Rainsun Nuts Limited v Privamnuts Epz Kenya Limited & 1 other

4. The Respondents entered appearance on 29.08.2023 and filed defence on 12.09.2023. The respondents averred that payments were made by cheques and that no request for payment were made. The 2nd Respondent prayed that his name be struck out of the suit. Jurisdiction was denied. There is also annexed letters from the first Respondent authorising the employees of the first Respondent to collect the macademia nuts. 5. The agreement annexed was to the effect that the delivery was by the 1st Respondent collecting the goods at the sellers’ premises. The premises are not named but from the pleadings it is indicated to be Nyeri County. Annexed to the pleadings were several cheques banked at Karatina branch of KCB Plc. This appeal is unique in that parties were busy arguing on repealed law and convinced the court to strike out pleading on basis of repealed law. 6. The court heard the preliminary objection through written submissions, and made its ruling on 17.09.2024. The court struck out the suit with costs. Submissions 7. The appellant filed submissions dated 28.03.2025. They submitted that section 15 of the Civil Procedure Act provides for suits to be filed where the defendant resides. Reliance was placed in the case of Korea Nyamai v Neema Parcels Limited [2021] KEHC 6029 (KLR), R Nyakundi posited as follows: It is well settled from the construction and interpretation of section 11, 12, 13, 14 and 15 of the Civil Procedure Act predominantly the objection as to the local jurisdiction of a Court does not normally stand on the equilibrium as an objection to the personal competence and subject matter jurisdiction to try the claim. It goes without saying competence of a Court to adjudicate over a dispute goes to the very root of the power conferred by the constitution and other enabling statutes. As summarized in the express provisions cited jurisdiction of a Court falls under the following categories territorial or what is commonly referred to as local limits jurisdiction, the pecuniary/personal jurisdiction and finally cause of action or a subject matter of the dispute. In drawing inferences and interpretation of distinction on the above classification due regard ought to be given on the cause of action and pecuniary jurisdiction. However it is not lost to the Court that there is proximity between the cause of action and territorial jurisdiction. 8. They also relied on explanation 3 of section 15 of the Civil Procedure Act. On whether the 2nd Respondent was wrongly joined, they stated that there are special circumstances, where the doctrine of limited liability can be limited. Reliance was placed on the decision of Riccatti Business College of East Africa Limited v Kyanzavi Farmers Company Limited [2016] eKLR, where the court of Appeal [Mwilu, AZAngalala & Kantai, JJA.] held as follows: The Court may lift the corporate veil in exercising its inherent jurisdiction to do justice and fairness for the ends of justice. This jurisdiction may be exercised only in special circumstances where the Court finds improper conduct, fraud or when a company is a sham, acting as an agent of the shareholders or evading tax revenues. Ringera, J (as he then was) in Corporate Insurance Company Limited v Savemax Insurance Brokers Limited [2002] EA 41 found that: “The veil of incorporation is not to be lifted merely because the company has no assets or it is unable to pay its debts and is thus insolvent. In such a situation, the law provides https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 2

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for remedies other than the director of the company being saddled with the debts of the company.” 9. The Respondent filed submissions dated 24.4.2025. They stated that the court’s jurisdiction is circumscribes as set out in the case of Owners of the Motor Vessel “Lillian S" v Caltex Oil (Kenya) Ltd [1989] KECA 48 (KLR) and Kenya Commercial Bank Ltd v Osebe [1982] KECA 35 (KLR). In the latter case, the Respondent submits on aspects not found in the case itself. 10. Using both deductive and inductive reasoning, the two fundamental approaches to logical thinking, there can be no basis for the conclusions reached or the second premise being true. The very submissions show that the submissions are on factual matrices that depend on a number of factual assumptions which can be correct or false. The fact that deliveries were made to Embu does not mean that the collection was done in Embu. This has to be factually established. It is the raison d'être for the question of territorial jurisdiction to be addressed through an application under Order 2 Rule 15. 11. On the second part they relied on the case of Victor Mabachi & another v Nurtun Bates Limited [2013] KECA 204 (KLR), where the Court of Appeal [Kihara Kariuki, PCA, Mwilu & Gatembu, JJ.A. stated as follows: In our view, moreover, the corporate status of Mediacom was not in question in the pleadings in the suit. This much is confirmed by the plaint, drawn and filed on behalf of the Respondent, and supported by an affidavit sworn by the Respondent’s representative. This being the case, Mediacom, as a body corporate, is a persona jurisdica, with a separate independent identity in law, distinct from its shareholders, director sand agents unless there are factors warranting a lifting of the veil. 12. The respondent also relied on the case of Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22. 13. They relied on the decision of Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR, where the supreme court stated as doth: “ (68) A Court’s jurisdiction flows from either the Constitution or legislation or both. Thus, a Court of law can only exercise jurisdiction as conferred by the constitution or other written law. It cannot arrogate to itself jurisdiction exceeding that which is conferred upon it by law. We agree with counsel for the first and second Respondents in his submission that the issue as to whether a Court of law has jurisdiction to entertain a matter before it, is not one of mere procedural technicality; it goes to the very heart of the matter, for without jurisdiction, the Court cannot entertain any proceedings. This Court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission (Applicant), Constitutional Application Number 2 of 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law.” https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 3

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Analysis 14. It is my understanding that jurisdiction is everything. The court is bound to take jurisdiction where it has and down its tools where it does not have jurisdiction. The court will therefore assume jurisdiction where it has and eschew jurisdiction where none exists. 15. Nyarangi JA, as then he was, immortalised these words, in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR as follows: “ Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law down tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction. Before I part with this aspect of the appeal, I refer to the following passage which will show that what I have already said is consistent with authority: “By jurisdiction is meant the authority which a court as to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted, and may be extended or restricted by the like means. If no restriction or limit is imposed the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the actions and matters of which the particular court has cognisance, or as to the area over which the jurisdiction shall extend, or it may partake of both these characteristics. If the jurisdiction of an inferior court or tribunal (including an arbitrator) depends on the existence of a particular state of facts, the court or tribunal must inquire into the existence of the facts in order to decide whether it has jurisdiction; but, except where the court or tribunal has been given power to determine conclusively whether the facts exist. Where a court takes it upon itself to exercise a jurisdiction which it does not possess, its decision amounts to nothing. Jurisdiction must be acquired before judgement is given” 16. The court has to take up jurisdiction it has and cannot assume jurisdiction by craft or innovation. The same is for eschewing jurisdiction. This was succinctly addressed in the case of Samuel Kamau Macharia & another v Kenya Commercial Bank Limited & 2 others [2012] eKLR. The Supreme Court stated as doth: “ This Court dealt with the question of jurisdiction extensively in, In the Matter of the Interim Independent Electoral Commission (Applicant), Constitutional Application Number 2 of 2011. Where the Constitution exhaustively provides for the jurisdiction of a Court of law, the Court must operate within the constitutional limits. It cannot expand its jurisdiction through judicial craft or innovation. Nor can Parliament confer jurisdiction upon a Court of law beyond the scope defined by the Constitution. Where the Constitution confers power upon Parliament to set the jurisdiction of a Court of law or tribunal, the legislature would be within its authority to prescribe the jurisdiction of such a court or tribunal by statute law.” 17. The memorandum of appeal raises only two issues, that is: 1. The court erred in finding that it had no jurisdiction to hear and determine the case before her. 2. The second Respondent was improperly impleaded. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 4

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18. The rest of the issues are ancillary, repetitive, prolixious and a waste of judicial time. The question this court will have to deal with is whether the magistrate’s court had jurisdiction to hear and determine this dispute. 19. Given the nature of the ruling, the court’s powers in respect hereto are immense. Contrary to the normal situation where the court defers to the finding of fact as held in the case of Selle & Another vs. Associated Motor Boat Co. Ltd & Others [1968] EA 123, this court is dealing with the understanding on the points of law involved. In that case the Court of Appeal stated as doth: “ This court is not bound necessarily to accept the findings of fact by the court below. An appeal to this court ... is by way of retrial and the principles upon which this court acts in such an appeal are well settled. Briefly put they are that this court must reconsider the evidence, evaluate it itself and draw its own conclusions though it should always bear in mind that it has neither seen nor heard the witnesses and should make due allowance in this respect..." 20. The Court is not involved in the finding of fact as the suit was heard on a preliminary objection. In hearing a preliminary objection, this court and the court below have the same jurisdiction. They proceed on an understanding that what is pleaded in the plaint is true. It is what the English common law used to call a demurrer. The locus classicus case of Mukisa Biscuit Manufacturing Co. Ltd V. West End Distributors Ltd [1969] E.A. 696 made this pertinent observation. It said: “ The first matter relates to the increasing practice of raising points, which should be argued in the normal manner, quite improperly by way preliminary objection. The improper raising of points of preliminary objection does nothing but unnecessarily increases costs and, on occasion, confuses issues. This improper practice should stop". 21. In a Tanzanian case of Hammers Incorporation Co. Ltd versus The board of trustees of the Cashewnut Industry Development Trust Fund, the Court of Appeal, (Rutakangwa, N. P. Kimaro and S.S. Kadage JJA), sitting in Dar es Salaam in their decision given on 17/9/2015 regretted that the practice of raising preliminary objection that was frowned upon by the court of appeal in Kampala in the Mukisa biscuit case (Supra) still persists. They stated as doth: “ It was hoping against hope. We believe that had that Court survived to this day it would have issued a sterner warning. This is because the "improper practice" never stopped. Neither did it ebb away. On the contrary, it is on the increase. This forced the Full Bench of this Court in Karata Ernest & Others V The Attorney General, Civil Revision No. 10 of 2010 (unreported) to mildly urge all parties in judicial proceedings to pay heed to what was aptly pronounced in the MUKISA BISCUIT case (supra). The late call appears to be falling on deaf ears as this ruling will demonstrate.” 22. In the case of Martha Akinyi Migwambo v Susan Ongoro Ogenda [2022] eKLR, Kiarie Waweru Kiarie J, posited as follows in regard to a preliminary objection, nicely as seen from two of the judges in Mukisa Biscuit Manufacturing Co. Ltd (supra): “ A preliminary objection must be on a point of law. The Court of Appeal in the case of Mukisa Biscuit Manufacturing Co. Ltd vs West End Distributors Ltd [1969)EA 696 at page 700 paragraphs D-F Law JA as he then was had this to say: https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 5

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....A Preliminary Objection consists of a point of law which has been pleaded, or which arises by clear implication out of pleadings and which if argued as a preliminary point may dispose of the suit. Examples are an objection to the Jurisdiction of the court or a plea of limitation, or a submission that the parties are bound by the contract giving rise to the suit to refer the dispute to arbitration. At page701 paragraph B-C Sir Charles Newbold, P. added the following: A Preliminary Objection is in the nature of what used to be a demurrer. It raises a pure point of law which is usually on the assumption that all the facts pleaded by the other side are correct. It cannot be raised if any fact has to be ascertained or if what is sought is the exercise of judicial discretion....” 23. A Tanzania Court of Appeal sitting in Dar es Salaam, in Karata Ernest & Others vs Attorney General (Civil Revision No. 10 of 2020) [2010] TZCA 30 (29 December 2010),( Luanda, J.A. , Ramadhani, C.J. , Rutakangwa, JJA), put the issue of preliminary objections in a more succinct manner: “ At the outset we showed that it is trite law that a point of preliminary objection cannot be raised if any fact has to be ascertained in the course of deciding it. It only "consists o f a point of law which has been pleaded, or which arises by dear implication out of the pleading obvious examples include: objection to the jurisdiction of the court; a plea of limitation; when the court has been wrongly moved either by non-citation or wrong citation of the enabling provisions of the law; where an appeal is lodged when there is no right of appeal; where an appeal is instituted without a valid notice of appeal or without leave or a certificate where one is statutorily required; where the appeal is supported by a patently incurably defective copy of the decree appealed from; etc. All these are clear pure points of law. All the same, where a taken point of objection is premised on issues of mixed facts and law that point does not deserve consideration at all as a preliminary point of objection. It ought to be argued in the "normal manner" when deliberating on the merits or otherwise of the concerned legal proceedings. 24. Justice Prof. J.B. Ojwang J (as he then was) succinctly addressed the issue of preliminary objection in the case of Oraro vs Mbaja [2005] eKLR: “ I think the principle is abundantly clear. A preliminary objection as correctly understood is now well settled. It is identified as, and declared to be the point of law which must not be blurred with factual details liable to be contested and in any event, to be proved through the processes of evidence. Any assertion which claims to be a preliminary objection, and yet it bears factual aspects calling for proof, or seeks to adduce evidence for its authentication, is not, as a matter of legal principle, a true preliminary objection which the court should allow to proceed. I am in agreement that where a court needs to investigate facts, a matter cannot be raised as a preliminary point. 25. It is therefore my view that a preliminary objection must be based on current law, and be factual. It cannot be based on disputed facts or facts requiring further enquiry. In determining a preliminary objection therefore only 3 documents are required in addition to the constitution. The impugned law, the plaint and preliminary objection. If you have to refer to the defence, then the preliminary objection is untenable. 26. The court will first address whether the matters complained of could be properly addressed in the manner the Respondent proposed. Though the preliminary objection does not raise any section of the https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 6

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law, it is presumed that it intended to deal with Section 15 of the Civil Procedure Act. The said section provides as follows: 15. Other suits to be instituted where defendant resides or cause of action arises Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction(a) the defendant or each of the defendants (where there are more than one) at the time of the commencement of the suit, actually and voluntarily resides or carries on business, or personally works for gain; or (b) any of the defendants (where there are more than one) at the time of the commencement of the suit, actually and voluntarily resides or carries on business, or personally works for gain, provided either the leave of the court is given, or the defendants who do not reside or carry on business, or personally work for gain, as aforesaid acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. 27. It was pleaded that the Plaintiff’s office is in Nyeri County. The goods were to be collected in Nyeri County. The defendant may reside in Embu but this does not make the court the exclusive court. More fundamentally, the question as to where the cause of action is to be performed is a question of fact. It cannot be gone into without breaching rules regarding the preliminary points of law. The Respondents submitted that the Respondent’s offices are located in Embu hence confirming that they do business in Embu. This is a difficult inference to be made from the syllogism and premises submitted upon. The premises upon which this assumption is made may not be true both from deductive and inductive reasoning, making the conclusion fallacious and unsupported. 28. The question as to where the Respondent carries business is a matter of fact. This has no effect on the registered office of a company. The explanations in section 15 come in handy especially the following: Explanation.(1)Where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence. Explanation.(2) A corporation shall be deemed to carry on business at its sole or principal office in Kenya, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Explanation.(3) In suits arising out of contract, the cause of action arises within the meaning of this section at any of the following places, namely- 29. i. the place where the contract was made; ii. the place where the contract was to be performed or the performance thereof completed; iii. the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable. This is made more succinctly in the explanations in section 15 of the Civil Procedure Act as follows: Illustration a https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 7

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(a) A is a tradesman in Nairobi. B carries on business in Mombasa. B by his agent at Nairobi buys goods of A and requests A to deliver them to Mombasa by rail. A may sue B for the price of the goods either in Nairobi, where the cause of action has arisen, or in Mombasa, where B carries on business. Illustration (b) A resides at Kisumu, B at Nairobi, and C at Mombasa. A, B, and C being together at Nakuru, B and C make a joint promissory note payable on demand and deliver it to A. A may sue B and C at Nakuru, where the cause of action arose. He may also sue them at Nairobi, where B resides, or at Mombasa, where C resides; but in each of these cases, if the non-resident defendant objects, the suit cannot proceed without the leave of the court. 30. The court was not entitled to look at the documents as that could amount to reliance on facts. In any case it was pleaded that collection was to be from the Appellant’s offices. The only recourse open to the parties in this case is to use illustration 2. Where the defendant objects to jurisdiction where a matter can be filed in several towns, then it is to object to jurisdiction with a view of invoking Section 18 of the Civil Procedure Act. 31. Therefore I find and hold that the suit could be filed both in Embu where the defendant resides, or in Nyeri where the cause of action is pleaded to be the payment point and the place of the Appellant’s performance. From the totality of the foregoing, the court erred in striking out the suit for lack of jurisdiction. The courts must therefore abhor striking out cases unless they are hopeless. In the case of Yaya Towers Limited v Trade Bank Limited (In Liquidation) [2000] eKLR, the Court of Appeal expressed itself follows: A plaintiff is entitled to pursue a claim in our Courts however implausible and however improbable his chances of success. Unless the defendant can demonstrate shortly and conclusively that the plaintiff’s claim is bound to fail or is otherwise objectionable as an abuse of the process of the court, it must be allowed to proceed to trial. In Lawrence v Lord Norreys (1890) 15 App Cas 210 at 219, Lord Herschell said:“ It cannot be doubted that the Court has an inherent jurisdiction to dismiss an action which is an abuse of the process of the court. It is a jurisdiction which ought to be sparingly exercised, and only in very exceptional cases. I do not think its exercise would be justified merely because the story told in the pleadings was highly improbable, and one which it was difficult to believe could be proved.” 32. This echoed the decision of Madan, JA in the locus classicus case of D.T. Dobie & Company Limited v Joseph Mbaria Muchina & Another [1980] eKLR, that: No suit ought to be summarily dismissed unless it appears so hopeless that it plainly and obviously discloses no reasonable cause of action, and is so weak as to be beyond redemption and incurable by amendment. If a suit shows a mere semblance of a cause of action, provided it can be injected with real life by amendment, it ought to be allowed to go forward for a court of justice ought not to act in darkness without the full facts of a case before it. 33. The appeal has merit. The court had jurisdiction. Therefore, the court erred in giving up jurisdiction it had. Whereas it feels nice to conclude matters, a court must take jurisdiction it has. The court should also have noted that the defence accepted jurisdiction by filing defence. It did not appear to the parties that the matter was handled by Senior Principle Magistrate. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 8

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34. The second limb is the preliminary objection related to the 2nd Respondent that he was just a director. It was not pleaded that the second Respondent was a party to the contract. Unfortunately most of the questions on this point are questions of fact. Nevertheless, there is no provision for suing directors on behalf of a company. Lifting the corporate veil cannot be done at this stage. It means that the 2nd Respondent is a busy body for now. The lifting of the veil can only be started if there is a judgment which the 1st Respondent will have failed to honour. 35. In any case the 2nd Respondent is neither a party nor a beneficiary of the contract pleaded to exist between the Appellant and the first Respondent. The Court of Appeal in Savings & Loan (K) Limited v Kanyenje Karangaita Gakombe & another [2015] eKLR stated as hereunder regarding privity of contract: “ In its classical rendering, the doctrine of privity of contract postulates that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly a contract cannot be enforced either by or against a third party… Over time some exceptions to the doctrine of privity of contract have been recognized and accepted. Among these exceptions is where a contract between two parties is accompanied by a collateral contract between one of them and a third party relating to the same subject matter.” 36. While addressing the same question of privity of contract, in that that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. In the case of Mark Otanga Otiende v Dennis Oduor Aduol [2021] eKLR R.E. Aburili stated as hereunder: 60. In its classical adaptation, the doctrine of privity of contract hypothesizes that a contract cannot confer rights or impose obligations on any person other than the parties to the contract. Accordingly, a contract cannot be enforced either by or against a third party, except in certain cases only. In Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847, Lord Haldane, LC rendered the principle thus: “My Lords, in the law of England certain principles are fundamental. One is that only a person who is a party to a contract can sue on it.” 61. In the Agricultural Finance Corporation v Lengetia Ltd (supra), quoting with approval from Halsbury’s Laws of England, 3rd Edition, Volume 8, paragraph 110, Hancox, JA, reiterated that: “As a general rule a contract affects only the parties to it, it cannot be enforced by or against a person who is not a party, even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. The fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he may be considered a party to the consideration does not entitle him to sue upon the contract.” 37. Further, in Bharminder Singh Osahan v Helicopters International Limited [2021] eKLR, M.W. Muigai J expressed the view that, at common law, a contract cannot confer rights or impose obligations on strangers to it, that is, persons who are not parties to the contract. In addressing this issue, the Court stated as follows: On the issue of privity of contract, in City Council of Nairobi vs Wilfred Kamau Githua T/ A Githua Associates & Another (2016) eKLR Pg. 10 the court observed at Halsbury’s Laws of England, 4th Edition, Volume 9 (1) Paragraph 478 states: https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 9

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“The general rule. The doctrine of privity of contract is that, as a general rule, at common law a contract cannot confer rights or impose obligations on strangers to it; that is persons who are not parties to it. The parties to a contract are those persons who reach agreement and, whilst it may be clear in a simple case who those parties are, it may not be so obvious where there are several contracts, or several parties, or both, for example in the case of multilateral contracts; collateral contracts, irrevocable credits; contracts made on the basis of memorandum and articles of a company, collective agreements, contracts with unincorporated association; and mortgage surveys and valuations”. AFC VS Lengetia, 1982 – 88 I KAR 722 which states: “As a general rule, a contract affects only the parties to it, and cannot be enforced by or against a person who is not a party, even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. The fact that a person who is a stranger to the consideration of a contract stands in such near relationship to the party from whom the consideration proceeds that he maybe considered a party to the consideration does not entitle him to sue upon the contract”. 38. The court finds that though merited, the court premised the decision of striking out on questions of evidence. The court is not entitled to do so. Consequently, I find there is merit in this appeal and I allow the same. I set aside the decision of the court. In lieu thereof I dismiss the preliminary objection save to add that the name of the second Respondent shall be struck out of the suit for lack of privity of contract. The order for costs is equally set aside. The court did not address the raison d’etre for awarding the 2nd defendant costs given the intertwined nature of the case with the 1st Respondent. The 2nd responded shall bear his costs in both this court and the court below. 39. The issue of costs is governed by Section 27 of the Civil Procedure Act, which provides as follows: 40. (1) Subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incidental to all suits shall be in the discretion of the court or judge, and the court or judge shall have full power to determine by whom and out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid; and the fact that the court or judge has no jurisdiction to try the suit shall be no bar to the exercise of those powers: Provided that the costs of any action, cause or other matter or issue shall follow the event unless the court or judge shall for good reason otherwise order. (2) The court or judge may give interest on costs at any rate not exceeding fourteen per cent per annum, and such interest shall be added to the costs and shall be recoverable as such. The Court of Appeal in the case of Farah Awad Gullet v CMC Motors Group Limited [2018] KECA 158 (KLR) had this to say: It is our finding that the position in law if that costs are at the discretion of the court seized up of the matter with the usual caveat being that such discretion should be exercised judiciously meaning without caprice or whim and on sound reasoning secondly that a court can only withhold costs either partially or wholly from a successful party for good cause to be shown. https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 10

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41. The Supreme Court set forth guiding principles applicable in the exercise of that discretion in the case of Jasbir Singh Rai & 3 others v. Tarlochan Singh Rai & 4 others, SC Petition No. 4 of 2012; [2014] eKLR, as follows: “ (18) 42. It emerges that the award of costs would normally be guided by the principle that “costs follow the event”: the effect being that the party who calls forth the event by instituting suit, will bear the costs if the suit fails; but if this party shows legitimate occasion, by successful suit, then the defendant or Respondent will bear the costs. However, the vital factor in setting the preference is the judiciously-exercised discretion of the Court, accommodating the special circumstances of the case, while being guided by ends of justice. The claims of the public interest will be a relevant factor, in the exercise of such discretion, as will also be the motivations and conduct of the parties, before, during, and subsequent to the actual process of litigation…. Although there is eminent good sense in the basic rule of costs– that costs follow the event – it is not an invariable rule and, indeed, the ultimate factor on award or non-award of costs is the judicial discretion. It follows, therefore, that costs do not, in law, constitute an unchanging consequence of legal proceedings – a position well illustrated by the considered opinions of this Court in other cases. Given that the Appellant substantially succeeded, they shall have costs of the appeal of Ksh. 185,000/ = payable by the 1st Respondent. The name of the 2nd Respondent is struck out for lack of privity of contract. The second Respondent shall bear his own costs given the intertwined nature of the defence with the 1st respondent. Determination 43. The upshot of the foregoing is that I make the following orders: a. I find there is merit in this appeal and I allow the same. I set aside the ruling and order striking out the suit in Nyeri CMCC No. E140 of 2023, given on 17.09.2024 by the Hon. F. Munyi (SPM). b. The effect is that the preliminary objection dated 16.10.2023 is dismissed in limine with costs of Ksh. 185,000/=, in default execution do issue. c. Given that both Embu and Nyeri Law Courts have jurisdiction, priority shall be given to the place where the defendant has offices. The suit is therefore transferred to Embu Chief Magistrate’s Court for hearing and final disposal. d. The name of the 2nd Respondent is struck out from the suit in the court below with the 2nd Respondent bearing his own costs in this court and the court below. e. The suit be listed for hearing and final disposal in Embu Magistrate’s Court f. The primary filed be fixed for hearing forthwith before the Chief Magistrate’s Court in Embu. Meanwhile the matter shall be fixed for mention on 12.08.2025 for directions before the Chief Magistrate’s Court in Embu. DELIVERED, DATED AND SIGNED AT NYERI ON THIS 23RD DAY OF JULY, 2025. JUDGMENT DELIVERED THROUGH MICROSOFT TEAMS ONLINE PLATFORM. KIZITO MAGARE https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 11

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JUDGE In the presence of:Ms. Gathua for the Appellant Ms. Muthoni for Kiranga for the Respondent Court Assistant – Michael https://new.kenyalaw.org/akn/ke/judgment/kehc/2025/11786/eng@2025-07-23 12

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