IN THE COURT OF APPEAL FOR EAST AFRICA
CORAM: (DUFFUS, P., LAW, AG. V-P., & MUSTAFA, J.A.)
CIVIL APPEAL NO 33 OF 1971
HAMILTON HARRISON & MATTEWS…………………….APPELLANT
1. CYRIL HERBERT MAYERS)
2. HAZEL MARGARET MAYERS) …………………………..RESPONDENTS
[Appeal from the order of the High Court of Kenya at Nairobi (Simpson, J.) dated 26th January,
1971 in Civil Case No. 1353 of 1969]
10th November, 1971
The following judgments were read:-
LAW AG. V-P.
This appeal arises out of a suit brought by two plaintiffs, A.C.L.I. Co. Ltd. and Akira Ranch Ltd., claiming relief against the respondents in respect of joint and several causes of action, which need not be particularized for the purposes of this appeal. I shall refer to these plaintiffs as A.C.L.1. and Akiri respectively. The chronology of relevant events leading to this appeal is as follows. On 20th May, 1969, a Mr. Lloyd was appointed receiver and manager of A.C.L.I. (of which company he was also a director) by the Standard Bank Ltd. under a debenture. As receiver, Mr. Lloyd Jones was empowered "to take possession of, collect and get in all or any part of the property and assets charged and for that purpose to take proceedings in the name of the company or otherwise as he may deem expedient n 17th October, 1969, a petition for the winding up of A.C.L.I. was pr8sented to the High Court. Such a petition must necessarily have been served on .C.L.I., so that the fact of a petition for winding-up having been presented must have been known to Mr. Lloyd-Jones in his capacity as receiver and manager.
The suit was filed on 27th October, 1969.On 14th November, 1969, a winding up order was made in respect of AC.L.I.and the Official Receiver was appoint8d Provisional Liquidator. Without reference to the liquidator; and on the instructions of Mr. Lloyd-Jones, the suit was continued in the names of both plaintiffs by service of the summons 2nd plaint on the first respondent on 26th November, 1969.
The first respondent consulted his advocates who on 30th December, 1969, wrote to the appellant, a firm of advocates representing the plaintiffs, pointing out the lack of authority for the prosecution of the suit, and expressing the view that the action was liable to be stayed and struck out so far as A.C.L.I, was concerned, "with costs against your firm" (meaning the: "appellant). On the 3rd January, 1970 a notice of motion was filed by the respondents, and served on the appellant, for hearin6 on 20th January. By this notice, the respondents prayed for an order
"…that all proceedings in this action in the name of A.C.L.I. be stayed on he grounds that service of the summons and plaint and all subsequent proceedings on behalf of the plaintiff A.C.L.I. have been taken after the 14th November, 1969, the date on which it went into liquidation, without the authority of its provisional liquidator, the Official Receiver, and that Messrs. Hamilton, Harrison and Mathews, whose name is on the record as the advocates purporting to act on the said p1aintiff's behalf, do pay the costs of the two defendants in this action including the costs of this application, to be taxed as between advocates and client and that the name of the said A.C.L.I…. as plaintiff be struck out of the summons and plaint commencing these proceedings for the purpose of all subsequent proceedings in this action."
The next event was that the appellant replied, on 7th January, 1970, to the letter of 30th December, 1969 In the appellant's letter, the following statement is made
"…the action was filed on behalf of .C.L.I. after proper instructions and before a. windin6-up order was me-de."
However) in an affidavit prepared by the appellant and sworn on 30th January, 1970) by Mr. Lloyd-Jones, it would appear that he authorised the institution and continuation of the suit in the name of "A.C.L.I. in his capacity as receiver and manager of that company appointed by the Standard Bank under a debenture.
I quote the last two paragraphs of that affidavit
5.” On or about the 21st October, 1969 I instructed Mr. Le Pelley of Hamilton Harrison & Mathews to take action in the high Court in the name of A.C.L.I. Co. td., to protect the company's ,assets by setting aside certain transactions. This is the action which I authorised, and I have authorised its continuance notwithstanding the liquidation of the Company.
6. I am informed by the advocates that an action can continue after the liquidation in the name of the company on the instructions of the Receiver."
The learned judge held, and there has been no appeal against this holding, that the action was brought in the name of the company on the instructions of a director. He also ordered that as the suit had been continued after the winding-up without the authority of the liquidator, and without being adopted by him subsequently,
" all proceedings in the name of A. C. L. 1… be stayed, and the name of A.C.L.I …be struck out of the summons and plaint commencing these proceedings…”
There has boon no appeal against this order. As to the costs incurred by the continuation of the suit in the name of A.C.L.I. after the winding-up, the learned judge commented "I see no alternative to ordering costs to be paid by the advocates concerned” and he proceeded so to order in the following terms:-
"that Messrs. Hamilton, Harrison and Mathews pay the costs of the two defendants in this action including the costs of this application, to be taxed as between party and party,"
and he granted a certificate for two counsel. It is solely with the order for costs that this appeal is concerned. When the appeal was opened before us by Mr. Humphrey Slade, he and his junior being employees of the appellant appeared unrobed as litigants in person.
The first ground of appeal is that the judge erred in making an order for costs against the appellant in the absence of service of the application on the appellant separately and in the absence of separate representation, and Mr. Slade relied on Kohli v. Popatlal  E.A. 219, and in particular on the following passage
"But before the court exercises this summary jurisdiction to mulct a solicitor in costs it must first give that solicitor an ample opportunity to meet the complaint against him and to answer it.”
To that Mr. D.N. Khanna, leading counsel for the respondents, replied as follows. The notice of motion specifically asked for a personal order for costs against the appellant. The notice was served on the appellant in its capacity as advocates for A.C.L.I. so that although not served separately the appellant had full notice of the claim for costs.
The motion was not in fact heard on the 20th January, 1970 but was adjourned by consent and argued on 19th January, 1971, so that the appellant had a full year in which to arrange for separate representation if it so desired. The question of costs was in fact argued before the judge, and no application was made for that issue to be deferred so as to enable the applicant to be separately represented agree with those submissions.
I consider that the appellant had ample notice of the claim for a personal order of costs against it. The appellant had a year to arrange for separate representation on that issue if it so desired. The issue was argued and left to the judge for decision. To adapt the words used in Kohli's case (supra) the appellant had ample opportunity to meet the complaint of beach of warranty of authority and the claim for costs is against it and to answer them, whether by separate representation or not. In my view this ground of appeal fails.
The second ground is that the judge erred in making an order for costs was against the appellant
a) when the action was properly filed
b) when the action could have been taken over by the liquidator had the receivership ended;
(c) when the person instructing the appellant had capacity as receiver to file and continue an action.
As to (a), the learned judge appreciated that the action was properly filed.
It was its continuation by service of the summons and plaint after the winding-up, without authority, which was the basis of his decision. As to (b), the fact is that the liquidator did not take over the action, nor adopt it subsequently, although he had over a year in which to do so had he seen fit. As to (0), Mr. Slade could not refer to any authority for the proposition that a receiver has capacity to continue a suit filed in the name of a company after it has been wound-up and a provisional liquidator appointed.
On the contrary I understood him to concede that the serving of the summons and plaint after winding-up was a “wrong step". I consider that this ground of appeal also fails.
The third ground is that the judge erred in ordering the appellant to pay the full costs of the action, as it survives so far as the second plaintiff Akira is concerned. I do not think that the judge ordered the appellant to pay the full costs of the action. What he said was that he granted the application "as prayed". The motion had prayed for the suit to be stayed "in the name of A.C.L.I." and that the name of A.C.L.I. as plaintiff be struck out of the summons and plaint. It is only in respect of these matters that an order for costs was asked for. I think the formal order could have been better worded so as to make this clear, but I have no doubt that the order that the appellant do e costs of the two respondents of this action refers only to the costs incurred as a result of the un authorised continuation of the suit in the name of A.C.L.I. I see no merit in this ground.
The fourth ground is that the respondents should not be allowed the costs incurred in the filing of their defence. Mr. Slade's submission is that the respondents were under a duty to mitigate the damages and that the costs have been unnecessarily inflated by filing a defence before a decision on the notice of motion. The learned judge seems to have been of the like opinion. He said
"The defendant's advocates who were already out of time filed their defence to the action on 19th January thus ensuring a heavier burden upon their friends in the event of the motion being successful."
Nevertheless he did not exclude the costs incurred by filing the defence from his general order. Mr. Khanna submitted that the learned judge erred in holding that the defence was filed out of time. The summons was served on 26th November, 1969.
An appearance was required to be entered within 10 days, 2nd by Order VIII, rule 1, of the Civil Procedure (Revised) Rules; the defence is required to be filed within 15 days thereafter. Mr. Khanna's argument is that the learned judge ignored the provisions of Order XLIX rule 3A wh0reby the p3riod between 24th December and the ensuing 15th January should be excluded from the computation of time for filing pleadings. I am at a loss to understand this submission. Tie time for filing the defence had expired on 21st December1969, so that Order XLIX rule 3A would appear to have no relevance. Mr. Slade contended that in these circumstances the costs incurred by preparing and filing the defence should be excluded, to the extent that they can be attributed to resisting A.C.L.I. 's claims in the suit. As to this I would point out that by section 27(1) of the Civil Procedure Act the costs of and incident to a suit arc in the discretion of the judge.
The learned judge in this case fully appreciated all the relevant facts relating to the late filing of the defence, but must have been of the view that these facts did not justify depriving the respondents of any part of the costs incurred in the preparation and filing of the defence. That was a matter within his discretion, and it has not boon made to appear to me that he wrongly exorcised his discretion in this respect.
To sum up, I consider that the order, the subject of this appeal, made by the learned judge, was one within his powers. It has not been shown that there was any wrongful exercise of discretion or /that this exercise was founded on any wrong principle. Although another judge might have made a less stringent order, I can see no reason for interfering in this case. I would dismiss this appeal with costs and certify for two advocates.
I agree with the judgment of the learned Ag Vice President. The appellant firm of advocates was ordered to pay cost, not for any neglect or impropriety of conduct on their part, but for a breach of their warranty of authority.
The breach in this case was a continuation of the action by A.C.L.I co. ltd after the appointment of a liquidator and without his authority. The advocates would, as a general rule, be responsible even if they continued the action with-out knowing that their authority to act had ceased. This matter was considered by the English court of appeal in the case of Yonge v Toynbee(1910) 1 K.B 215 at 233 and the following quotation from the judgment of Swinfen Eady, J emphasizes the advocates responsibility in this matter.
“I wish to add that in the conduct of litigation the court places much reliance upon solicitors, who are officers; it issues writs at their instance, and accepts appearances for defendants which they enter, as a matter of course, and without questioning their authority; the other parties to the litigation also act upon the same footing, without questioning or investigating the authority of the solicitor on the opposite side; and much confusion and uncertainty would be introduced if a solicitor were not to be under any liability to the opposite party for continuing to act without authority in cases where he originally possessed one.”
"The Vice-President has fully dealt with all the aspects of this appeal and I agree with him that the learned trial judge fully considered the matter and was justified in the order which he made. I agree therefore that this appeal be dismissed in accordance with the order of the learned Ag. Vice-President, and as Mustafa, J.A. also agrees it is so ordered.
I have read the judgment prepared by Law, Ag. V.P. and I agree with it.
I have nothing useful to add