[2022] KEHC 10568 (KLR)

Top Image Media Consultants Ltd v Jamii Bora Bank Ltd & another (Civil Suit 88 of 2019) [2022] KEHC 10568 (KLR) (Commercial and Tax) (10 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10568 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Commercial and Tax

Civil Suit 88 of 2019

A Mshila, J

June 10, 2022

Between

Top Image Media Consultants Ltd

Plaintiff

and

Jamii Bora Bank Ltd

1st Defendant

Keysian Auctioneers

2nd Defendant

Ruling

Background 1. The Plaintiff filed a Notice of Withdrawal of Suit dated 9th February 2021 under Order 25 Rule 1 of the Civil Procedure Rules stating that the Plaintiff herein has withdrawn the suit against the Defendants with no orders as to costs.

2. On 12th July 2021, the Court directed the parties to file submissions on costs as hereunder.

Plaintiff’s Case 3. The Plaintiff while relying on Section 27 of the Civil Procedure Act submitted that the courts have routinely interpreted the mentioned section to give unfettered discretion to court to decide whether or not to award costs. The said jurisdiction must however be exercised judiciously.

4. In the present case, the court is asked to decide whether, if a party does not respond to a suit, they may be awarded costs. The court is further called upon to determine whether it can award costs at this stage when the same were not awarded at the point of dispensing with the interlocutory application. The record will show that the Applicant never filed a defence on the substantive claim. Without defending the substantive suit, the Defendant is not entitled to costs.

5. On 4th March, 2019, the 1st Defendant filed a Notice of Appointment in the present suit, acknowledging the existence of this suit. It however elected not to file any Defence. In the case of Cecilia Karuru Ngayu v Barclays Bank of Kenya & another [2016] eKLR the court gives an in-depth analysis of what amounts to 'a successful party' and where the court observed that the analysis must be objective and the court does not look on the merits but the conduct of the parties. For this reason, it was the Plaintiff’s submission that the Defendant having failed to file a Defence to the substantive suit, despite proper service, cannot be found to be entitled to costs of the suit.

6. On the issue of whether the Defendants are entitled to costs of the Application dated 25th February, 2019; the Plaintiff submitted that the court is functus officio as relates to the said application. This is so because the same was fully dispensed with on 4th March, 2019 and no costs for that specific Application were sought for or awarded to the Defendant. Without any order awarding costs for the said Application the Defendant cannot rely on their response to the said Application to now seek costs for the main suit which has been withdrawn without their response.

7. Further, the Plaintiff was partially successful in the said Application, receiving a conditional injunction and hence he can equally argue that it was entitled to costs just as much as the Defendants may claim costs for the said Application. The Plaintiff urged the Court to reject the plea for costs by the Defendants.

Defendants’ Case 8. It was the Defendants’ submission that the Plaintiff moved the Court by way of a Plaint dated 25th February, 2019 and equally filed a Notice of Motion Application filed under a Certificate of Urgency dated 25th February, 2019.

9. The 1st Defendant filed its Replying Affidavit dated 4th March 2019 opposing the Plaintiff's Application. The Court issued a Conditional Order on the foretasted date requiring the Defendant to pay sum of Kenya Shillings Seven Million Five Hundred Thousand Kshs.7, 500, 000 together with auction related costs.

10. Despite issuance of the foretasted Court order, the Plaintiff delayed fulfilling the conditional Court order and continuously failed to appear in Court despite issuance of numerous mention notices by the 1st Defendant. In essence, the 1st Defendant attended Court in the absence of the Plaintiff and thus incurred hefty costs and expenditure and the same is evident from the file records.

11. On or about 9th February, 2021 the Plaintiff served a Notice of Change of Advocates through the firm of Wambugu & Muriuki Advocates upon the 1st Defendant and subsequently filed a Notice of Withdrawal of Suit. The 1st Defendant did not object to the withdrawal of suit but prayed for costs of the suit. The Plaintiff objected the prayer for costs asserting that the 1st Defendant did not respond to the main suit. In a rejoinder, the 1st Defendant informed the Court they defended the matter from the interlocutory stage to completion and the same is evident from the court records.

12. It was the Defendants’ case that the 1st Defendant expeditiously defended themselves throughout the proceedings. From the records, it is the Plaintiff's continuous non-attendance and delay in satisfying the terms of the Conditional Order dated 4th March 2019 that contributed to the prolonged dispensation of the matter herein. The courts in Armadilo Equity Limited vs. Institute of Correspondence Studies (K) Limited (2006) eKLR granted costs to the Plaintiff because it was the Defendant's actions that led to institution of the suit.

13. Similarly, the Court in Morgan Air Cargo Limited v Evrest Enterprises Limited [2014] eKLR the presiding judge stated that;“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 reference to the context of the particular case.”

14. The costs of the suit should be awarded to the 1st Defendant noting the events of the matter and the general conduct and more specifically the lethargy to satisfy the Conditional order and honour the numerous mention notices issued by the 1st Defendant.

15. Section 27 of the Civil Procedure Act provides that the court or trial 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. Thus, the Defendants submitted that the Court has full discretion on the issue of costs but the same has to be exercised in accordance with the principles of fairness and justice.

Issues for Determination 16. The Court has carefully considered the written submissions by the parties herein and the following issue is for determination;a.Whether the 1st Defendant is entitled to costs of the suit?

Analysis 17. The Plaintiff withdrew the present suit on 18th March, 2021 by consent. The Defendants however prayed for costs. The Prayer for costs was objected to necessitating the present Application.

18. By virtue of Section 27 of the Civil Procedure Act, it is trite law that the issue of costs is a discretionary award that is awarded to a successful party. Section 27 provides: -“(1)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.”

19. In the case of Party of Independent Candidate of Kenya & another vs Mutula Kilonzo & 2 others [2013] eKLR which cited with approval the words of Murray C J inLevben Products vs Alexander Films (SA) (PTY) Ltd1957 (4) SA 225 (SR) at 227 that it stated:“It is clear from authorities that the fundamental principle underlying the award of costs is two-fold. In the first place the award of costs is a matter in which the trial Judge is given discretion ...But this is a judicial discretion and must be exercised upon grounds on which a reasonable man could have come to the conclusion arrived at.... In the second place the general rule that costs should be awarded to the successful party, a rule which should not be departed from without the exercise of good grounds for doing so.”

20. Costs are at the discretion of the court, yet, follow the event. (See the Halbury’s Laws of England; 4th Edition (Re-issue), [2010], Vol.10. para 16).“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.”

21. The issue that this court has to settle is whether or not the act of recording the consent is an event within the phrase “costs follow the event.” It is not in dispute that the Plaintiff and the Defendants have agreed to settle the case. Did the filing of the suit, the Application and the various steps taken by the parties and the intended resolution of this suit by recording the intended consent as aforesaid amount to an event as envisaged under Section 27 Civil Procedure Act cited above?

22. In Morgan Air Cargo Limited v Evrest Enterprises Limited (supra), the court held: -“But it does 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 reference to the context of the particular case.”

23. The settlement of a case by consent does not necessarily mean there is no successful party. Therefore, the settlement of a matter whether by consent or otherwise, is not a bar to costs.

24. Justice (Retired) Richard Kuloba in Judicial Hints of Civil Procedure stated as follows: -“The words “the event” means the result of all the proceedings to the litigation. The event is the result of the entire litigation. It is clear however, that the word “event” is to be regarded as a collective noun and is to be read distinctively so that in fact it may mean the “events” of separate issues in an action. 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, but that, where the action involves separate issues, whether arising under different causes of action or under one cause of action, the costs of any particular issue go to the party who succeeds upon it. An issue in this sense need not go to the whole cause of action, but includes any issue which has a direct and definite event in defeating the claim to judgement in the whole or in part”

25. At page 101 of the same book, Kuloba elaborated as follows: -“The law of costs as it is understood by courts in Kenya, is this, that where a plaintiff comes to enforce a legal right and there has been no misconduct on his part-no omission or neglect, and no vexatious or oppressive conduct is attributed to him, which would induce the court to deprive him of his costs-the court has no discretion and cannot take away the plaintiffs right to costs. If the defendant, however innocently, has infringed a legal right of the plaintiff, the plaintiff is entitled to enforce his legal right and in the absence of any reason such as misconduct, is entitled to the costs of the suit as a matter of course”

26. Going by the afore-going excerpts, the issues raised in the suit relate to the Plaintiff’s default in loan repayment. The Plaintiff indeed acknowledged that it is indebted to the bank. The Plaintiff went ahead and filed the Notice of Motion dated 25th February 2019 which Application was responded to by the 1st Defendant vide Replying Affidavit dated 4th March 2019. Moreover, the 1st Defendant attended the court on numerous occasions. Looking at the nature of the consent filed herein and the entire circumstances of the case, and in the exercise of the Court’s discretion, this court is satisfied that the 1st Defendant is entitled to costs.

Findings and Determination 27. For the foregoing reasons this court makes the following findings and determination;i.The Court finds that the 1st Defendant is entitled to costs of the suit;i.The 1st defendant is hereby awarded costs of this suit.Orders Accordingly.

DATED, SIGNED AND DELIVERED ELECTRONICALLY AT NAIROBI THIS 10TH DAY OF JUNE, 2022. HON. A. MSHILAJUDGEIn the presence of;Evedi for the PlaintiffsMudibo holding brief for Okello for the DefendantsLucy---------------------------Court Assistant