Safmarine Kenya Limited v KRK Impex PVT Limited & another [2015] KECA 344 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a shipping company that released cargo documents against a written undertaking it ignored could not escape judgment with a sham defence.
What this practically means
#Executive summary
#Key legal issues
#Whether the appellant's statement of defence raised bona fide triable issues
The defence was a sham that raised no triable issue; striking it out was justified.
The appellant never denied receiving the undertaking from the 2nd respondent; the undertaking expressly transferred all rights in the cargo upon receipt of full payment. Mere denials of privity and consideration could not stand against the plain terms of the undertaking. The trial judge made definitive findings based on material plainly apparent from the pleadings, and the defence amounted to a sham deserving of summary disposal.
Whether the undertaking was enforceable absent a formal contract of novation
Novation may be implied from conduct; the undertaking effected a complete transfer of rights enforceable by the 1st respondent.
Novation requires the animus novandi and substitution of obligations, but the animus novandi is inferred from proved facts rather than proved directly. The appellant's own conduct in querying the countermand showed it regarded the undertaking as binding. The 2nd respondent received full payment and relinquished all rights; the 1st respondent relied on the guarantee, which was therefore binding on the appellant.
Effect of the purported revocation of the undertaking
The purported countermand was ineffective against the 1st respondent, who was never notified despite having paid in full.
A party opting out of a contractual guarantee must bring that decision to the attention of the affected party and obtain consent. The 2nd respondent had received full payment and expressly relinquished all rights; the revocation, communicated by a notation and email, was never disclosed to the 1st respondent. The appellant's release of the bills of lading on the 2nd respondent's instructions was negligent and dishonest.
Waiver and acquiescence
Neither waiver nor acquiescence was established against the 1st respondent.
Waiver is the voluntary relinquishment of a legal right and acquiescence is tacit acceptance; the averments in the plaint were not controverted and there was no evidence that the 1st respondent knew of or condoned the appellant's conduct. The 1st respondent was innocent of knowledge or participation and was therefore entitled to compensation.
Whether shipment of the cargo to India outside the jurisdiction defeated the claim
No; the 1st respondent had already suffered loss compensatable in damages.
The appellant argued the cargo had left the jurisdiction before the suit, ousting the court's jurisdiction. The court held this was immaterial because the 1st respondent had already suffered a compensatable loss by the time of suit; the claim for enforcement of the undertaking or refund could proceed in monetary terms.
Legal principles established
#- The power to strike out a defence is reserved for clear, plain and obvious cases and must not be exercised by embarking on the merits of the case.
- A pleading may be struck out where it is vexatious, frivolous or an abuse of process; a mere denial is not a sufficient defence.
- Novation may be implied from the conduct of the parties where they intend to substitute parties to the original contract.
- A party who has received an irrevocable undertaking backed by consideration and wishes to opt out must first bring that intention to the knowledge of, and obtain the consent of, the affected party.
Court orders
#- 1.The appeal is dismissed with costs to the 1st respondent
- On appeal from
- High Court of Kenya at Nairobi
- High Court Civil Case No 693 of 2008
- Jurisdiction invoked
- First appeal to the Court of Appeal under the Constitution/Appellate jurisdiction Act from the ruling and order of the High Court (as stated in the judgment: 'an appeal from the ruling and order of the High Court of Kenya at Nairobi (Khaminwa, J.) dated 12th March 2010')
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Safmarine Kenya Limited v KRK Impex PVT Limited & another [2015] KECA 344 (KLR)", Case Analysis (2015). Civil Appeal No 210 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/344/eng@2015-10-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.