Upward Scale Investments Co. Ltd & 7 others v Mwangi Keng’ara & Co. Advocates [2017] KECA 628 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that security for costs can only be ordered through a formal application where the applicant proves the other party cannot pay if they lose.
What this practically means
#Executive summary
#Key legal issues
#Whether security for costs could be granted without a formal application
The learned Judge erred; the respondent ought to have made a formal application for security for costs enabling the court to hear arguments and weigh competing rights, and having declined stay of taxation the Judge had no basis for granting the security.
Security for costs is designed to protect a party from a litigant who by near insolvency cannot pay costs if he loses. The onus lies on the applicant to prove such inability, not merely allege it. Here the respondent's apprehension that the joint venture would dissolve and costs would be unrecoverable was made only in a replying affidavit; no formal application was made, so the court could not weigh competing rights, and the orders curtailed the appellants' right of appeal.
Characterisation of the orders made by the High Court
Despite the respondent's argument that the deposit directed was of taxed fees, the Court was satisfied the orders were security for costs for amounts to be taxed.
The respondent's own affidavit showed she was apprehensive that once the office block was complete and sold, the joint venture would cease to exist and she would be unable to recover costs to be taxed. The orders issued were in response to that apprehension and therefore were in substance orders for security for costs, attracting the legal requirements governing such orders.
Bias of the learned Judge
The ground failed for lack of evidence.
The appellants alleged that the learned Judge's conduct portrayed extreme bias against them, but the Court found no evidence supporting the allegation and dismissed that ground of appeal.
Costs of the application below
The learned Judge erred in directing each party to bear its own costs without giving reasons; the Court of Appeal held costs should abide the outcome of the intended appeal.
Under Section 27(1) of the Civil Procedure Act costs are discretionary, but the proviso requires costs to follow the event unless the court for good reason otherwise orders. The learned Judge gave no reasons for departing from that principle, which was an error. Taking into account the nature of the application, the Court of Appeal directed that the costs of the application abide the outcome of the intended appeal.
Legal principles established
#- A Notice of Appeal is what gives the Court of Appeal jurisdiction in any appeal, and the Court cannot entertain arguments in respect of a decision not before it.
- Issues for determination flow from the pleadings, and a court may only pronounce judgment on issues the parties framed for determination; this applies to appeals as well.
- An order for security for costs requires a formal application by the party seeking it, and the onus is on the applicant to prove the respondent's inability to pay costs if unsuccessful.
- Costs follow the event unless the court, for good reason which it must give, otherwise orders.
Court orders
#- 1.Appeal allowed with costs to the appellants
- 2.Decision dated 20th March 2015 set aside to the extent of the conditions attached to the leave granted to file the Notice of Appeal out of time
- On appeal from
- High Court of Kenya at Nairobi
- H.C Misc. Civil Applic. No. 530 of 2013
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal jurisdiction (Appeals from the High Court exercising civil jurisdiction); no specific constitutional or statutory provision is quoted in the judgment
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Upward Scale Investments Co. Ltd & 7 others v Mwangi Keng’ara & Co. Advocates [2017] KECA 628 (KLR)", Case Analysis (2017). Civil Appeal No. 88 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2017/628/eng@2017-03-31
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.