Southern Oil Supplies Co Ltd v SGS Kenya Ltd
The bottom line
#Kenya's High Court can make an insolvent plaintiff with a weak case pay money upfront to cover the defendant's legal costs if it loses.
What this practically means
#Executive summary
#Key legal issues
#Discretion to order security for costs under Order XXV rule 1
The court has an unfettered discretion to order security in any case where it thinks fit, exercisable only judicially.
The court held the discretion is broad and unfettered, constrained only by the implied requirement of judicial exercise. The application could equally have rested on section 401 of the Companies Act given the plaintiff's admitted insolvency, but nothing specifically turned on the rule under which the application was filed.
Burden of proof in an application for security for costs
The applicant bears the burden of showing cause why security should be granted.
The court placed the evidential burden on the defendant applicant, which discharged it by affidavit evidence that the plaintiff had failed to satisfy two decrees, had ceased operations, and had no assets in Mombasa - averments the plaintiff did not deny.
Weakened prospects as a ground for security
Where a plaintiff's claim has been weakened by a ruling limiting it to nominal damages and the plaintiff is insolvent, security should be ordered.
It was common ground that Shields J had ruled the suit disclosed only a cause of action for nominal damages, tremendously weakening the claim. Combined with the plaintiff's admitted insolvency and unsatisfied decrees, the defendant was entitled to be insured as to costs, and the security was fixed at Kshs 80,000/= with two months to comply.
Legal principles established
#- Under Order XXV rule 1 the court has a discretion to order security for costs in any case where it thinks fit.
- The discretion to order security for costs is unfettered but must be exercised judicially.
- The applicant for security for costs bears the burden of showing cause why the relief should be granted.
- The poverty or insolvency of a litigant may justify an order for security where the litigant's rights appear weak and the suit has been weakened by prior rulings.
Court orders
#- 1.The plaintiff to furnish security for the defendant's costs valued at Kshs 80,000/= within 2 months from the date of the ruling
- Jurisdiction invoked
- Order XXV rule 1 of the Civil Procedure Rules and section 401 of the Companies Act
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- R M G v N G, S Properties Ltd & M Developers Ltd (Interested Parties)[2013] KEHC 2612 (KLR)15 Aug 2013applied
- Jane Achieng (suing as plaintiff) v. Advocate (Defendant/Applicant) - Application to strike out plaint and for security for costs[2007] KEHC 2602 (KLR)29 Jun 2007applied
Cite this brief
#Cite this brief
Caselaw, "Southern Oil Supplies Co Ltd v SGS Kenya Ltd", Case Analysis (1991). Civil Case No 724 of 1985. Source:
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.