Wafaa Industries Limited v Nic Bank Limited & another [2021] KEELC 3192 (KLR)
The bottom line
#Kenya's Environment and Land Court refused to force a company to deposit Kshs. 68 million as security for costs because the applicant proved nothing about its ability to pay.
What this practically means
#Executive summary
#Key legal issues
#Whether the 2nd Defendant discharged the burden of proving the Plaintiff's inability to pay costs
The 2nd Defendant did not discharge the burden; there was no evidence of insolvency or that the Plaintiff was an entity of straw, and its assertions that the Plaintiff owns other properties were not shown to be false.
The court held the burden always rests on the defendant. The Plaintiff's Plaint listed immovable properties, which the 2nd Defendant did not disprove. No evidence of insolvency or non-existence of the Plaintiff was adduced, and no attempt was made to show the Plaintiff was an entity of straw. Mere apprehension, as held in Wamukoya v Makokha, does not warrant security for costs.
Balancing access to justice against the defendant's interest in securing costs
The court must weigh the injustice to the plaintiff of being stifled by a security order against the injustice to the defendant of being unable to recover costs; here the forgery plea is not frivolous, so the Plaintiff should be allowed to prosecute its suit.
Relying on Article 50 of the Constitution and Ocean View Beach Hotel, the court held that a litigant with a prima facie discernible claim should not be impeded. The Plaintiff's forgery claim could only be rebutted by the 1st Defendant after evidence was adduced, so ordering security would stifle a proper claim.
Legal principles established
#- The burden of proving that a plaintiff will be unable to pay costs if unsuccessful lies on the defendant applying for security for costs; mere apprehension is not enough.
- The test on an application for security for costs is whether the defendant has shown a bona fide defence, not whether the plaintiff has a prima facie case.
- The court has a complete discretion whether to order security for costs, to be exercised reasonably and judicially.
Court orders
#- 1.The Application dated 18th March, 2020 is dismissed with costs
- Jurisdiction invoked
- Order 26 Rule 1 of the Civil Procedure Rules; Article 50 of the Constitution (access to justice) considered
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Wafaa Industries Limited v Nic Bank Limited & another [2021] KEELC 3192 (KLR)", Case Analysis (2021). Not stated in the judgment (Plaint dated 2nd October, 2019; Notice of Motion dated 18th March, 2020). Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2021/3192/eng@2021-05-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.