South Sea Services Limited v Mutiso (Environment and Land Appeal 68 of 2021) [2022] KEELC 2409 (KLR)
The bottom line
#A Mombasa court allowed a hospitality company hit by Covid-19 to replace a Kshs 2 million cash deposit with a title deed, but only under strict conditions.
What this practically means
#Executive summary
#Key legal issues
#Whether the court could review/vary its directions of 14th December, 2021 requiring a cash deposit of Kshs. 2,000,000 into an escrow account
Yes - the court reviewed and varied the order to allow substitution of the cash deposit with a valid Certificate of Title Deed, subject to conditions (official search, valuation report, timelines)
The court set out the statutory regime for review under Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules, noting that such powers are discretionary and must be exercised judiciously. It found the applicant's inability to raise the cash within 30 days attributable to the Covid-19 pandemic's effect on the hospitality business and a family dispute over the estate, and held that the applicant had not refused to pay but only sought substitution of security. Balancing the parties' positions and in furtherance of Article 159 of the Constitution, the court allowed substitution of the cash with a title deed subject to a recent official search and valuation, with stringent timelines.
Whether the application was fatally defective for being brought under the wrong provision (Order 40 Rule 7) instead of Section 80/Order 45
No - the court acknowledged the citation was not strictly apt but declined to defeat the application on that basis
The respondent argued the application was incurably defective and an abuse of process having been brought under the wrong citation and out of time. The court concurred that there was no temporary injunction in place warranting Order 40 Rule 7, but held that the appeal deserved to be heard on merit pursuant to the overriding objective in Article 159(1) and (2) of the Constitution. It therefore overlooked the defective citation and determined the application on its merits, granting conditional relief.
Whether the Covid-19 pandemic and the family dispute constituted sufficient reason to disturb the escrow deposit direction
Yes - these were pertinent and cogent considerations excusing the applicant's inability to remit rent
The court took judicial notice of the pending family appeal over the estate and the uncontroverted claim that the applicant had invested over Kshs. 15,000,000 in permanent structures on the premises. It accepted that the hospitality industry was severely affected by the pandemic and government restrictions, engaging force majeure principles which allocate the risk of loss where performance becomes impossible due to unforeseen events. It directed that these factual claims be measured and assessed during the hearing of the appeal and related suits.
Legal principles established
#- Review is not an appeal; it must be confined to error apparent on the face of the record, discovery of new and important matter, or other sufficient reason, and re-appraisal of evidence would amount to appellate jurisdiction
- The power to review, vary or set aside court orders is discretionary and must be exercised judiciously, not capriciously
- Force majeure principles may apply where unforeseen circumstances such as the Covid-19 pandemic prevent performance of contractual obligations like payment of rent
Court orders
#- 1.The Notice of Motion application dated 23rd December, 2021 by the Appellant/Applicant be and is hereby allowed
- 2.There be review and/or variation of the Orders of the Court granted on 14th December, 2021 whereby the Appellant/Applicant to substitute the cash sum of Kenya Shillings Two Million (Kshs. 2,000,000.00) being rent arrears up to April, 2021 with a valid Certificate of Title Deed
- 3.The Applicant to cause the security of a Certificate of Title Deed to be deposited in ELC Court pending the hearing and final determination of the Appeal
- 4.A recent official search of the certificate of title deed, free from any encumbrances, be conducted within Seven (7) days
- 5.A recent valuation report of the land conducted by a qualified and court-credited Land Valuer/Economist be undertaken and attached to the title deed within the next Twenty One (21) days
- 6.The Appellant and the Respondent to prepare balanced and reconciled books of inspected and audited accounts by competent accountants of both parties and furnish a report to the Court on or before 15th July, 2022
- 7.The Appellant granted leave of 30 days to compile, file and serve the Record of Appeal, with mention on 27th June, 2022 pursuant to Sections 79B & G of the Civil Procedure Act and Order 42 Rules 11 and 13
- 8.All the directions made on 14th December, 2021 to still subsist, with simultaneous hearing of ELC (OS) No. 207 of 2021 and Appeal No. 68 of 2021 on 15th July, 2022, and stay of execution of the ruling of CMCC No. 884/2021 delivered on 8th October, 2021 pending hearing and final determination of the appeal
- 9.The costs of the Notice of Motion application to be in the cause
- On appeal from
- Chief Magistrate's Court, Mombasa
- CMCC No. 864 of 2021 (referred to in parts of the judgment as CMCC No. 884 of 2021)
- Jurisdiction invoked
- Sections 1A, 1B, 3 and 3A of the Civil Procedure Act and Order 40 Rule 7 of the Civil Procedure Rules, 2010; Article 159(1) and (2) of the Constitution of Kenya
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "South Sea Services Limited v Mutiso (Environment and Land Appeal 68 of 2021) [2022] KEELC 2409 (KLR)", Case Analysis (2022). ELC Appeal No. E68 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelc/2022/2409/eng@2022-05-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.