Alliance Media Kenya Ltd v Sports Stadia Management Board [2021] KEHC 9500 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NAIROBI

MILIMANI COMMERCIAL & ADMIRALTY DIVISION

CIVIL SUIT NO. 246 OF 2012

ALLIANCE MEDIA KENYA LTD...RESPONDENT/PLAINTIFF

VERSUS

SPORTS STADIA

MANAGEMENT BOARD..................APPLICANT/DEFENDANT

RULING

By a Certificate of Urgency dated 31st January 2020 filed together with a Notice of Motion brought under the provisions of Section 1A, 1B, 3A and 95 of the Civil Procedure Act, cap 21 and order 10 Rule 11, Order 51 Rule 1 of the Civil Procedure Rules, 2010and all other enabling provisions of the law, and a Supporting affidavit, the Applicant/Defendant urged the court to be heard on priority basis on grounds;

a) The Applicant/Defendant seeks to file its Defence and counterclaim out of time.

b) The Applicant/Defendant seeks to set aside the Interlocutory Judgment issued in this suit.

c) The delay to file the defence and counter-claim was occasioned by the Applicant’s/Defendant’s Counsel and the same should not be burdened upon the Applicant.

d) Failure to urgently dispense with the Applicant in the first instance will occasion the Applicant severe injustice and irreparable harm.

In the supporting affidavit of Pius Metto the Director General in the Applicant’s/Defendant’s Organization, he averred that the Applicant instructed its Advocates to represent it in a suit instituted by the Respondent/Plaintiff herein in good time, once it was served with the pleadings and summons to enter appearance but the Advocate failed to enter appearance and file a defence in good time. Marked “PM-1” is a copy of the Notice of Appointment of Advocates dated 8th May 2012.

The Applicant stated that it had no established legal office in place when this suit was instituted and therefore tracking the progress of the case was dependent upon the Counsel on record who in return failed to update the Applicant on such progress.

The Applicant stated that its Legal officer made several visits to the Counsel’s offices and perused the court file to find an interlocutory Judgment on record.

The Applicant appointed the firm of M/S Bake Hassan Hisham & Associates Advocates on 23rd July 2019 to represent the it in this matter. Marked “PM-2” is a copy of the instructions letter dated 23rd July 2019.

The Applicant stated that the matter was referred to Court Annexed Mediation on 13th November 2018, when parties highly anticipated to settle the matter but unfortunately no amicable agreement was arrived at. Marked “PM-3” is a copy of a notice dated 13th November 2018 from the Mediation Deputy Registrar.

The delay to enter appearance and file a defence was as a result of the mistake of counsel and the same ought not to be levied upon the Applicant.

It’s in the public interest that the Applicant be allowed to file its defence since it’s a Government institution involving the usage of public funds whereas the Applicant has lost an approximate sum of more than Ksh 23,100,000/- being the outstanding rental and/or revenue arrears to be paid by the Respondent.

The Applicant averred that none of the parties herein will be prejudiced in any way whatsoever by this Court granting leave for the Applicant to file its defence and counterclaim out of time.

The Applicant’s Defence and counter claim raises triable issues that call for this court’s intervention and determination.

REPLYING AFFIDAVIT

The Application was opposed vide an affidavit dated 3rd March 2020, sworn by the Business Development Manager of the Plaintiff. He averred that this matter was filed on 26th April 2012 by the Plaintiff seeking the following prayers;

a) A declaration that at no time did there exist a landlord/tenant relationship and therefore no rent is outstanding;

b) A declaration that the distress for rent levied against the Plaintiff on 11th April 2012 is unlawful and hereby set aside;

c) A permanent injunction restraining the Defendant by itself, its servants, agents and/or associates from levying distress against the Plaintiff and/or proceedings to remove and auction the Plaintiff’s goods proclaimed on 11th April 2012.

d) A permanent injunction restraining the Defendant by itself, its servants, agents and/or associates in any way interfering with the Plaintiff’s Bill Boards located at the Defendant’s premises at Moi International Sports Centre-Kasarani and Nyayo National Stadium and in particular the right of the Plaintiff to remove such bill boards for the sites aforesaid;

e) General damages for unlawful distress for rent;

f) Costs of the suit;

g) Interest at Court rate; and

h) Any other relief or further reliefs the court may deem fit to grant.

The Respondent/Plaintiff stated that their Advocates proceeded to serve the Summons to enter appearance on the application dated 26th April 2012 to the Applicant/Defendant who duly instructed the firm of M/S Nyaberi & Company Advocates to act for them.

Simultaneously with the Plaint, the Plaintiff filed an application under a Certificate of Urgency. The Defendant went ahead and opposed the said application by filing Grounds of Opposition dated 21st May 2012. Marked JM2. At this particular time, the Defendant was yet to file a Defence to the Plaintiff’s claim.

In 2016, the Plaintiff filed another suit against the Defendant (HCCC No 454 of 2016) which was strenuously defended successfully by the Defendant. Marked JM3 is a statement of Defence by the Defendant in HCCC No. 454 of 2016.

The Plaintiff waited for a year before requesting for interlocutory judgment against the Defendant. The request was made on 15th April 2013.

The Plaintiff stated that the request for interlocutory judgment was made by the Plaintiff two (2) months after the Defendant had instructed another firm, M/S Wairuhiu K’Owade & Nganga advocates to come on record and defend their interests in this suit. MarkedJM4 is a copy of the Notice of Change of Advocates filed in court on 28th February 2013.

The Plaintiff averred that once interlocutory judgment had been entered against the Defendant, the Plaintiff’s Advocates prepared a draft decree and forwarded it to the Defendant’s Advocates on record for their approval and/or amendment.

Thereafter, the Plaintiff’s advocates invited the Defendant’s advocates severally to attend court for formal proof. Marked JM6is the Notice of Formal Proof.

The Plaintiff asserted that none of the appointed advocates sought to set aside the interlocutory judgment which was within the Defendant’s knowledge and that of their advocates on record. However, the Defendant’s records show that their Advocates were notified and were aware of the interlocutory judgment as early as 1st October 2013 as set out in their letter of 23rd October 2013. Marked JM 7 is a copy of the said letter.

APPLICANT/DEFENDANT’S FURTHER AFFIDAVIT

The Application is further supported vide an affidavit dated 4th March 2020, sworn by Pius Metto, Director General of the Defendant/ Applicant herein. The Defendant/Applicant averred that it had instructed two different Counsel to represent it in this particular suit and the HCCC 454 OF 2016 suit which are equally different suits altogether.

The Defendant stated that the Plaintiff/Respondent had not adduced any evidence to prove the presence of any advocate-client communication between the Counsel previously on record and the Defendant concerning the progress of the suit.

The Defendant averred that it became aware of the presence of the interlocutory judgment in 2019 after having established from the Attorney General’s Office a Legal Office within itself.

The Defendant/Applicant being dissatisfied with lack of communication and poor services rendered by its initial Counsel, opted to instruct the Firm of Jamal Bake which acted promptly by filing the application before this court.

The Defendant instructed its current Counsel on record when the suit had already been referred to Court Annexed Mediation and an act to set aside the interlocutory judgment while the mediation process is ongoing would be in bad faith, an abuse of the court process and a dubious effort to frustrate the said mediation.

The Application herein is not an afterthought and the Defendant has moved to court the earliest opportune moment immediately after conclusion of the Mediation process.

APPLICANT’S/DEFENDANTS SUBMISSIONS

The Applicant submitted that the mistake of its Counsel upon failing to file a defence on its behalf should not be visited upon it and that this Court should allow the Applicant table its defence and be accorded a fair hearing. In the case of Philip Chemolo & Another vs Augustine Kubede [1982 -88] KLR 103 at 1040 Aploo J/A (as he then was) stated that:

“Blunders will continue to be made from time to time and it does not follow that because a mistake has been made that a party should suffer the penalty of not having his case heard on merit.”

It was Applicant’s submission that it should not be denied its constitutional right of being heard and that this Court should invoke its inherent jurisdiction and allow the Applicant file its defence in upholding the provisions of Article 159 (2)(d) and Article 50 of the Constitution of Kenya, 2010. The Rules of Natural Justice dictate that the court should hear and determine each case on its merit and that no litigant should be driven from the seat of justice without being heard.

In the case of Martha Wangari Karua vs The Independent Electroral and Boundaries Commission & Others, Nyeri Civil Appeal No. 1 of 2017, where the Court held that;

“the Rules of Natural Justice require that the court must not necessarily drive any litigant from the seat of justice without a hearing, however weak his or her case may be.”

This was also reiterated in the case of Mbaki & Others vs Macharia & Another (2005) 2 EA 206, at page 210, where the court stated that;

“the right to be heard is a valued right. It would offend all notions of justice if the rights of a party were to be prejudiced or affected without the party being afforded an opportunity to be heard.”

The Applicant herein is a Governmental Institution dealing with tax payers’ money and therefore it is in the public interest that the Applicant be allowed to file its defence in order to avoid plunder into the Tax payers’ Monies. In the case of Bank of Africa Kenya Limited vs Put Sarajevo General Engineering Co. Ltd & 2 Others [2018]eKLR, Lady Justice Maureen A. Odero held that;

“The amount involved in this suit is a very substantial sum USD 1,280,881. 31 approximately Ksh 133,211,700/- based on exchange rates in the year 2017 when the suit was filed. This is not an amount to be sneezed at. Justice demands that the applicant be accorded an opportunity to present his defence before being condemned to pay such a huge sum of money. The defendant deserves to be allowed an opportunity to present his case and have the same determined on its merits.”

It was the Applicants submission that it had lost an approximate of Ksh 23,100,000/- of the tax payers’ money being rental and/or revenue arrears following default in rental payment by the Plaintiff/Respondent. It is vividly clear that the judgment entered in favour of the Plaintiff/Respondent herein will occasion great injustice to the Defendant/Applicant and the entire public to set it aside and allow the Defendant/Applicant’s case be heard.

Order 10 Rule 11 of the Civil Procedure Rules provides that;

“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.”

RESPONDENT /PLAINTIFF’S SUBMISSIONS

The Respondent/Plaintiff submitting on whether the Interlocutory Judgment entered was regular, stated that it was not in contention as to whether the Defendant/Applicant was served with summons to enter appearance or not. Having been duly served with the summons to entered appearance, together with the Plaint, the Plaintiff’s/Respondent’s application of even date, the Defendant/Applicant elected to oppose to the said application through the firm of Ms Nyaberi Company Advocates by filing grounds of opposition and a replying Affidavit but chose to put in a defence/counterclaim to the Plaintiff’s claim.

The Respondent submitted that any Advocate appointed by a litigant has full and proper instructions from the litigant. In the present case, at no particular time did the Advocate on record for the Applicant state that he did not have full/proper instructions to act for the Defendant/Applicant.

Having been duly served with summons to enter appearance together with the Plaint and the application dated 26th April 2012 and the Defendant filed a Replying Affidavit to the Motion dated 20th April 2012 and Notice of Appointment of Advocates. It however neglected to file a defence to the Plaint, the Plaintiff was right to request for interlocutory judgment as provided for under Order 10, Rule 6 of the Civil Procedure Rules 2010.

The Respondent submitted that the Defendant having appointed a firm of Advocates to represent them, it is presumed and well known that all correspondences are to be made through the said firm. Therefore, for the Defendant to allege that it was not aware of the progress. As is common practice, the Plaintiff’s advocates did inform the Defendant’s Advocates of the interlocutory judgment.

Further the Defendant/Applicant waited for seven (7) years in order to file an application to set aside the interlocutory judgment. The basis of their application is Article 159 (2) (d) and Article 50 of the Constitution of Kenya 2010. Taking into account the principles of equity, equity does not aid the indolent, in this case the Defendant is guilty of laches.

In Ecobank Kenya Limited vs Minolta Limited & 2 Others [2018]eKLR, Justice Sewe notes at paragraph 19 of the Court’s Judgment by echoing the sentiments of Kiaga J.;

“I am not in the least persuaded that Article 159 of the Constitution and the Oxygen Principles….were ever meant to aid in the overthrow of destruction of rules of procedure and to create an anarchical free for all in the administration of justice…”

Therefore, the Respondent submitted that the Applicant failed to take any expeditious and necessary steps to set aside the Court’s Order and cannot now seek the aid of Articles 50 and 159 (2)(d) of the Constitution of Kenya 2010to tilt the balance scale on its side despite having knowledge of the Interlocutory judgment entered back in 2013.

Further that the current firm of Advocates, Jamal & Bake Hassan was instructed by the Defendant on 23rd July 2019 to represent its interests and there is no reason given as to why they did not apply to set aside the interlocutory judgment until eight (8) months later. The delay is inordinate and therefore inexcusable.

The Respondent in its submissions on whether the Defendant’s/Applicant’s application dated 31st January 2020 is merited relied on the case of Michael Kamau Gakundi vs Daima Bank Limited & Another [2012]eKLR, where Havelock J. at paragraph 10 by citing Kimaru J. Notes that;

“ it is duty of the litigant to keep in touch with his advocate so as to know the fate of the case. It appears that in this case, the Appellants were content to have the suit remain pending and must therefore bear the consequence.”

The Respondent submitted that the only reason given by the Applicant is the alleged mistake by the Counsel which has not been substantiated and if there were such mistake, the Defendant is not without recourse. It can seek compensation from its Counsel who acted negligently. There is no affidavit by the Counsel who allegedly made the mistake confirming such fact. This is therefore a mere allegation by the Deponent of the Supporting Affidavit which remains unsubstantiated.

The Respondent submitted that the prayers sought by the Applicant are the exercise of discretion by the court. As was held in Shah v Mbogo as noted in paragraph 2 of Shadrack Mwirigi Baariu vs Marania Limited [2018] eKLR, where the learned judge cited Shah vs Mbogo (1967) EA 166, that the principles governing the exercise of the judicial discretion in setting aside ex parte judgment obtained in the absence of an appearance of defence.

DETERMINATION

The issue for determination is whether Interlocutory judgment entered for the Plaintiff against the Defendant should be set aside or not.

The Plaintiff served the Defendant with the Plaint and Summons Interlocutory judgment was entered and a decree was issued on 15th April 2013.

The Defendant does not challenge service of the Plaint and Summons

Therefore, the impugned Interlocutory judgment was regular service under Order 5 CPR 2010 was sufficient.

The parties through Counsel pursued the application dated 26th April 2012 and vide Ruling of 20th September 2012 temporary injunction was granted. The parties then pursued out of court settlement but they did not culminate to Consent/Settlement. Parties pursued mediation and then failed and now resulted to hearing and determination of the suit.

The Defendant/Applicant deponed that the lack of filing a Defence within the requisite period was realized in 2019 through AG’s office as various advocates on record for the Defendant failed to fulfil the obligation to file the Defence. The draft defence and Counterclaim is annexed to the application for filing and serving and would not occasion injustice but allow the matter in issue to be fully heard and determined.

The Court relies on the case of;

James Kanyiita Nderitu & Another vs Marios Philotas Ghikas & Another [2016]eKLR,where the Court of Appeal stated that;

“From the outset, it cannot be gain-said that a distinction has always existed between a default judgement that is regularly entered and one which is irregularly entered. In a regular default judgment, the defendant will have been duly served with summons to enter appearance or to file defence, resulting in default judgment. Such a defendant is entitled, under order 10 Rule 11 of the Civil Procedure Rules, to move the court to set aside the default judgment and to grant him leave to defend the suit. In such a scenario, the court has unfettered discretion in determining whether or not to set aside default judgment, and will take into account such factors as the reason for failure of the defendant to file his memorandum of appearance or defence, as the case may be; the length of time that has elapsed since the default judgment was entered; whether the intended defence raises triable issues; the respective prejudice each party is likely to suffer and whether on the whole it is in the interest of justice to set aside the default judgment, among others….”

This matter was filed on 20th April 2012 and todate ,9 years on, it has not been heard and determined. Clearly, both parties have delayed hearing and conclusion of the matter. On the other hand, the Defendant explained in great detail how Counsel on record failed to file Defense and did not convey relevant communication to the Applicant. The Applicant appointed another Counsel who similarly failed to file Defense and to inform the Client, the Defendant. It is in 2019 that the Applicant reliably learnt from AG’s Office that the Defense was not filed and that is when Counsel on record was appointed. The Applicant submitted the inadvertent conduct of previous Counsel should be excused as the Counsel’s misconduct should not be visited on the client.

On the other hand, the Plaintiff Respondent stated, that the Defendant was aware that the Defence was not filed as they were served with application(s) and responded to the same. The parties were also engaged in HCCC 454 of 2016 by same parties and pleadings were filed, heard and concluded the same. The claim by the Advocates omission was not substantiated. Although, the interlocutory judgment is regular, the defence and counterclaim raise triable issues.

The justice of this case, despite inordinate delay tilts to granting the Applicant a fair hearing; setting aside the Interlocutory judgment of 2013 and allowing the Applicant to ventilate the issues in the Draft Defence and Counterclaim.

However, the grant of setting aside the Interlocutory judgment is conditional as the judgment was regular and there has been inordinate delay.

DISPOSITION

1. The Defendant /Applicant application of 31st January 2020 is granted with costs as follows;

2. The Defendant/Applicant’s Draft Defence & Counterclaim shall be deemed as filed and served on condition;

3. The Defendant/Applicant shall pay throwaway costs of Ksh 20,000/- to Respondent.

4. The parties to pursue Case Management before DR Commercial & Tax within 60 days and thereafter set the matter for hearing interpartes.

DATED SIGNED & DELIVERED IN OPEN COURT ON 26TH JANUARY 2021 (VIRTUAL CONFERENCE)

M.W. MUIGAI

JUDGE

IN THE PRESENCE OF;

MS MALIA FOR THE APPLICANT

MICHUKI & MICHUKI ADVOACTES FOR THE RESPONDENT- N/A

COURT ASSISTANT: TUPET