Esnad General Trading Limited v Poundberry Limited [2022] KEHC 11331 (KLR)

Esnad General Trading Limited v Poundberry Limited (Civil Suit E900 of 2021) [2022] KEHC 11331 (KLR) (Civ) (5 May 2022) (Ruling)

Neutral citation: [2022] KEHC 11331 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Civil

Civil Suit E900 of 2021

JN Mulwa, J

May 5, 2022

Between

Esnad General Trading Limited

Plaintiff

and

Poundberry Limited

Defendant

Ruling

1. On 28thJanuary 2022, an ex-parte default interlocutory judgment was entered in favour of the Plaintiff herein. The Defendant/Applicant has now approached this court vide two Notices of Motion dated 3rd February 2022 which motions are supported by the Supporting Affidavits of the Defendant’s Director, Isabel Wanjiku Gichuru.

2. The first application seeks a stay of execution of the Decree that may be issued in respect of said judgment and any other consequential orders thereto. It is brought under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 51 Rules 1, 3, 4 and 10 of the Civil Procedure Rules, 2010.

3. The grounds on which the application is based are that the interlocutory default judgment was entered in favour of the Plaintiff on 28th January 2022 and the matter was scheduled for formal proof on 7th February 2022. That the Defendant has a valid defence to the claims raised by the Plaintiff which raises triable issues, on grounds that the Defendant is apprehensive that the Plaintiff may move to execute the decree, and further that if the decretal amount is paid to the Plaintiff, the Defendant shall suffer loss and damage as the Plaintiff, being a foreign company, may not repay it. Lastly, that this application has been made without unreasonable delay.

4. The second application seeks the setting aside of the ex parte judgment entered therein, and a further prayer that leave to file the annexed draft defence out of time be granted. It is brought under Sections 1A, 1B and 3A of the Civil Procedure Act and Order 10 Rules 11 of the Civil Procedure Rules, 2010.

5. The application is based on the grounds that the interlocutory judgment was irregularly obtained as service was not effected upon the defendant in accordance to the Civil Procedure Rules, 2010, in that the Defendant’s Director, Isabel Wanjiku Gichuru did not receive and/or sign on any copy of the Summons to Enter Appearance to signify receipt yet she is the one who is administratively in charge of the Defendant’s main office where she is based at. It is avered that service was effected upon a former member of the company who had ceased to be a director and shareholder of the company as at the date of service.

6. In opposition, the Plaintiff filed a Replying Affidavit sworn on 10th April 2022 by its Director Ameer Shaker. He averred that the applications are not only frivolous and vexatious but are also a waste of precious judicial time, stating that the Plaintiff instituted the instant suit vide Plaint dated 1st November 2021 extracted, the Summons to Enter Appearance dated 8th November 2021, and that both the Plaint and Summons were served upon the Defendant on 9th November 2021, which service was duly acknowledged. However, the Defendant opted not to enter appearance nor file a defence within the prescribed period leading to the entry of judgment in default. Further, that the Defendant has not sought to cross examine the process server in order to demonstrate to the court that he was not properly served. In the Plaintiff’s view therefore, the instant application is but an attempt by the Defendant to curtail the Plaintiff from enjoying the fruits of its judgment.

7. In rejoinder, the Defendant filed a Supplementary Affidavit sworn on 22nd April 2022 by its Director Isabel Wanjiku Gichuru. She reiterated her earlier averments that the court was misled into entering an irregular default judgment as the Summons to Enter Appearance and the Plaintiff’s other documents were delivered to a recipient not authorized to receive summons. Further, she contended that it is unnecessary to call the process server for cross examination since the Replying Affidavit does not prima facie disclose that there was proper service.

8. When this matter came up in court on 22nd February 2022, the court directed parties to file and exchange their written submissions within fourteen days. They were also granted corresponding leave to put in further Affidavits if it became necessary. As at the time of writing this ruling, long after the expiry of the stipulated time, only the Defendant had filed its written submissions. For that reason, this ruling was written on the basis of the material and submissions on record.

9. The issues that arise for determination, in my view are:i.Whether there was proper service of Summons upon the Defendantii.Whether the Defendant has established a proper basis to warrant the setting aside of the default judgment.iii.Whether the application for stay of execution is merited.

10. Whether there was proper service of Summons upon the DefendantThe law on service has changed and developed greatly over the years. Indeed, it is now permitted to effect service of summons through electronic media including the electronic mail and WhatsApp messaging application.Order 5 Rule 22B of the Civil Procedure Rules which was introduced vide Legal Notice No. 22 of the 26th day of February, 2020 provides that:“Electronic Mail Services (E-mail) [Order 5, rule 22B]1. Summons sent by Electronic Mail Service shall be sent to the defendant's last confirmed and used E-mail address.2. Service shall be deemed to have been effected when the Sender receives a delivery receipt.3. Summons shall be deemed served on the day which it is sent; if it is sent within the official business hours on a business day in the jurisdiction sent, or and if it is sent outside of the business hours and on a day that is not a business day it shall be considered to have been served on the business day subsequent.4. An officer of the court who is duly authorized to effect service shall file an Affidavit of Service attaching the Electronic Mail Service delivery receipt confirming service.”

11. Further, Order 5 Rule 22C of the Rules provides:“22C. Mobile-enabled messaging Applications [Order 5, rule 22C]1. Summons may be sent by mobile-enabled messaging Applications to the defendant's last known and used telephone number.2. Summons shall be deemed served on the day which it is sent; if it is sent within the official business hours on a business day in the jurisdiction sent, or and if it is sent outside of the business hours and on a day that is not a business day it shall be considered to have been served on the business day subsequent.3. Service shall be deemed to have been effected when mobile-enabled messaging services when the Sender receives a delivery receipt.4. An officer of the court who is duly authorized to effect service shall file an Affidavit of Service attaching the delivery receipt confirming service.”

12. In the case of Oyunge Barnabus & 3 others (Suing as Administrators of the estate of Mathayo Ratemo Mayaka (deceased)) v Charles Oteki Rioba [2021] eKLR, the Court held:“The general practice has always been that service must be effected personally. Where it is impossible to effect personal service, the courts usually grant leave to the person who is supposed to effect service upon a party by way of substituted service after it is satisfied that service of summons cannot be served in the ordinary way. Courts have previously regarded any other form of service such as the one the Respondents used as improper unless leave of the court was granted. However, through Legal Notice No. 22 dated 26th February, 2020, the Civil Procedure Rules, 2010 were amended and amongst the new provisions introduced were rules regarding mode of service provided for under Order 5 of the rules. I agree with learned counsel for the Respondent that the changes in the rules have been developed to fit the prevailing circumstances as we are experiencing the COVID-19 Pandemic which makes personal service difficult. Specifically, Order 5, rule 22B and Order 5, rule 22C which rules have introduced other modes of service other than the traditional physical service of the defendant.”

13. The Applicant claims that there was no proper service as Summons to Enter Appearance and the Plaintiff were delivered to a recipient not authorized to receive summons as the recipient had ceased being a director of the company at the time of service. From the outset however, I wish to state that I am satisfied that service was duly effected upon the Defendant. The Judiciary Case Tracking System (CTS) indicates that the Plaint dated 1st November 2021 was filed on 4th November, 2021. The CTS further indicates that the firm of Wangong’u Ndichu & Company Advocates entered appearance for Poundberry Limited, the Defendant herein, vide a Memorandum of Appearance filed on 23rd November, 2021 at 13:19:53. This could only have been done upon receipt of the Summons to Enter Appearance.

14. That as it may, there is on record an Affidavit of Service sworn on 25th November, 2021 by William Ongoro, an Advocate practicing in the firm of the Plaintiff’s Advocates on record. The said advocate deposed that on 9th November, 2021 at 10. 00am, he scanned the Summons to enter appearance dated 8th November 2021, Plaint, Verifying Affidavit, list of Witnesses, Witness Statement and List and Bundle of Documents all dated 1st October 2021. 15. Thereafter, he effected service vide electronic mail to the Defendant’s Director Mr. Bob Kioko through the mailing address bob.kioko73@gmail.com which he personally knew to be his as they had been exchanging numerous official communication through the same. The said Advocate duly annexed a copy of the delivered Email)14. Order 5 Rule 22B above provides that summons sent by Electronic Mail Service shall be sent to the Defendant's last confirmed and used E-mail address. According to the CR12 form dated 10th July, 2021 annexed to the Defendant’s application, the Email address bob.kioko73@gmail.com to which the Plaintiff’s advocate sent the Summons to Enter Appearance, conspicuously appears beside the column for “registered office”. This was the document relied on by the Defendant in support of their averment that Bob Kioko was not a Director of the Company but they did not deny the said email address or offer any proof of existence of an alternative email address. I am therefore satisfied that the Defendant duly received the Summons to Enter Appearance sent vide the abovementioned email address.

15. Further, I note that in the Affidavit of Service referred to hereinabove, the Plaintiff’s Advocate deposed that he also sent the Summons to Enter Appearance, the Plaint and other accompanying documents to Mr. Sam Bob Kioko via the WhatsApp Messaging Application to the number +25473554xxxx and receipt was duly acknowledged. Whilst this is the same number that appears in the CR12 dated 10th July, 2021, the deponent of the Affidavit of Service did not provide any proof of the same. This does not however diminish the fact that service of summons was duly effected by way of electronic mail and the Defendant filed a Memorandum of Appearance in response thereto, albeit out of the prescribed time.In view of the foregoing, the court find that service was properly effected upon the Defendant in accordance with the provisions of Order 5, Rule 22B of the Civil Procedure (Amendment) Rules, 2020.

16. The defendant having entered appearance, but failed to file a defence within the timelines prescribed by the law, it follows that the interlocutory judgment herein was regularly entered. In this regard, I am guided by the case of James Kanyiita Nderitu & another v Marios Philotas Ghikas & another [2016] eKLR where the Court of Appeal held that:“From the outset, it cannot be gainsaid that a distinction has always existed between a default judgement that is regularly entered and one which is irregularly entered. In a regular default judgement, the defendant will have been duly served with summons to enter appearance or to file defence, resulting in default judgment.

17. Whether the interlocutory judgment entered herein should be set aside?A default interlocutory judgment may be set aside under Order 10 Rule 11 of the Civil Procedure Ruleswhich stipulates 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.”

18. A reading of the above provision reveals that the court’s discretion to set aside or vary an ex parte judgment entered in default of appearance or defence is intended to be exercised to avoid injustice. In the case of Patel v EA Cargo Handling Services Ltd (1974) EA 75, the court held that:“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 condition on itself or fetter wide discretion given to it by the rules, the principle obviously is that unless and until the count has pronounced judgment upon merits or by consent, it is to have power to revoke the expression of its coercive power where that has obtained only by a failure to follow any rule of procedure.”

19. In the case of Philip Kiptoo Chemwolo & Mumias Sugar Company Ltd v Augustine Kubende [1986] eKLR, the court posited that:“The Court has unlimited discretion to set aside or vary a judgment entered in default of appearance upon such terms as are just in the light of all facts and circumstances both prior and subsequent and of the respective merits of the parties.

20. In Shah v Mbogo [1967] EA 116, the Court stated that:“The discretion is intended 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”.In exercising such discretion, this court will be guided by various factors laid by the Court of Appeal in James Kanyiita Nderitu & another v Marios Philotas Ghikas & another [supra]. These are:“…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.”

21. To begin with, I hold the view that the Defendant has not proffered plausible reasons for the failure to file its Defence within the period prescribed by law. Indeed and as noted hereinabove, the Defendant claimed that there was no proper service of Summons. However, the court has established that this was not the case.

22. Next to consider is whether the Defendant’s annexed draft Defence raises triable issues. I have perused the annexed draft Defence and I note that the Defendant has out rightly denied defrauding the Plaintiff as claimed. The Defendant avers that the failure to fulfil its end of the bargain arose due to no fault of its own as they were informed by the suppliers of the N95 masks of the unavailability of the said model which the Plaintiff required and this was communicated to the Plaintiff. In my view, this is a triable issue which calls for judicial examination and trial.

23. In Isaac Awuondo v Surgipharm Limited & Another(2011) eKLR, the Court of Appeal defined a triable issue as follows:“In this respect defence on the 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.”

24. As regards the length of time that had lapsed since the default judgment was entered, I note that the default judgment was entered on 28th January, 2022 whilst this application was filed less than a week later on 3rd February, 2022. There was no delay at all in bringing the application. In the circumstances, I am of the view that whatever prejudice that the Plaintiff may suffer as a result of setting aside the interlocutory judgment, can be compensated by an award of costs. In totality, the court finds that it is in the interest of justice that the interlocutory judgment entered herein against the Defendant be set aside and the Defendant be accorded an opportunity to ventilate its Defence.

25. I find useful guidance in Sebel District Administration v Gasyali & Others(1968) E.A. 300, where the Court observed that:-“In my view the Court should not solely concentrate on the poverty of the Applicant’s excuse for not entering appearance or filing a defence within the prescribed time. 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 I think it should always be remembered that to deny the subject a hearing should be the last resort of a court. It is wrong under all circumstances to shut out a defendant from being heard. A defendant should be ordered to pay costs to compensate the plaintiff for any delay occasioned by the setting aside and be permitted to defend.”

26. Whether the application for stay of execution is merited?Having found that there is a basis for setting aside the interlocutory judgment entered against the Defendant, it is my considered view that it will not serve any useful purpose to venture into the merits or otherwise of the application for stay of execution of the decree that would have been issued in respect of the said judgment.

27. For all the foregoing reasons, the Defendant’s 2nd application dated 3rd February 2022 is hereby allowed in the following terms:a.The default interlocutory judgment entered on 28th January 2022 against the defendant is hereby set asideb.The Defendant shall file and serve its Statement of Defence and all accompanying documents within 14 days from the date of this Ruling.c.In default of compliance with order (b) above, the order vacating the interlocutory judgment shall automatically lapse .d.The Defendant shall pay the Plaintiff throw away costs of Kshs. 25,000/= within 14 days of this ruling.

Orders accordingly.DATED SIGNED AND DELIVERED THIS 5TH DAY 0F MAY 2022. J.N.MULWAJUDGE.