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ELCPartially AllowedELC No. 245 of 2013· [2014] KEELC 572 (KLR)

Municipal Council Of Mavoko v Galot Industries Limited [2014] KEELC 572 (KLR)

High Court of Kenya
23 May 2014
993 words in judgment
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The bottom line

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The High Court ruled that a defendant who pays a disputed claim before judgment must still pay the winner's legal costs unless a signed costs agreement is filed in court.

What this practically means

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Executive summary

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The Municipal Council of Mavoko filed suit against Galot Industries Limited claiming land rates arrears of Kshs. 12,842,540/=. By a Notice of Motion dated 4th October 2012, supported by the affidavit of its advocate Patrick Kahonge, the Plaintiff sought two orders: that the suit be marked as compromised, and that the Defendant pay costs of the defended suit and the application. It was common ground that the Defendant had, on or about 23rd June 2011, paid all outstanding rates and obtained clearance certificates, and the parties agreed on the marking of the suit as compromised (prayer No. 1). The contest was confined to prayer No. 2, costs, which the parties canvassed by written submissions. The Defendant, through its director Mohan Galot, contended that there was an agreement that each party bear its own costs, while the Plaintiff maintained that having achieved the result sought in the suit, costs should follow the event. Relying on Section 27(1) of the Civil Procedure Rules and the dictum in Hussein Janhomamed v Twensche Overseas Trading Co. Ltd (1967) EA 287, L. Gacheru J held that costs are discretionary but must follow the event unless the court has good reason to order otherwise, and that discretion must be exercised judicially on evidence. Because the alleged agreement on costs was never filed in court, and the Defendant settled the claim out of court, the Plaintiff was the successful litigant and entitled to costs. The court marked the suit as compromised and ordered the Defendant to pay the costs of the suit and the application. It is so ordered.

Key legal issues

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01

Whether the Plaintiff was entitled to costs of the suit and application

Holding

The Plaintiff was the successful litigant as the Defendant paid the demanded rates out of court, and costs follow the event

Reasoning

The court exercised its discretion under Section 27(1) of the Civil Procedure Rules. Although costs are discretionary, that discretion must be exercised judicially. The 'event' means the result of the entire litigation. The Defendant settled the demanded amount out of court and obtained rates clearance certificates, making the Plaintiff the successful litigant. The alleged agreement that each party bear its own costs was not filed in court, so the Plaintiff was entitled to costs.

p. 2
02

Whether an alleged agreement on costs could displace the costs-follow-the-event rule

Holding

An unfiled alleged agreement on costs could not displace the default rule on costs

Reasoning

The Defendant alleged there was consent that each party meet its own costs, but no such agreement was produced or filed in court. Without evidence of such an agreement, the general rule that costs follow the event applied, and depriving the successful party of costs would require proper grounds supported by evidence.

p. 2

Legal principles established

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  • Costs of and incidental to all suits are in the discretion of the court but shall follow the event unless the court for good reason otherwise orders
  • A party who succeeds in litigation is entitled to costs from the losing party

Court orders

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  1. 1.The suit is marked as compromised, the Defendant having paid all the outstanding rates
  2. 2.The Defendant/Respondent to pay costs of the suit and the application

Authorities

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Legislation

  • Civil Procedure Rules (as cited; costs provision corresponds to the Civil Procedure Act)Section 27(1)

Cases cited (1)

  • Hussein Janhomamed Vs Twensche Overseas Trading Co.Ltd
    (1967) EA 287 Pg 292
Jurisdiction invoked
Section 27(1) of the Civil Procedure Rules (as cited in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Municipal Council Of Mavoko v Galot Industries Limited [2014] KEELC 572 (KLR)", Case Analysis (2014). ELC No. 245 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2014/572/eng@2014-05-23

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