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Court of AppealPartially Allowed

Owners of the Motor Vessel “Lillian S" v Caltex Oil (Kenya) Ltd (Civil Appeal 50 of 1989) [1989] KECA 48 (KLR)

Court of Appeal of Kenya
17 November 1989
NYNyarangiMAMasimeKWKwach
16,263 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~65 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal freed a arrested ship, ruling the fuel supplier hadn't contracted with its owners and had hidden key facts when getting the arrest order.

What this practically means

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Executive summary

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Caltex Oil (Kenya) Ltd arrested the motor vessel 'Lilian S' at Mombasa under a writ in rem claiming Kshs 6,110,434/55 for gas oil, fuel and bunkers allegedly supplied to the vessel. The vessel's owners, Sea Guardian Company SA of Panama, applied to the High Court to set aside the writ and warrant of arrest; Bosire J dismissed the application, inferring that the fuel was probably for the vessel's operation. The Court of Appeal (Nyarangi, Masime and Kwach JJA) unanimously allowed the appeal and ordered the immediate release of the vessel. Applying section 4 of the Judicature Act, which incorporates English admiralty law and procedure (Supreme Court Act 1981, sections 20 and 21, and RSC Order 75), the court held that admiralty jurisdiction is statutory and must be decided at once on the affidavit evidence once challenged. On the evidence, the fuel was ordered by and was the property of Southern Oil Supply Company Ltd (SOSCO), the vessel serving only as a storage base pending resale to other vessels, so there was no sufficiently direct connection with the ship's operation or maintenance under section 20(2)(m). Further, the telexes showed the contract of sale was between Caltex and SOSCO, so the owners were not the 'relevant person' liable in personam under section 21(4). The affidavit to lead the warrant was incurably defective for non-compliance with Order 75 rule 5(9), and Caltex breached the duty of full and frank disclosure on the ex parte arrest application by concealing the telexes. The ruling below was reversed, the writ and all subsequent proceedings set aside, and costs awarded to the appellants here and below.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the plaintiff's claim fell within section 20(2)(m) of the Supreme Court Act 1981, i.e. whether the goods supplied were supplied to the ship for her operation or maintenance
  2. 2.Whether the claim could be enforced by an action in rem under section 21(4) of the 1981 Act, i.e. whether the owners of the vessel were the 'relevant person' who would be liable in an action in personam
  3. 3.Whether the affidavit in support of the warrant of arrest complied with Order 75 rule 5 of the Rules of the Supreme Court
  4. 4.Whether the respondent made full and frank disclosure on the ex parte application for the arrest of the ship
  5. 5.Whether a question of jurisdiction must be decided immediately on the material before the court

Key legal issues

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01

Whether the goods supplied fell within section 20(2)(m) of the Supreme Court Act 1981

Holding

The claim did not fall within section 20(2)(m); the fuel was delivered on board merely as storage pending resale by SOSCO, so there was no sufficiently direct connection with the ship's operation or maintenance and the High Court had no admiralty jurisdiction.

Reasoning

The affidavit of Kariuki was silent on the purpose of supply. The evidence of Saliarelis and Tsakiris showed the fuel was ordered by and was the property of SOSCO and the vessel was used only as a storage base pending sale to other vessels. Following The River Rima, a sufficiently direct connection with the ship's operation is required; none was shown on the affidavit evidence.

p. 3
02

Whether the owners of the vessel were the 'relevant person' liable in personam under section 21(4)

Holding

It was SOSCO, not Sea Guardian Company SA, that would be liable in an action in personam; the action in rem could not therefore be brought against the vessel.

Reasoning

The contract of sale was concluded by an exchange of telexes between Caltex and SOSCO; Caltex's invoice and statement of account were directed to SOSCO; and the vessel was nominated by SOSCO merely as the delivery point. The owners never placed any order with Caltex and were never shown to be liable in personam on the claim.

p. 27
03

The duty to decide a question of jurisdiction immediately on the material before the court

Holding

Once jurisdiction is raised, the court must decide it at once on the evidence before it, however scanty; a court without jurisdiction down tools.

Reasoning

Admiralty jurisdiction is statutory. The authorities (I Congresso del Partido, The River Rima, Gatoil, The Evpo Agnic) show courts deciding jurisdiction on the affidavit evidence immediately. Setting aside a writ is not deferred pending viva voce evidence where the statutory prerequisites are absent on the affidavits.

p. 14
04

Compliance with Order 75 rule 5 and the duty of full and frank disclosure

Holding

The affidavit to lead the warrant did not contain the particulars required by rule 5(9)(b) and no leave was sought, making it incurably defective; Caltex also concealed the telexes, so the ex parte arrest order was improperly obtained and would have been discharged.

Reasoning

Rule 5(9) mandates identification of the relevant person and of ownership at the time the cause of action arose. The court retains a discretion to continue an order despite non-disclosure, but that discretion cannot validate an arrest where jurisdiction was absent and material facts were deliberately concealed; the duty of candour applies with equal force in Kenya.

p. 16

Legal principles established

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  • Admiralty jurisdiction is statutory and must be strictly established on the evidence before an action in rem may proceed; jurisdiction must be decided immediately once raised.
  • A claim under section 20(2)(m) of the Supreme Court Act 1981 requires a sufficiently direct connection between the goods supplied and the operation or maintenance of the ship.
  • An action in rem under section 21(4) lies only against a ship owned or chartered by the person who would be liable in personam on the claim.
  • An affidavit in support of a warrant of arrest must contain the particulars required by Order 75 rule 5(9), including the identity of the relevant person, unless leave is granted.
  • Full and frank disclosure is required on ex parte applications, including ex parte applications to arrest a ship.

Court orders

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  1. 1.Appeal allowed
  2. 2.The writ in rem and all subsequent proceedings set aside
  3. 3.The warrant of arrest set aside and the motor vessel 'Lilian S' ordered released from arrest
  4. 4.Costs of the appeal and of the application below awarded to the appellants

The bench

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One judgment of the whole court — no separate or dissenting opinions.

NY
majority

Wrote the judgment

Wrote the leading judgment. Held that the claim for fuel supplied to the vessel did not fall within section 20(2)(m) of the Supreme Court Act 1981 as applied in Kenya because the fuel was stored on board pending resale by SOSCO and had no reasonably direct connection with the vessel's operation or maintenance; that SOSCO, not the owners, would be liable in personam; and that Caltex failed its duty of full and frank disclosure on the ex parte arrest application.

I would allow the appeal with costs here and below to the appellant and reiterate the terms of the court's order mentioned above.p. 16
MA
concurring

Wrote the judgment

Wrote a separate concurring judgment agreeing that the claim fell neither within section 20(2)(m) nor section 21(4) of the Supreme Court Act 1981, that the affidavit to lead the warrant of arrest breached Order 75 rule 5, and that the appeal should be allowed with costs.

That evidence so far as it was adduced by the respondent fell foul of the requirements of rule 5 of Order 75: it failed to establish that the appellant was "the relevant "person".p. 22
KW
concurring

Wrote the judgment

Wrote a separate concurring judgment. Found on the telexes that the contract of sale was between Caltex and SOSCO, that the owners were not the 'relevant person' under section 21(4)(b), that the affidavit in support of the warrant was incurably defective for non-compliance with RSC Order 75 rule 5(9) and that Caltex concealed material facts; agreed the appeal should be allowed and the ship released.

I have no dificulty in finding as a fact that the sale was made to SOSCO and only SOSCO, and no other party, could be liable in an action in personam for the value of the goods sold and delivered by Caltex.p. 27
On appeal from
High Court of Kenya
Jurisdiction invoked
Section 4 of the Judicature Act (Cap 8) applying the English admiralty jurisdiction, law and procedure; appeal against an interlocutory ruling of the High Court

Relief refused

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Continuation of the warrant of arrest notwithstanding material non-disclosure

The court held that the ex parte arrest order was improperly obtained because the respondent concealed the telexes showing the contract was with SOSCO, so the non-disclosure could not be excused by any discretion to continue the order.

p. 33

Costs

Appeal allowed with costs here and below to the appellants

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

I would allow the appeal with costs here and below to the appellant and reiterate the terms of the court's order mentioned above. As Masime and Kwach JJ A also agree, it is so ordered.
p. 16Disposition - appeal allowed with costs
At the conclusion of arguments in this appeal, we allowed the appeal and made an order for the immediate release of the motor vessel "Lilian S".
p. 22Final orders - immediate release of the vessel
Jurisdiction is everything. Without it, a court has no power to make one more step.
p. 14Primacy of jurisdiction
There was therefore no reasonably direct connection between the storage of the fuel oil and the operation or maintenance of the vessel "Lillian S".
p. 3Section 20(2)(m) - direct connection requirement
It is axiomatic that in ex-parte proceedings there should be full and frank disclosure to the court of facts known to the applicant
p. 16Duty of full and frank disclosure on ex parte ship-arrest applications
No leave having been obtained the afidavit should have been rejected outright. In this respect, the afidavit to a warrant of arrest was incurably defective.
p. 30Defective affidavit to lead warrant of arrest

Issues in the judgment

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minor

Internal pagination/numbering errors: the numbering in Kwach JA's judgment skips and repeats (paragraphs numbered 107 twice and 104-107 repeated), and the sequence in Nyarangi JA's judgment jumps from paragraph 32 to 34.

minor

The case number of the appeal and the neutral citation are not stated anywhere in the judgment as provided.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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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, "Owners of the Motor Vessel “Lillian S" v Caltex Oil (Kenya) Ltd (Civil Appeal 50 of 1989) [1989] KECA 48 (KLR)", Case Analysis (1989). . Source: https://new.kenyalaw.org/akn/ke/judgment/keca/1989/48/eng@1989-11-17

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