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Court of AppealPartially AllowedCivil Appeal No. 96 of 2016

Canyon Properties Limited & 3 others v Eliud Kipchirchir Bett & 2 others [2017] KECA 115 (KLR)

Court of Appeal of Kenya
23 November 2017
3,661 words in judgment
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The bottom line

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Kenya's Court of Appeal ruled that when a plaintiff withdraws a lawsuit, the judge must consider the defensive work the defendants did before denying them legal costs.

What this practically means

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Executive summary

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The respondents, an advocate and a real estate agent, sued the appellants claiming a finder's fee of Kshs. 122,000,000 arising from the sale of the appellants' Miritini land to the interested party, and simultaneously sought injunctive orders. After the interim orders lapsed, various applications and preliminary objections were filed and heard, but the main suit was never set down for hearing. The respondents then withdrew the suit and application by notice, with no orders as to costs. The appellants sought costs, but Otieno, J., in a ruling of 19th August 2016, held that no party had been adjudged successful or unsuccessful, that the suit was withdrawn at the earliest opportunity, and that the parties should bear their own costs. On appeal, the Court of Appeal (Visram, Karanja & Koome, JJ.A) confined itself to a single issue: whether the trial judge exercised his discretion judicially in declining costs. Relying on its earlier exposition of Order 25 of the Civil Procedure Rules in Beijing Industrial Designing & Researching Institute v Lagoon Development Limited, the Court held that the case fell within the third scenario, where withdrawal requires leave on terms as are just. Although the main suit had not been set down for hearing, the appellants had entered appearance, filed defences, a preliminary objection and an application to set aside the exparte orders, and parties had been heard on several interlocutory matters. The judge ought to have considered those steps and the fact that any costs award would only cover work done up to withdrawal; his failure to do so vitiated the exercise of discretion. The Court of Appeal allowed the appeal, set aside the ruling on costs, awarded the appellants the costs of the withdrawn suit at the High Court, denied the interested party High Court costs as it had not appealed, and awarded the appellants and the interested party the costs of the appeal.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the learned Judge of the High Court exercised his discretion judicially in declining to award costs to the appellants upon the respondents' withdrawal of the suit

Key legal issues

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01

Whether the trial judge exercised his discretion judicially in declining to award costs upon withdrawal of the suit

Holding

He did not: although the main suit had not been set down for hearing, the judge failed to consider the appearances, defences, preliminary objections and contested applications the appellants had prosecuted, all of which were relevant to the costs discretion.

Reasoning

The Court found that the parties fell within the third scenario under Order 25 - withdrawal only upon terms as are just. Steps taken by the appellants to defend the suit could not be ignored merely because the main suit was not set down for hearing. Any costs awarded would only cover work done up to the point of withdrawal, which the judge ought to have considered but did not, rendering the exercise of discretion flawed.

p. 6
02

The right of a plaintiff to withdraw or discontinue a suit

Holding

The right to withdraw proceedings cannot be questioned in principle, but it is always subject to the court's power to make an order as to costs.

Reasoning

Relying on Nigerian and Kenyan Supreme Court authority, the Court affirmed that withdrawal is a right exercisable in various circumstances, but the court retains jurisdiction over costs, as recognised in the Salat decision and Order 25 of the Civil Procedure Rules.

p. 4
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The three scenarios for discontinuance under Order 25 of the Civil Procedure Rules

Holding

Before setting down for hearing, a plaintiff may withdraw by notice as of right; after setting down, withdrawal requires written consent of all parties or leave of the court on just terms.

Reasoning

The Court adopted its earlier exposition in Beijing Industrial Designing & Researching Institute v Lagoon Development Limited, which maps Order 25 into three scenarios, and classified the present case within the third scenario because contested steps had been taken despite the suit not being set down for hearing.

p. 6

Legal principles established

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  • Where a suit has been set down for hearing but no written consent to discontinuance exists, the plaintiff must obtain leave of the court to withdraw, on such terms as to costs as are just; the trial judge must consider the defensive steps actually taken by defendants before declining costs.
  • An appellate court will not interfere with a discretionary decision unless the judge misdirected himself on law, misapprehended the facts, took into account irrelevant considerations, failed to take into account relevant considerations, or the decision was plainly wrong.
  • Costs follow the event as a guiding principle, but the ultimate determinant is the judiciously exercised discretion of the court, and costs do not constitute an invariable consequence of legal proceedings.

Court orders

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  1. 1.The ruling dated 19th August 2016 declining to grant costs to the appellants is set aside
  2. 2.The appellants shall have the costs of the withdrawn suit at the High Court
  3. 3.The interested party is not entitled to costs at the High Court as it did not file an appeal against the said decision
  4. 4.The appellants and the interested party shall have the costs of this appeal

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority
majority
Martha Karambu Koome
M. K. KoomeJA
Currently serving
majority
On appeal from
High Court of Kenya at Mombasa
H.C. COMM No. 23 of 2016
Jurisdiction invoked
First appeal / appellate jurisdiction of the Court of Appeal over the High Court ruling on costs

Relief refused

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Costs of the withdrawn suit at the High Court for the interested party

The interested party did not file an appeal against the ruling and was therefore not entitled to High Court costs

p. 7

Costs

The appellants shall have the costs of the withdrawn suit at the High Court; the interested party is not entitled to costs at the High Court; the appellants and the interested party shall have the costs of this appeal.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the end, we find merit in this appeal. The appeal ought to be allowed to the extent that the ruling dated 19th August, 2016 declining to grant costs to the appellants be set aside.
p. 7Disposition - appeal allowed and ruling set aside
The appellants shall have the costs of the withdrawn suit at the High Court but since the interested party did not file an appeal against the said decision they are not entitled to costs at the High Court. The appellants and the interested party shall have the costs of this appeal.
p. 7Final orders on costs
In such eventuality, the plaintiff must obtain leave of the court to discontinue the suit or to withdraw the claim or any part thereof, which is granted upon such terms as are just.
p. 6Order 25 - leave required where no consent to withdrawal
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.
p. 6Relevant considerations in the costs discretion on withdrawal
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.
p. 6Costs follow the event but subject to judicial discretion

Issues in the judgment

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minor

The judgment quotes the High Court ruling with a duplicated passage - the paragraph beginning "The court takes notice that it has a duty to encourage alternative methods of dispute resolution" appears twice consecutively in the quoted extract.

minor

Typographical errors appear in the quoted authority of Rosaline Njeri Macharia and Kuloba's text ("in tis discretion").

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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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, "Canyon Properties Limited & 3 others v Eliud Kipchirchir Bett & 2 others [2017] KECA 115 (KLR)", Case Analysis (2017). Civil Appeal No. 96 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/115/eng@2017-11-23

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