Ftg Holland v Afapack Enterprises Limited & another [2016] KECA 3 (KLR)
The bottom line
#Kenya's Court of Appeal ruled that a foreign company cannot be forced to provide security in a lawsuit without real evidence it plans to leave Kenya or hide its assets.
What this practically means
#Executive summary
#Key legal issues
#Requirements for an order for attachment before judgment / furnishing of security under order 39 of the Civil Procedure Rules
The respondent was bound to demonstrate, by affidavit, that the appellant was about to leave Kenya under circumstances affording reasonable probability that execution of any decree would be obstructed or delayed, or that the appellant was about to dispose of or remove its property from the jurisdiction. No such evidence existed.
The respondents' application was anchored on order 39 rules 1(b) and 2. Under rule 1(b), a warrant may issue only where the defendant is about to leave Kenya in circumstances giving reasonable probability that execution of a decree will be obstructed or delayed. Rule 5, invoked suo moto by the Judge, requires proof of intent to dispose of or remove property. There was no scintilla of evidence of either; the Judge instead relied on the appellant's foreign domicile and absence of attachable assets, considerations extraneous to the rules.
Whether a court may suo moto invoke a procedural rule and adjudicate on issues not raised by the parties
It was improper for the learned Judge to invoke order 39 rule 5 sua sponte without giving the parties an opportunity to address him, as the pleadings defined the case to be met.
The pleadings framed the case as one of the appellant about to leave Kenya to frustrate execution. The appellant prepared its rebuttal on that basis. The Judge, without hearing the parties, fished out rule 5, whose considerations differ from rule 1(b). Pleadings define and delimit the matters in controversy; a judge who determines unpleaded issues or searches for material not presented departs from the adversarial system.
Applicability of the overriding objective provisions (sections 1A, 1B and 3A of the Civil Procedure Act)
The overriding objective provisions had no application in the circumstances and could not substitute for the specific statutory requirements of order 39.
The Judge, having failed to find evidence satisfying order 39, turned to sections 1A, 1B and 3A of the Civil Procedure Act and considered the appellant's domicile and lack of attachable assets. Those provisions could not supply the missing proof of intent to obstruct execution required under the rules, and could not justify the order made.
Legal principles established
#- A foreign registered company sued in Kenya cannot be ordered to furnish security merely because it is foreign; there must be clear evidence that it is about to leave the jurisdiction or to dispose of or remove its property with intent to obstruct or delay execution of a decree.
- The power to attach before judgment is not to be exercised lightly and requires clear proof of the mischief to be avoided.
- A judge may not determine issues not pleaded by the parties or look for material not presented by them.
Court orders
#- 1.Appeal allowed with costs
- 2.Orders issued on 19th March, 2013 by the High Court set aside
- 3.The respondents' motion dated 19th July, 2012 dismissed with costs
- On appeal from
- High Court of Kenya at Nairobi
- H.C.C. No. 352 of 2012
- Jurisdiction invoked
- First appellate jurisdiction under the Civil Procedure Act (appeal from the High Court)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ftg Holland v Afapack Enterprises Limited & another [2016] KECA 3 (KLR)", Case Analysis (2016). Civil Appeal No. 171 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2016/3/eng@2016-11-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.