A.K. Abdulgani v Geofrey Nzioka Ndumbu [2016] KEHC 5388 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   APPEAL NO.  247 OF 2010

A.K. ABDULGANI ………………………………………….APPELLANT

VERSUS

GEOFREY NZIOKA NDUMBU ………………..........………RESPONDENT

JUDGMENT

This appeal arises from the ruling of Honourable A.K. Ndungu Senior Principal Magistrate (as he then was) in Milimani Commercial Court Nairobi CMCC No. 4942 of 2009 delivered on 24th June 2010.

The background  to this appeal is  that by a plaint dated  31st July  2009 the respondent herein Geoffrey Nzioka  Ndumbu filed suit  against  the appellant  A.K. Abdulgani in Nairobi CMCC 4942/2009 seeking  or special damages   in the sum  of kshs  2,072,233. 00 being costs  of repairs to motor vehicle  registration No.  KAS 962K which   was involved  in a road accident  collision  with KAS 971X  and  whose  occurrence  the respondent blamed the negligence  of the  appellant’s driver then driving motor vehicle  registration No.  KAS 971X .

The affidavit  of service sworn by Nyahima  Maganga  of Mombasa  on 2nd  November  2009 and filed in court  on 27th November  2009  shows that  he  served  summons to enter appearance  on the defendant   at Port Reitz on Mr Kaku  the Manager  of A.K. Abdulgani Limited on 28th October  2009.

On 27th November  2009 the respondent’s  counsels requested  for entry of  judgment under Order IXA Rule 3  of the Civil Procedure Rules in default of  the appellant’s  entry of appearance  which judgment  was endorsed  on 26th January  2010  by the magistrate.  The respondent’s counsels then proceeded to request for decree and certificate of costs.  On 30th  March 2010, vide an  application dated the  same day, the appellant  sought for  stay of execution of decree, setting aside  of the exparte  judgment  entered on  26th January 2010  together with   all consequential orders; and for unconditional leave to defend the suit.

That application for setting aside exparte judgment was opposed by  the respondent.  The trial magistrate  heard the  application and by  a ruling delivered on 24th June 2010, he dismissed  the application by the appellant  on the basis  that  service  was properly effected  and that there  was  indolence  on the part of the  appellant and  its insurance company hence  the lawful  judgment  could not  be disturbed  by inexcusable mistake on the  part of the appellant  or their  agent; among  other reasons.

It is that ruling and order that the appellant was aggrieved by and as a result, filed this appeal. The Memorandum of Appeal sets out six (6) grounds of appeal namely:

The  Learned magistrate erred  in law and  in fact by finding that there were no  good reasons  advanced  in the applicant’s application  to set aside  interlocutory  judgment consequently condemning  the defendant  unheard  for  a genuine mistake  of its  insurers.

The  Learned magistrate erred  in law and  in fact by  not finding that the affidavit  on record of  Linda  Olweny  put forward  a case of  an  excusable  error  or mistake in  misfiling of the summons and  refused to set aside  the default  judgment  hence occasioning injustice  and hardship  to the defendant.

The  Learned magistrate erred  in law and  in fact by  ignoring  the affidavits by the applicant/defendant and relying on the respondent’s  grounds of opposition  notwithstanding   that the respondent had not  filed any  replying affidavit.

The Learned magistrate erred in law and in fact in declining to use his discretion in favour of the applicant/defendant.  Consequently he condemned the defendant unheard notwithstanding that the defendant had attached a copy of its defence which raised serious legal issued as to the validity of the suit.

The  Learned magistrate erred  in law and  in fact in giving  more weight to the plaintiff’s/respondent’s default judgment  obtained as against the applicant/defendant and causing great prejudice  to the defendant  whereas had he  exercised  his discretion  to set  aside the  said interlocutory  judgment , the learned magistrate  would have caused no prejudice  to the plaintiff who would have  been compensated  by being  paid  thrown away  costs  and at the same  time his case  be heard on  merit  by  the Honourable court.

The  Learned magistrate erred  in law and  in fact by not  finding that   this  was an  applicant’s/defendant’s application not  his insurers’ and proceeded to condemn the defendant/applicant as being indolent in which case  the defendant would have to  deal with the claim on its own.

The appellant prayed that   the  ruling  dismissing the application for setting aside of exparte judgment in default be set aside, interlocutory  judgment entered  be set aside  with all consequential orders  and it be granted  unconditional  leave to  defend the  suit and  any  other  or further  relief the court may deem fit  to grant  together  with costs of the suit.

The parties’ advocates  agreed to  dispose  of this appeal by way  of written  submissions but only  the appellant  filed their submissions dated  30th October  2014.  According to the appellant, there  was excusable  mistake by the  appellant’s insurance company  as explained in the  affidavit  of Linda Olweny  that they  received  summons from the  appellant but  misfiled them inadvertently.  It is also  contended that the appellant  had a good defence to the  respondent’s  claim in that  ownership of the motor vehicle   was denied; that  there  was  no formal proof of the claim for loss of use; there  was  contribution, no particulars of the damaged parts   were particularized  and that therefore  the interlocutory  judgment  was  irregularly  entered  as the pleaded  special damages  required strict  proof   by  way of  formal proof  hearing   which never  took place.  Reliance  was placed on Charles  Mwalia  V KBS HCC  1058/2000 on the principles for setting aside   interlocutory  judgment; CENEAST  AIRLINE LTD V Kenya  Shall Ltd  cited in Patel V EA Cargo  Handling  Services [ 1974] EA, 75; Sebei District  Administration V Gasyah[1968] EA  300.  It was contended that albeit interlocutory judgment was lawful, but that the trial magistrate failed to exercise his discretion correctly in favour of the appellant.  Reliance   was placed on the case of Shah V Mbogo & Another[1968] EA 93.  The appellant prayed for an order setting aside the judgment entered in the lower court and leave be granted to defend the suit on merit.

This being a first  appeal, this court is  bound by the principles  espoused in Section 78  of the Civil Procedure Act, to reevaluate, reexamine and reconsider the lower court   record and the affidavit  evidence before it   and arrive  at its own  independent conclusion as was settled  in the case of  Selle V Associated  Motor Boat  Company Ltd [1968] EA 123. Thus, thisCourt is not necessarily bound to follow the trial court’s findings of fact if it appears that the trial court had clearly failed on some point to take into account some circumstances probabilities   materially to estimate the evidence. Additionally, this court is  bound by  the principles  settled in the case of  Mbogo V Shah & Another  [1968] EA 93 where the Court  of Appeal set  out circumstances   under which  an appellate  court may interfere  with a decision of the trial court. It was stated thus:

“ I think  it is well settled that this court  will not interfere  with the  exercise of discretion by the inferior  court unless  it is satisfied  that the decision is clearly wrong because  it has misdirected  itself  or because  it has acted  on matters on which  it should not  have acted or because  it failed to take into consideration matters which it should  have taken into account  and consideration and in doing so arrived  at a wrong conclusion.”

The decision that is impugned was made out of evidence by affidavit and grounds of opposition.  The issue of demeanor of witnesses does not therefore arise.  The decision  was  refusal by the trial court to set aside  exparte judgment  entered in  default of  appearance so as to enable the appellant/defendant unconditionally  defend the  suit in the court below.

The established principles for setting aside interlocutory/exparte judgment are now well settled.  The power to set aside interlocutory/exparte  judgment  is a discretionary  one and  freely donated  by the provisions  of  Order IXA Rule  10  of the old  Civil Procedure  Rules  ( Now Order 10 Rule  11 of the  2010 Civil Procedure Rules). The provisions state:

“Where judgment has been entered under this order the court may set aside or vary such judgment and any consequential decree or order upon such terms as are just.”

The principles guiding the setting aside exparte  judgment  and in the exercise  of the court’s  unfettered  discretion  were also set out in Maina V Mugiria  [1983] KLR  78, Kimani V McConnel[1966] EA  547and Patel V EA Cargo  Handling  Services [1974] EA  75.

The above  authorities establish that the  discretion of the court  to set aside  exparte judgment but that such  discretion  was intended  to be  so exercised  to avoid justice  or  hardship  resulting  from accidents, inadvertence  or excusable  mistake or  error but is not  designed to assist the  person who has deliberately sought, whether  by evasion or otherwise, to  obstruct  or delay  the course of  justice. In Maina V Mugiria (supra) the Court of Appeal stated:

“The principles governing the exercise of judicial discretion to set aside an exparte judgment obtained in default of either party to attend the hearing are:

Firstly, there are no limits or restrictions on the judge’s discretion except that it should be based on such terms as may be just because the main concern of the court is to do justice to the parties.

Secondly, this discretion is intended  so to be  exercised to avoid injustice  or hardship  resulting  from accident, inadvertence, or excusable  mistake or error, but is not  designed to assist the  person who has deliberately sought, whether  by evasion or otherwise, to  obstruct  or delay  the course of  justice ( Shah V Mbogo [1967] EA 116 at  123B, Shabir  Din V Ram Parkash Anand  [1955] 22 EACA 48).

Thirdly, the Court of Appeal should not  interfere  with the  exercise  of  the discretion of a  judge unless  it is satisfied that   the judge in exercising his discretion  has misdirected  himself  in some  manner  and as a result  has arrived at a wrong  decision, or unless it is manifest  from the case  as a whole  that the judge  has been  clearly wrong in the exercise of his  discretion and that  as a result  there has been misjustice.  Mbogo V Shah [1968] EA 93.

The court has no discretion where it appears there has been no proper service (Kanyi Naran V Velji Ramji [1954] 21 EACA 20).

A discretionary power should be exercised judicially and in a selective and discriminating manner, not arbitrarily and idiosyncratically.  (Smith V Middleton [1972] SC 30. ”

I am also inclined to accept the holding in Jesee Kimani V MC Connel [1966] EA 547 where the court held that:

“Some of the matters  to be considered when  an application is  made are, the facts  and circumstances, both  prior  and subsequent, and all  the respective merits  of the parties  together with any other material  factors  which appear  to have  entered into the passing of the judgment, which would not or might  not have  been present  had the judgment  not been exparte and  whether or not it would be  just and reasonable, to set aside or vary the  judgment, upon terms to be imposed .”

In the present case, there is  no dispute that the summons to  enter appearance  were served  upon  the appellant  and that  there  was  no appearance   entered within the  prescribed  period hence, the interlocutory  judgment in default  of appearance  as entered  was regular. However the appellant’s  explanation  for failure to enter appearance  in time   was as deposed  by Muradali  Mohamed  Hussein in his  sworn affidavit  dated  30th March  2010 that upon the appellant  being served with summons to enter appearance, they proceeded  and handed it  over to  their insurers Occidental  Insurance  Company Ltd who did not  give the  appellants  any feedback and the  appellants  believed that  an appearance   and defence  must  have been filed only  for them  to receive   notice of entry of judgment  on 22nd March 2010.

That immediately they received notice of entry of judgment, they contacted  their  insurance company  over the issue  and were informed  that the  insurance  had inadvertently  filed  away the  summons without  acting on them, a mistake  they regretted vide the affidavit of Ms Linda Olweny the insurance company’s legal officer.  The appellant  contended that  the failure to  appear  and defend the suit  was  not intentional and that they  had  a good defence to the claim, urging the court  not to  visit  on them  mistakes  of their insurance  company which mistake  was  inadvertent  and excusable.  He annexed copy of draft defence.

In the affidavit  of Linda  Olweny  sworn on 30th March 2010, the  deponent who  was the appellant’s  insurer’s legal officer acknowledged receiving summons from the appellant on 2nd November  2009 and inadvertently filing them together  with other documents  while sorting  out  the department  until 24th March 2010 when  notice of entry of judgment  and  intention to execute  was served on  them.  She regretted the mistake and apologized and urged that the same not to be visited upon the appellant who had a good defence.

The trial  magistrate  in dismissing the appellant’s application for  setting  aside  exparte judgment  observed  that the  court  would  always set aside its orders  where  there is  an excusable  error  or mistake  in order to avoid  injustice or hardship being  occasioned  to a party.  However, he noted that “ in  a situation   where service  is  properly effected  and  due to what is sheer negligence  on the part of the applicant’s insurers by failing to act as  expected  the matter proceeds  and orders  regularly  entered.  It is my view improper to interfere with such orders.” “  The court cannot assume a supervisory role in how persons or body of persons conduct their business.  If there are administrative lapses at the defendant’s insurer’s firm that is not for the court to correct.  In any  event it is the insurance  company that ought  to take cause of the  claim and when  such lethargically  attitude  to court  proceedings is exhibited then  the firm must bear the consequences  of such  indolence.  Equity comes to the aid of the diligent and not the indolent.  The plaintiff who lawfully obtained orders should not be subjected to suffering by the inexcusable mistake as the part of the defendant or their agent.  Consequently, the application before me must fail.  The same is dismissed with costs to the plaintiff/respondent.”

From the above  extract  of the  ruling by the trial  magistrate, the issue is whether the trial  magistrate correctly exercised his discretion  in refusing  to set aside  the exparte  judgment in order for  the  appellant to be accorded   an opportunity  to be heard  in their  defence of  the respondent’s claim.

In the Court of Appeal decision of Philip Keipto Chemwolo &another v Augustine Kubende[1986] KLR 492-(1982-88)1KAR 1036 the court expressed itself thus concerning mistakes which are admitted:

“ it must be recognized that blunders will continue to be made from time to time and it does not follow that because a mistake has been made a party should suffer the penalty of not having his case determined on its merits.”

Nonetheless, it is not in every case that a mistake committed by a party, his advocate or insurance company that would be a ground for the court to exercise its discretion in favour of the applicant. Each case must be treated according to its circumstances. The conduct of the party seeking discretionary orders of the court is also factor to be taken into account.

In this case, the appellant’s insurance company legal officer Linda Olweny has candidly explained that they inadvertently filed away their insurer’s matter after receiving summons to ente appearance. Iam inclined to agree with the appellant on this point since misfiling or filing away does in some instances happen and such possibility cannot be ruled out in this case.

In the Belinda Murai & Others (Supra) case, Madan JA held:

“A mistake is a mistake. It is no less a mistake because it is committed by Senior Counsel.  Though in the case of junior counsel the court might feel compassionate more readily.  If  a blunder  on a point  of law can be  a mistake, the door to justice is not closed because a mistake  has been made by a lawyer  of experience  who ought to know  better.  The court may not condone it but it ought to certainly to do whatever   is necessary to rectify it if the interests of justice so dictate.”

The leaned Judge of Appeal in the Belinda Murai(supra) case further went on to state that:-

“ It is  well known that courts of law themselves  make mistakes which  is politely  referred to as erring  in their interpretation  of laws  and adoption of  legal point of view which courts  of appeal sometimes overrule………”

I am in the circumstances inclined to give a benefit of doubt to the Appellant that there was a likelihood of filing away and forgetting and or archiving away of the parent file for this matter which caused the delay in instructing an advocate to take up the defence on behalf of the appellant and leading to the entry of judgment against the appellant in default of appearance and defence.

On the other hand, this court must also establish whether the appellant had an arguable defence that raised triable issues. The respondent’s claim in the  lower  court  was for a sum of kshs 2,072,233 being  the cost of repairs  of a  motor vehicle  KAS 962K, loss  of  user of the said motor vehicle, investigators fees, assessor’s fees  and police abstract fee.

The appellant’s draft defence denied ownership of the accident motor vehicle KAS 971X.  They also denied  that there  was  an accident involving  the two  motor vehicles  or that  their driver  was negligent in  the manner  he allegedly  drove the alleged accident motor vehicle, while  also pleading  that the suit  as filed  was defective and that the driver  of the motor vehicle  KAS 962K  was  negligent in the manner  in which  he drove, steered and controlled or managed  motor  vehicle  registration No.  KAS 992K Isuzu Lorry.

As earlier  stated, the power to set aside  exparte  judgment  is a  discretionary  one, which discretion  must  nonetheless be exercised  judicially and not  arbitrarily  and  idiosyncratically.  In Pithon Waweru  Maina V Thuga Mungiria  (supra)  the Court  of Appeal stated  that:

“ The nature of the action should be considered , the defence  if one has been brought  to the notice of  the court; however irregularly, should be  considered; the question as to whether  the plaintiff  can reasonably  be compensated  by costs  for any delay occasioned  should be  considered; and finally, it should  be remembered  that to  deny the  subject  a hearing  should  be the last  resort  of a court ( Jamnadas V Sodha Gordandas  Hemraj  [1952] 7 ULR 7).”

In my humble view, the trial magistrate did not exercise his discretion judiciously.  He did not take into account any of the established principles for setting aside exparte judgment.  He concentrated on the mistake by the insurance company in filing away the served summons.  That  mistake    was owned  up and in honesty, by the said  insurance  company’s  legal officer, Linda Olweny who explained the  circumstances  and regretted  the omission  as being inadvertent and not deliberate.  The trial magistrate however refused to accept that explanation and concluded that the omission was due to lethargy   attitude to court proceedings.

The affidavit of Linda Olweny has not in my humble view demonstrated any lethargical attitude by the insurance company to court processes.  She explains how she received summons and inadvertently filed them away with other documents and only came to when they were notified of entry of judgment.  That explanation in my view is not one of lethargical attitude.  It is a regrettable explanation which the trial magistrate harshly refused to accept.

In addition, the trial magistrate  did not consider  the draft defence  on record, the fact  that the  plaintiff/respondent could have  been adequately compensated  by an  award of costs  for the delay occasioned  and the cardinal principle   that to deny the subject  a  hearing should be  the last resort  of a court.

In this case, the failure to enter appearance and file defence to the respondent’s claim was due to the mistake and delay occasioned by the appellant’s insurance company who promptly received the summons. In my humble  view, this is a  matter where  the respondent could  have been adequately  compensated  by an award  of costs  for the delay occasioned by the  insurance  company’s dilatoriness  and the appellant should not  have been denied  a hearing because of  the mistake of its insurance  company.  In my view, no injustice would have been occasioned  to the respondent   that could  not be  compensated  by costs   since the  application for  setting aside  exparte  judgment  was made  timeously and without undue delay.

The draft defence in my view, raised   triable issues which the trial magistrate ignored.  He did  not examine  the justice of the  case   for the appellant  and whether  there was any triable issue to be  considered  and accord  the appellant  an opportunity to ventilate  its challenge  to the claim  by the respondent, subject  to being penalized in costs, of course, so  that the  matter could be properly  reviewed on merit.

Therefore, applying the principles which I have outlined   herein for the setting aside  of exparte judgment in default of appearance  and defence, and in order to  accord  the appellant  a hearing, I  hereby allow this appeal and set  aside the trial  magistrate’s  order made on  24th June  2010  dismissing  the appellant’s application dated 30th March, 2010  and in  its place  substituting  that order  of dismissal  with an order allowing  the application dated  30th March 2010 to the effect  that the exparte  judgment  and all consequential orders  entered against  the appellant  in favour of the  respondent are hereby set aside  and the case  is remitted  to the Chief Magistrate’s  Court at Milimani  for hearing and  final determination on merit.  Since this judgment is delivered handwritten, the appellant  is hereby granted  leave of 21 days from the date when the file herein is remitted to the lower court  to file and serve the defence upon the respondent.

The respondent shall have costs of the application in the lower court as pronounced by the trial magistrate.

I order that each party bear their own costs   of this appeal.

Dated, signed and delivered in open court at Nairobi this 17th day of March 2016.

R.E. ABURILI

JUDGE