AI-generated case brief
Case Brief · caselaw.co.ke
ELCPartially AllowedNotice of motion dated 29th November 2018· [2019] KEELC 2916 (KLR)
Nakumatt Holdings Limited v South Coast Holdings Ltd [2019] KEELC 2916 (KLR)
AI-assisted case brief
·~4 min to read original · ~4 min briefThe bottom line
#What this practically means
#Executive summary
#This was a ruling on the defendant's notice of motion dated 29th November 2018 brought under Sections 1A, 1B, 3A and Order 26 of the Civil Procedure Act and Rules, seeking an order that the plaintiff deposit security for costs of Kshs150,847,196, a stay of proceedings pending the deposit, and a restraint on the plaintiff's administrator from paying legal fees until security was deposited. The defendant relied on an audit report by PKF showing that the plaintiff, whose affairs were under administration in Nairobi Insolvency Cause No. 10 of 2017, had liabilities of over Kshs35.8 billion against assets of about Kshs6 billion, with no provision for unsecured creditors, meaning the defendant's costs would be insecure. The plaintiff opposed the application, arguing it was defective, conflicted with existing court orders, and that the defendant had admitted ownership of fixtures and fittings remained with the plaintiff. The plaintiff relied on authorities holding that impecuniosity should not bar a genuine claim. Justice A. Omollo found that the plaintiff's financial challenges were a matter of public domain and admitted through the insolvency cause, that the plaintiff made no submissions on its ability to pay costs, and that the plaintiff was using the insolvency cause as a shield to file further suits. Though both parties' claims had a probability of success, the court held security for costs served the interest of justice. The application was allowed in part: security of Kshs40 million (reduced from the sum sought) was to be deposited in a joint interest account of both parties' advocates within 60 days, proceedings were stayed until deposit, prayer (e) was declined, and each party was to bear its own costs of the application.
Key legal issues
#01
Whether to order a financially challenged plaintiff to deposit security for costs
Holding
Application allowed in part; security of Kshs40 million ordered and proceedings stayed pending deposit
Reasoning
The court considered the discretionary principles for security for costs, including whether the plaintiff has a prima facie case and whether impecuniosity should bar a genuine claim. It found the plaintiff's financial challenges admitted through the insolvency cause, noted the audit report showing liabilities far exceeding assets, and observed the plaintiff made no submissions on its ability to pay costs. Weighing the parties' competing rights, security was warranted, though at a reduced sum.
p. 2
Legal principles established
#- Where a plaintiff's financial status to meet the defendant's costs is in doubt, it serves the interest of justice to order security for costs, even where both claims have a probability of succeeding
Court orders
#- 1.The plaintiff to deposit security in the sum of Kshs40 million in a joint account to be opened in names of the plaintiff's advocates and the defendant's advocates within 60 days of the order
- 2.The proceedings stayed until the deposit has been paid into the said account
- 3.Each party to bear their own costs of the application
- 4.Prayer (e) of the motion declined
- Jurisdiction invoked
- Sections 1A, 1B, 3A and Order 26 of the Civil Procedure Act and Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nakumatt Holdings Limited v South Coast Holdings Ltd [2019] KEELC 2916 (KLR)", Case Analysis (2019). Notice of motion dated 29th November 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2019/2916/eng@2019-06-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.