Fidelity Insurance Company v Hussein M. Ali t/a Crescent Service Station [2015] KEHC 1108 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI

CIVIL   CASE NO.  424 OF 2013

FIDELITY INSURANCE COMPANY…………………………PLAINTIFF

VERSUS

HUSSEIN M. ALI

T/A CRESCENT SERVICE STATION …………………….DEFENDANT

RULING

This suit was instituted on 7th October, 2013 by Fidelity Shield Insurance Company Limited against its insured Hussein M. Ali T/A Crescent Service Station.  The  plaintiff’s  claim against  the defendant  insured  is for a declaration  that the plaintiff  is entitled  to avoid the policy  of insurance  No.  MC 4011058214  for breach of conditions  of the  policy; a declaration that the plaintiff  is not liable  to make any payment  under the aforesaid  policy insurance  in respect of  any claim against the defendant  arising out of  injuries  or loss sustained  in an accident on  6th November 2011 involving motor vehicle  registration No.  KAV 485 K, a declaration that the plaintiff is not  liable to  pay any claim arising  out of the  said accident  for reasons that the defendant  did not  report the  accident  and that the motor vehicle  was at the material time of the  said accident  driven by  an unauthorized  driver which was contrary  to the terms  of the policy of insurance; and  costs  of the suit .

On 16th October  2013  the defendant  was served with summons to enter  appearance as evidenced  by the affidavit  of service sworn on 21st October  2013  by  Wilson Wambua  Nguta.

On 4th November 2013  the plaintiff  requested  for judgment  for reasons  that the defendant   had not, at  that material time, entered  any appearance  and or filed defence  within the  stipulated period.  Interlocutory judgment was entered on 6th November 2013 by the Deputy Registrar.

On 11th November 2014 the defendant filed a defence through the law firm of Sagana, Biriq & Company advocates.

The plaintiff  set down the suit for  formal proof  hearing and that is when  the defendant, vide an application dated  23rd February 2015  and filed on  the same day sought to stay proceedings  and the  setting aside  of the interlocutory  judgment; and leave to file a defence.  The application  is grounded on the premises that the prayers sought in  the plaint do not entitle the plaintiff  to an interlocutory judgment hence  the interlocutory judgment  entered  was irregular, null and void; the  defendant had demonstrated the  interest to defend  the suit by filing Memorandum of Appearance  and defence; he  has a strong  defence ; it is in the interest of justice  that the suit  be determined  on merits; the application had been  brought without  inordinate delay; no prejudice  will be suffered  by the plaintiff if judgment  is set  aside; and that the court  has unfettered  discretion  to set aside the interlocutory judgment.

The said application is further supported by the affidavit sworn by Hussein Ali on 23rd February 2015 echoing the above grounds.  The plaintiff emphasized that Order 10 Rule  4-7 of the  Civil Procedure Rules do not  entitle  a plaintiff to interlocutory judgment  where there  was no prayer for  a liquidated  sum and that  what the  plaintiff should have  done, would be to set down  the suit for  hearing and  not formal proof .  The defendant also stated that  he has a good defence to  the claim by the plaintiff  hence  he should be allowed to defend the claim since there are various claims against  him by injured persons  as  well as  death following an accident  involving his  motor vehicle KAV 485K which  was insured  by the plaintiff  hence  he will be  prejudiced if judgment  is not  set aside  and he is allowed  to defend the suit.  Further, that he is willing to abide by any conditions that the court may impose on it for the issuance of the orders sought.

The plaintiff’s application was brought  under Order 10, Rule 11, Order  50 Rule  6, Order  21 Rule 1 of the Civil Procedure  Rules; Sections 1A,1B,3A and 63(e) of the Civil Procedure Act and all other enabling provisions of the law.  He annexed copies of plaint, Memorandum of Appearance filed on 30th October 2014 dated 25th October 2014, and defence dated 11th November 2014.  He also  filed supplementary affidavit  on 17th June 2015 reiterating  the earlier supporting  affidavit  and   stating that  he only came to learn of  interlocutory judgment  on   4th December 2014 from his  counsel and instructed  him to file this  application.

The plaintiff opposed the application  by the defendant and filed  replying affidavit sworn by Caren Jaguga on 31st March 2015 maintaining  that  the judgment  entered was  regular following  service  of summons  to enter appearance upon the  defendant and his failure to  enter appearance  or file defence  within  the prescribed period, which was inexcusable.

The deponent who is the plaintiff’s  legal officer contended that no leave  was sought to file Memorandum of Appearance and defence  out of time; there has been inordinate  delay in filing  the application; the  application was intended to frustrate the plaintiff’s  bid to formally prove its case; that the defendant  had no viable defence  that raises triable issues.  The plaintiff urged this court to dismiss the application with costs.

The parties argued the application through oral submissions.

In the supporting submissions, the defence counsel Miss Kigera submitted reiterating  what is contained in her client’s  application, grounds and supporting  affidavit, emphasizing  that the judgment entered  was irregular and no reason  should be given for  the delay or failure to file  defence  or enter  appearance  within the prescribed period. She relied  on the case of Andrew  Washington Njenga V Co-Operative Merchant  Bank Ltd(2004) e KLR maintaining  that the judgment  entered  is null and  void  hence the defence  filed  should be validated.

Mr Mutia advocate for the plaintiff  submitted in opposition, relying on  the replying affidavit that the  judgment  entered  was regular  and that the defendant  was guilty  of laches, having taken a period of over one year before filing this application  to set aside  a regular judgment and after entering an appearance  and filing defence out of time  without leave of court.  Counsel also  maintained  that there  was no  viable  defence  that raises  triable  issues  hence the  application  was only intended  to frustrate  formal proof  hearing.

In a brief rejoinder, Miss Kigera submitted that the matter could only be set down for formal proof hearing if the prayers sought are pecuniary in nature.  Further, that declaratory orders could not be quantified hence they fell under Order 10 Rule 9 of the Civil Procedure Rules and therefore the plaintiff should have set down the suit for hearing.  She maintained  that the defence  was not frivolous  as it raises  triable issues following  the accident involving an  insured motor vehicle  where people were  injured and the plaintiff  was seeking to  repudiate  liability.

I have carefully considered the application as filed, the supporting affidavit and supplementary affidavit, the replying affidavit, oral submissions by both parties advocates and the authorities relied on, in line with the established law.  The issue for determination, in my view, is whether the defendant is entitled to the orders sought.  There are several ancillary questions attendant to this issue which will be determined alongside the main issue.

At the commencement of this ruling I did set out the history of the matter herein.  The Deputy Registrar  entered judgment against the defendant  in favour  of the plaintiff  in default of appearance  and defence  following  a formal  request  made on  4th November 2013  dated 1st November, 2013.  The request for judgment did not set out the provisions under which it was made.  Neither did the Deputy Registrar state under what provisions of the law the judgment had been entered.  From the defendant’s  arguments, there was no jurisdiction to enter  judgment as the claim was unliquidated  and therefore the defendant had unconditional open ended  leave to  defend the suit  anytime since, in any case, judgment was not available to the plaintiff in such  a claim which should have been  set down for hearing and not formal proof .

In the  opposing papers and submissions, the plaintiff contends that where  no appearance  or defence is filed  to a claim within the stipulated  period, then the plaintiff is entitled to judgment hence  the judgment  entered  was regular and since  no reasons  have been advanced  for failure  to file appearance  and defence  in time, the court should not exercise its discretion in favour of such a defendant   whose application is intended to frustrate the hearing of the suit  herein.

The applicable law on entry o judgment is found in Order 10 Rules 4, 5, 6 and 7 of the Civil Procedure Rules which provide:

1. Where  the plaint makes  a liquidated  demand  only and the defendant  fails to appear  on  or before  the day fixed in the summons or all the defendants  fail  so to appear, the court shall, on request in form No. 13  of Appendix A, enter judgment  against the defendant  or defendants for any sum not exceeding the liquidated  demand together  with interest  thereon  from the filing of the suit  at such  rate as the court thinks reasonable, to the  date  of judgment, and costs.

2. Where  the plaint makes  a liquidated  demand   together with  some other  claim, and the  defendant fails, or all  the defendants fail to appear  as aforesaid, the court shall, on request  in Form No. 13 of Appendix A, enter  judgment  for the liquidated demand  and interest  thereon, as provided by Sub Rule (1) but the award if costs shall await judgment upon such other claim.

3. Where  the plaint makes  a liquidated demand  with or without  some other  claim, and there  are  several defendants of whom one or more appear and any other fails  to appear, the court shall, on  request  in form No. 13 of  the Appendix A enter judgment  against any defendant failing  to appear  in accordance  with  Rule 4, and execution may issue upon such judgment  and decree  without prejudice  to the plaintiff’s right to  proceed with the action  against  such as have appeared.

4. Where  the plaint is drawn with  a claim for pecuniary damages  only or for detention  of goods with or without  a claim for  pecuniary damages and any defendant fails to appear, the court  shall on request  on Form No. 13 of Appendix  A, enter interlocutory judgment against  such defendant  and the  plaintiff shall set down  the suit for assessment by the court  of the damages  or the value of  the goods and damages  as the  case may be.

5. Where  the plaint  is drawn  as mentioned  in Rule 6 and there are  several  defendants  of whom one  or more appear and any other fails to appear, the court  shall on request  in Form No. 13 of Appendix A, enter  interlocutory judgment  against the defendant  failing to appear, and the damages  or the  value of the  goods and the  damages, as the  case may be, shall  be assessed  at the same time  as the hearing of the suit against the other  defendants, unless  the court otherwise orders.

From the above provisions, I gather that a default judgment can only be entered in respect of the liquidated demand whereas the other claims  proceed to hearing.  In addition, final judgment can only be entered where the suit  is for a  liquidated  demand and some other claim. Where  the claim is for  pecuniary  damages  only or for retention  of goods  with or  without pecuniary  damages, the  court is only entitled to enter  interlocutory judgment  and fix the  matter for  assessment  of quantum of damages  or value  of goods.

In all other claims, such as  the plaintiff’s claim in the instant suit which  seeks for  declaratory  orders without  any pecuniary  value, the plaintiff  must proceed  under Order  10 Rule  9 of the Civil Procedure Rules  to set down the matter for  hearing( See Ruth Gathoni Ngotho-Kariuki v William Mwangi Wambugu (2012) e KLR.  This is so because the prayers sought in the plaint herein are neither liquidated nor pecuniary in nature.

In Kenya Commercial Bank Ltd V Joshua Aggrey Oburi & Another CA 199,200,201 of 1999, the Court of Appeal  was clear that unless the matter falls within  the provisions  aforestated   in Order 10 Rules 4,5,6 and 7 of the Civil  Procedure Rules, the Deputy  Registrar  has no power to enter an interlocutory  judgment  and therefore  judgment  should be set  aside  ex debito justiciae  since such  a judgment  is a nullity.  A similar position was upheld in Mint Holding Ltd & Another vs Trust Bank Ltd CA 249 (2011) e KLR.

In Andrew Washington Njenga V Co-operative Merchant Bank Ltd (2004) Mohamed Ibrahim J (as he then was) held that where the plaintiff did not make claims for pecuniary damages but had 2 other claims, a permanent injunction and a declaratory order, the plaintiff had taken the plaint out of the possible purview of the limb in Order IXA Rule 5 (now Order 10 Rule 5) of the Civil Procedure Rules and therefore, the interlocutory judgment was improperly or irregularly entered. The learned judge proceeded to set it aside.

In the  said Andrew Washington Njenga  case, citing the Court of Appeal decision  in Magon V Ottoman Bank(1968) EA 156 page 158 JA Duffus, the court was  clear that  whereas the power to set aside judgment  was  discretionary upon such terms as may  be just, but in a case  where  obtaining  of judgment  was  irregular  and not in accordance  with the  law and practice  as laid down under the relevant cited  provisions  of the Civil Procedure Rules, the respondent is entitled, as a matter  of right, to have  the judgment set  aside without  any conditions  imposed.  Further, the court  was emphatic that there  is no justification  for the defendant to give  any  explanation  or reasons for any  supposed delay as the interlocutory  judgment  entered was  in violation  of the law  and that the  court’s  discretion would only come into  play if the judgment was regular.

I fully agree with the  above principles and do apply them here, and  find that  in the circumstances  of this case, which  are similar  to the cases cited  by the defendant’s counsel, that  in the plaintiff’s claim against the defendant, there  was indeed  no liquidated claim  or claim for pecuniary damages or  for retention  of goods.  That being  the case, the provisions  of Order 10 Rules 4,5,6,7  of the Civil  Procedure Rules were not available to the plaintiff  who  only  had the option of setting down  the suit for  hearing and  not  to apply and or obtain any  interlocutory judgment and purport  to schedule  the case for formal proof  hearing.

It is for the above reasons that I find the application by the defendant  herein  merited and I proceed  to allow it  and set aside  the interlocutory  judgment  entered by the Deputy Registrar  on 6th November  2013  in default of appearance  and defence for  being an irregular judgment.  The plaintiff shall therefore be entitled to set the suit down for hearing under Order 10 Rule 9 of the Civil Procedure Rules.

However, as the defendant  has demonstrated  the interest to defend  the suit by filing  and serving  the  defence  upon the plaintiff, he is  entitled  to defend without conditions and the issue  of the existence  of a meritorious  or arguable  defence with  triable  issues  does not  arise for  consideration by the court  since this  court has in the circumstances  of this case, no  power to deny a party an opportunity to be heard  thereby ousting  him from the judgment seat, based on the court’s view  of the strength or weakness of his defence. Accordingly, the memorandum of appearance filed and defence filed on 11th November 2014 dated the same day is hereby deemed to be validly on record and duly served.

Each party shall bear their own costs of the application herein.

Dated, signed, and delivered in open court this 28th day of September 2015.

R.E. ABURILI

JUDGE

28/9/2015

28/9/2015

Coram R.E. Aburili J

C.A. Adline

No appearance for plaintiff.

No appearance for defendant

Court - Parties are absent

Date was given to them in court on 1st July 2015.  Ruling delivered and pronounced in open court as scheduled.

Ruling to be typed.

Registry to inform parties’ advocates.

R.E. ABURILI

JUDGE

28/9/2015