Thiongo v APA Insurance Company Limited [2023] KEHC 25369 (KLR)

Thiongo v APA Insurance Company Limited (Civil Appeal 10 of 2019) [2023] KEHC 25369 (KLR) (9 November 2023) (Judgment)

Neutral citation: [2023] KEHC 25369 (KLR)

Republic of Kenya

In the High Court at Naivasha

Civil Appeal 10 of 2019

GL Nzioka, J

November 9, 2023

Between

David Kariuki Thiongo

Appellant

and

APA Insurance Company Limited

Respondent

(Being an appeal against the judgment delivered by Hon. G. N. Okapasi Senior Resident Magistrate, (SRM) dated 23{{^rd}} January 2019 vide Civil Case No. 2 of 2018 at the Principal Magistrate’s Court at Engineer)

Judgment

1. The appeal herein emanates from the decision in the aforesaid Chief Magistrate Civil Case No. 2 of 2018 at the Principal Magistrate’s Courts at Engineer. The appellant sued the respondent in the subject matter seeking for the following reliefs: -a.A declaration that the defendant is under a statutory and contractual duty not to repudiate the contract.b.The defendant is compelled to repair the plaintiff’s motor vehicle KBV 792N.c.In the alternative to payer (b) the defendant be compelled to compensate the plaintiff for the loss of motor vehicle KBV 792N.d.Special damages of Ksh. 30,000 as pleaded in paragraph 13 of the plaint.e.Damages for loss of use of the vehicle at the rate of Ksh. 25,000 per week for 29 weeks from 3rd July 2017 to the date of filing the suit.f.General damages for breach of contract.g.Costs of the suit.

2. By a judgment delivered on the 23rd January 2019, the learned trial Magistrate entered judgment in favour of the appellant as against the respondent in the following terms:a.Prayer a), b) and d) are allowed.b.Each party shall bear its own cost of the suit.

3. However, the appellant is aggrieved by the subject judgment on the following grounds:a.The trial court erred in law and in fact in refusing to award costs to the appellant who was successful in the suit which was strenuously defended by the respondent.b.The trial court erred in law and in fact, in that it did not follow the applicable principles of law in refusing to award the appellant costs of the suit.c.The trial court erred in fact and in law by failing to give reasons or otherwise explain the circumstances and factors that it took into consideration when it declined to award costs of the suit to the appellant.

4. The appeal was disposed of vide filing of submissions. The appellant in submissions dated, 4th November 2022, argued that the trial court did not follow the applicable principles of law, laid out in section 27 of the Civil Procedure Act (Cap 21) Laws of Kenya, in refusing to award costs of the suit.

5. That, the import of section 27 of the Civil Procedure Act was discussed in the cases of; Republic vs Rosemary Wairumu Munene, ex-parte Applicant vs Ihururu Dairy Farmers Co-operative Society Ltd, Judicial Review No. 6 of 2014, Jasbir Singh Rai & Others vs Tarlochan Rai & Others [2014] eKLR and Judicial Hints on Civil Procedure 2ndEdition (Nairobi Law Africa) 2011 by Justice Kuloba (retired) where it was stated that, costs are to be awarded at the discretion of the court and that, costs follow the events unless the court has a good reason to order otherwise.

6. That, he was the successful party and was thus entitled to costs, however, the learned trial court did not take into account relevant factors, nor gave reasons for failing to award him costs.

7. The appellant further submitted that, the discharge voucher which was signed by the parties subsequent to the decision of the court, does not bar him from filing and defending the appeal herein. That, prior to signing the discharge voucher, the parties entered into a consent whereby the respondent would pay him in lieu of repairing his motor vehicle and agreed that the consent would not affect his appeal.

8. Further, the prior conduct of the parties intimated that they intended to negotiate and settle claims relating to the damage of the motor vehicle only. Furthermore, the respondent being aware of the present appeal and of his intention to prosecute the same, omitted the present appeal from the discharge voucher which was only in relation to the Civil Suit at Engineer. That, if it the parties’ intention was to settle both the civil suit and the appeal, the same would have been captured in the wording of the discharge voucher.

9. The appellant relied on the case of; Charles Josephat Akwono vs Solicitor General (2015) eKLR where the court held that, the omission to expressly mention the suit, that was within the knowledge of the parties, in the discharge voucher meant that the parties did not intend for the costs of the suit to be part of the settlement covered by the discharge voucher.

10. The appellant furthermore submitted that, the discharge voucher was drafted by the respondent with the intention to settle all claims including the appeal which, however, was not his intention thus the discharge voucher is ambiguous for having more than one interpretation.

11. The appellant placed reliance on the contra-proferentem rule contending that, where a clause in a contract is drafted by a party for its own benefit, the clause should be construed in favour of the other party in cases of ambiguity. He relied on the case of; Kenneth Kasemo Karisa vs Kenya Bureau of Standards [2011] eKLR in support of his contention.

12. However, the respondent in its submissions dated; 2nd December 2022, argued that the discharge voucher did not exclude the present appeal or any part of the claim arising from the Civil Case No. 2 of 2018 in the Principal Magistrate’s Court at Engineer.

13. That, the discharge voucher was created after the consent recorded on 29th May 2019. Further the discharge voucher enhanced the sum payable to the appellant from Ksh. 500,000 as agreed to in the consent to Ksh. 750,000 as full and final settlements of all claims arising out of the damage to the appellant’s motor vehicle.

14. Furthermore, paragraph 3 of the said voucher contains an undertaking by the appellant to indemnify the respondent. That, the appellant voluntarily executed the discharge voucher several months after delivery of judgment and filing of his appeal, and therefore cannot now revoke or cancel it. That, in any case, the appellant cannot exclude the discharge voucher from the appeal without discharging and reimbursing the sum of; Ksh. 250,000 paid over and above the specified amount in the ordered dated; 29th May 2019.

15. The respondent further submitted that, the appellant’s contention that he did not intend to include costs in the discharge voucher has not been demonstrated either through swearing an affidavit or tendering evidence on any such intention of the parties that differ from the voucher. That, the terms of the voucher were not ambiguous or contradictory as it did not limit the discharge but was wide enough to cover the appeal and therefore the contra-proferentem rule does not apply.

16. The respondent distinguished the case of Charles Josephat Akwono vs Solicitor General (supra) relied on by the appellant arguing that, the discharge voucher therein had contradictions on the scope of claims it covered, and that the phrase therein was inelegantly drafted as it would bar the applicant from making future claims against the government which would be unreasonable.

17. Having considered the arguments by the parties I find that the law on costs is settled. That section 27 of the Civil Procedure Act provides that:“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 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”

18. Further, the Supreme Court in Jasbir Singh Rai & 3 others v Tarlochan Singh Rai & 4 others [2014] eKLR stated that: -“(18)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, prior-to, during, and subsequent-to the actual process of litigation.”

19. The Supreme Court went further and stated that: -“(22)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. The relevant question in this particular matter must be, whether or not the circumstances merit an award of costs to the applicant.”

20. In the same vein, the Court of Appeal in the case of Supermarine Handling Services Ltd v Kenya Revenue Authority [2010] eKLR held that: -“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. See Section 27 (1) of the Civil Procedure Act.In the case Devram Dattan v Dawda [1949] EACA 35 it was held,““It is well established that when the decision of such a matter as the right of a successful litigant to recover his costs is left to the discretion of the Judge who tried his case, that discretion is a judicial discretion, and if it be so its exercise must be based on facts....If, however, there be, in fact, some grounds to support the exercise by the trial Judge of the discretion he purports to exercise, the question of the sufficiency of those grounds for this purpose is entirely a matter for the Judge himself to decide, and the Court of Appeal will not interfere with his discretion in that instance.”Thus, where a trial court has exercised its discretion on costs, an appellate court should not interfere unless the discretion has been exercised unjudicially or on wrong principles. Where it gives no reason for its decision the Appellate Court will interfere if it is satisfied that the order is wrong. It will also interfere where reasons are given if it considers that those reasons do not constitute “good reason” within the meaning of the rule.”

21. From the decision of the trial court the appellant’s claim was successful in terms of prayers (a), (b) and (d) apparently there was no counter-claim. Therefore, generally based on the statutory provisions referred to and case law that the costs follow the event. The appellant was entitled to costs.

22. However the trial court ordered to the contrary that each party bear its own costs. The departure from the rule that costs following the event was not justified, consequently to that extent the appeal succeeds.

23. It is noteworthy that, after the judgment, a decree was issued dated 1st February 2019 which clearly reflects the orders of the trial court. However, subsequent thereto, the parties engaged in further negotiations which gave rise to execution of a consent and resultant discharge voucher, executed by the parties in settlement of the matter.

24. I note that, there is varying interpretation of the content of the voucher that is at the centre of this matter and in particular whether the sum paid as final and full settlement of the matter includes costs.

25. The answer to the above key question lies inter alia in the following words in the discharge voucher, to the effect that;“We confirm that the said sum shall be paid to us in full and final settlement of all claims arising out of damage to motor vehicle KBV 792N on 25/02/2017 (hereinafter referred to as “the said damage”) and that I/We shall have no further claim, and any other claim that may arise under CAP 405 Laws of Kenya, against the insurers and or their insured. (emphasis added).

26. In my considered opinion, the moment the parties entered into an agreement to negotiate the settlement of the matter after the judgment, they set aside the judgment aside by conduct negotiation.

27. Thus, it cannot be said that, the parties intended to execute both the judgment of the court simultaneously, with the negotiated settlement. In fact, since the appellant has already been paid pursuant to the judgment of the trial court, it is not tenable to argue that, the judgment has not been complied with or satisfied.

28. In that regard, the parties are either bound by the trial court’s judgment and are liable to enforce and/or appeal against it or are bound by the terms of the discharge voucher. The two cannot operate at the same time.

29. Indeed, if the terms of the subject discharge voucher are ambiguous as argued by the appellant, then the same are incapable of implementation and the appellant cannot have benefitted from that ambiguity. Even if the court were to interpret the subject voucher, as alluded to by the appellant, it clearly states that, the respondent is to settle “all claims” arising out of damage to motor vehicle KBV 792V.

30. The question is: Is the issue of costs raised herewith independent of the claim arising out of the subject motor vehicle. Don’t the costs arise as a result of the appellant claim against the respondent. If costs were awarded, would they not be claimed in relation to the subject matter herein?

31. Furthermore, the discharge voucher states that, the payment was made in full and final settlement of all claims arising out of the damage of the subject motor. Are costs not party of such claims? Aren’t costs incidental thereto the main claim. I think so.

32. Furthermore, it is averred that the negotiated sum was Kshs 500, 000 and an additional sum of Kshs 250, 000 was paid. If that is so, what did it represent?

33. It is the finding of the court find that, although the discharge voucher does not expressly state that, the payment made include costs, the use of the term “all”, in my considered opinion, means both direct and indirect claims.

34. Indeed borrowing from the pleadings, the appellant claimed for both a declaratory order that, the respondent was bound to repair the motor vehicle and also sought costs. Therefore clearly the costs were part and parcel of the appellant’s claim. It cannot be said that, the parties were negotiating in piece meal.

35. Furthermore, the costs awarded relates to the relief granted in the matter in the trial court, not in the negotiated settlement out of court. As such if the appellant is pursuing costs, they will be awarded based on the matter in the trial court and not the negotiated settled.

36. The upshot of the afore is that, the appeal succeeds only in the finding that, the appellant was entitle to costs as per the trial court decision, however, the appeal does fails in so far as the respondent is bound to pay the same.

37. The appellant is however at liberty to pursue costs in the trial court matter on conditions that the negotiated discharge voucher is set aside. The costs are thus not payable where the matter has been overtaken by subject event of discharge voucher.

38. In view of the finding of the court neither party has fully succeeded or failed in this matter, therefore I order each party do meet its own costs.

39. It is so ordered.

DATED, DELIVERED AND SIGNED ON THIS 9TH DAY OF NOVEMBER, 2023. GRACE L. NZIOKAJUDGEIn the presence of:Mr. Wanjohi for the appellantMr. Ndegwa holding brief for Mr. Menge for respondentMs Ogutu-court assistant