[2006] KEHC 1388 (KLR)
The court found that the plaintiff's suit raises triable issues and that the defendants failed to provide documentary evidence to show that the plaintiff has ceased trading. In the absence of such evidence, the apprehension of the defendants regarding the plaintiff's inability to pay costs was not substantiated....
Source-derived case information.
- Citation
- [2006] KEHC 1388 (KLR)
- Parties
- Plaintiff: Pabeco Enterprises Ltd; Defendant: Hi-Ten Creations Ltd; Defendant: Shantibhai Shah; Defendant: Hites Shantibhai Shah; Defendant: Atulla Shantibhai Shah
- Court
- High Court
- Court Station
- High Court at Nairobi (Milimani Law Courts)
- Jurisdiction
- Kenya
- Case Number
- Civil Case 1815 of 2001
- Procedural Posture
- Civil Case / Ruling on Application for Security for Costs
- Outcome
- application dismissed
- Legal Topics
- Security for Costs, Promissory Notes, Company Liability, Personal Guarantees
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Pabeco Enterprises Ltd
Plaintiff
Hi-Ten Creations Ltd
Defendant
Shantibhai Shah
Defendant
Hites Shantibhai Shah
Defendant
Atulla Shantibhai Shah
Defendant
Procedural Posture
Civil Case / Ruling on Application for Security for Costs
Legal Issues
- 1 Whether the plaintiff should be ordered to provide security for costs under Order XXV of the Civil Procedure Rules.
- 2 Whether the plaintiff company has ceased trading and is unable to meet any order for costs.
- 3 Whether the defendants have provided sufficient evidence to justify an order for security for costs.
Ratio Decidendi
The court found that the plaintiff's suit raises triable issues and that the defendants failed to provide documentary evidence to show that the plaintiff has ceased trading. In the absence of such evidence, the apprehension of the defendants regarding the plaintiff's inability to pay costs was not substantiated. Therefore, the application for security for costs lacked merit and was dismissed. The court exercised its discretion under Order XXV of the Civil Procedure Rules, emphasizing that the power to order security for costs should be exercised judiciously and only where the applicant has met the evidentiary threshold.
Court Disposition
application dismissed
Orders
- The defendants' application for security for costs is dismissed.
- There is no order as to costs.
Full Case Text
Judgment text and source record
22 paragraphs
REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT NAIROBI (NAIROBI LAW COURTS)
Civil Case 1815 of 2001
PABECO ENTERPRISES LTD……………………….........................................................……...PLAINTIFF
VERSUS
HI-TEN CREATIONS LTD…………........................................................………………….1ST DEFENDANT
SHANTIBHAI SHAH……………..………….......................................................………….2ND DEFENDANT
HITES SHANTIBHAI SHAH……..………….......................................................…………3RD DEFENDANT
ATULLA SHANTIBHAI SHAH…………......................................................……………...4TH DEFENDANT
RULING
The defendants by way of this Chamber Summons brought under Order XXV Rule 1, 4, 5, 6 and 7 of the Civil Procedure Rules seeks orders that the plaintiff do provide security for costs up to Shs.145,000/= or such other amount as may be ordered by the court and that in default the defendants be at liberty to apply for the dismissal of the suit.
The application is based on the ground that the plaintiff is a limited liability company and has ceased trading and has not filed its annual returns and that the defendants are apprehensive that the plaintiff will not be able to meet any order for costs which may be made against it.
The application is also supported by an affidavit sworn by HITEN SHANTIBHAI the 3rd defendant on behalf of the other defendant in which he avers that the plaintiff filed this suit against the defendants on 24th October 2001; that the plaintiff company ceased trading since 2000 and has not filed its annual returns at the Companies Registry; that the plaintiff does not have any known assets; that the defendants are apprehensive that the plaintiff will be unable to meet any order for costs which may be made against it.
The hearing of this application proceeded ex parte due to non-appearance of the respondent. The hearing date of this application was taken ex parte and there was an order directing that the plaintiff be served but although counsel for the defendants informed the court that service was effecting, there is no return of service filed to that effect.
This claim arises out of 23 unpaid promissory NOTES AMOUNTING TO Shs.5,690,060. 35. The plaintiff in his plaint avers that on or about the year 1998 the defendants requested the plaintiff to advance monies to them amounting to Shs.5,690,060. 35, that the plaintiff did concede to the request and the 1st defendant was advanced monies amounting to Shs.5,690,060. 35; that it was agreed inter alia that the defendants do sign and execute promissory notes in favour of the plaintiff which were placed with HABIB AFRICAN BANK for collection and payment and the same were entered in the Banks register with all the details; that the 2nd, 3rd and 4th defendants did give their personal guarantees against the promissory notes by duly signing at the back of the promissory notes and that the defendants did execute and sign the said promissory notes all of which were signed but upon presentation and collection were dishonoured and Notice of Dishonour was duly issued to the defendants save for promissory notes amounting to Shs.1,030,000/= which were paid.
They denied that they requested the plaintiff to advance them monies as alleged in paragraph 5 of the plaint or at all, they deny to have been advanced the said amount of Shs.5,690,060. 35. The 2nd, 3rd and 4th defendants deny making any promissory notes in favour of the plaintiff or giving their personal guarantees against the promissory notes as alleged in the plaint. But without prejudice to the aforegoing the 2nd, 3rd and 4th defendants aver that if they signed at the back of the alleged promissory notes, it was merely an endorsement and the same was not meant and did not constitute them guarantors in law. The 1st defendant in answer to paragraph 7 of the plaint avers that it did not make the notes sued upon as there was no resolution authorizing the issue of the said notes and neither were the alleged notes issued by the Directors of the 1st defendant company under zeal. That without prejudice to the aforegoing, the 1st defendant further avers in the alternative that it made and delivered the alleged promissory notes at the request of K.M. PATEL and for his accommodation in order that he could only discount them to the order of his bank HABIB AFRICAN BANK LTD. That the said K.M. PATEL was not to discount them or negotiate them to anyone else and that the plaintiff gave consideration for the alleged promissory notes.
The said promissory notes were signed by the defendants a fact which is admitted although they allege that the signing of the promissory notes at the back was merely an endorsement and the same was not meant and did not constitute them guarantors in law.
The plaintiff’s suit raises trial issues and this coupled with the fact that defendants did not avail documentary evidence to show that the plaintiff has ceased trading makes the defendants application lack in merit and the same is dismissed with no order as to costs.
Dated and delivered at Nairobi this 13thday of September 2006.
J.L.A. OSIEMO
JUDGE