| Should one’s financial
ability be a pre-condition for accessing Kenya’s justice system? Should a creditor
first demonstrate his ability to compensate the debtor for expenses he may incur in
defending the claim before the courts agree to hear his case? This is the issue at the centre of a recent case in which the defence demanded a
whopping Sh200 million as security before the hearing of a claim.
Dubai resident Swapan Sadhan Bose filed a suit in March
2004 against four defendants, including businessman Ketan Somaia. In the suit, he sought
to compel Somaia to transfer to him 30 per cent of the issued share capital of Dolphin
Holdings Limited and 100 per cent interest in Dolphin Holdings Limited in Marshalls (EA)
Limited and Nyali Beach Hotel Limited.
He also sought from Somaia compensation at the rate of
$6,250 a day from August 11, 2001, until such time as he (Somaia) is through with the
transfer of the same issued shared capital.
In the alternative, Bose sought orders requiring Somaia to
pay him $15 million (Sh1.7 billion), plus interest at court rates, from April 11, 2001
until the date of full payment.
Each of the four defendants filed their respective defences
and thereafter each filed an application for security of costs.
Somaia, Dolphin Holdings Limited and Nyali Beach Hotel
Limited filed affidavits to show the estimated costs to defend the action by Bose —
each presented an advocate-client bill of costs of Sh56,347,678.70
The other defendant, Marshalls (EA) Limited, presented a
bill of Sh59,953,505.55 as its likely costs in defending the suit.
The defendants insisted that the costs be paid before the
commencement of the hearing because they would not know how to be compensated in the event
that the Dubai resident lost his claim.
The court heard that the plaintiff did not have any assets
in Kenya that could be attached to satisfy costs and that he was permanently resident in
Dubai.
And what was the Dubai resident’s take on the bill of
costs? "The total sum proposed is over Sh200 million and such sum would be
unreasonable and would amount to a bar to the prosecution of the suit," said
Bose’s lawyer, Mr Manjit Billing.
He said it was improper for the plaintiff to present a
draft bill of advocate-client costs instead of a party-to-party bill of costs.
The lawyer also took issue with the inclusion of VAT in the
bill of costs saying such did not accrue on an estimate.
Billing also claimed that the issues raised in his
client’s plaint were based on a simple contract and there were no complex or
difficult questions for the court’s determination.
He proposed a global sum of Sh10 million, which works to
Sh2.5 million as security costs for each defendant.
However, Billing conceded that the defendants were entitled
to a reasonable security for costs but not the sums demanded.
And what did the court think of the issue? Justice Mohammed
Ibrahim, who is hearing the case, dismissed the over Sh200 million demand by the
defendants and ordered Bose to deposit Sh20 million as security for the costs instead.
He was unequivocal: "Granting the prayer sought would
be tantamount to locking out an aggrieved party from seeking justice.
"I am of the opinion that to impose or fix the amounts
claimed as security for costs would by itself amount to oppression of the plaintiff.
"And considering the amount sought, that has all the
likelihood of preventing the prosecution of this suit and closing the plaintiff from the
corridors of justice in Kenya."
He said courts must not permit a situation where
international businessmen and corporations think that the primary consideration of access
to the country’s judicial system and justice is one’s financial position or
ability.
"We must avoid a situation that could make
international business to shun investing in Kenya or transacting with our business
community locally and internationally for fear that it is costly to obtain access to
justice in our country," the judge observed.
He gave Bose 30 days to deposit the money in a trust
account in the joint names of his lawyer and those of Somaia and his firms.
Somaia and his companies are represented by lawyers Ochieng
Oduol and Ramesh Manek.
The judge said the suit by Bose against Somaia and three of
his firms would not be heard until the Sh5 million was deposited in a trust account.
Kenya’s judicial process allows for a defendant to
apply for security of his costs to be given by a party acting as a claimant on certain
grounds specified by rules of civil procedure.
An application for security of costs should be made at the
first case management conference.
An order for security of costs can only be made against a
person acting as claimant and can only be made before judgment.
A court may reject an application for security for costs if
it is of the opinion that the application is being used oppressively, for example, to
stifle a valid claim. |
