David Kiptum Korir v Kenya Commercial Bank & another [2021] eKLR

REPUBLIC OF KENYA
IN THE HIGH COURT OF KENYA
AT ELDORET
CIVIL CASE NO. 64 OF 2018
DAVID KIPTUM
KORIR.........................................................PLAINTIFF
VERSUS
KENYA COMMERCIAL BANK.................................. 1 ST DEFENDANT
DENNIS KIRUI T/A SADDABRI AUCTIONEERS....2ND DEFENDANT
RULING
1. The current application regards costs of the suit and award thereof
sought by the 1st defendant (KENYA COMMERCIAL BANK). The genesis
of this matter is that the Plaintiff moved the court vide Plaint dated 22 nd
October, 2014 and concomitantly filed an application and supporting
affidavit of even date.
2. The Plaintiff was the sole registered proprietor of the freehold interest
comprised in parcel known as L.R. NO. NGERIA/CHEPYAKWAI
BLOCK 3(KINGWAL)/54 measuring 14.75 hectares in which the 1st
Defendant had an interest in the property as a charge, having advanced
an overdraft facility of Ksh. 500,000/= through account number
1102468274 in the name of the Plaintiff in or about the year 2000.
A condition set was that the plaintiff would surrender the original title for
the suit property with the 1st Defendant. The Plaintiff complied with the
condition and funds thereafter released.
3. The Plaintiff accepted the terms and conditions governing the loan
offered and executed the facility but due to constant defaults and the
outstanding arrears, the overdraft facility accrued interest. The 1st
Defendant sought to realize the security thus accumulating in the current
suit filed by the plaintiff.
4. The 1st Defendant instructed counsel who entered appearance
and filed their statement of Defence on 18 February, 2015.The 1s
Defendant further filed a Replying Affidavit to the application sworn on
9th March, 2015. Parties herein filed written submissions to the
application dated 22 nd October, 2014 and the court gave its
ruling in favour of the Applicant on 28° June, 2017.
5. Subsequently the Plaintiff entered into negotiations with the 1 st
Defendant, with a view to settling the outstanding sum and eventually

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they entered into a consent and suit property successfully discharged in

favour of the Plaintiff. The 1st Defendant sought costs of the suit, but the
plaintiff contested and argued that he was the one entitled to costs hence
the current application.
The thrust of this application is that the plaintiff and the 1 st defendant by
consent settled the dispute before court through payment of outstanding
sum of Kshs.94000 by the plaintiff to the 1 st defendant and the successful
discharge of the suit property in favour of the plaintiff by the 1 st
Defendant.
6. The gist of the above settlement is that on or about the year 2000, the
1st defendant advanced an overdraft financial facility of Kshs.500,000 to
the plaintiff with the plaintiff surrendering title deed on land number
NGERIA/CHEPYAKWAI BLOCK 3 (KINGWAL) 54 measuring 14.75 acres
as security.
7. However, due to default and outstanding arrears by the plaintiff, the
overdraft facility accrued interest upon which the 1 st defendant sought to
execute a statutory power of sale through the 2 nd defendant at which
stage the plaintiff brought the now settled suit. The 1 st defendant argues
that they are the successful party and are entitled to costs whilst the
plaintiff on his part argues that he is the successful party thus entitled to
costs.
The application was canvassed by way of written submissions.
8. The applicant (1st defendant) submits that the court has jurisdiction to
grant the orders sought by virtue of Section 27 of the Civil Procedure
Act, saying it is trite law that the issue of costs is a discretionary award
that is awarded to a successful party. To buttress this point, the applicant
relies on 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 in Levben Products vs Alexander
Films (SA) (PTY) Ltd 1957 (4) SA 225 (SR) at 227 that:
"It is clear from authorities that the fundamental
principle underling the award of costs is two-fold. In
the first place the award of costs is 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."
9. In addition, the applicant contends that an out of court settlement
amounts to conclusion of a case and therefore amounts to events
contemplated under Section 27 of the Civil Procedure Act. The
applicant relies on the case of Morgan Air Cargo Limited vs Evrest
Enterprises Limited (2014) eKLR to cement this position.

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10. It is the applicant’s submissions that were it not but for the plaintiff’s
default, the settled suit would not have been filed and the 1 st defendant
would not have been forced to defend the suit in court. According to the 1 st
defendant, the plaintiff’s failure to pay his debt to the 1 st defendant was
the catalyst that led to the suit before court. They rely on the case of
Cecilia Karuru Ngayu vs Bacrclays Bank of Kenya & another (2016)
eKLR to buttress the fact that they are entitled to costs for the troubled
undertaken to defend the proceedings.
Based on the foregoing, the 1st defendant submits that the court grant it
the orders sought.
11. The respondent on his part (plaintiff) argues that he is the one entitled
to costs and not the 1st defendant on the basis that the conduct of the
defendants from the beginning (which he terms as a misrepresentation of
the facts) greatly inconvenienced him leaving him with no option but to
seek court’s intervention. He argues that the amount as displayed by the
defendants in the statutory notice of sale differed from the amount he paid
and that resulted in the settlement of the suit. He contends that he was
left with no option but to contest the debt of Kshs. 4, 931,614.41 which
has never been substantiated by the defendants. The plaintiff submits that
this was done in bad faith because immediately he paid Kshs.94000 to the
defendants, the defendants moved the court to have the matter marked
as settled.
12. Additionally, the plaintiff submits that the defendants proceeded to
issue a notification for sale of the suit property dated 8 th October 2014
before issuing statutory notices as stipulated by law. That as a
consequence, the equitable maxim of he who comes to court must do so
with clean hands must be applied by court. He relies on the case of
Francis Munyoki Kilonzo & another vs Vincent Mutua Mutiso
(2013) eKLR.
13. The plaintiff invites court to take into account this conduct of the
parties as one of the factors to be considered in determining costs as was
held in Cecilia Karuru Ngayu vs Bacrclays Bank of Kenya & another
(2016) eKLR. He maintains that the defendant is not the successful
party.
And that termination of the suit by the defendants as a result of
settlement by the parties, cannot be considered as being successful but
rather, is a demonstration that but for the conduct of the defendant’s
action, the suit would not have been brought. Based on the foregoing, the
plaintiff prays for costs in his favour against the defendants.
Analysis and Determination
14. The main issue for determination regards who shall bear the costs of
the suit. The 1st defendant relies on Section 27 of the Civil Procedure
Act which is instructive and therefore necessary to reproduce hereunder.
15. Section 27 provides: -
“ (1)Subject to such conditions and limitations as may
be prescribed, and to the provisions of any law for the

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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.”
A careful reading of Section 27 indicates that it is considered trite law that
costs follow the cause/event, as described by Sir Dinshah Fardunji
Mulla in his book The Code of Civil Procedure, 18 th Edition, 2011
reprint 2012 at 540, is that costs must follow the event unless the court,
for some good reasons, orders otherwise.
16. Additionally, the provision provides for ‘costs of and incidental to all
suit’ which expression includes not only costs of suit but also costs of
application in suit as described by Mulla (supra) at 536. Furthermore,
Rtd. Justice Richard Kuloba in his book Judicial Hints on Civil
Procedure, 2nd Edition, 2005 at 95 notes that the words ‘the event’
means the result of all the proceedings incidental to the litigation.
Accordingly, the event means the result of the entire litigation. The order
as to costs as provided for under section 27 remains at the discretion of
the court.
17. In Republic v. Rosemary Wairimu Munene (Ex parte Applicant)
v. Ihururu Dairy Farmers Co-operative Society Ltd Judicial Review
Application No. 6 of 2004 Mativo J. held that the issue of costs is the
discretion of the Court and is used to compensate the successful party for
the trouble taken in prosecuting or defending the case and not to penalize
the losing party. This position was adopted by the court in Cecilia Karuru
Ngayu vs. Barclays Bank of Kenya & Another [2016] eKLR which
has been cited with approval by both parties in their submissions.
18. The import is that a successful party is entitled to costs unless he or
she is guilty of any misconduct or there exists some other good reasons
and or cause for not awarding costs to the successful party.
19. In Reid, Hewitt & Co v Joseph, AIR 1918 Cal 717 and Myres v
Defries (1880) 5 Ex D 180, the house of Lords noted that: -
“The expression ‘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 where
the action involves separate issues, whether arising
under different causes of action or under one cause of
action, the word ‘event’ should be read distributive and
the costs of any particular issue should go to the party
who succeeds upon it.”

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The drift therefore is that it is not on every issue that success will bring a
right to the costs. As Kuloba notes in Judicial Hints (supra), in case of
total success, the successful party may be deprived of the costs of a
separate issue on which he was unsuccessful.
20. The award of costs is therefore not cast in stone but courts have
ultimate discretion. In exercising this discretion, courts must not only look
at the outcome of the suit but also the circumstances of each case. In
Morgan Air Cargo Limited v Evrest Enterprises Limited [2014]
eKLR the court noted that
“The exercise of the discretion, however, depends on
the circumstances of each case. Therefore, the law in
designing the legal phrase that ‘’Cost follow the event’’
was driven by the fact that there could be no ‘’one-size-
fit-all’’ situation on the matter. That is why section
27(1) of the Civil Procedure Act is couched the way it
appears in the statute; and even all literally works and
judicial decisions on costs have recognized this fact and
were guided by and decided on the facts of the case
respectively. Needless to state, circumstances differ
from case to case.”
21. Furthermore, this discretion must be exercised judiciously and courts
should not deprive a plaintiff/defendant of his or her costs unless it can be
shown that they acted unreasonably. The Halsbury’s Laws of England,
4th Edition ( Re-issue), {2010}, Vol.10. para 16, notes 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” (Emphasis
added).
22. Any departure from this trite law can only be for good reasons which
the Supreme Court in Jasbir Singh Rai & Others vs Tarlochan Rai &
Others {2014} eKLR noted includes public interest litigation since in
such a case, the litigant is pursuing public interest as opposed to personal
gain.
23. The court must therefore ask itself what factors should be taken into
consideration when determining the costs of suit. This issue was
addressed by the learned judge in Morgan Air Cargo Limited v Evrest
Enterprises Limited (Supra) to include:
a. the conduct of the parties
b. the subject of litigation
c. the circumstances which led to the institution of the

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proceedings
d. the events which eventually led to their termination
e. the stage at which the proceedings were terminated
f. the manner in which they were terminated
g. the relationship between the parties and
h. The need to promote reconciliation amongst the
disputing parties pursuant to Article 159 (2) (c) of the
Constitution.
24. Noteworthy, the list is not exhaustive. In other words, the court must
be guided not only by the conduct of the parties in the actual litigation,
but also other matters including likely consequences of the order for costs.
25. In the present case, the plaintiff contends that were it not but for the
defendants’ action of putting up for sale the suit property, the suit would
not have been filed. The defendant on its part also submitted that were it
not for the plaintiff action of defaulting in payment of his obligations, then
the defendants would not incur costs in defending the proceedings.
26. It is therefore necessary to look at the factors highlighted in Morgan
Air Cargo Ltd (supra) as applicable to our case. In particular, I will focus
on the conduct of the parties, the subject of litigation, the circumstances
that led to the termination of the proceedings and the manner in which
they were terminated.
27. In the present circumstances, there is no doubt that the plaintiff had
obligation to the 1st defendant by virtue of financial overdraft facility
extended to him. Their relationship was one of debtor and creditor. What
was in dispute is the amount of money owed by the Plaintiff. In its
notification for sale of the suit property dated the 19 th of August 2014, the
amount indicated as due was Kshs. 4, 931, 619.41. However, the
settlement of the current suit was upon payment of Kshs. 94,000 by the
plaintiff. This in my opinion, begs the question what transpired that the
amount of Kshs. 4,931,619 suddenly reduced to Kshs. 94000"
28. Though valid, the above question should not inform the outcome of
this application in my opinion considering that parties settled this matter
by consent.
I am guided by the decision of the learned judge which was also cited by
the 1st defendant in Cecilia Karuru Ngayu v Barclays Bank of Kenya
& another (supra) which cited with approval the Supreme Court of
Uganda in Impressa Ing Fortunato Federice vs Nabwire which held:
-
“it is trite law that where a judgement is given on the
basis of consent of parties, a court may not inquire into
what motivated the parties to consent or to admit
liability.”
29. Moreover, there is no doubt in my mind that the suit before court was
precipitated by the default and failure of the plaintiff to discharge his
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financial obligations upon which the 1 st defendant sought to enforce the

statutory power of sale as a means of recovering the debt owed to it and
which was paid by the plaintiff resulting in the settling of this matter.
30. As such, the settlement of a matter whether by consent or otherwise,
is not a bar to costs. In addition, settlement of a case by consent does not
necessarily mean there is no successful party. I stand guided by the
decision of the learned judge in Morgan Air Cargo Limited v Evrest
Enterprises Limited (supra) where 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.”
31. From the foregoing there does not appear to be any misconduct or
behaviour that would warrant a departure from granting costs to the
defendants. After all, mere opinion of the court that a successful party had
not behaved well, as Kuloba rightly notes in Judicial Hints at pg 99, is
not by itself sufficient to justify a court in depriving a party of his/her cost.
Notably, it is clear that a successful defendant, who after all is brought
into court against his/her will, can only be deprived of his/her costs when it
is shown that his conduct, either prior to or during the course of the suit
has led to litigation which, but for his own conduct might have been
averted. There is room to infer that the conduct of the applicant in
demanding such astronomical figures, gave the plaintiff cold feet, and he
sought protection my filing.
32. Premised on the case of Rufus Njuguna Miringu & Another vs
Martha Muriithi & 2 Others (2012) eKLR particularly on the
interpretation of the proviso to Section 27(1) of the Civil Procedure
Act, that the material event referred to in the provision is the result of the
proceedings, and it is the successful party in this result who is normally
awarded costs. However, where parties have settled the matter by
consent, the consent cannot be interpreted to mean that on or the other
party has succeeded in a suit. The successful determination of the dispute
is attributable to both parties. The issue of a party’s conduct, affecting the
award of costs, does not arise when parties have entered consent as they
are deemed to have accepted their respective conduct prior to the
consent. The court also noted that the Defendants’ conduct would in the
circumstances only be material if the plaintiffs are seeking to set aside the
consent order. The court found that in the circumstances, it was only just

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for the parties to bear their own costs of the proceedings.

33. Likewise I am of the view that each party contributed, by their
conduct to the filing of this suit, and in that case I order that each party
shall bear its cost.
DELIVERED, SIGNED AND DATED THIS 10 TH DAY OF MARCH 2021
VIRTUALLY.
H. A. OMONDI
JUDGE

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