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Court of AppealDismissedNotice of Motion dated 10th September 2021 (Court of Appeal, Mombasa)

The Owners of the Motor Vessel ‘Dolphin Star’ v E.T. Timbers Pte Limited (Civil Application E063 of 2021) [2021] KECA 303 (KLR)

Court of Appeal of Kenya
17 December 2021
4,285 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal refused to pause admiralty proceedings against the Dolphin Star because money damages could compensate the shipowner if it won on appeal.

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 (Kairu, Nyamweya and Lesiit, JJA) on a notice of motion dated 10th September 2021 seeking a stay of High Court admiralty proceedings pending the hearing and determination of an appeal against a ruling of 14th July 2021. In that ruling the High Court had upheld its admiralty jurisdiction over an in rem claim by the Respondent charterers against the Motor Vessel Dolphin Star for about US$2 million arising from an alleged breach of a charterparty, dismissed the Applicant's application to strike out the suit and set aside the warrant of arrest, ordered the deposit of US$3 million as security for the vessel's release, granted the Respondent leave to amend pleadings, and shared costs of the application equally. The application was brought under Section 49(3) of the English Senior Courts Act 1981, the English CPR, Sections 3A and 3B of the Appellate Jurisdiction Act, Rule 5(2)(b) of the Court of Appeal Rules, Sections 4(2) and (3) of the Judicature Act and the court's inherent jurisdiction. The Court confirmed its jurisdiction to entertain stay applications arising from admiralty rulings, found the appeal arguable on whether leave to amend clothed the High Court with jurisdiction post facto and whether the security orders were made suo motu, but held the nugatory limb failed because damages would adequately compensate the Applicant. The application was dismissed with costs to the Respondent.

Questions the Court framed

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

  1. 1.Whether the Court has jurisdiction to entertain an application for stay of proceedings arising from a High Court ruling exercising admiralty jurisdiction
  2. 2.Whether the Applicant's appeal is arguable
  3. 3.Whether the appeal will be rendered nugatory if the stay of High Court proceedings is not granted

Key legal issues

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01

Whether the appeal is arguable

Holding

The appeal is arguable on the grounds that leave to amend may have clothed the High Court with jurisdiction post facto, and that the security orders may have been made suo motu without hearing the parties

Reasoning

The Court found that it was arguable whether the leave to amend the Respondent's pleadings clothed the High Court with jurisdiction to entertain the case after the fact, and whether the orders made against the Applicant were sought in the initial pleadings or made suo motu without a hearing. These are bona fide arguable points sufficient under the Kinyanjui v Ketter principles, without making definitive findings.

p. 8
02

Whether the appeal will be rendered nugatory if stay is not granted

Holding

The appeal will not be rendered nugatory because the Applicant, if successful, would be entitled to damages sufficient to compensate it

Reasoning

Applying the test of reversibility or adequacy of damages, the Court was satisfied that what is sought to be stayed (the continuation of High Court proceedings, default judgment applications, cargo discharge and possible sale) would not render the appeal nugatory since the Applicant would be compensable in damages if the appeal succeeded. The twin principles must both be satisfied; failing the nugatory limb, the application fails.

p. 8
03

The applicable principles for stay of proceedings under Kenyan and English law

Holding

The Kenyan position on stay of proceedings is not dissimilar to the English one; Rule 5(2)(b) jurisdiction is original, independent and discretionary and arises only where a notice of appeal has been lodged

Reasoning

The Court endorsed the English factors from Kings College Hospital v Thomas and NB v Haringey LBC (a stay is the exception; cogent evidence of the appeal being stifled; balance of harm; prospects considered only where strongly shown) and the Kenyan crystallization in Stanley Kangethe Kinyanjui v Tonny Ketter, finding the two jurisdictions' approaches substantially aligned.

p. 6

Legal principles established

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  • The Court of Appeal has jurisdiction to entertain an application for stay of proceedings arising from a ruling or order of the High Court exercising admiralty jurisdiction
  • An applicant under Rule 5(2)(b) must satisfy both twin principles - an arguable appeal and that the appeal will be rendered nugatory without the stay; where damages can adequately compensate the applicant, the nugatory test is not met

Court orders

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  1. 1.The Notice of Motion application dated 10th September 2021 is dismissed
  2. 2.Costs of the application are awarded to the Respondent

The bench

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

majority

Wrote the judgment

majority

Wrote the judgment

majority

Wrote the judgment

On appeal from
High Court of Kenya (Admiralty)
Jurisdiction invoked
Rule 5(2)(b) of the Court of Appeal Rules 2010, Section 3A and 3B of the Appellate Jurisdiction Act (Cap 9), and the inherent jurisdiction of the Court; with reference to Section 49(3) of the Senior Courts Act 1981 (England) and Sections 4(2) and (3) of the Judicature Act (Cap 8)

Relief refused

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Stay of the High Court proceedings pending the hearing and determination of the appeal from the Ruling of 14th July 2021

The appeal was found arguable, but the Applicant failed to establish that the appeal would be rendered nugatory, since damages would compensate it if it succeeded on appeal

p. 8

Costs

Dismissed with costs to the Respondent: 'the Notice of Motion application dated 10th September 2021 is dismissed with costs to the Respondent.'

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.

There is no doubt that this court has jurisdiction to entertain an application for stay of proceedings arising from a ruling or order of the High Court exercising admiralty jurisdiction.
p. 5Jurisdiction over stay applications in admiralty matters
It is arguable whether the leave to amend clothed the High Court with jurisdiction to entertain the case, post facto.
p. 8Arguability of jurisdictional challenge
The burden lies with the Applicant to show that its appeal will be rendered nugatory. The test to apply is to consider whether or not what is sought to be stayed if allowed to happen is reversible; or if it is not reversible whether damages will reasonably compensate the party aggrieved.
p. 8Nugatory test and burden of proof
We are satisfied that this application has no merit. Accordingly, the Notice of Motion application dated 10th September 2021 is dismissed with costs to the Respondent.
p. 8Disposition and costs

Issues in the judgment

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minor

The Applicant's counsel's citation of the English case appears with two different spellings in the judgment - 'Richbold Norway ASA' and 'Reichhold Norway ASA' - in the submissions and in the Court's own quotation respectively

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "The Owners of the Motor Vessel ‘Dolphin Star’ v E.T. Timbers Pte Limited (Civil Application E063 of 2021) [2021] KECA 303 (KLR)", Case Analysis (2021). Notice of Motion dated 10th September 2021 (Court of Appeal, Mombasa). Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2021/303/eng@2021-12-17

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