https://new.kenyalaw.org/akn/ke/judgment/keelc/2026/4803

 **REPUBLIC OF KENYA** **IN THE ENVIRONMENT AND LAND COURT AT NAIROBI** **ELC. NO. 440 OF 2011** **SYENERGY INDUSTRIAL CREDIT LIMITED …………PLAINTIFF** **VERSUS** **CAPE HOLDINGS LIMITED............................................DEFENDANT** **RULING** 1. The suit was instituted by way of an Originating Summons dated 23rd August 2011 seeking, inter alia, the extension of a caveat lodged by the Plaintiff over the property known as L.R. No. 209/19436 pending the determination of arbitration proceedings between the parties. 2. During the pendency of the suit, the caveat and the Deputy Registrar’s notice requiring its removal were extended by the Court and subsequently by consent of the parties, to remain in force pending the conclusion of the arbitration. Part of the consent entered into between the parties was that ***“the issue of costs is reserved for determination by this court after the determination of the arbitration”*** 3. The arbitration proceedings culminated in an arbitral award published on 30th January 2015, and later litigated by the High Court, the Court of Appeal and the Supreme Court. 4. The decree arising from the arbitral award has already been fully executed by way of attachment of the suit property. In light of the final settlement and execution of the substratum of the dispute in HCCCOMM Misc. 114 of 2015; Cape Holdings Limited vs Synergy Industrial Credit Limited, there remained no live issue for determination in this suit, thereby necessitating its withdrawal. 5. Vide a Notice of Withdrawal filed on 27th March 2025, the Plaintiff withdrew the entire suit under Order 25 Rule 1 of the Civil Procedure Rules, which permits a Plaintiff to withdraw its suit at any time before the suit is set down for hearing. Subsequently, the Defendant wrote a letter to the Deputy Registrar dated 28th March 2025 requesting the Deputy Registrar to sign judgment for the costs of the suit in its favour pursuant to the automatic provisions of Order 25 Rule 3vof the Civil Procedure Rules. 6. It is this request for judgment for costs by the Defendant that is the subject of this ruling. 1. The Plaintiff filed its submissions dated 13th February, 2026 and the Defendant filed their submissions on 30th September, 2025 and Rebuttal submissions on 16th February, 2026. Parties agreed to highlight their respective submissions on 5th May 2026. **The Defendant’s Submissions** 1. **The Defendant's submissions and oral highlights were that upon the Plaintiff withdrawing the entire suit, it became entitled to costs pursuant to Order 25 Rule 3 of the Civil Procedure Rules. Counsel submitted that the issue before the Court is straightforward, namely whether the Defendant is entitled to costs following the withdrawal of the suit.** 2. The Defendant submitted that the Plaintiff instituted the suit by way of an Originating Summons dated 23rd August 2011 seeking, inter alia, extension of a caveat over L.R No. 209/19436 pending arbitration proceedings arising from an alleged breach of a contract of sale. During the pendency of the suit, consent orders were recorded preserving the caveat pending the determination of the dispute. The Defendant was subsequently placed under administration, and the proceedings were stayed. The Defendant contended that while under administration, the Plaintiff purported to mark the matter as settled and filed a Party and Party Bill of Costs claiming Kshs.101, 735,288.06, which was subsequently set aside together with the settlement order vide the Court's ruling of 13th June 2024. Thereafter, the Plaintiff filed a Notice of Withdrawal dated 27th March 2025 withdrawing the whole suit, prompting the Defendant to seek judgment for costs. Counsel clarified that from 12th October, 2012 to 9th June, 2023, the Defendant was placed under administration. 3. Counsel further submitted that the Defendant has vigorously defended the suit over the years, having filed numerous applications, submissions and authorities between 20th February 2012 and 7th February 2024, excluding the present application, thereby expending considerable time and resources in defending the proceedings. It was submitted that costs follow the event under Section 27 of the Civil Procedure Act and that all the authorities relied upon confirm that where a suit is withdrawn, the Defendant is ordinarily entitled to costs unless sufficient reasons are demonstrated to warrant departure from the general rule. The Defendant relied on Samson K.A Tim v D.M Machage [2019] KEHC 8004 (KLR), Cecilia Karuru Ngayu v Barclays Bank of Kenya & Another [2016] eKLR and Wanjiku & 8 Others v Del Monte Kenya Limited & Another; National Environment Management Authority & 6 Others (2024) eKLR, which cited with approval Mudhihiri Mohammed & 2 Others v Ahmed Iman & Others, for the proposition that withdrawal of suits is ordinarily subject to payment of costs. 4. The Defendant further submitted that it had previously been awarded costs before the Court of Appeal following the withdrawal of an application by the Plaintiff and urged the Court to apply the principle that equity is equality. 5. In rebuttal submissions and highlighting of submissions, Counsel submitted that the authorities relied upon by the Plaintiff are distinguishable and that the Court ought to consider the entire history of the litigation, including the Plaintiff's earlier attempt to settle the matter and file a Bill of Costs in excess of **Kshs.100 million**, before exercising its discretion on costs. **Plaintiff’s Submissions** 1. The Plaintiff on its part submitted that the circumstances of this case are unique and that the Defendant is not entitled to costs merely because the suit was withdrawn. Counsel highlighted that the Plaintiff responded to the Defendant's request for costs by filing documents including the decisions of the High Court, Court of Appeal and the Supreme Court together with the decree issued in favour of the Plaintiff in the substantive dispute. 2. The Plaintiff submitted that the Court must consider the circumstances that led to the institution, continuation and eventual withdrawal of the suit. It was submitted that the suit was instituted by way of an Originating Summons seeking preservation of the suit property through extension of a caveat pending the determination of arbitration proceedings between the parties. The arbitral proceedings culminated in an award published on 30th January 2015 in favour of the Plaintiff which was subsequently upheld by the High Court, the Court of Appeal and the Supreme Court, culminating in a decree issued on 25th March 2021 which was fully executed in favour of the Plaintiff. Consequently, the substratum of the present suit was conclusively determined, and the suit was withdrawn after it was overtaken by events. 3. The Plaintiff submitted that although Order 25 Rule 3 of the Civil Procedure Rules provides for costs upon withdrawal of a suit, the provision must be read together with Section 27 of the Civil Procedure Act which preserves the Court's discretion to decline an award of costs for good reason. It was contended that sufficient reasons have been demonstrated in the present case to warrant an order that each party bears its own costs. 4. In support of its position, the Plaintiff relied on Nicholas Kiptoo Arap Korir Salat v IEBC & 7 Others, Supreme Court Application No.16 of 2014, Morgan Air Cargo Limited v Everest Enterprises Limited [2014] eKLR, Beijing Industrial Designing & Researching Institute v Lagoon Development Limited [2015] eKLR and Halsbury's Laws of England, 4th Edition (Re-issue), Vol.10 paragraph 16. Counsel particularly referred the Court to Morgan Air Cargo Limited v Everest Enterprises Limited, where the Court set out the factors to be considered in determining costs, including the conduct of the parties, the circumstances leading to the institution and termination of proceedings, the stage at which proceedings were terminated and the manner in which they were terminated. Counsel submitted that the Court ought to adopt a holistic approach in determining whether costs should be awarded and not merely consider the fact of withdrawal of the suit. 5. The Plaintiff maintained that the withdrawal of the suit was neither an admission of weakness nor an abuse of the court process but was necessitated by the complete settlement and execution of the substantive dispute in another forum, rendering the present proceedings unnecessary. The Court was therefore urged to exercise its discretion judiciously and decline the Defendant's request for costs. **Analysis and Determination** 1. Having carefully considered the pleadings, the written submissions, the oral highlights by Counsel and the applicable law, it is evident that the Plaintiff's right to withdraw the suit is not in dispute. The issue before the Court for determination is whether, in the circumstances of this case, the Defendant is entitled to costs following the withdrawal of the suit and whether sufficient reasons exist to warrant the Court's exercise of its discretion to decline an award of costs. 2. The Court record shows that consent was entered by the parties to this suit on 18th January 2012 before Nyamweya J, where among the orders made was on the question of determination of costs. Part of the consent was that: ***“the issue of costs is reserved for determination by this court after the determination of the arbitration:”*** 3. It is not disputed that the Plaintiff instituted these proceedings by way of an Originating Summons dated 23rd August 2011 seeking, inter alia, the extension of a caveat lodged over L.R No.209/19436 pending the determination of arbitration proceedings between the parties. It is equally not disputed that vide a Notice of Withdrawal dated 27th March 2025, the Plaintiff wholly withdrew the suit, thereby precipitating the Defendant's request for judgment on costs pursuant to Order 25 Rule 3 of the Civil Procedure Rules. 4. The Defendant's position is that costs automatically follow the event, which was withdrawal of the suit; the Plaintiff contends that the Court retains unfettered discretion under Section 27(1) of the Civil Procedure Act to decline an award of costs where sufficient reasons exist. 5. Order 25 Rule 3 of the Civil Procedure Rules provides that: **"*Upon request in writing by any defendant the registrar shall sign judgment for the costs of a suit which has been wholly discontinued and any defendant may apply at the hearing for the costs of any part of the claim against him which has been withdrawn.*"** 1. However, the above provision cannot be read in isolation. Section 27(1) of the Civil Procedure Act provides that costs shall follow the event unless the Court or Judge for good reason otherwise orders. It follows therefore that although the general principle is that a successful litigant is entitled to costs, the award of costs nevertheless remains a matter of judicial discretion which must be exercised judiciously and upon consideration of the circumstances of each case. 2. In the case of **Canyon Properties Limited & 3 others v Eliud Kipchirchir Bett & 2 others [2017] KECA 115 (KLR),** the [Court of Appeal](https://kenyalaw.org/judgments/KECA/) held that**:** ***“We draw guidance from the sentiments of the Supreme Court in* Jasbir Singh Rai & 3 others vs. Tarlochan Singh Rai & 4 others [2014] eKLR *where the court expressed itself as follows:*** **"It emerges that the award of costs would normally be guided by the principle that "costs follow the event": the effect being that the party who calls forth the event by instituting suit will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or Respondent will bear the costs. However, the vital factor in setting the preference is the judiciously exercised discretion of the Court, accommodating the special circumstances of the case, while being guided by ends of justice. The claims of the public interest will be a relevant factor in the exercise of such discretion, as will also be the motivations and conduct of the parties, prior to, during, and subsequent to the actual process of litigation… Although there is eminent good sense in the basic rule of costs – that costs follow the event – it is not an invariable rule and, indeed, the ultimate factor on award or non-award of costs is the judicial discretion. It follows, therefore, that costs do not, in law, constitute an unchanging consequence of legal proceedings – a position well illustrated by the considered opinions of this Court in other cases. The relevant question in this particular matter must be whether or not the circumstances merit an award of costs to the applicant.” (Emphasis added)** ***We have outlined above the steps that had been taken in the matter before the High Court. While appreciating that the main suit had not been listed for hearing, the learned Judge ought to have considered the fact that there were appearances and actual prosecution of some applications in court which must have involved preparations on the part of counsel. In any event, the costs awarded would only cover the work already done up to the point of withdrawal of the suit.”*** 1. In **Rai & 3 others v. Rai & 4 others [2014]KESC 31 (KLR),** the Supreme Court emphasised that while costs normally follow the event, courts have the discretion to depart from this principle for compelling reasons, including the conduct of the parties and the stage at which the withdrawal occurs. 2. Costs are in the discretion of the court, yet follow the event. See the Halsbury’s Laws of England; 4th Edition (Re-issue), [2010], Vol.10. para 16 that: ***“The court has discretion as to whether costs are payable by one party to another, the amount of those costs, and when they are to be paid. Where costs are in the discretion of the court, a party has no right to costs unless and until the court awards them to him, and the court has an absolute and unfettered discretion to award or not to award them. This discretion must be exercised judicially; it must not be exercised arbitrarily but in accordance with reason and justice”*** 1. In exercising its discretion, the Court is required to consider factors including the conduct of the parties, the subject matter of the proceedings, the circumstances that led to the institution of the suit, the events that resulted in its termination, the stage at which the proceedings were terminated, and the manner in which they were brought to an end. 2. Good reasons" that justify departure from the general rule that 'costs follow the event' will vary from case to case. The court in **Rai & 3 others v. Rai & 4** others supra observed that: ***"There was no prescribed definition of any set of good reasons that can justify a court's departure, in awarding costs, from the general rule, costs-follow-the-event. In the classic common law style, the courts have proceeded on a case-by-case basis to identify good reasons for such a departure. An examination of evolving practices on that question shows that, as an example, matters in the domain of public-interest litigation tend to be exempted from the award of costs.*** 1. From the jurisprudence in this area of law, the exercise of discretion on costs depends on the facts of each case, and is guided by the principle that costs should follow the event unless the court orders otherwise. Such circumstances as are relevant include: 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 they 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;** (**ix) public interest** 1. In the present matter, the Plaintiff instituted the suit by way of an Originating Summons dated 23rd August 201**1** seeking, inter alia, extension of a caveat lodged over L.R. No. 209/19436 pending the determination of arbitration proceedings between the parties. The purpose of the proceedings was therefore to preserve the Plaintiff’s interest in the property pending resolution of the substantive dispute through arbitration. 2. Upon institution of the proceedings, the Court extended the caveat and the Deputy Registrar’s notice requiring its removal. Thereafter, the parties entered into a consent under which the caveat was to remain in force pending the conclusion of the arbitration proceedings. The proceedings before this Court therefore served the immediate purpose for which they were commenced, namely, preservation of the status quo pending determination of the dispute through the agreed arbitral process. 3. The arbitration proceedings subsequently concluded with the publication of an arbitral award dated 30th January 2015. The award was thereafter challenged through the appropriate legal avenues and was ultimately upheld by the High Court, the Court of Appeal and the Supreme Court. Following the conclusion of those proceedings, the decree arising from the arbitral award was executed through attachment of the suit property in **HCCCOMM Miscellaneous Application No. 114 of 2015, Cape Holdings Limited v Synergy Industrial Credit Limited**. 4. It is therefore clear that by the time the Plaintiff withdrew the present suit, the substratum of the dispute had already been determined and exhausted. There was no longer any live issue remaining for determination by this Court. The withdrawal of the suit was not therefore occasioned by an abandonment of a claim that had failed, nor was it intended to defeat the Defendant’s rights. Rather, the proceedings had achieved the purpose for which they were instituted and had become overtaken by subsequent events. 5. The Court has considered the Defendant’s argument that it participated in the proceedings and incurred costs in defending the matter. The Defendant indeed participated in the proceedings and filed submissions and applications as demonstrated from the record. However, the mere fact that a party participated in proceedings does not automatically entitle that party to costs. The Court must interrogate whether such costs were unnecessarily incurred as a result of unreasonable conduct by the other party. 6. In this case, the Defendant was aware from the outset that the proceedings were directly connected to the arbitration process. The continued existence of the suit pending arbitration was not a unilateral action by the Plaintiff but was sanctioned through orders of the Court and subsequently by consent of the parties. The Defendant cannot therefore be heard to argue that the proceedings were unnecessary or that the Plaintiff acted improperly in maintaining them during the pendency of arbitration. 7. The Court has further considered the stage and manner in which the proceedings were terminated. The Plaintiff withdrew the suit under Order 25 Rule 1 of the Civil Procedure Rules, which permits withdrawal before the suit is set down for hearing. The withdrawal was made after the conclusion of the arbitration process, after the arbitral award had been affirmed through the appellate process, and after execution of the decree. The Plaintiff therefore acted within the law and at a stage when continuation of the proceedings would serve no useful purpose. 8. Unlike a case where a litigant institutes proceedings without sufficient basis and later abandons them, the circumstances herein demonstrate that the Plaintiff had a legitimate reason for commencing the proceedings and maintaining them until the resolution of the arbitration dispute. The proceedings provided the necessary interim protection pending arbitration and were only withdrawn once the dispute had been conclusively resolved elsewhere. 9. The Court is also guided by the principle expressed by Justice Kuloba in **Judicial Hints on Civil Procedure** that although a successful party should ordinarily not be deprived of costs merely because proceedings were uncontested or terminated without a hearing, the Court may consider other circumstances that justify a departure from the general rule. Such circumstances include the conduct of parties and the events leading to termination of proceedings. 10. In the present case, there is no evidence that the Plaintiff acted vexatiously, abused the Court process, delayed the matter unnecessarily, or instituted proceedings for an improper purpose. On the contrary, the Plaintiff withdrew the suit once the subject matter had been exhausted and there remained no practical relief capable of being granted by this Court. 11. The Court must also consider that litigation between parties who have already resolved the substantive dispute through another lawful mechanism should not unnecessarily continue merely for purposes of determining costs. The objective of Article 159(2)(c) of the Constitution, which encourages alternative dispute resolution and reconciliation, is better served by recognising that parties are entitled to conclude proceedings once the underlying dispute has been resolved. 12. Having considered the circumstances of this case, the Court finds that there exists sufficient reason to depart from the general principle that costs follow the event. The suit was instituted for a legitimate purpose, achieved that purpose, and was withdrawn only after the underlying dispute had been conclusively resolved through arbitration and execution of the resulting decree. 13. Accordingly, the Court finds that the justice of the matter requires that each party bears its own costs of the withdrawn suit. 14. The final order of the Court is that the Defendant’s request through the letter to the Deputy Registrar dated 28th March 2025 requesting the Deputy Registrar to sign judgment for the costs of the suit in its favour pursuant to the provisions of Order 25 Rule 3 of the Civil Procedure Rules is declined. The Court orders that each party bears its own costs of the withdrawn suit. **Delivered, dated and signed via Microsoft Teams this 23rd day of July, 2026.** **HON. L. G. KIMANI** **JUDGE ENVIRONMENT AND LAND COURT** *The Ruling is read in the presence of-* *Allen Gichuhi for Applicant* *Ashley for Respondent*