Stephen Kara Karianjahi v Josephine Mary Ryan & Chief Magistrate’s Court Milimani Commercial Court [2022] KEHC 1391 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

CIVIL CASE NO. 6 OF 2021

STEPHEN KARA KARIANJAHI.................PLAINTIFF/RESPONDENT

-VERSUS-

JOSEPHINE MARY RYAN...................1ST DEFENDANT/ APPLICANT

THE CHIEF MAGISTRATE’S COURT

MILIMANI COMMERCIAL COURT........................2ND DEFENDANT

RULING

1. The 1st defendant/applicant in this instance took out the Notice of Motion dated 8th November, 2021 and sought for an order directing the respondent to deposit the sum of Kshs.1,200,000/= in court as security for costs and for stay of these proceedings pending compliance by the plaintiff to furnish the same or any other further orders as the circumstances of the case may deem fit.

2. The Motion is supported by the grounds presented on its face and the facts stated in the affidavit of advocate Josephine Mary Ryan.

3. To oppose the Motion, the respondent put in the replying affidavit sworn by Stephen Kara Karianjahi dated 10th December 2021.

4. When the Motion came up for interparties hearing before the court, the parties were directed to file and exchange written submissions.

5. I have considered the grounds laid out on the face of the Motion, the facts deponed in the affidavits supporting and resisting the Motion, and the contending written submissions and authorities relied upon.

6. The orders being sought in the Motion are two issues for determination before me are whether the respondent ought to provide security for costs and whether there should be stay of proceedings pending compliance of the same. I will address the issues contemporaneously.

7. To give a brief background of the matter, is that by an order made in CMCC No.5428 of 2017(Josephine Mary Ryan v Adili Corporate Limited) on 12th March 2018 ,judgment was entered on admission in the applicant’s favour for the sum of Kshs.2,850,000/= plus interest which remains unsatisfied.

8. Subsequently, upon being satisfied that the applicant's company is a sham and a device that the directors improperly used in a scam to solicit funds from the applicant for their personal benefit on March 15, 2019, the trial court issued a number of orders, including lifting the corporate veil of the said company and proceeding with the execution orders against the directors, who must pay the decretal sum or face civil jai

9. Being aggrieved by the said orders, the respondent preferred an appeal in high court Civil Appeal No.188 of 2019 and presently the respondent instituted these proceedings seeking an Order for Certiorari directing orders in the lower court made therein by the respondent be quashed and an Order for prohibiting the execution orders.

10. The applicant further states that the respondent has despite several demands failed, neglected to settle the applicant’s taxed costs awarded in previous suits between the same parties over the same subject matter namely:

i. High Court Civil Appeal No.188 of 2019 taxed costs of Kshs.84,970/=

ii. High Court Civil Appeal No.160 of 2018 taxed costs of Kshs.164,110/=

iii. CMCC No.5428 of 2017 assessed costs of Kshs.223,685/=

11. The applicant states that the respondent's financial situation is basically non-existent, and that he has no known assets that might be used to satisfy an order for costs, as his capacity to pay the applicant's costs of defending the respondent's claim is highly questionable.

12. The applicant submits that the petition is a gross abuse of the court process as the respondent has exhausted his right to appeal and that this court has the power to order the execution of a decree by arrest and detention of any person provided due process is adhered.

13. On whether the respondent will be able to pay the applicant’scosts, the applicant has relied on the case of Noormohammed Adbulla v Ranchodbha J Patel & Another (1962) E.A 448 where the court stated as follows:

“The order for security for costs in such a case is not directed towards enforcing payment of the costs as such, but is designed to ensure that a litigant who by reason of near insolvency is unable to pay the costs of the litigation when he loses, is disabled from carrying on litigation indefinitely except upon terms and conditions which afford a measure of protection to the other parties”

14. The applicant submitted that the respondent has no known unencumbered assets or property that would satisfy an Order for Costs, and that the respondent has not presented any affidavits of means demonstrating the availability of any significant funds to meet an adverse order on costs from ordinary cash flow and accumulated profits.

15. On whether an Order for security for costs will stifle the respondent’s claim, the applicant relied on the case of Patrick Ngetakimanzi v Marcus Mutuamuluvi & 2 Others-High Court Election Petition No. 8 of 2013where it was stated as follows:

“Security of costs ensures that the respondent is not left without recompense for any costs or charges payable to him. The duty of the court is therefore to create a level ground for all the parties involved, in this case, the proportionality of the right of the petitioner to access to justice vis-a-vis the respondent's right to have security for any costs that may be owed to him and not to have vexatious proceedings brought against him.”

16. The applicant submitted that the respondent has not produced one iota of evidence to support the proposition that an order for security for costs is oppressive or can be used as a device to prevent its claim.

17. The applicant contends that the sum of Kshs.1,200,000/= is just and reasonable having regard to the anticipated reasonable party and party costs.

18. In reply, the respondent stated that the applicant's claim for security of costs should be denied because it would deprive him of a fair hearing on the issues he raised about the applicant's tendering of defective affidavits, and that an order for payment of the costs would be enforceable because he resides within the court's jurisdiction.

19. The respondent avers that the amount of Kshs.1,200,000/= being sought as security of costs is unreasonable, excessive and aimed at frustrating his suit for redress.

20. The respondent submitted that poverty alone is not a proper justification for an order for security of costs. He relied on the case of Shakalanga Jirongo v Board of National Social Security Fund HCC No.957 of 2000 in which the court held that:

“Poverty is not sufficient ground for an order for security for costs”

21. Order 26 Rule 1, 5 and 6 of the Civil Procedure Rules stipulate as follows :

1. In any suit the court may order that security for the whole or any part of the costs of any defendant or third or subsequent party be given by any other party.

6. (1) Where security by payment has been ordered, the party ordered to pay may make payment to a bank or a reputable financial institution in the joint names of himself and the defendant or in the names of their respective advocates when advocates are acting.

22. The rationale for security for costs is to ensure firstly, that a party is not left without recompense for costs that might be awarded to him in the event that the unsuccessful party is unable to pay the same due to poverty; secondly, it ensures that a litigant who by reason of his financial ability is unable to pay costs of the litigation if he loses, is disabled from carrying on litigation indefinitely except on conditions that offer protection to the other party. In Noormohamed Abdulla -vs- Ranchhodbhal J. Patel & Another (1962) E.A. 448,it was held:-

“The order for security for costs in such a case is not directed towards enforcing payment of the costs as such, but is designed to ensure that a litigant who by reason of near insolvency is unable to pay the costs of the litigation when he loses, is disabled from carrying on the litigation indefinitely except upon terms and conditions which afford some measure of protection to the other parties..”

23. In the present case, the applicant alleged that the respondent’s ability to meet the applicant’s costs of defending their claim is questionable since he has not been able to settle the applicant’s taxed costs awarded in previous suits between them over the same subject.

24. The applicant further avers that the respondent has no known assets that which can satisfy an order for costs.

25. On the other hand, the respondent submitted that the applicant should be able to demonstrate and prove that if he loses the case, he would be unable to pay, and that poverty alone is not sufficient  reason for a security for costs order.

26. I note that the applicant did not furnish this court with any evidence to support its claim that the respondent is financially unstable so as to justify its claim that it will experience difficulties in recovering costs from the respondent should it be successful in the suit. In other words, no material was placed before this court to show that the respondent is in dire straits such that they will be unable to meet their financial obligations for costs should they lose the case.

27. I find that the application for security for costs is unmerited and

I therefore dismiss it with orders that costs shall be in the cause.

DATED, SIGNED AND DELIVERED ONLINE VIA MICROSOFT TEAMS AT NAIROBI THIS 10TH DAY OF MARCH, 2022.

..........................

J. K. SERGON

JUDGE

In the presence of:

……………………………. for the Plaintiff

……………………………. for the 1st Defendant

……………………………. for the 2nd Defendant