By Newton Arori
Section 27 of the Civil Procedure Act lays down the general principle regarding the payment of costs at the conclusion of a suit thus: a) costs follow the event b) the event is that the unsuccessful party will be ordered to pay costs of the successful party c) the court has discretion as to who pays costs, the amount thereof and when they are to be paid. The discretion must be exercised judicially; it must not be exercised arbitrarily but in accordance with reason and justice.
In Republic v Rosemary Wairimu Munene (Judicial Review Application No. 6 of 2014), the court stated, “the basic rule on attribution of costs is that costs follow the event…it is well recognised that the principle ‘costs follow the event’ is not to be used to penalise the losing party; rather it is for compensating the successful party for the trouble taken in prosecuting or defending the case.”
Justice Richard Kuloba in his book “Judicial Hints on Civil Procedure” 2nd edition (2011) is especially clear on this point: “Costs are awarded at the unfettered discretion of the court, subject to such conditions and limitations as may be prescribed and to the provisions of any law for the time being in force, but they must follow the event unless the court has good reason to order otherwise.”
There is no clear prescribed definition of what constitutes “good reasons” that should justify the court’s departure from the general rule that “costs follow the event.” This article sets out to identify the various instances where courts have made exceptions to that general rule and have instead ordered each party to bear their own costs.
Public interest litigation
This is perhaps the most common instance when each party to the suit bears their own costs. The reason for this is that the losing party is not acting in his own interest, but in the interest of the public.
The rationale for exempting loser litigants from paying their opponents costs in public interest matters has a constitutional basis. Article 22 of the Constitution provides that “every person has a right to institute court proceedings claiming that a right or fundamental freedom in the bill of rights has been denied, violated, infringed or is threatened.” It also states that, in addition to a person acting in their own interest, court proceedings in this regard may be instituted by a person acting in the public interest. Likewise, Article 258 of the Constitution provides that every person has the right to institute court proceedings claiming that the Constitution has been contravened or is threatened with contravention, and that the said proceedings may be instituted by a person acting in the public interest.
It has been said imposing costs would discourage potential litigants and therefore hinder the enforcement of the Bill of Rights.
In the case of John Harun Mwau & 3 others v Attorney General & 2 others, the High Court held, “The intent of Articles 22 and 23 of the Constitution is that persons should have free and unhindered access to this court for the enforcement of their fundamental rights and freedoms. Similarly, Article 258 allows any person to institute proceedings claiming the Constitution has been violated or is threatened. The imposition of costs would constitute a deterrent and would have a chilling effect on the enforcement of the bill of rights.
The court further noted, “in matters concerning public interest litigation, a litigant who has brought proceedings to advance a legitimate public interest and contributed to a proper understanding of the law in question without private gain should not be deterred from adopting a course that is beneficial to the public for fear of costs being imposed.”
Where the suit is withdrawn
Sometimes the claimant may withdraw his claim because the parties have agreed to a settlement, or other reason. Usually, although not invariably, the courts have held that in that case each party will bear their own costs.
In the case of Little Africa Kenya Limited v Andrew Mwiti Jason (2014) eKLR for instance, the plaintiff had sued, applying for an injunction in a case involving claims for breach of confidentiality, non-competition and of intellectual property. Afterwards, the defendant filed a counterclaim. Despite the court granting the injunctive orders against the defendant, the plaintiff agreed to withdraw his claim in the interest of amicable resolution. The defendant also withdrew his counterclaim the same day.
The defendant claimed that it was entitled to the costs of the suit. That claim was opposed by the plaintiff who argued that since parties consented to the withdrawal of the matter, the appropriate order would be for each party to bear their own costs.
In deciding the issue of costs, the court was guided by the case of Rufus Njuguna Miringu &Another v Martha Muriithi &2 others (2012) eKLR where the learned judge stated, “consent cannot be interpreted to mean that one or the other party has succeeded in a suit. Even if in the present case such settlement has worked out in the defendant’s favour, the successful determination of the dispute is still attributable to both the plaintiffs and the defendants. In the circumstances, it would be just for the parties to bear their own costs of the proceedings.”
The court further observed that the costs incurred by the defendant was on the counterclaim which by law, survives a withdrawal or termination of the suit, yet despite this right, the defendant had chosen not pursue the counterclaim and withdrew it also. Because of this, each party was ordered to cater for their own costs.
Conduct of the parties
The way a party/ parties to a case conduct(s) themselves leading to the suit also has a bearing on the issue of who shoulders the costs. This is exemplified by the case of Bruce Mutie Mutuku t/a Diani Tour and Travel Centre v Equity Bank Ltd (2014) eKLR. In that case, the applicant applied to have an appeal dismissed for want of prosecution; that the appellant had delayed in prosecuting his appeal.
The applicant argued that the appellant had failed to prosecute the appeal contrary to order 42 rule 11 of the Civil Procedure Rules that provides as follows: “Upon filing of the appeal the appellant shall within thirty days cause the matter to be listed before a judge for directions.”
The court found that indeed there had been a five-month delay by the appellant in prosecuting the appeal. However, the court held that the delay was not enough to warrant the striking out of the appeal, and that the appellant should be given a second chance to prosecute the appeal. Therefore, the court ruled in favour of the appellant and dismissed the applicant’s application. That notwithstanding, the court declined to ward costs to the appellant because the appellant was guilty of some delay, even though not inordinate. Thus each party was ordered to bear their own costs.
As earlier stated, the purpose of ordering a losing party to pay the costs of the winning party is to compensate the winning party for expenses incurred. Therefore, it is important that such compensation should not be given where it is not deserved. In addition to the instances discussed above, when awarding costs the court considers all other relevant factors so as to achieve a just determination. ^