Baraka Apparel EPZ (K) Ltd v Rose Mbula Ojwang t/a Faida 2002 Caterers [2007] KECA 471 (KLR)

REPUBLIC OF KENYA

IN THE COURT OF APPEAL OF KENYA

AT NAIROBI

Civil Appeal 280 of 2005

BARAKA APPAREL EPZ (K) LTD…………….…………………APPELLANT

AND

ROSE MBULA OJWANG T/A FAIDA 2002 CATERERS.……RESPONDENT

(Appeal from the ruling of the High Court of Kenya

Milimani Commercial Courts, (Kasango, J) dated 21st April, 2005

in

H.C.C.C NO. 682 of 2003)

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JUDGMENT OF THE COURT

This is an appeal from the ruling of the superior court (Kasango, J) in which the learned judge dismissed the appellant’s application to set aside an ex-parte judgment.  The facts leading to this appeal may be briefly stated.

The suit between the parties herein was fixed for hearing in the superior court on 16th November 2004 but come the hearing day, the defendant (the appellant in this appeal) failed to attend and the superior court proceeded with the suit culminating in a judgment delivered on

19th December 2004 in favour of the plaintiff (the respondent in this appeal).

The defendant, through its advocate, filed a Chamber Summons application under “Orders 1XA Rule 10, Order XX1 Rules 22-25 Order XXX1X Rules 1 and 2 of the Civil Procedure Rules and section  3A of the Civil Procedure Act and any other enabling provisions of the law” seeking the following orders from the superior court:-

“1. THAT this honourable court be pleased to set aside the ex-parte judgment entered herein on the 9th December 2004 against the defendant.

2.  That there be stay of execution pending the hearing and determination of this application.

3.  That the honourable court do restrain the plaintiff her servants or agents from executing the decree arising from this matter.

4.  That the court do issue such other orders as it may deem fit.

5.  That the costs of this application be provided for.”

That application was brought on the following grounds:-

“(a)  The judgment herein was entered ex-parte against the defendant due to its absence.

(b)  The defendant’s counsel on record was not aware of the hearing date having not been informed of the same by his legal associate.

(c)   The default of the defendant’s counsel to attend court should not be vested (sic) on the defendant to its prejudice.

(d)  The defendant has a good and valid defence in this matter.

(e)   That it would be fair for this Honourable Court to exercise its discretion and make such orders as may be necessary for the ends of justice.”

There was also a supporting affidavit sworn by Mr. Rustam Hira the advocate for the defendant.  That application although dated 20th December 2004, was not filed in court until 25th January, 2005.  The application came up for hearing before the superior court (Kasango, J) on 8th March 2005 when Mr Hira appeared for the defendant/applicant and Mr Ougo for the plaintiff/respondent.  After hearing the submissions by counsel for both parties the learned Judge reserved her ruling which she eventually made and was delivered on her behalf by Azangalala, J on 21st April, 2005. In dismissing the application the learned judge concluded her ruling thus:-

“The evidence presented before me is two fold; that the defendant’s counsel’s legal assistant failed to enter the date on the office file and failed to enter it in the diary; that the defendant’s counsel’s receptionist was served with a hearing notice.  In considering these two facts and the defendant’s counsel’s submissions I am of the view that the defendant has not presented before me the full facts of the failure to attend the hearing of this case, and accordingly is not deserving the exercise of this court’s discretion in its favour.  I find that there is no sufficient cause shown why this court should deprive the plaintiff the fruits of a regular judgment and since I am obliged to look both ways before reaching a decision of an application such as this one, I am of the view that the defendant’s application is not merited and the same is rejected.

The order of this court is that the defendant’s application dated 20th December 2004 is dismissed with costs to the plaintiff.”

It is that order of dismissal that triggered this appeal in which the appellant in its Memorandum of Appeal set out ten grounds of appeal.  Since these grounds set out clearly the appellant’s case we reproduce them in full:-

“1.  That the learned trial judge erred in law in failing to allow the application dated 20th December, 2004.

2.     That the learned trial judge exercised her judicial discretion erroneously in failing to appreciate that despite the fact that the application was not filed until 25th January, 2005, the same could not be the basis to deny an application and furthermore no prejudice had been occasioned to the respondent.

3.     That the learned trial judge further manifestly misdirected herself in the exercise of her discretion in that, presuming the appellant’s  advocate’s affidavit failed to state that the legal assistant had no knowledge of the hearing day, had no bearing and/or consequence on the application.

4.     That the learned trial judge therefore totally misdirected herself in law (sic) relying on matters extraneous to the application.

5.     That the learned trial judge failed to appreciate that by visiting the error of an advocate (sic) she denied the appellant the right of having its case heard on merits.

6.     That the learned trial judge further failed to appreciate and misdirected herself by refusing to set aside the judgement (sic) she denied the appellant’s rights which should be the last resort of any court.

7.     The learned trial judge further drew conclusions which were erroneous and therefore corroborates the fact that she failed to exercise her discretion judiciously in that she stated “The plaintiff’s counsel distinguished this authority with our present case, by pointing out the defendant in this case relied on the argument that the defendant’s advocate had no knowledge of the date and the impression they wanted to create was that the plaintiff had not served a hearing notice.” and thus the learned trial judge drew conclusions which were never submitted upon nor was there any suggestions that the appellant was entitle (sic) to a hearing notice and therefore misdirected herself in stating that the full facts were not brought out in court.

8.     That the learned trial judge totally misdirected herself in law by holding and concluding that the appellant had deliberately sought, whether by evasion or otherwise, to obstruct or delay the course for justice and that the question of the approval of the decree was irrelevant and immaterial to the application before the court.

9.     That the learned trial judge further misdirected herself in law in failing to take cognizance of the further affidavit as that elucidated the facts to enable her to exercise her discretion judiciously.

10.    That the learned trial judge misdirected herself in law by drawing conclusions which were not relevant and had no bearing on the application before her.”

The appeal came up for hearing before us on 22nd May, 2007 when Mr Rustam Hira appeared for the appellant and Mr John Akello Ougo appeared for the respondent.

Mr Hira admitted that there was a mistake in his office when they failed to appear on the day the suit had been fixed for hearing but he was of the view that since an explanation had been given and in view of the fact that there was a substantial defence on record the appellant ought to have been granted the right to be heard.  It was Mr Hira’s contention that there was a strong and arguable defence which was totally ignored by the superior court.  Hence Mr Hira submitted that there was no justification in law for the learned judge to disallow the application to set aside ex parte judgment.

Finally, Mr Hira submitted that the learned judge took into account matters which were not before her and failed to take into account the defence filed.

In opposing the appeal Mr Ougo took us through the history of the suit in the superior court culminating in the ex parte judgment.  Mr Ougo submitted that the explanation for non attendance on the day fixed for hearing of the case was not candid and that even after the ex parte judgment had been delivered the appellant took a considerable period of time before the application to set aside was filed.  It was also pointed out that at some stage of the proceedings the parties had contemplated settling the matter and, for that intimation, the appellant was granted adjournment.  It was therefore Mr Ougo’s contention that taking into account the conduct of the appellant and its counsel the superior court was entitled to disallow the application.  He therefore asked us to dismiss this appeal with costs.

This appeal raises the important question of setting aside ex parte judgment and how a court is to exercise its discretion.  The principles are now settled  and have been restated in many decisions including  Shah V. Mbogo [1967]E.A. 116at 123B, Mbogo v Shah[1968] E.A. 93 and Patel v E.A. Cargo Handling Services Ltd [1974] E.A. 75 at pg 76c.

Learned counsel on both sides also appreciated that the principles are well settled and referred us to some of the decided cases.  The principles were admirably expounded. In Pithon Waweru Maina v Thuka Mugiria( 1982-88) 1 KAR 171 at p.172Potter J.A stated:

“ This is another case concerning the exercise of the judicial discretion under  Ord 9A, rr 10 and 11 and under ord 9B, r 8 (which are in the same terms) of the Civil Procedure (Revised) Rules 1948, to set aside an ex parte judgment obtained in the absence of an appearance or defence by the defendant or upon the failure of either party to attend the hearing.  As regards the exercise of that discretion, certain principles are now well established in our law.

Firstly, as was stated by Duffus P in Patel v EA Cargo Handling Services Ltd [1974] EA 75 at 76C and E:

“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”.

Secondly, as Harris J said in Shah v Mbogo [1967] EA 116 at 123B

“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.”

That judgment was approved by the Court of Appeal in Mbogo v Shah [1968] EA 93 and in Shabir Din v Ram Parkash Anand [1955]22 EACA 48Briggs JA said at 51

“I consider that under Ord 9, r20, the discretion of the court is perfectly free, and the only question is whether upon the facts of any particular case it should be exercised. In particular, mistake or misunderstanding of the appellant’s legal advisers, even though negligent, may be accepted as a proper ground for granting relief, but whether it will be so accepted must depend on the facts of the particular case. It is neither possible nor desirable to indicate in detail the manner in which the discretion should be exercised.”

Thirdly……..

“…………….. a 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.  See per Newbold P in Mbogo v Shah [1968] EA 93 at 96G”

And in a recent decision of this Court in CMC Holdings Limited v Nzioki[2004] 1 KLR 173it was stated:-

“We are fully aware that in an application before a court to set aside exparte judgment, the Court exercises its discretion in allowing or rejecting the same.  That discretion must be exercised upon reasons and must be exercised judiciously. On appeal from that decision, the Appellate Court would not interfere with the exercise of that discretion unless the exercise of the same discretion was wrong in principle or that the Court did act perversely on the facts.  This is trite law and there are many decided cases in support of the proposition.  One such authority is that of Magunga General Stores vs Pepco Distributors [1987] 2 KAR 89 to which we were referred and in which this Court stated as follows:

“The Court on an appeal will not interfere with the exercise of a discretion on an application for summary judgment unless the exercise was wrong in principle or the judge acted perversely on the facts.”

The courts are to be guided by the foregoing when dealing with the exercise of discretion in setting aside ex parte judgments.  But each case must be considered on its own peculiar circumstances.  In the present appeal, it would appear that there was a mistake or error in the office of the appellant’s advocates. Mr Hira admitted as much.  What about the defence on record? Was it considered? It is a cardinal principle of our law that a party should not be condemned unheard, subject, of course, to the Civil Procedure Rules and other provisions of the law.  Here it is a question of weighing this well established principle vis-a vis procedural requirements.  It is our humble view that where there is a defence which raises  bona fide triable issues, or even a solitary bona fide issue the same ought to be allowed to proceed to hearing and final determination on merits.  In the celebrated case of Evans vs Bartlam [1937]2 All ER 646 at p. 650Lord Atkin said:-

“It was suggested in argument that there is another rule that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default, such as mistake accident fraud or the like.  I do not think that any such rule exists though obviously the reason, if any for allowing judgment and thereafter applying to set it aside is one of the matters to which the court will have regard in exercising the discretion…. The principle obviously is that unless and until the court has pronounced judgment upon the merits or by consent, it is to have power to revoke the expression of its coercive power where that has been obtained only by a failure to follow any of the rules of procedure.”

We have carefully considered the ruling of the learned Judge and while we do not fault her in the manner she considered the explanation given as to why there was no appearance for the appellant, we fail to see any consideration of the defence on record.  That defence ought to have been considered however irregularly placed on record.  We think that had the learned Judge paid attention to the defence on record, she might have come to a different conclusion.

In view of the foregoing, we allow this appeal, and set aside the ruling of the learned Judge dated 21st April, 2005.  We substitute therefore an order allowing the Chamber Summons dated 20th December 2004 with the result that the superior court’s ex parte judgment dated 9th December, 2004 is now set aside.  This appeal is however allowed on condition that the appellant deposits Kshs. 1,000,000/- (one million) in an interest earning joint account in the names of counsel appearing for both parties within 30 days of this judgment.  The reason is that the circumstances prior and subsequent to the entry of judgment was considered by the superior court and the applicant was found wanting.  We have already stated that we shall not interfere with that finding.  In default of payment of the deposit the appeal shall stand dismissedwithcosts. Each party will otherwise bear its own costs of this appeal.

Dated and delivered at Nairobi this 29th day of June, 2007.

E.O. O’KUBASU

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JUDGE OF APPEAL

E.M. GITHINJI

………….…………..

JUDGE OF APPEAL

P.N. WAKI

…….…………………

JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR