CHURCH ROAD DEVELOPMENT CO. LTD v BARCLAYS BANK OF KENYA LTD & 2 others [2006] eKLR

Key Facts

Transaction Type

Issues

• The court considered the impact of the withdrawal notice on cost allocation. It ruled that the defendants are entitled to the costs of the application, as the plaintiff's attempt to withdraw the suit did not extinguish the defendants' right to claim costs under Order 24 rule 3 of the Civil Procedure Rules. The managing director was ordered to pay these costs personally.
• The court addressed whether a plaintiff's withdrawal of a suit nullifies their prior undertaking to pay damages for an interlocutory injunction. The ruling emphasized that undertakings remain enforceable even after a suit is discontinued, unless there are special circumstances. Legal precedents like Halsbury's Laws and the case of Newcomen vs Coulson were cited to affirm that defendants retain the right to seek damages inquiries regardless of the plaintiff's withdrawal.
• The court examined the defendants' ability to seek an inquiry into damages after the plaintiff filed a withdrawal notice. It concluded that the withdrawal does not negate the enforceability of the damages undertaking. The inquiry must proceed to assess the KShs. 8,000,000/= claimed loss from the 10-month injunction, ensuring the undertaking retains its legal effect.

Holdings

• The court held that the plaintiff's liability under its undertaking to pay damages did not cease upon the lodging of its Notice of Withdrawal of Suit. The undertaking remains enforceable to ensure damages sustained by the defendants during the injunction period are assessed.
• The court awarded the costs of the application dated 22nd May 2006 to the defendants, emphasizing that the plaintiff cannot unilaterally determine cost allocation upon withdrawing a suit.
• The court directed an inquiry to assess the damages sustained by the defendants due to the interlocutory injunction, specifically the loss of KShs. 8,000,000/= in rental income over ten months, pending evidence of actual losses.

Remedies

• The costs of the suit and damages are to be paid personally by the plaintiff's managing director, Francis K. Ngatia.
• The Amended Plaint dated 11th May 2006 is struck out with costs on an Advocate-Client basis.
• The court may grant any further relief it deems appropriate.
• An inquiry as to the damages is directed to assess the net of KShs. 8,000,000/= in gross rental income the defendant was deprived of for 10 months.
• The costs of the application are awarded to the defendants in any event.

Legal Principles

Precedent Name

Cited Statute

Judge Name

Passage Text

• I am convinced beyond any doubt that the plaintiff's liability under its undertaking as to damages did not cease upon the lodging of its Notice of Withdrawal of Suit.
• The learned authors of HALSBURY'S LAWS OF ENGLAND, 4th Edition, Vol. 24 described an undertaking as to damages as being an undertaking: 'to abide by any order as to damages which the court may make in case it should afterwards be of opinion that the defendant has, by reason of the order, sustained any damages which such party ought to pay.'
• 'I cannot accede to Mr. Higgins argument, that a Plaintiff can deprive a Defendant of his right to damages under the Plaintiff's undertaking by discontinuing his action, ....... it would be a most dangerous doctrine to hold that he can thus evade his liability.'

Damages / Relief Type