Ignazio Messina and C.P.S.A v Stallion Insurance Company Ltd [2005] KECA 301 (KLR)
The bottom line
#Kenya's Court of Appeal refused to force a company in liquidation to deposit appeal security, because the request came too late in the day.
What this practically means
#Executive summary
#Key legal issues
#Competence of a second application for security for costs after an earlier dismissal
The application was competent; the earlier dismissal by Kwach JA did not estop the applicant because the discretion can be exercised again if circumstances materially change, and the subsequent winding up order was such a change.
The court distinguished the earlier application, decided when the respondent was merely under statutory management, from the present one made after a winding up order had been placed on record. Following Siri Ram Kaura v Morgan and Keary Developments, the court held that the discretion under Rule 104(3) is assessed against circumstances existing at the time of each application, so material change defeats an estoppel argument.
Application of section 401 of the Companies Act principles to appellants
The principles governing security for costs against limited company plaintiffs apply to limited company appellants, but the court retains a complete discretion whether to order security even where inability to pay is established.
Relying on Pearson v Naydler and Keary Developments, the court held that although section 401 speaks of a company as plaintiff, the same principles apply where the company is an appellant. A winding up order evidences inability to pay costs, yet the discretion remains judicial and must weigh factors such as delay, prospects of appeal, and whether the application would obstruct prosecution of the appeal.
Security for past costs
Security for past costs was refused because the taxed High Court costs were already secured by the bonds given under the stay-of-execution order.
The superior court had granted a stay of execution conditioned on the respondent furnishing insurance bonds (Shs.21,500,000 originally, of which Shs.11,500,000 remained valid). Since the decretal sum included the taxed costs, those costs were already secured, and requiring further security for past costs would be improper. However, the valid bonds could not be treated as security for the appeal costs.
Exercise of discretion on the facts
Even though the threshold for security was prima facie met, the court declined to exercise its discretion in the applicant's favour on the particular circumstances, including the imminence of the appeal hearing and unresolved questions of leave under sections 228 and 241 of the Companies Act.
The application was filed three years after the winding up order and close to the hearing date. The court noted it had not been shown the orders allowing the appeal to proceed after liquidation, did not know whether the applicant had leave under section 228, nor whether the liquidator had sanction under section 241. Given the respondent's status as a defendant appealing an ex parte judgment, ordering security at that stage would impede the appeal.
Legal principles established
#- Rule 104(3) empowers the Court to order further security for costs of an appeal and security for past costs, but the discretion is unfettered subject only to being exercised judicially, and the burden lies on the applicant to show cause why the relief should be granted.
- The law and principles governing security for costs against a limited company as plaintiff under section 401 of the Companies Act apply equally where a limited company is an appellant against whom security for costs of an appeal is sought.
- A liquidation order is prima facie credible testimony that a company will be unable to pay costs, and the dismissal of a previous security-for-costs application does not preclude a fresh application if circumstances materially change.
- Security bonds furnished for due performance of a decree in the court below cannot be converted into security for costs of the appeal.
Court orders
#- 1.The application was dismissed
- 2.Costs of the application awarded to the respondent
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 1524 of 1999
- Jurisdiction invoked
- Rules 42(1) and 104(3) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- EMMESS TRANSPORT LIMITED & another v INTERCON FREIGHT LOGISTICS LIMITED & 4 others[2017] KEHC 5004 (KLR)6 Jun 2017
Cite this brief
#Cite this brief
Caselaw, "Ignazio Messina and C.P.S.A v Stallion Insurance Company Ltd [2005] KECA 301 (KLR)", Case Analysis (2005). Civil Application No. Nai. 229 of 2001 (as cited in the ruling) - application in Civil Appeal No. 18 of 2001. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2005/301/eng@2005-04-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.