The events leading to the impugned ruling delivered on June 8, 2018 were set out earlier in this judgment. The two motions presented before the subordinate court primarily sought the setting aside of the order of withdrawal of suit pursuant to Respondent’s the notice of withdrawal dated January 12, 2018 and the reinstatement of the suit. Order 25 Rule 1, 2 & 3 of the Civil Procedure Rules spell out the procedure of withdrawal, discontinuation of a suit and consequences thereof. Order 25 Rules 1 provides that: -“At any time before the setting down of the suit for hearing the plaintiff may by notice in writing, which shall be served on all parties, wholly discontinue his suit against all or any of the defendants or may withdraw any part of his claim, and such discontinuance or withdrawal shall not be a defence to any subsequent action”.

19. In the court’s considered view, this appeal turns on the question whether the lower court properly applied the applicable provisions of the law and correctly exercised its discretion in determining the Appellant’s motion. That motion sought inter alia that the order of January 15, 2018 allowing the Respondent’s notice of withdrawal of the suit be set aside ex debito justitiae, that the suit be reinstated and or adjusted to deem the Appellant’s counterclaim properly filed within time, and that the suit be adjusted to allow the withdrawal of the Respondent’s claim with costs. The Appellant invoked the provisions of Order 7 Rule 3 and Order 25 Rule 5 of the Civil Procedure Rules, inter alia.

20. Undeniably, the Appellant’s motion was primarily calling for the exercise of the lower court’s discretion even though certain aspects of the motion were clearly a matter of applying the law and the court had no discretion therein. Thus, as the lower court observed, the law did not donate power to the court to grant some of the prayers sought by the Appellant in his motion.

21. The discretionary power of the court is to be exercised judicially and upon reason, rather than arbitrarily or capriciously. The Court of Appeal inMashreq Bank PSC v Kuguru Food Complex Limited [2018] eKLR stated that:-“This Court ought not to interfere with the exercise of a Judges’ discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it is manifest from the case as a whole that the Judge was clearly wrong in the exercise of discretion and occasioned injustice. Conversely, a court exercising judicial discretion must be guided by law and facts and not ulterior considerations. This much was stated by the Court of Appeal in the case of Shah v Mbogo (supra):“A court of appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising this discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and as a result there has been injustice”. [Emphasis added]See also United India Insurance Co Ltd v East African Underwriters (K) Ltd [1985] E.A 898: -

22. The rationale behind the untrammeled right of a party to withdraw his proceedings is found in a long line of authorities emphasizing the right. The Court of Appeal in Canyon Properties Limited & 3 others v Eliud Kipchirchir Bett & 2 others [2017] eKLR stated as follows: -“As a general proposition, the right of a party to discontinue or withdraw his claim cannot be questioned. There are many circumstances when a plaintiff may legitimately wish to discontinue or withdraw his claim. Addressing a similar issue, the Supreme Court of Nigeria in Abayomi Babatunde v Pan Atlantic Shipping & Transport Agencies Ltd & Others, SC 154/2002 identified those circumstances to include situations where:i.a plaintiff realizes the weakness of his claim in the light of the defence put up by the defendant,ii.a plaintiff's vital witnesses are not available at the material time and will not be so at any certain future date,iii.where by abandoning the prosecution of the case, the plaintiff could substantially reduce the high costs that would have otherwise followed after a full-scale but unsuccessful litigation, oriv.a plaintiff may possibly retain the right to re-litigate the claim at a more auspicious time if necessary.Ibrahim SCJ, while considering an application for leave to withdraw a notice of appeal under Rule 19 of the Supreme Court Rules which allows a party, at any time before judgment, to withdraw any proceedings with leave of the Court in John Ochanda v Telkom Kenya Ltd SC APP No 25 of 2014 (unreported) stated,“Ido hold the view that a prospective Appellant is at liberty to withdraw a Notice of Appeal at any time before the Appeal has been lodged and any further steps taken. No proceedings have commenced strictly. I am also of the view that just like under the Civil Procedure Rules or Court of Appeal Rules, the right to withdraw or discontinue proceedings or withdraw a Notice of Appeal respectively ought to be allowed as a matter of right subject to any issue of costs, which can be claimed by the respondents, if any.” (Emphasis added).The above sentiments were accepted and followed by the Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR where it was reiterated that:“A party’s right to withdraw a matter before the court cannot be taken way. A court cannot bar a party from withdrawing his matter. All that the court can do is to make an order as to costs where it is deemed appropriate.

23. In Beijing Industrial Designing & Researching Institute (supra), the Court of Appeal, spelt out the scenarios contemplated under the provisions of Order 25 of the Civil Procedure Rules by stating that:-“The above provision presents three clear scenarios regarding discontinuance of suits or withdrawal of claims. The first scenario arises where the suit has not been set down for hearing. In such an instance, the plaintiff is at liberty, at any time, to discontinue the suit or to withdraw the claim or any part thereof. All that is required of the plaintiff is to give notice in writing to that effect and serve it upon the all the parties. In that scenario, the plaintiff has an absolute right to withdraw his suit, which we agree cannot be curtailed. The second scenario arises where the suit has been set down for hearing. In such a case, the suit may be discontinued or the claim or any part thereof withdrawn by all the parties signing and filing a written consent. In this scenario, the right of the plaintiff is circumscribed by the requirement that he must obtain the written consent of all the other parties. The last scenario arises where the suit has been set down for hearing but all the parties have not reached any consent on discontinuance of the suit or withdrawal of the claim or any part thereof. In such eventuality, the plaintiff must obtain leave of the court to discontinue the suit or to withdraw the claim or any part thereof, which is granted upon such terms as are just. In this scenario too, the plaintiff’s right to discontinue his suit is circumscribed by the requirement that he must obtain the leave of the court. That such leave is granted on terms suggests that it is not a mere formality.”

24. This matter falls within scenario one as envisaged in Order 25 Rule 1 of the Civil Procedure Rules. Under the Rule, a party may at any time prior to his suit being set down for hearing withdraw it, wholly or partially, against any defendant by filing a written notice of withdrawal that shall be served on the adverse party or parties. There is nothing in the rule to suggest that the court is required to demand proof of service of the notice on the adverse party or parties before allowing the withdrawal of a suit, or that the withdrawal order only takes effect upon service of the notice of withdrawal, as the Appellant appears to assert on this appeal.

25. In the Beijing Industrial Designing case above, the Court of Appeal considered relevant pronouncements by the Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 Others [2014] eKLR before observing that:“In the first scenario the right of the plaintiff to withdraw his suit cannot be taken away. It is a kind of absolute and untrammeled right. We understand the apex Court to say that even where leave of the Court is required, subject to considerations such as costs, (terms that are just) the courts ought not to stand in the way of a plaintiff who wishes to discontinue his suit. The decisions of the Supreme Court cannot be interpreted to mean, as the respondent implied, that a plaintiff has a right to discontinue his suit in sundry and all cases, even without leave where the law requires such leave. To so hold would be to reduce the requirement for leave to a mere formality, which we do not think, is what was intended by the decisions of the Supreme Court or Order 25”.See also Energy Regulatory Commission v John Sigura Otido [2021] eKLR.

26. In this instance the Respondent filed a notice of withdrawal after his motion dated Decemeber 22, 2017 had been heard and allowed exparte, based on the now disputed service thereof on the Defendants in the lower court, and the filing on January 5, 2018 of the memorandum of appearance by the Appellant, but before the defence and counter claim was filed by the Appellant. The notice of withdrawal of the plaint dated January 15, 2018 was endorsed by the court on the same date, formally signifying the withdrawal of the Respondent’s suit. In the court’s considered opinion, and based on pronouncements of superior courts outlined herein, the failure to effect service on the Appellant though flouting the procedure contemplated in Order 25 Rule 1 of the Civil Procedure Rules cannot defeat the right of withdrawal as given effect by the endorsement of the lower court. The position taken by the lower court on the matter is legally sound and cannot be faulted.

27. Equally the lower court correctly held that Order 25 of the Civil Procedure Rules did not empower the court to reinstate a withdrawn suit. This is the correct interpretation of the provisions of Order 25 and is consistent with relevant decisions of the superior courts on the issue; the lower court had no discretion in the matter. That said, one is tempted, upon considering the manner in which the Respondent conducted the proceedings in the lower court, to agree with the Appellant that the conduct is suggestive of abuse of the process of the Court by the Respondent. For starters, the prayers in the motion of the Respondent as crafted sought final orders which, upon being granted essentially determined the suit at interlocutory stage.

28. The lower court while dismissing the motions by the Appellant and other defendants in the lower court had in exercise of its discretion granted costs of the suit to any defendant who had appeared as of January 15, 2018, the date of the withdrawal of the suit. The Appellant, apparently unaware of the said withdrawal, had subsequent to that date, filed a defence and counter claim. By ground 5 of his appeal and submissions herein, the Appellant complains that the lower court erred by denying costs thereby incurred despite the Respondent’s proven failure to serve the notice of withdrawal of the suit on him and his co-defendants in the lower court.

29. Regarding set-offs and counterclaims Order 7 Rule 3 of the Civil Procedure Rules provides that: -“A defendant in a suit may set-off, or set-up by way of counterclaim against the claims of the plaintiff, any right or claim, whether such set-off or counterclaim sound in damages or not, and whether it is for a liquidated or unliquidated amount, and such set-off or counterclaim shall have the same effect as a cross-suit, so as to enable the court to pronounce a final judgment in the same suit, both on the original and on the cross-claim; but the Court may on the application of the plaintiff before trial, if in the opinion of the court such set-off or counterclaim cannot be conveniently disposed of in the pending suit, or ought not to be allowed, refuse permission to defendant to avail himself thereof”.

30. A counterclaim is ordinarily anchored on and draws its life from an existing suit. Thus, the Appellant whether ignorant of the fact of withdrawal or not, could not institute a counterclaim in the matter where the suit had ceased to exist by virtue of withdrawal. The filing of the defence and counterclaim was inconsequential in the circumstances. Once withdrawn, the suit could not be reinstated and or adjusted to accommodate the Appellant’s counterclaim. The Appellant was not without a remedy as he was at liberty, if so minded, to lodge a separate action for redress incorporating the claims in his intended counterclaim against the Respondent. See the decision of the Court of Appeal in Charles Langat v Mukesh Kumar Kantilal Patel [2019] eKLR.

31. In view of the foregoing, this court agrees with the finding of the lower court that it could not set aside the withdrawal order and or reinstate and adjust the withdrawn suit as sought by the Appellant’s motion before it, but that it could award costs. However, given the undisputed failure by the Respondent to serve the notice of withdrawal upon the Appellant, the lower court erred in the exercise of its discretion under Order 25 of the Civil Procedure Rules by denying the Appellant the costs incurred in filing the defence and counterclaim. These costs having arisen as a direct result of the non-service by the Respondent ought to be borne by the said party.

32. Thus, while finding no merit in grounds 1 to 4 of the appeal, this court is however persuaded of the merits of ground 5 of the appeal. The court will accordingly vary the ruling of the lower court by way of a further order awarding the costs in respect of the defence and counterclaim to the Appellant. To that extent only the appeal has succeeded. Nevertheless, considering the circumstances leading to this appeal, the Court will order that each party bears its own costs in respect of the appeal.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 1ST DAY OF DECEMBER 2022. C MEOLIJUDGEIn the presence of:Mr Odhiambo for the AppellantMr Amanya for the RespondentC/A: Adika