Dande & 4 others v British-American Asset Managers Limited & 11 others
The bottom line
#Kenya's Court of Appeal ruled that when a suit is withdrawn because a settlement restored the disputed funds, the withdrawing party's opponents cannot claim automatic costs.
What this practically means
#Executive summary
#Key legal issues
#Applicability of Order 25 Rule 3 to the withdrawal of the suits
The Rule did not apply because the suits were withdrawn following a settlement in which the subject matter was restored to its rightful owners, not because there was no basis for the suits.
The court found as undisputed fact that funds had been transferred through the appellants to the 3rd to 12th respondents without the 1st and 2nd respondents' consent, that the 3rd to 12th respondents conceded wrongdoing and settled, and that the suits were withdrawn because the subject matter had been restored. That is not a 'wholly discontinued' suit of the kind contemplated by Order 25 Rule 3, so the mandatory costs-on-withdrawal mechanism was not triggered.
Exercise of discretion under section 27 of the Civil Procedure Act
The trial Judge properly exercised his discretion in directing that each party bear its own costs, adopting the consent order between the 1st and 2nd and 3rd to 12th respondents.
Section 27 leaves costs to judicial discretion, with costs following the event unless the court for good reason otherwise orders. The trial Judge gave reasons: the plaintiffs succeeded in recovering all funds, but a consent that each party bear its own costs had been recorded. The Court of Appeal found no misdirection, no reliance on irrelevant matters, and no failure to consider relevant matters warranting interference under Mbogo v Shah.
Adverse findings of fact made without a full trial
While the appellants took issue with the trial court's use of the term 'fraud', that did not detract from the finding that they were not entitled to costs.
The appellants argued that no trial having been held, the Judge could not make conclusive findings of fraud. The Court acknowledged the complaint but held that even setting aside the fraud characterisation, the undisputed facts - that the appellants' actions as senior employees led to the unauthorised transfer of funds and the subsequent suits - amply supported the discretionary outcome on costs.
The cross-appeal: entitlement of the 1st and 2nd respondents to costs
The cross-appeal failed because the issue before the trial court was the appellants' claim for costs, not a determination of entitlement between the parties, and there was no error in the each-party-bears-own-costs order.
The court distinguished between the question actually before the trial Judge (the appellants' demand for costs upon withdrawal) and the broader question of who was entitled to costs. Since the trial Judge's order mirrored the consent between the respondents and involved no error of principle, there was no basis to award the 1st and 2nd respondents costs on the cross-appeal.
Legal principles established
#- Order 25 Rule 3 of the Civil Procedure Rules does not apply to a withdrawal of suits made pursuant to a settlement restoring the subject matter to its rightful owners; in such circumstances costs remain in the discretion of the court under section 27 of the Civil Procedure Act.
- The Court of Appeal will not interfere with a trial court's exercise of discretion on costs unless satisfied the decision is clearly wrong, based on misdirection, or on a failure to consider relevant matters.
- On a first appeal, the Court of Appeal reconsider the evidence and draw its own conclusions, but will only depart from the trial court's findings where they are not based on the evidence, wrong principles of law were applied, or discretion was exercised injudiciously.
Court orders
#- 1.The appeal is dismissed
- 2.The cross-appeal is dismissed
- 3.Each party shall bear its own costs of the appeal
- On appeal from
- High Court of Kenya at Nairobi
- Civil Case No. 353 of 2016
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Court of Appeal's appellate jurisdiction (Civil Procedure Act; the judgment does not cite a specific constitutional provision)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Dande & 4 others v British-American Asset Managers Limited & 11 others", Case Analysis (2022). Civil Appeal 277 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/469/eng@2022-03-18
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.