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Court of AppealPartially AllowedCivil Appeal (Application) E012 of 2020· [2022] KECA 1240 (KLR)

Blue Thaitian SRL (Owners of the Motor Yacht "Sea Jaguar") v Alpha Logistics Services (EPZ) Limited

Court of Appeal
4 November 2022
4,695 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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Kenya's Court of Appeal ordered the yacht's owner to deposit Kshs 15 million as security for costs within 45 days, or its appeal will be struck out.

What this practically means

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Executive summary

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This is a ruling of the Court of Appeal at Mombasa (Murgor, Nyamweya and Lesit, JJA) on an application by Alpha Logistics Services (EPZ) Limited, the respondent in the main appeal, for security for costs of Kshs 15,000,000 from Blue Thaitian SRL, owners of the Motor Yacht 'Sea Jaguar', pending the hearing of an appeal against a High Court admiralty judgment awarding the applicant Euros 785,000. The applicant alleged that Blue Thaitian SRL had been placed into liquidation in Italy and that the yacht's deteriorating value would not cover the decree. The Court first held that Grounds of Opposition are not provided for in the Court of Appeal Rules, so facts could only be introduced by affidavit; the respondent was restricted to legal arguments, and the question of its counsel's instructions from a non-joined liquidator was of no consequence. On the merits of the application, the Court held that under Rule 111(3) (formerly Rule 107(3)) it has an unfettered discretion to order further security at any time, and that arguments against dual security in an in rem claim were overtaken by that provision. Applying the principles in Gatirau Peter Munya and Mama Ngina Kenyatta v Mahira Housing Company, the Court found prima facie, unrebutted evidence that the respondent might be unable to meet costs, while declining to determine the legal effect of the foreign liquidation or the nature of the admiralty proceedings, as those are merits issues for the appeal. The undisputed settlement agreement of May 23, 2019 tilted the balance against the respondent. The Court ordered security of Kshs 15,000,000 to be deposited within 45 days into a joint advocates' account, failing which the appeal shall stand struck out with costs to the applicant.

Key legal issues

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01

Competency of Grounds of Opposition in the Court of Appeal

Holding

Grounds of Opposition are not provided for in the Court of Appeal Rules; facts may only be introduced by affidavit, so the respondent was restricted to legal arguments.

Reasoning

The Court contrasted Order 51 Rule 14 of the Civil Procedure Rules, which recognises Grounds of Opposition in the High Court, with the Court of Appeal Rules which contain no such provision. Definitions of 'ground' and 'affidavit' from Black's Law Dictionary were used to conclude that factual assertions via Grounds of Opposition are incompetent.

p. 3
02

Whether two sets of security for costs can coexist in an in rem claim

Holding

Arguments against dual security in an in rem claim are precluded by the clear provisions of Rule 111(3), which confers an unfettered discretion to order further security.

Reasoning

The respondent argued that the arrest and sale of the res was comprehensive security and that additional security in an in rem claim is available only in restricted circumstances. The Court held these arguments are expressly overtaken by Rule 111(3), and noted the English CPR Part 61 provisions relied on apply only where alternative security has been given, of which there was no evidence.

p. 4
03

Threshold for an order for further security for costs

Holding

The applicant must show the respondent, if unsuccessful, would be unable to pay costs due to poverty; prima facie uncontroverted evidence suffices, and the Court applies the Mama Ngina Kenyatta considerations.

Reasoning

The Court adopted the principles in Gatirau Peter Munya and the seven considerations in Mama Ngina Kenyatta v Mahira Housing Company. Evidence that the respondent appears to be in liquidation, unrebutted by any replying affidavit, prima facie demonstrated possible inability to meet costs. The Court declined to determine the legal effect of the foreign liquidation, as that would venture into the merits.

p. 4
04

Prospects of success of the appeal

Holding

The undisputed settlement agreement of May 23, 2019, not set aside by any evidence, tilted the balance in favour of ordering security.

Reasoning

Although the Court declined to determine whether the admiralty action was in rem, in personam or hybrid, it noted the respondent did not dispute the claim, the warrant of arrest, or the judgment in default. The existence of an unchallenged settlement agreement covering part of the decretal amount weighed against the respondent under the Mama Ngina Kenyatta considerations.

p. 7
05

Instructions of the respondent's counsel

Holding

The question whether Muregi Okere Advocates had instructions from the liquidator was of no legal consequence because the liquidator was not joined as a party.

Reasoning

The party before the Court was Blue Thaitian SRL as Owners of the Motor Yacht, which had filed a notice of change of advocates served on the applicant. Since neither party joined the liquidator, the alleged lack of instructions from the liquidator could not affect the competency of the response.

p. 4

Legal principles established

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  • The Court of Appeal has power and unfettered discretion under Rule 111(3) (formerly Rule 107(3)) to at any time direct further security for costs and security for past costs relating to matters in question in the appeal.
  • Facts in an application before the Court of Appeal can only be introduced by affidavit, not by Grounds of Opposition; a respondent is restricted to issues of law in Grounds of Opposition.
  • In a security-for-costs application the Court will not be drawn into the merits of the appeal.
  • An applicant for further security for costs need only adduce prima facie, uncontroverted evidence that the respondent may be unable to meet the costs.

Court orders

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  1. 1.Blue Thaitian SRL, the Owners of the Motor Yacht 'Sea Jaguar', to deposit further security of Kenya Shillings Fifteen Million (Kshs 15,000,000/=) to guarantee the costs of the High Court proceedings and of the appeal
  2. 2.The said sum to be deposited within 45 days of the date of the ruling into a joint account to be opened by the Applicant's and Respondent's Advocates prior to the hearing of the appeal
  3. 3.In default of the deposit, the appeal shall stand struck out with costs to the Applicant

Authorities

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Legislation

  • Appellate Jurisdiction Actsections 3A and 3B
  • Court of Appeal Rules, 2010Rule 50; Rule 107(3)
  • Court of Appeal Rules, 2022Rule 52; Rule 111(3)
  • Civil Procedure Act of EnglandPart 25 Rules 12 and 13; Part 52 Rule 10(1); Part 61; Part 61.3(5)(a); Practice Direction 61.3.6(1)
  • Civil Procedure RulesOrder 51 Rule 14
  • Insolvency Actsection 720; Schedule 5, paragraph 22

Cases cited (13)

  • Mohamed & Another v Haidara
    [1972] EA 166

    Unrebutted facts in a supporting affidavit must prevail where the response is incompetent

  • Marco Tools & Explosives Ltd vs Mamujee Brothers Ltd
    [1988] KLR 730

    The Court has unfettered judicial discretion to order or refuse security for costs depending on circumstances

  • Gatirau Peter Munya v Dickson Mwenda Githinji And 2 Others
    CA (Application) No 38 of 2013 [2014] eKLR

    Applicant for further security must show respondent would be unable to pay costs due to poverty

  • Mama Ngina Kenyatta and Another v Mahira Housing Company
    Civil Application No NAI 256 of 2003 [2005] eKLR

    Considerations for exercising discretion under Rule 107(3) on security for costs

  • Messina & Anor v Stallion Insurance Company Ltd
    [2005] 1 KLR 431

    Principles on security for costs relied on by the applicant

  • Westmont Holdings Sdn-Bhd v Central Bank of Kenya Limited
    [2017] eKLR

    Court should not be drawn into merits of the appeal in a security-for-costs application

  • In re Cooperativa Muratori and Cementisti – CMC DI Ravenna (Insolvency)
    [2020] eKLR

    Recognition of foreign insolvency proceedings under the Insolvency Act

  • Dan-Bunkering (Singapore) PTE Ltd v The Owners of the Ship or Vessel "PDZ Mewah" & Anor
    [2021] 10 CLJ

    A pure in rem action is not affected by liquidation of the owner of the res

  • Angre Port Private Limited v Tag 15 and Anor
    Bombay High Court (Interim Application (L) No 112 of 2021 in Commercial Admiralty Suit (L) No 4 of 2020)

    An action in rem can be continued even at the stage of liquidation of a corporate debtor

  • Owners of the Ship "Al Khattiya" vs The Owners and/or Demise Charterers of the Ship "Jag Laadki"
    [2018] EWHC 389 (Admlty)

    Requirements for invoking admiralty in rem jurisdiction

  • Stallion Eight Shipping Co SA v Natwest Markets PLC
    [2018] EWCA Civ 2760

    Admiralty in rem jurisdiction requirements

  • The Global 1
    [2006] SGHC 30

    Effect of Acknowledgment of Service on in rem and in personam claims

  • Stolt Kestrel BV v Sener Petrol Denizcilik Ticaret AS and CDE SA v Sure Wind Marine Limited
    [2015] EWCA Civ 1035

    Filing an Acknowledgment of Service triggers the in personam element but does not invoke in rem jurisdiction over the res

On appeal from
High Court of Kenya at Mombasa
Mombasa Admiralty Claim No 3 of 2018
Jurisdiction invoked
Sections 3A and 3B of the Appellate Jurisdiction Act; Rule 107(3) of the Court of Appeal Rules 2010 (succeeded by Rule 111(3) of the Court of Appeal Rules 2022); inherent jurisdiction of the Court

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Blue Thaitian SRL (Owners of the Motor Yacht "Sea Jaguar") v Alpha Logistics Services (EPZ) Limited", Case Analysis (2022). Civil Appeal (Application) E012 of 2020. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2022/1240/eng@2022-11-04

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.