Ari Credit & Finance Limited v Safari Image Limited & 2 others [2003] KECA 102 (KLR)
The bottom line
#Kenya's Court of Appeal dismissed a company in liquidation's late appeal because its liquidator delayed nearly six months before instructing lawyers.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the applicant's delay in lodging the record of appeal should be excused and the period extended
- 2.Whether the liquidator/liquidation agent acted with reasonable diligence in giving instructions to appeal
- 3.Whether the applicant required prior sanction of the superior court or the committee of inspection under section 241(1)(c) of the Companies Act before lodging its notice of appeal
Key legal issues
#Reasonable diligence by a liquidation agent in prosecuting an appeal
The application fails because the liquidation agent took nearly six months to instruct the applicant's advocates after receiving copies of the proceedings, and no adequate explanation was offered.
The record shows copies of proceedings and ruling were received on 26th September 2002, yet instructions were only given on 18th November 2002. The Judge reasoned that even allowing for leave or absence of staff, a delay of even two months was long enough for the liquidator to instruct counsel. Neglect to instruct was therefore the fault of the liquidator, and the delay was not excusable.
Sanction required under section 241(1)(c) of the Companies Act for a company in liquidation to appeal
Proceedings in the Court of Appeal are commenced by a notice of appeal, so the sanction of the superior court or the committee of inspection must be obtained before lodgment of that notice; a subsequent extension of time does not cure the want of sanction.
Relying on Trade Bank Limited v. L.Z. Engineering Construction Limited, the Judge pointed out that although the one-day late notice of appeal was regularised by extension of time, that extension is not equivalent to the statutory sanction. This was stated as guidance to the applicant on dismissal of the application.
Entitlement of the respondents to credit for the fixed deposit of Shs.1,400,000
The deposit was admitted and was agreed to be security (in part) for the loan; the respondents are entitled to be credited with it plus interest once the counterclaim is heard.
The affidavit of George Omondi admitted the sum was held as security and on lien, and the defence did not deny the existence of the fixed deposit or its purpose. The Judge considered the remaining issue (hearing of the counterclaim) minor and found the applicant's insistence on technicality unjustified, expressing the view that the litigation must end.
Legal principles established
#- A company in liquidation must obtain the sanction of the superior court or the committee of inspection before lodging a notice of appeal; an extension of time for filing the notice by the Court of Appeal does not amount to, or substitute for, that statutory sanction.
- In an extension-of-time application, the applicant must show that it or its agent acted with reasonable diligence; an unexplained delay of about six months in giving instructions to advocates falls short of that standard.
Court orders
#- 1.The application is dismissed with costs
- 2.Advisory observation that the applicant ought to have obtained the sanction of the superior court or the committee of inspection prior to lodgment of its notice of appeal, as the one-day extension of time was not equivalent to such sanction
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- High Court of Kenya
- H.C.C.C. No. 980 of 1995
- Jurisdiction invoked
- Appellate jurisdiction of the Court of Appeal over a single Judge's application, including extension of time to lodge a record of appeal
Relief refused
#Extension of time / leave to lodge the record of appeal out of time
The liquidator failed to act with reasonable diligence, delaying instructions for nearly six months; the litigation should end and the applicant is being too technical
Costs
This application is dismissed with costs (costs awarded to the respondents).
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
This application is dismissed with costs.
Before I depart from this application I would want to point out to the applicant that it ought to have obtained, prior to lodgment of its notice of appeal, the sanction of the superior court or the committee of inspection, to lodge the notice of appeal
Validating time for filing a notice of appeal by the one day extension granted by this Court is not equivalent to granting of the sanction as required under Section 241(1)(c) of the Companies Act, Cap. 486.
I am not satisfied that the liquidator acted with reasonable diligence. It was really his fault when he neglected to instruct his advocates to appeal.
I think the applicant’s advocates are being too technical. They want to have their cake and eat it. That ought not to be allowed.
Issues in the judgment
#The number of the application before the Court of Appeal is not stated anywhere in the judgment; the parties are referred to only as 'the applicant' and 'the respondents' without names for the second and third respondents.
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Ari Credit & Finance Limited v Safari Image Limited & 2 others [2003] KECA 102 (KLR)", Case Analysis (2003). Civil Application (record does not state the application number). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2003/102/eng@2003-04-10
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.