1. I have considered the Notice of Motion Application dated 21st June, 2024 together with the affidavit in support sworn on even date and the replying affidavit sworn on 24 June, 2024.
2. The Application seeks to mark this matter as settled with costs to the 3rd and 8th Defendants and, subsequently, order that the 3rd and 8th Defendants be at liberty to file a bill of costs.
3. The Applicant’s primary argument was that the 3rd and 8th Defendants were never part of the transactions and they remain alien to the matter.
4. Counsel contended that the Applicant spent time and costs in these proceedings to protect their interests in this matter, including: administrative costs; time spent on this matter; and legal costs in engaging counsel to protect the interest of 3rd and 8th defendants while seeking to be expunged from these proceedings and seeking to lift injunction orders against the assets of the 3rd defendant.
5. On the other hand, the Respondent contended that the 3rd and 8th Defendants were justifiably included in the suit because the 3rd and 7th Defendants had entered into a share transfer agreement with the 8th Defendant whereby the 700 shares in the 7th Respondent were acquired by the 8th Defendant for a merger consideration of USD 1.00.
6. Consequently, the Plaintiff moved court seeking orders to prevent the transfer of shares within the 3rd Defendant to any other party due to the risk of the Plaintiff not being able to recover the full amount of the loan advanced which was the subject matter of this suit.
7. Counsel explained that it was on the strength of the evidence presented by the Plaintiff that the Hon. Justice E.C. Mwita granted interim orders sought by the Plaintiff on 27th June 2022 with the effect that the court barred the transfer of shares within the 3rd Defendant to any other party. He urged the court to accept that the 3rd Defendant and the 8th Defendant were therefore necessary parties to the present matter.
8. Additionally, counsel pointed out that the 3rd and 8th Defendants sought to have the Court vacate and/or set aside its orders issued on 27th June, 2022 by filing an application dated 22nd July 2022. However, the Court declined to issue any orders to the said application and instead, on 24th July, 2022, the Court directed the 3rd and 8th Defendants to serve that application on all parties. Thereafter, no further progress was made to the said application.
9. It is trite law that costs follow the event and are granted at the discretion of the Court. Section 27 of the Civil Procedure Act, Chapter 21 Laws of Kenya, provides that:
“(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.”
10. The above position has been upheld by several courts. For instance, in the case of Cecilia Karuru Ngayu vs Barclays Bank of Kenya & Another (2016) eKLR, the Court cited with approval the case of Republic vs Rosemary Wairimu Munene, Ex-parte Applicant Ihururu Dairy Farmers Co-operative Society Ltd, Judicial Review No. 6 of 2014 wherein the court held as follows on costs: -
”the issue of costs is the discretion of the court as provided under the above section. The basic rule on attribution of costs is that costs follow the event… it is well recognized that the principal costs follow the event is not to be used to penalize the losing party; rather it is for compensating the successful party for the trouble taken in prosecuting or defending the case.”
11. In Morgan Air Cargo Limited v Evrest Enterprises Limited [2014] eKLR, where the Court held that:
“[11] The Court takes the view that awarding costs is a matter of the discretion of the Court. It is not a matter of course. The exercise of the discretion, however, depends on the circumstances of each case. Therefore, the law in designing the legal phrase that ‘’Cost follow the event’’ was driven by the fact that there could be no ‘’one-size-fit-all’’ situation on the matter. That is why section 27(1) of the Civil Procedure Act is couched the way it appears in the statute; and even all literally works and judicial decisions on costs have recognized this fact and were guided by and decided on the facts of the case respectively. Needless to state, circumstances differ from case to case.”
12. Guided by the above, based the circumstances of this case, I am persuaded that my brother, Mwita, J. found that the 3rd and 8th Defendants were necessary and proper parties to the instant suit, and accordingly made orders to that effect as stated above. I do not think that the Applicant may therefore say that it was needlessly dragged into the suit. Had the court declined to issue orders against those parties, that would have been a different matter.
13. In the circumstances as set out above, and given that the main subject matter has already been settled as between all the other parties, I do not think that a protracted claim over costs between the present parties is a prudent use of judicial time.
14. I would therefore depart from the principle that costs follow the event for the additional reason that it is not clear in this case which of the parties ‘won’ or ‘lost’. I find that in the circumstances of the case, it is appropriate for each of the parties to bear their own costs.
15. I would extend that principle to the present Application because despite my finding that the same is without merit, the Application concerns an issue mutual interest to both parties and resolving that issue will benefit all the parties.
16. The file is marked as closed and the matter is marked as settled.