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Court of AppealAllowedCivil Appeal No. 248 of 2003

City Panel Beaters & Painters Ltd v Lila Vadgama [2011] KECA 288 (KLR)

Court of Appeal of Kenya
8 April 2011
1,876 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that courts cannot deny a winning party their legal costs without giving a reason, and reinstated the company's defence and counterclaim.

What this practically means

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Executive summary

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This unopposed Court of Appeal appeal arose from a fee claim by advocate Lila Vadgama against his former client, City Panel Beaters & Painters Ltd, for Shs.1,401,000 in legal fees. The client filed a defence, set-off and counterclaim totalling Shs.2,255,000, alleging a rent-free occupancy arrangement in lieu of legal fees. Vadgama applied to strike out the defence and counterclaim, and the client in turn sought to strike out Vadgama's 'counterclaim to counterclaim' founded on an allegedly defamatory letter. In a ruling of 11th March 2003, Mwera J struck out the counterclaim to counterclaim as incompetent because the Civil Procedure Rules contain no procedure for a counterclaim to a counterclaim, and also struck out substantial portions of the defence and counterclaim as scandalous and as imputing criminal and disciplinary conduct. Notably, the Judge ordered each party to bear its own costs despite the client's success, and gave it 14 days to amend its defence; instead the client appealed. Allowing the appeal, the Court of Appeal held that the client was wrongfully deprived of its costs as the successful party without any reason being assigned, since costs follow the event under section 27(1) of the Civil Procedure Act unless the court otherwise orders for good reasons. It further held that the issues raised in the set-off and counterclaim, which Vadgama had answered and joined issue on, were intertwined with the claim and ought to be determined at the full hearing. The Court reinstated the struck-out pleadings, remitted the issues for determination on the merits, and ordered the costs of the appeal to abide the result of the hearing before the superior court. The judgment was delivered by the whole court, Omolo, Bosire and Waki, JJA, on 8th April 2011.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the appellant, as the successful party before the High Court, was wrongfully deprived of its costs without any reason being assigned
  2. 2.Whether the striking out of paragraphs of the defence, set-off and counterclaim was proper, or whether the issues raised therein ought to be determined at the full hearing

Key legal issues

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01

Whether the successful party in an interlocutory application may be denied costs without recorded reasons

Holding

The appellant was wrongfully deprived of its costs as the successful party because no reason was assigned for the order that each party bear its own costs, contrary to the proviso to section 27(1) of the Civil Procedure Act that costs shall follow the event unless the court for good reasons otherwise orders.

Reasoning

Section 27(1) of the Civil Procedure Act gives the court discretion over costs, but the proviso establishes the default rule that costs follow the event unless the court orders otherwise for good reasons. The High Court struck out the counterclaim to counterclaim in the appellant's favour yet ordered each party to bear its own costs without recording any reason. On appeal, unopposed, the Court found the deprivation of the successful party's costs wrongful and reversed that order, directing instead that costs await the outcome of the suit.

p. 3
02

Whether the defence, set-off and counterclaim struck out by the High Court should be reinstated

Holding

The appeal was allowed and the struck-out paragraphs and subparagraphs of the defence, set-off and counterclaim were reinstated, with all issues to be determined at the full hearing before the superior court.

Reasoning

The Court agreed with counsel that the issues of illegality or imputation of criminal conduct could only be determined at the full hearing of the suit. Because Vadgama had responded to the set-off and counterclaim and joined issue with the appellant, the two respective claims were intertwined and ought to be heard and determined together on the merits. The Court accordingly reinstated the struck-out pleadings and remitted the matter for hearing, making the costs of the appeal contingent on the final result.

p. 3

Legal principles established

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  • A successful party may not be deprived of costs without the court assigning a reason, since costs follow the event unless the court for good reasons otherwise orders
  • Where a plaintiff's claim and a defendant's set-off and counterclaim are intertwined and the plaintiff has joined issue with them, the issues raised should be determined at the full hearing rather than struck out on interlocutory application

Court orders

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  1. 1.The appeal is allowed and the orders sought by the appellant are granted
  2. 2.The various paragraphs and subparagraphs of the 'defence, set-off and counterclaim' struck out by the superior court are reinstated
  3. 3.The issues arising from the pleadings shall be determined by the superior court on merits upon hearing the parties
  4. 4.The costs of this appeal shall abide the result of the hearing before the superior court

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

majority

Wrote the judgment

majority

Wrote the judgment

On appeal from
High Court of Kenya at Nairobi
H.C.C.C. No. 1073 of 2001
Jurisdiction invoked
First appeal to the Court of Appeal against a ruling and order of the High Court in a civil suit (unspecified statutory basis in the judgment)

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In the result we allow this appeal and grant the orders sought by the appellant with the result that the various paragraphs and subparagraphs of the “defence, set-off and counterclaim” which were struck out by the superior court are hereby reinstated.
p. 3Final orders - reinstatement of struck-out pleadings
We further order that the costs of this appeal shall abide the result of the hearing before the superior court.
p. 4Costs of the appeal
The appellant, as correctly submitted by Mr. Mogeni, was wrongfully deprived of its costs as the successful party without any reason being assigned for such order.
p. 3Costs follow the event
We also think the issues raised in the “set off and counterclaim” which the respondent responded to and joined issue with the appellants ought to be determined at the full hearing as the two respective claims are intertwined.
p. 3Intertwined claims to be determined at full hearing

Issues in the judgment

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minor

The judgment dates Vadgama's 'counterclaim to counterclaim' inconsistently - the quoted ruling of the High Court refers to filing on 25.1.2002 while the narrative says it was filed on 23rd January, 2002

minor

The appellant's memorandum of appeal is quoted as seeking allowance of an application dated 6th February, 2001, but the narrative records the appellant's striking-out application as a motion taken out on 14th February, 2002

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "City Panel Beaters & Painters Ltd v Lila Vadgama [2011] KECA 288 (KLR)", Case Analysis (2011). Civil Appeal No. 248 of 2003. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2011/288/eng@2011-04-08

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.