Ali v Receiver Manager Imperial Bank Limited (in Receivership) & another [2022] KEHC 13741 (KLR)

Ali v Receiver Manager Imperial Bank Limited (in Receivership) & another (Civil Case E748 of 2021) [2022] KEHC 13741 (KLR) (Civ) (19 July 2022) (Ruling)

Neutral citation: [2022] KEHC 13741 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Case E748 of 2021

DO Chepkwony, J

July 19, 2022

Between

Shahida Amir Ali

Plaintiff

and

Receiver Manager Imperial Bank Limited (in Receivership)

1st Defendant

Kenya Deposit Insurance Corporation

2nd Defendant

Ruling

1. The 1st and 2nd defendants (the applicants herein) vide a notice of motion application dated January 31, 2022 are seeking for orders that;1. spent;2. spent;3. the default judgment entered against the 1st and 2nd defendants on November 29, 2021 be set aside;4. the 1st and 2nd defendants be granted unconditional leave to defend the suit and leave to file a statement of defence out of time;5. costs of the application be provided.

2. The application is premised on the grounds on its face and the depositions in the supporting affidavit of Andrew Rutto, the 1st defendant’s/applicant’s liquidation agent sworn on January 31, 2022. He depones that vide A Plaint dated August 12, 2021, the plaintiff sued the defendants for Kshs 21,606,716 as compensation for items allegedly lost while in an alleged safety deposit box stored at the Imperial Bank Limited’s (in liquidation) Parklands branch at the time when Imperial Bank Limited was under receivership. That summons to enter appearance together with the plaint were served upon the defendants on September 30, 2021. That the 2nd defendant is required by law, specifically thePublic Procurement and Assets Disposal Act, to carry out a rigorous procurement process before appointing a firm of advocates which they did on November 10, 2021. Further that the process of procuring a firm of advocates took long and after analysis of quotations received, the Firm of Issa & Company Advocates was considered. That the defendant sent a letter of instructions dated November 26, 2021 to the said advocates but was received on December 21, 2021 during which period, the plaintiff had made its application to request for judgment against the defendants and which judgment was allowed on November 29, 2021. It is further argued that the delay was further occasioned by the delay by the Central Bank in approving the transition of the Imperial Bank Limited which was done on December 8, 2021. That upon entering appearance, the applicant’s advocate noticed that the matter had been set down for formal proof hearing on February 1, 2022 hence this application. It is contended that the delay is excusable and that it is in the interest of justice that the default judgment entered against the defendants on November 29, 2021 is set aside.

3. The application is opposed vide the replying affidavit of Shahida Amiral Ali sworn on March 15, 2022. It is stated that the suit herein was institutedvide a plaint dated August 12, 2022 for recovery of Kshs 21,606,716 as compensation for valuables lost in the custody of the 1st applicant. That at the time of filing the suit, the 1st applicant was under receivership of the 2nd applicant. That the applicants were duly served with the pleadings and mention notices. That the default judgment entered on November 29, 2022 was entered regularly following the applicant’s failure to enter appearance despite service. That the applicants were indolent and as such guilty of laches. That if the orders sought are granted, the respondent stands prejudiced. That this court has the discretion to decline the prayers sought, as such the application dated January 31, 2022 be dismissed with costs.

4. By consent of parties, the application was canvassed by way of written submissions which I have read and considered.

5. Order 10 rule 11 of the Civil Procedure Rules, 2010 provides;“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.”

6. The Court of Appeal inPithon Waweru Maina v Thuka Mugiria [1983] eKLR considered the principles upon which a judgment can be set aside and held as follows:“a)Firstly, there are no limits or restrictions on the judge’s discretion except that if he does vary the judgment he does so on such terms as may be just...The main concern of the court is to do justice to the parties, and the court will not impose conditions on itself to fetter the wide discretion given it by the rules. Patel v EA Cargo Handling Services Ltd[1974] EA 75 at 76C and E b). 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 116at 123B, Shabir Din v Ram Parkash Anand (1955) 22 EACA 48c). 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 matter 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.

7. It is clear that this court’s discretion of setting aside a default judgment is unfettered and must be exercised judiciously. The service of summons is admitted and the delay entering appearance has been blamed on the prolonged procurement process in obtaining a firm of advocates to represent the defendants. This is a satisfactory reason for delay although the defendants would have notified the plaintiff through a letter of the delay in the procurement as a courtesy. The plaintiff was justified to move the court for a default judgment.

8. As to whether the draft statement of defence attached herein raises triable issues, I am persuaded by the observation of Duffus P. in the case ofPatel v East Africa Cargo Handling Services Ltd (1974) EA 75 who held that:-“The main concern of the court is to do justice to the parties and the court will not impose conditions on itself to fetter the wide discretion given to it by the rules. I agree what where it is a regular judgement as is the case here the court will not usually set aside the judgment unless it is satisfied that there is a defence on the merits. In this respect defence on merits, does not mean in my view, a defence that must succeed, it means as Sheridan, J put it “a triable issue” that is an issue which raises a prima facie defence and which should go to trial for adjudication.”

9. This court has considered the copy of the draft defence exhibited. The same raises triable issues which include but not limited to whether the suit discloses any reasonable cause of action and whether the plaintiff was a party to the license agreement for safe deposit locker signed between Abdul Amin, Zohra A.A and Rafzq Jaffer Ali as licensees with the 1st defendant.

10. Article 159 of the Constitution of Kenya, 2010 preserves the right to be heard and it is not within this court to limit such right. It, therefore, favors the interest of justice to allow this application.

11. Owing to the foregoing, this court makes the following orders;a.The application is merited and the same is allowed.b.The default judgment against the applicant is set aside.c.The defendants to pay Kshs 20,000/= as throw away costs.

It is so ordered.

RULING DELIVERED VIRTUALLY, DATED and SIGNED at NAIROBI THIS ...19THDAY OF JULY 2022D. O. CHEPKWONYJUDGE