Rajnikant Velji Shah & another v Galot Industries Limited & 2 others [2019] KEELC 725 (KLR)
The bottom line
#The Environment and Land Court refused to make defendants' lawsuit insurance deposit order, ruling that guessing an opponent can't pay costs is never enough—you must prove it, promptly.
What this practically means
#Executive summary
#Key legal issues
#Applicability of Order 26 Rule 4 of the Civil Procedure Rules
Order 26 Rule 4 does not apply where there is no evidence that the plaintiffs reside outside Kenya and the claim is not founded on a negotiable instrument or foreign judgment; the application falls under Order 26 Rule 1
The court found no evidence that the plaintiffs were non-residents; they had stated in their verifying affidavit that they reside in Parklands, Nairobi. The claim was based on a tenancy agreement, not a bill of exchange or foreign judgment. Therefore the general rule on security from non-resident plaintiffs, relied on by the plaintiffs in Shah v Shah, was not engaged and the application could only be considered under the general discretion in Order 26 Rule 1.
Burden of proof in an application for security for costs
The applicant must prove, not merely allege, the plaintiff's inability to pay costs; the applicants placed no evidence of the plaintiffs' inability before the court
Relying on Gatirau Peter Munya v Dickson Mwenda Kithinji and Hall v Snowdon Hubbard, the court held that the onus lies on the applicant to demonstrate inability or lack of good faith making an order for security reasonable. The applicants adduced no evidence of the plaintiffs' financial incapacity, and the onus was not on the plaintiffs to demonstrate their ability to pay. Absent such evidence, the application could not succeed.
Effect of delay on a discretionary application for security for costs
The application, brought five years after the suit was filed with no explanation for the delay, failed on the ground of laches
The suit was filed in 2012 and the application in 2017 without explanation. The court held the applicants guilty of laches, disentitling them to a discretionary remedy. The same reasoning applied to the prayer for an undertaking as to damages under Order 40 Rule 2, sought over five years after the interlocutory injunction of 28th February 2012, whose application is yet to be heard inter partes.
Bona fides of the plaintiffs' claim
The court could not determine the merit of the plaintiffs' claim at that stage but found it was not frivolous, vexatious or an abuse of process
The applicants argued the plaintiffs' claim rested on a forged and fraudulent lease executed without authority. The court held it could not determine the merits at the interlocutory stage, but on the material before it the plaintiffs' claim was not frivolous, vexatious or an abuse of the process of the court, removing one of the grounds on which security might have been justified.
Legal principles established
#- The burden is on the applicant for security for costs to establish that the plaintiff would be unable to pay costs if unsuccessful; mere allegation is insufficient
- Unexplained delay disentitles a party to a discretionary remedy
Court orders
#- 1.The Notice of Motion application dated 24th July, 2017 is dismissed
- 2.Costs of the application awarded to the plaintiffs
- Jurisdiction invoked
- Order 26 Rules 1 and 4 and Order 40 Rule 2 of the Civil Procedure Rules, Sections 1A, 1B and 3A of the Civil Procedure Act
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Rajnikant Velji Shah & another v Galot Industries Limited & 2 others [2019] KEELC 725 (KLR)[2019] KEELC 725 (KLR)14 Nov 2019
Cite this brief
#Cite this brief
Caselaw, "Rajnikant Velji Shah & another v Galot Industries Limited & 2 others [2019] KEELC 725 (KLR)", Case Analysis (2019). Not stated in the judgment (Notice of Motion dated 24th July, 2017 in the main suit). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/725/eng@2019-11-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.