[2022] KEHC 10219 (KLR)

Osahan v Helicopters International Limited (Commercial Case E001 of 2021) [2022] KEHC 10219 (KLR) (Commercial and Tax) (8 July 2022) (Ruling)

Neutral citation: [2022] KEHC 10219 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Commercial Case E001 of 2021

A Mshila, J

July 8, 2022

Between

Bharminder Singh Osahan

Plaintiff

and

Helicopters International Limited

Defendant

Ruling

Background 1. The notice of motion dated July 30, 2021 was brought under the provisions of order 26 rules 1, 5 and 6 (1) Civil Procedure Rules and section 1A, 1B and 3A of the Civil Procedure Act. The application was supported by the grounds on the face of it and the sworn affidavit of Mandeep Singh Osahan who sought the following orders;a.The plaintiff/respondent be ordered to provide security for costs of the suit in the sum of Kshs 2, 000,000. 00/= or any other sum as the court deems fit, as security for costs of the defendant, within thirty (30) days of the order.b.The said sum of Kshs 2, 000,000/= be deposited in a joint interest earning bank account in the names of the respective advocates for the plaintiff and the defendant.c.In default of provision of security for costs within the prescribed period, the plaintiff/respondent’s suit be struck out/dismissed.d.Pending provision for security, the instant proceedings be stayed.e.The costs of this application be factored in the cause.

2. The applicant stated that the plaintiff is admittedly a British citizen resident in the United Kingdom, at 1 the Stables Howbridge Hall road, Witham, CM8 and has no known assets in Kenya, real or moveable, which could satisfy an order for costs, should the same be ultimately made in favor of the defendant/applicant.

3. In the event the instant claim does not succeed and the plaintiff is ordered to pay costs of the suit to the defendant, the former is likely to default on any such payment as there would be no real risk of execution against him.

4. The plaintiffs’ foreign status has provided an unfair and inequitable protection from legal attachment of execution and as such, the court needs to order for provision of security so as to ensure the defendant is also adequately catered for in the event of the instant suit being dismissed.

5. It would suit the interests of justice to grant the prayers sought herein that the plaintiff be directed to deposit security for costs before to afford the applicant some insurance for the huge amount of money that is to be spent in the prosecution and defence of the matter and its incidentals, before subjecting it to more costs and expenses.

6. The respondent through the replying affidavit dated August 24, 2021 stated that he is also a Kenyan citizen, with an identification card, ID No 2xxxxx3 and also a Kenyan passport, passport No A1xxxx4.

7. He jointly owns properties with the applicant, which properties were inherited from their father. The properties are: -a)LR No 209/1xxx Mugoya Estateb)Bank A/C 4xx & locker No xxxx Bank New Delhi, Indiac)Bank account Diamond Trust Bank Ltd.

8. The respondent also has bank accounts in Kenya with I&M Bank account numbers 00xxxx0 (Kenya shillings), 00xxxx1 (British pound) and 0xxxxxx0 (US dollar).

9. It is not enough that the applicant alleges that the respondent is not able to pay costs in the event that this suit is unsuccessful but the same allegations must be proved.

Applicant’s Case 10. It was the applicant’s contention that the purpose of an order for security for costs is to protect the defendant from situations in which he/she is dragged to court and made to lose even the costs of litigation. It is also meant to prevent frivolous and useless litigation by persons.

11. Further, the test in an application for security for costs is not whether the plaintiff has established aprima facie case but whether the defendant has shown a bona fidedefence. see: Jayesh Hasmukh Shah v Narin Haira & another [2015] eKLR where the court outlined the factors to be taken into consideration.

12. The respondent attached documents purportedly in support of his financial standing. It was the applicant’s submission that the documents so presented are admittedly heavily redacted and therefore not instructive/indicative of the plaintiff/respondent's financial standing. The production of the said documents offends the provisions of section 66 as read together with section 68 of the Evidence Act.

13. The applicant further submitted that it is rather cunning of the plaintiff/respondent to redact the said documents, which redacted content greatly impacts the substance of the application before the court. The plaintiff/respondent is guilty of material non-disclosure and that the court ought to draw a negative inference to the respondent's actions being that the balances in the said bank accounts are incapable of satisfying any judgment in favor of the applicant.

14. The respondent further led evidence of his ownership of real property being title number title number Athi River/Athi River block 1/136 independently owned and property LRNo 209/12589 Mugoya estate, jointly owned with the applicant's director- Mandeep Oshan. The applicant submitted that the combined value of the property owned independently and the respondent's share in the jointly owned property does not compare to the costs that may be awarded to the applicant, in the event of judgment in its favor, taking into account the huge amounts involved in the suit.

15. The plaintiff's alleged possession of assets and of income generating activities outside the jurisdiction of the court are immaterial to the motion before this honorable court and ought to be disregarded.

16. It was the applicant’s further submission that it filed a defence dated July 19, 2021, which defence substantively denies the plaintiffs allegations and which defence remains unchallenged to date. The applicant submitted that on the face of it, the defence is credible and bona fide with a high likelihood of success.

Respondent’s Case 17. The respondent in response submitted that an order for security is discretionary as per the provisions of order 26 rule 1 and the court must consider;a.Absence of known assets and an office within the jurisdiction of the court; and insolvency or inability to pay costs;b.The general financial standing or wellness of the plaintiff;c.The bona fides of the plaintiff’s claim; ord.Any other relevant circumstances or conduct of the plaintiff or the defendant.(see: Raw Bank PLC v Yusuf Shaa Mohamed Omar & another [2020] eKLR and Jayesh Hasmukh Shah v Narin Haira & Another [supra)

18. The onus of establishing the above factors falls on the applicant as it was held in the case of Kihiumwiri Farmers Company Limited v Breeze Investments Company Ltd & 3 Others [2019] eKLR.

19. The premise of the defendant’s application is that the plaintiff is a foreigner and has utterly failed to discharge its burden of evidential burden of proof on any financial limitation on the part of the plaintiff.

20. Contrary to the defendant’s assertions, the plaintiff established that he holds dual citizenship; he has known real and movable assets in Kenya; he has bank accounts in Kenya with I&M Bank; and that he is self-employed running a successful business since 2018 in the United Kingdom known as Aviation Consult Limited.

21. The plaintiff submitted that he is financially stable and is unlikely to run away from any liability that may accrue in the event that he is unsuccessful with his claim herein.

Issues For Determination 22. The court has considered the pleadings, affidavits, annexures and submissions by the parties and has framed only one issue for determination which is;a.Whether the plaintiff/respondent be ordered to provide security for costs of the suit in the sum of Kshs 2, 000,000. 00/=;

Analysis 23. The defendant/applicant has brought this application under the provisions of order 26 rule 1, 5 and 6(1) of the Civil Procedure Rules 2010 which provides that;“In any suit the court may order that security for the whole or any part of the costs of any defendant or third or subsequent party be given by any other party.[order 26, rule 5] effect of failure to give security. 5. (1)If security for costs is not given within the time ordered and if the plaintiff is notpermitted to withdraw the suit, the court shall, upon application, dismiss the suit.(2)If a suit is dismissed under sub-rule (1) and the plaintiff proves that he was prevented by sufficient cause from giving the required security for costs the court may set aside the order dismissing the suit and extend the time for giving the required security.[order 26, rule 6] investment of security.

6. (1)Where security by payment has been ordered, the party ordered to pay may makepayment to a bank or a reputable financial institution in the joint names of himself and the defendant or in the names of their respective advocates when advocates are acting.”

24. In the case ofNoor Mohammed Abdul v Ranchodbhal J Patel &another [1962] EA 448 the court laid out the reasons for the issuance of orders for security for costs as follows; -“The order for security for costs in such a case is not directed towards enforcing payment of the costs as such, but is designed to ensure that a litigant who by reason of near insolvency is unable to pay the costs of the litigation when he loses, is disabled from carrying on the litigation indefinitely except upon terms and conditions which afford some measure of protection to the other parties.”

25. In the exercise of its direction in such an application, the court has to consider the following: -(1)1) That the plaintiff will be unable to meet an order for costs if the respondent succeeds;(2)That the plaintiff ordinarily resides outside the jurisdiction of the court;(3)That the party moving the court for security has not delayed too long in the proceeding before making the application;(4)Whether an order is made it would effectively shut any party, out of the relief in circumstances where the party’s impecunity may be cured by the litigation.

26. In addressing the main issue this court has broken down the requirements as set down under the afore-going provisions; the first being “that plaintiff will be unable to meet an order for costs if the respondent succeeds”; to this the respondent stated that he has bank accounts in Kenya with I&M Bank and produced redacted bank statements, which redacted content greatly impacts the substance of the application before the court. It is not possible for one to determine that the accounts hold any money in them as mere listing of account numbers does not prove that the respondent indeed has money. The respondent also stated that he independently and jointly owned properties with the applicant, which properties they inherited from their father. However, the value of the parcels of land is unknown.

27. Secondly was that the plaintiff ordinarily resides outside the jurisdiction of the court; To this the respondent stated that is that he is also a Kenyan citizen, with an identification card. This notwithstanding, the respondent clearly stated that he is resident in the United Kingdom and that he is self-employed running a successful business since 2018 in the United Kingdom. Plainly put the plaintiff ordinarily resides outside the jurisdiction of the court.

28. Lastly is whether an order is made it would effectively shut any party, out of the relief in circumstances where the party’s impecunity may be cured by the litigation; -To this the court is in agreement with the applicant that in the event the instant claim does not succeed and the plaintiff is ordered to pay costs of the suit to the defendant, the former is a non-resident and if in default on any such payment, there would be no real risk of execution against him. Even with the existence of the Foreign Judgments (Reciprocal Enforcement) Act cap 43, it would be difficult for the defendant to trace the plaintiff’s whereabouts in the United Kingdom if he was to lose this case.

29. The test to be applied is that which was set down in the case of Shah v Shah[1982] KLR 95 at 98, law JA held as follows:“The general rule is that security is normally required from plaintiff’s resident outside the jurisdiction, but as was agreed in the court below, a court has a discretion, to be exercised reasonably and judicially to refuse to order that security be given.The test on application for security is not whether the plaintiff has established a prima facie case, but whether the defendant has shown abona fide defence.”

30. Has the applicant showed that it has a bona fide defence? The defendant/applicant filed a defence dated July 19, 2021 and among the issues arising from the defence is that there has never been a contract of employment, a contract for service or a partnership agreement, executed between the parties. which issue can only be determined wholly during the trial.

31. The upshot therefore is that with the material provided there is a reasonable cause for apprehension and this court is satisfied that this a suitable case for it to exercise its discretion in favour of the applicant/defendant.

Findings And Determination 32. In the light of the foregoing this court makes the following findings and determinations;a.This court finds the application has merit and it is hereby allowed.b.The plaintiff/respondent to provide security for costs of this suit in the sum of Kshs 2, 000,000. 00/= as security for costs of the defendant/applicant, within thirty (30) days from the date hereof. Pending the provision of security, the instant proceedings be and are hereby stayed.c.The said sum of Kshs 2, 000,000/= be deposited in a joint interest earning bank account in the names of the respective advocates for the plaintiff/respondent and the defendant/applicant pending hearing and determination of the main suit.d.In default of provision of security for costs within the time prescribed period, the plaintiff/respondent’s suit shall be hereby struck out with costs to the applicant/defendant.e.The respondent to bear the costs of this application.

33. Orders accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 8TH DAY OF JULY, 2022. HON. A. MSHILAJUDGEIn the presence of;No appearance by partiesJasmin----------------------Court Assistant4