Lachlan Kenyan Limited v. I.S & M, Civ app (Metals) Limited.(application for security for cost)

IN THE COURT OF TANZANIA

(COMMERCIAL DIVISION)

AT DAR ES SALAAM

COMMERCIAL  CASE NO. 56 OF 2007

LACHLAN KENYA LIMITED ………………………… PLAINTIFF

VERSUS

I.S. & M (METALS) LIMITED ………………………DEFENDANT

RULING

LUANDA, J,

        This is an application for security for cost. The application has been made by the defendant because according to the plaint, the plaintiff is a limited liability company incorporated and carrying on business in Kenya and therefore, she is residing out of Tanzania.

        The application has been made under O. XXV, Rule 1 (I) Sections. 68 (e) and 95 of the Civil Procedure Code, Cap. 33. Let me point out right away that the citing of Sections. 68 (e) and 95 of the Civil Procedure Code is not necessary because there is a clear provision which specifically deal with the issue under discussion (See Aero Helicopter (T) Ltd V F. N. Jansen [1990] TLR 142)

        Back to the application. In paragraphs 4 and 5 of their affidavit in support of the application, the application /defendant stated as follows:

4. That the said plaintiff/ Respondent company  is not registered in Tanzania; has no any office in Tanzania and has no any immovable property in Tanzania other than the amount being claimed in this suit if at all is proved.

5.  THAT the Defendant/ Application has no any means of recovering the costs already incurred and that likely to be incurred now and  until finalization of this suit if the Plaintiff does not succeed in their claim and costs are awarded  to the Applicant/ Defendant.

In their counter affidavit, the Plaintiff/respondent stated as follows, I reproduce the relevant paragraphs, namely paras 3 and 4.

3. That the contents of para1, 2, 3 and 4 of the affidavit are noted.

4. That the contents of paragraph 5 of the Affidavit are disputed. It is stated that the Respondent is a renowned limited liability Company, a going concern with several assets in Kenya. In the event the Applicant is granted an order for costs against the Respondent, the Applicant can easily recover the same as the Respondent has never been declared insolvent and the respondent’s properties are not exempted from attachment by any law whatever.   

In reply, to the counter affidavit, the Applicant/ Defendant stated:

3. THAT the contents of paragraph 1, 2, and 3 of the counter affidavit are noted. The Applicant take note of the implied admission of the fact that the Plaintiff/ Respondent  Company has no any office in Tanzania, is not registered has no any immovable property in Tanzania.

4. That the contents of paragraph 4 of the counter – affidavit are disputed. The Respondent has not even dared to state which properties may be attached and in which part of Kenya those properties are situated, whether they are movable or immovable hence the need of deposit of Security for costs is more than important.

In this application Mr.Mushamba learned counsel appeared for the Applicant/ Defendant, while Mr. Ngowi advocated for the Respondent / Plaintiff. The parties were ordered to present their cases in writing. The learned counsel dutifully complied with the Order. They filed their submissions.

        I have carefully read the submissions as well as the affidavits. And I reproduced some of the paragraphs for ease reference.

        In our case there is no dispute at all that the Respondent/ Plaintiff is a foreign company registered and carrying business in Kenya. Further; the company is neither registered nor has office in Tanzania. The company has no property in Tanzania either – whether movable or immovable. This prompted the defendant/ Applicant to file this application as is provided for under O.XXV, Rule 1 (1) of the CPC, Cap, 33. The Rule reads:

1 (I) Where, at any stage of a suit, it appears to the Court that a sole plaintiff is, or (when there are more Plaintiffs than one) that all the Plaintiffs are residing out of Tanzania, and that such Plaintiff does not, or that no one of such Plaintiffs does, possess any sufficient immovable property within Tanzania other than the property in (sic) Suit, the court may, either of its own motion or on the application of any defendant, Order the Plaintiffs, within a time fixed by it, to give  security for the payment likely to be incurred by any defendant.

 [Emphasis Mine].

The reason behind this Rule is not far to seek – to protect the defendant who is not likely to recover his costs in the event he wins the case. However, the word “may” gives this Court discretion. And the discretion must be exercised judiciously.

        But there is exception to that general rule. The exception is stipulated in a case law. And the Respondent/ plaintiff heavily relied on it. It is stated in Unilever PLC Vs Hangaya Ramadhani Saidi & Another Civil Appeal No. 28/ 1991 CAT (DSM) (Unreported) that where there are in existence reciprocal arrangement for enforcement of judgments, and it is shown that the Plaintiff has enough property in the Country where he is resident, or within the jurisdiction of the court, there is no need to order such Plaintiff to furnish Security for costs.

        But the Plaintiff didnot say there is an existence of such agreement between Tanzania and Kenya neither did she substantiate her version that she owns properties in Kenya. What is in the affidavit is a bald statement that she owns properties. That is not enough.

        The plaintiff further submitted that Kenya is a member of the East African Community and so there wouldnot be a problem for the defendant / Applicant to recover her costs. But the plaintiff/ Respondent didnot say, by being a member of the East Africa Community, how the defendant/ Applicant will recover the some. By the mere fact that Kenya is a member of the East African Community, In my, view doesnot by itself excempt the plaintiff from complying with the laws of her partner sister states. The laws of other partner States must be complied with unless otherwise stated or waived.

        In our Case the Plaintiff miserably failed to discharge the burden. And so I think this is a fit case to order the Plaintiff to furnish security for costs. I hereby order the Plaintiff to deposit in Court USD 15,000 as security for costs, which I think is reasonable.

        Order accordingly.

B. M. LUANDA

JUDGE

3^rd April, 2008

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