Keshavji Ramji Ladha v Bank of Credit and Commerce International – SA (BCCI) (In Compulsory Liquidation)
The bottom line
#Kenya's Court of Appeal ruled that a company suing in Kenya with no local assets can be ordered to deposit security before its case proceeds.
What this practically means
#Executive summary
#Key legal issues
#Whether the trial judge properly weighed the competing considerations under Section 401 of the Companies Act before refusing security for costs
The judge identified the correct considerations but treated them lightly, failing to weigh the competing reasons, and thus fell into error
The judge correctly identified that the respondent was a foreign company in liquidation with no known assets in Kenya, and that the liquidator was based in the UK with no record showing he would be within easy reach for execution of costs. Taking the registration of the foreign judgment as sufficient proof of the respondent's capacity to meet its litigation obligations was a serious misapprehension, warranting appellate interference with the discretion.
Whether an unconverted registered foreign judgment could be set off against an order for costs
No - a judgment must be converted into a decree before it can serve as an instrument of set-off
The court held that a judgment, whether foreign or otherwise, is good until declared otherwise, but in its form as a judgment it is not capable of enforcement. It must take the shape of a decree. Since the foreign judgment had not been converted into a decree, it could not act as a set-off against the appellant's claim for costs, and the appellant was entitled to demand security for anticipated costs.
Whether ordering security for costs against a company in liquidation would be unfair
No unfairness would be occasioned because the security need not be paid out forthwith and conditions could ensure accessibility to the successful party
The appellant was not demanding immediate payment of the secured sum. The judge could attach appropriate conditions, providing security by bank bond or similar instrument, or depositing liquid cash with a neutral entity so it would be easily accessible to the successful party. The disparity between the decretal sum and the security demanded did not preclude the order.
Legal principles established
#- A registered foreign judgment must be converted into a decree before it can be enforced or act as an instrument of set-off
- On a first appeal the court must re-evaluate the evidence and reach its own conclusion, but should be slow to interfere with findings of fact unless based on no evidence, misapprehension of the evidence, or a wrong principle
- Where a company in liquidation is plaintiff, a judge may require security for the defendant's costs under Section 401 of the Companies Act if credible testimony shows the company may be unable to pay those costs
Court orders
#- 1.The respondent to furnish security in the sum of Kshs.6,081,698.00 within sixty (60) days from the date of the reading of the ruling
- 2.The security to be in the form of a bank guarantee from any reputable bank of the parties' choice, alternatively deposited in an interest-bearing account in the joint names of learned counsel for both parties within the same sixty (60) days
- 3.Costs of the appeal and the proceedings in the High Court to the appellant, to be agreed or assessed
- On appeal from
- High Court of Kenya at Nairobi
- H.C. Bankruptcy Cause No. 9 of 2000
- Jurisdiction invoked
- Article 164(3) of the Constitution of Kenya 2010; Section 78 of the Civil Procedure Act (Cap 21); Rule 29(1) of the Court of Appeal Rules
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Keshavji Ramji Ladha v Bank of Credit and Commerce International – SA (BCCI) (In Compulsory Liquidation)", Case Analysis (2015). Civil Appeal No. 44 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2015/969/eng@2015-01-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.