1. On 3rd December, 2025, both Counsel instructed herein informed this Court that the matter had been settled directly between the parties and that the only outstanding issue was that of costs. As Counsel could not agree on the aspect of costs, I directed that they submit on the issue so that the court determines the same.
2. Mr. Okanda, learned Counsel for the Plaintiff submits that as the foundational dispute has been resolved by the parties, the Court has wide discretion under Section 27 of the Civil Procedure Act to order that each party bears its own costs as both sides are successful parties in the settlement.
3. Counsel contends that under Article 159(2)(c) of the Constitution, this Court is obligated to promote alternative dispute resolution, thus then should support the parties’ win-win situation in the settlement and order that they bear their own respective costs.
4. On his part, Mr. Odongo, learned Counsel for the Defendants, submits that his clients are entitled to costs on the ground that they were unnecessarily brought before the Court by the Plaintiff. He contends that, as a result of the suit, the Defendants have incurred expenses in filing pleadings and other documents and in attending Court on at least six occasions. He further contends that the agreement between the parties did not include a settlement on the issue of costs.
5. In rejoinder, Mr. Okanda submits that the Plaintiff instituted the suit out of necessity and in order to obtain injunctive relief for protection, as the 1st Defendant was making demands from the Plaintiff that exceeded the amount lawfully due to it.
6. Having considered the parties’ respective submissions and the record, the Court is of the view that the issue falling for determination is whether, in the circumstances where the parties settled the substantive dispute out of Court directly without involving their Advocates, and did not agree on the question of costs, the Defendants are entitled to an award of costs of the suit.
7. The Court must also determine whether, in the exercise of its discretion under Section 27 of the Civil Procedure Act and in light of the settlement reached by the parties, it would be appropriate to order that each party bears its own costs.
8. The law governing the award of costs is found in Section 27(1) of the Civil Procedure Act, which provides that costs are in the discretion of the Court, but that such costs shall follow the event unless the Court, for good reason, orders otherwise.
9. The scope of this discretion was authoritatively considered by the Supreme Court in Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & 4 Others [2014] KESC 31 (KLR); [2014] 2 KLR 253, where the Court stated:
“It is clear that there is no prescribed definition of the ‘event’; it is left to the discretion of the Court to determine what the event is. However, the general rule remains that costs follow the event.”
10. The Court further emphasized that while the discretion on costs is wide, it must be exercised judicially and on the basis of sound legal principles.
11. The Court of Appeal in Supermarine Handling Services Ltd v Kenya Revenue Authority [2010] KECA 373 (KLR) similarly held that:
“Costs of any action or other matter or issue shall follow the event unless the court or Judge shall for good reason otherwise order.”
12. The Court underscored that although the discretion to award costs is broad, a successful party should ordinarily be awarded costs unless good reason exists to depart from the general rule.
13. In this matter, it is undisputed that the parties successfully resolved the substantive dispute outside of Court. However, the settlement reached did not expressly address the question of costs. While the Court strongly encourages parties to resolve disputes amicably, including through the use of alternative dispute resolution mechanisms as envisaged under Article 159(2)(c) of the Constitution, it remains essential that any settlement comprehensively considers all ancillary issues that may arise from the main dispute.
14. One such critical issue is the allocation of costs, which often becomes a matter of contention if left unaddressed in the settlement agreement. The principle of amicable resolution is therefore most effective when accompanied by careful attention to these consequential matters.
15. Where parties are represented by Advocates, the central purpose of such representation is to ensure that their legal interests are fully protected and that all potential implications of a settlement are adequately addressed.
16. Involving Counsel in the negotiation and documentation of settlements ensures that matters such as costs, interest or other consequential rights are not inadvertently omitted. Failure to include Advocates in the process frequently results in residual issues being left for the Court to determine, as has occurred in the present case. Representation thus serves not merely as a procedural formality but as a substantive safeguard, ensuring that agreements are comprehensive, enforceable and reflective of the parties’ true intentions.
17. Parties should therefore always ensure that their Counsel are fully involved and/or informed in any settlement discussions and agreements, as their representation is essential to safeguard legal interests and address all consequential matters, including costs.
18. The Plaintiff argued that the settlement reflected a “win-win” situation and that each party should bear its own costs. While the Court appreciates the rationale behind a win-win argument, it is not apt in the circumstances of this case. A settlement merely ends the substantive dispute but does not displace the general rule that costs follow the event. In the absence of an agreement addressing costs, the Court must apply the ordinary principles governing costs.
19. The Plaintiff further submitted that the suit was filed out of necessity to obtain injunctive relief. However, the matter did not proceed to hearing on its merits, and the Court cannot determine whether the Plaintiff had good cause to institute the proceedings. That question would only arise upon a full hearing of the dispute. Consequently, no finding is made on the propriety of the Plaintiff’s decision to approach the Court.
20. The Court notes that the Plaintiff initiated the suit, thereby creating the necessity for the Defendants to act. It is evident that the Defendants were required to participate in Court proceedings, including attending Court and filing pleadings, and in the process incurred legal costs. Their involvement was entirely reactive, prompted by the Plaintiff’s decision to bring the matter before the Court.
21. In the circumstances, it would be improper to attribute fault to the Defendants for the costs they incurred, as the proceedings had not advanced to trial, and the dispute was ultimately settled before a determination on the merits.
22. The principle that costs follow the event, as established in Jasbir Singh Rai & 3 Others and Supermarine Handling Services Ltd supports the view that the party compelled to respond to litigation is ordinarily entitled to an award of costs, absent misconduct or other compelling reasons to depart from the rule.
23. The costs incurred by the Defendants arose solely as a consequence of the Plaintiff instituting the proceedings and cannot fairly be shifted onto the Defendants. In the exercise of its discretion under Section 27 of the Civil Procedure Act, and having regard to the facts that the Plaintiff initiated the action, the matter was settled before trial, and no fault is attributable to the Defendants, the Court finds that the Defendants are entitled to an award of costs.
24. In the premises, and in the exercise of the Court’s discretion under Section 27 of the Civil Procedure Act, the Court finds that the Defendants are entitled to the costs of the suit. In view of the above, the matter therefore stands withdrawn, with costs awarded to the Defendants.
25. In light of the determination reached above, I shall urge the parties to engage in meaningful discussions with a view to agreeing on the amount of costs payable to the Defendants. Once such an agreement is reached, the parties are directed to formalize it by filing a consent in Court, which will then be adopted as the operative order on costs.
26. In the event that the parties are unable to reach an agreement on the costs payable, they shall be at liberty to have the matter referred to the Deputy Registrar of this Court for determination. It is noted that the Defendants have already filed a party-and-party bill of costs, which will serve as the basis for taxation and/or determination on the issue of the Defendant’s costs.
27. This file is hereby closed.
DELIVERED (virtually), DATED & SIGNED this 13th day of March, 2026.
JOE M. OMIDO
JUDGE
FOR PLAINTIFF: Mr. Okanda.
FOR DEFENDANTS: Mr. Olando holding brief for Mr. Odongo.
COURT ASSISTANT: Mr. Ngoge & Mr. Juma.
2. Mr. Okanda, learned Counsel for the Plaintiff submits that as the foundational dispute has been resolved by the parties, the Court has wide discretion under Section 27 of the Civil Procedure Act to order that each party bears its own costs as both sides are successful parties in the settlement.
3. Counsel contends that under Article 159(2)(c) of the Constitution, this Court is obligated to promote alternative dispute resolution, thus then should support the parties’ win-win situation in the settlement and order that they bear their own respective costs.
4. On his part, Mr. Odongo, learned Counsel for the Defendants, submits that his clients are entitled to costs on the ground that they were unnecessarily brought before the Court by the Plaintiff. He contends that, as a result of the suit, the Defendants have incurred expenses in filing pleadings and other documents and in attending Court on at least six occasions. He further contends that the agreement between the parties did not include a settlement on the issue of costs.
5. In rejoinder, Mr. Okanda submits that the Plaintiff instituted the suit out of necessity and in order to obtain injunctive relief for protection, as the 1st Defendant was making demands from the Plaintiff that exceeded the amount lawfully due to it.
6. Having considered the parties’ respective submissions and the record, the Court is of the view that the issue falling for determination is whether, in the circumstances where the parties settled the substantive dispute out of Court directly without involving their Advocates, and did not agree on the question of costs, the Defendants are entitled to an award of costs of the suit.
7. The Court must also determine whether, in the exercise of its discretion under Section 27 of the Civil Procedure Act and in light of the settlement reached by the parties, it would be appropriate to order that each party bears its own costs.
8. The law governing the award of costs is found in Section 27(1) of the Civil Procedure Act, which provides that costs are in the discretion of the Court, but that such costs shall follow the event unless the Court, for good reason, orders otherwise.
9. The scope of this discretion was authoritatively considered by the Supreme Court in Jasbir Singh Rai & 3 Others v Tarlochan Singh Rai & 4 Others [2014] KESC 31 (KLR); [2014] 2 KLR 253, where the Court stated:
“It is clear that there is no prescribed definition of the ‘event’; it is left to the discretion of the Court to determine what the event is. However, the general rule remains that costs follow the event.”
10. The Court further emphasized that while the discretion on costs is wide, it must be exercised judicially and on the basis of sound legal principles.
11. The Court of Appeal in Supermarine Handling Services Ltd v Kenya Revenue Authority [2010] KECA 373 (KLR) similarly held that:
“Costs of any action or other matter or issue shall follow the event unless the court or Judge shall for good reason otherwise order.”
12. The Court underscored that although the discretion to award costs is broad, a successful party should ordinarily be awarded costs unless good reason exists to depart from the general rule.
13. In this matter, it is undisputed that the parties successfully resolved the substantive dispute outside of Court. However, the settlement reached did not expressly address the question of costs. While the Court strongly encourages parties to resolve disputes amicably, including through the use of alternative dispute resolution mechanisms as envisaged under Article 159(2)(c) of the Constitution, it remains essential that any settlement comprehensively considers all ancillary issues that may arise from the main dispute.
14. One such critical issue is the allocation of costs, which often becomes a matter of contention if left unaddressed in the settlement agreement. The principle of amicable resolution is therefore most effective when accompanied by careful attention to these consequential matters.
15. Where parties are represented by Advocates, the central purpose of such representation is to ensure that their legal interests are fully protected and that all potential implications of a settlement are adequately addressed.
16. Involving Counsel in the negotiation and documentation of settlements ensures that matters such as costs, interest or other consequential rights are not inadvertently omitted. Failure to include Advocates in the process frequently results in residual issues being left for the Court to determine, as has occurred in the present case. Representation thus serves not merely as a procedural formality but as a substantive safeguard, ensuring that agreements are comprehensive, enforceable and reflective of the parties’ true intentions.
17. Parties should therefore always ensure that their Counsel are fully involved and/or informed in any settlement discussions and agreements, as their representation is essential to safeguard legal interests and address all consequential matters, including costs.
18. The Plaintiff argued that the settlement reflected a “win-win” situation and that each party should bear its own costs. While the Court appreciates the rationale behind a win-win argument, it is not apt in the circumstances of this case. A settlement merely ends the substantive dispute but does not displace the general rule that costs follow the event. In the absence of an agreement addressing costs, the Court must apply the ordinary principles governing costs.
19. The Plaintiff further submitted that the suit was filed out of necessity to obtain injunctive relief. However, the matter did not proceed to hearing on its merits, and the Court cannot determine whether the Plaintiff had good cause to institute the proceedings. That question would only arise upon a full hearing of the dispute. Consequently, no finding is made on the propriety of the Plaintiff’s decision to approach the Court.
20. The Court notes that the Plaintiff initiated the suit, thereby creating the necessity for the Defendants to act. It is evident that the Defendants were required to participate in Court proceedings, including attending Court and filing pleadings, and in the process incurred legal costs. Their involvement was entirely reactive, prompted by the Plaintiff’s decision to bring the matter before the Court.
21. In the circumstances, it would be improper to attribute fault to the Defendants for the costs they incurred, as the proceedings had not advanced to trial, and the dispute was ultimately settled before a determination on the merits.
22. The principle that costs follow the event, as established in Jasbir Singh Rai & 3 Others and Supermarine Handling Services Ltd supports the view that the party compelled to respond to litigation is ordinarily entitled to an award of costs, absent misconduct or other compelling reasons to depart from the rule.
23. The costs incurred by the Defendants arose solely as a consequence of the Plaintiff instituting the proceedings and cannot fairly be shifted onto the Defendants. In the exercise of its discretion under Section 27 of the Civil Procedure Act, and having regard to the facts that the Plaintiff initiated the action, the matter was settled before trial, and no fault is attributable to the Defendants, the Court finds that the Defendants are entitled to an award of costs.
24. In the premises, and in the exercise of the Court’s discretion under Section 27 of the Civil Procedure Act, the Court finds that the Defendants are entitled to the costs of the suit. In view of the above, the matter therefore stands withdrawn, with costs awarded to the Defendants.
25. In light of the determination reached above, I shall urge the parties to engage in meaningful discussions with a view to agreeing on the amount of costs payable to the Defendants. Once such an agreement is reached, the parties are directed to formalize it by filing a consent in Court, which will then be adopted as the operative order on costs.
26. In the event that the parties are unable to reach an agreement on the costs payable, they shall be at liberty to have the matter referred to the Deputy Registrar of this Court for determination. It is noted that the Defendants have already filed a party-and-party bill of costs, which will serve as the basis for taxation and/or determination on the issue of the Defendant’s costs.
27. This file is hereby closed.
DELIVERED (virtually), DATED & SIGNED this 13th day of March, 2026.
JOE M. OMIDO
JUDGE
FOR PLAINTIFF: Mr. Okanda.
FOR DEFENDANTS: Mr. Olando holding brief for Mr. Odongo.
COURT ASSISTANT: Mr. Ngoge & Mr. Juma.