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Court of AppealPartially AllowedCivil Appeal No. 1 of 2015· [2015] KECA 365 (KLR)

Beijing Industrial Designing & Researching Institute v Lagoon Development Limited [2015] KECA 365 (KLR)

Court of Appeal
9 October 2015
ASAsike-MakhandiaWilliam OukoW. OukoKMK. M'inoti
5,336 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~21 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal ruled that you cannot withdraw a lawsuit just to escape contempt of court proceedings against you.

What this practically means

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Executive summary

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This appeal arose from a construction contract under which the appellant was engaged to build the Madharini holiday resort in Kilifi County. After the contract soured, the respondent filed HCCC No. 2 of 2014 at Malindi seeking interim relief under section 7 of the Arbitration Act pending arbitration, and obtained prohibitory injunctions. Following a later ruling in the appellant's favour restraining construction pending arbitration, the appellant filed two applications in the same suit: to restrain enforcement of bank guarantees, and to commit two of the respondent's directors for contempt of the injunction orders. On the morning fixed for hearing those applications, the respondent filed a notice of discontinuation of the suit, which Angote, J. upheld, holding that nothing survived discontinuance. The appellant appealed. The Court of Appeal framed the cut-and-dry issue as whether the High Court erred in allowing discontinuation while contempt proceedings were pending. Holding that the general right to discontinue under Order 25 of the Civil Procedure Rules is not absolute where leave is required, and that contempt proceedings are quasi-criminal and implicate the public interest in the rule of law rather than merely private interests, the court held that the respondent's withdrawal of its suit to defeat the pending contempt application was an abuse of process. The court also held that the court's inherent jurisdiction under section 3A of the Civil Procedure Act, as illustrated by the House of Lords in Castanho v Brown & Root, permits termination of process to be prevented where used for collateral advantage. The appeal was allowed, the High Court's order of 29 October 2014 set aside, and the appellant awarded costs of the appeal. The judge's secondary costs issue and the merits of the contempt application were left to the High Court.

Key legal issues

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01

Whether a plaintiff has an absolute right to discontinue a suit where a contempt application is pending in the same suit

Holding

No. Where contempt of court proceedings are pending, the discontinuation of the suit at the sole instance of the alleged contemnor is an abuse of process and should not be allowed without terms, because contempt proceedings implicate the public interest in the rule of law.

Reasoning

The court read Order 25 of the Civil Procedure Rules as creating three scenarios: discontinuance as of right before setting down; by consent; and by leave on just terms. While the general right to discontinue exists, contempt proceedings are quasi-criminal and their purpose is to uphold the supremacy of the law, not merely private interests. Order 40 Rule 3(3) compels contempt applications to be made in the suit granting the injunction, so allowing discontinuance would let an alleged contemnor benefit from its own wrongdoing. Section 3A and the inherent jurisdiction (Castanho) empower the court to stop such abuse.

p. 8
02

Whether the High Court erred in upholding discontinuation without setting any terms

Holding

Yes. In the circumstances, the High Court erred by upholding the respondent's right to discontinue without setting terms; its order of 29 October 2014 was set aside.

Reasoning

The respondent discontinued the suit on the very morning of the hearing, filed a fresh suit the next day raising the same issues, and thereby defeated a pending contempt application. The uncritical application of Order 25 Rule 1 sacrificed the public interest in the rule of law to the respondent's asserted absolute right of withdrawal. The court concluded the judge erred and allowed the appeal, deeming it unnecessary to address the secondary costs issue.

p. 8
03

Standard of proof and character of contempt proceedings

Holding

Contempt of court proceedings are quasi-criminal, attracting a standard of proof higher than balance of probabilities, and cannot be terminated at the exclusive instance of the alleged perpetrator.

Reasoning

Relying on In Re Bramblevale Ltd and Mutitika v Baharini Farm, the court characterized contempt as quasi-criminal, with the standard of proof 'higher than proof on the balance of probabilities, almost but not exactly, beyond reasonable doubt.' This characterisation underpinned the holding that criminal or quasi-criminal proceedings should not be ended at the discretion of the alleged perpetrator.

p. 6

Legal principles established

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  • A party may discontinue a suit under Order 25 Rule 1 without leave only where the suit has not been set down for hearing; where leave is required, it is granted on terms as are just and is not a mere formality.
  • A party against whom contempt of court proceedings are pending in a suit may not unilaterally discontinue that suit so as to defeat the contempt proceedings; the court may refuse or term such discontinuation.
  • The court has inherent power under section 3A of the Civil Procedure Act to prevent the right to discontinue being used as an abuse of process or to obtain a collateral advantage.
  • A service of a notice of discontinuance that complies with the rules may nonetheless constitute an abuse of the process of the court.

Court orders

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  1. 1.Appeal allowed
  2. 2.Order of the High Court (Environment & Land Court at Malindi, Angote, J.) dated 29th October 2014 set aside
  3. 3.Appellant granted costs of this appeal

Authorities

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Legislation

  • Civil Procedure RulesOrder 25 Rule 1
  • Civil Procedure RulesOrder 25 Rule 2(1) and (2)
  • Civil Procedure RulesOrder 40 Rule 3
  • Civil Procedure RulesOrder 40 Rule 3(3)
  • Civil Procedure ActSection 3A
  • Civil Procedure ActSection 27(1)
  • Arbitration ActSection 7
  • Supreme Court RulesRule 19
  • Rules of the Supreme Court of EnglandRule 81.4
  • Rules of the Supreme Court (England)Order 21 Rule 2(1)

Cases cited (17)

  • Econet Wireless Kenya Ltd v The Minister for Information & Communication & Another
    HC Misc. App. No. 1640 of 2003
  • Board of Governors, Moi High School Kabarak v Malcolm Bell & Another
    SC Petition Nos. 7 & 7 of 2013
  • Ntarangwi Ikiara v Commissioner of Lands & 2 Others
  • Eiden Enterprises Ltd. & 2 Others v Paradise Mombasa Marketing Ltd. & 5 Others
  • Sushilaben Ramniklal Shah v Vegetable Bargain Centre Ltd
  • Groia v The Law Society of Upper Canada
    [2015] ONSC 686
  • Abayomi Babatunde v Pan Atlantic Shipping & Transport Agencies Ltd & Others
    SC 154/2002
  • John Ochanda v Telkom Kenya Ltd
    SC App. No. 25 of 2014
  • Nicholas Kiptoo Arap Korir Salat v IEBC & 7 Others
    SC App. No. 16 of 2014
  • Kisumuwalla Oil Industries Ltd v Pan Asiatic Commodities Pte Ltd & Another
    CA No. 100 of 1995
  • Corporate Insurance Co v Loise Wanjiru Wachira
    CA No. 151 of 1995
  • In Re Bramblevale Ltd
    (1970) Ch 128
  • Mutitika v Baharini Farm
    (1982-88) 1 KAR 863
  • Johnson v Grant
    1923 SC 789
  • Burchell v Burchell
    Case No 364/2005
  • New Zealand Shipping v Societe des Ateliers et Chantiers de France
    (1919) AC 1
  • Castanho v Brown & Root (UK) Ltd & Another
    (1981) 1 All ER 143
On appeal from
Environment & Land Court at Malindi
HCCC No. 2 of 2014
Jurisdiction invoked
First appellate jurisdiction over appeals from the High Court under Article 164(1A)(2) of the Constitution and the Appellate Jurisdiction Act (implied from the appeal against the High Court ruling; no express provision quoted in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Beijing Industrial Designing & Researching Institute v Lagoon Development Limited [2015] KECA 365 (KLR)", Case Analysis (2015). Civil Appeal No. 1 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/365/eng@2015-10-09

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.