Fursys (K) Limited v Systems Intergated Limited T/A Symphony [2004] KEHC 71 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA

AT NAIROBI MILIMANI

CIVIL CASE 1237 OF 2002

FURSYS (K) LIMITED..................................... PLAINTIFF

-VERSUS-

SYSTEMS INTERGATED

LIMITED T/A SYMPHONY............................ DEFENDANT

RULING

The application dated 27th February, 2004 and now before thecourt seeks several orders, the main one of which is that the ex partejudgment entered herein on 5th February, 2004 in favour of theplaintiff and all the consequential orders be set aside. It is broughtby Chamber Summons under O.IXA Rules 10 and 11 of the CivilProcedure Rules, S3A of the Civil Procedure Act and all other enablingprovisions of the law.

The main grounds upon which the application is based are thatthe ex parte judgment sought to be enforced herein is irregularhaving been obtained during the pendency of a binding agreement between the parties through their respective advocates, by which thetime limited under the Civil Procedure Rules requiring the defendantto file it's statement of defence was to start running upon the plaintiffduly notifying the defendants on record. At the time of the entry ofthe said ex parte judgment, the defendant’s advocates on record hadnot been expressly or otherwise notified to file their statement ofdefence within the period agreed upon. These grounds are morethan adequately amplified in the supporting affidavit of SHIRAZGULAMHUSEIN MAGAN, the advocate having the personal conduct ofthis matter on behalf of the defendant.

The application is opposed and MR. KIM BYUNG TAE, themanaging director of the plaintiff company has filed a replyingaffidavit. His response to the applicant's main ground of applicationis that he knows that there was no agreement between him and thedefendant not to file its defence and that he has also been informedby his advocates on record, which information he verily believes to betrue, that even if there was such an agreement between theplaintiff's previous advocates and the defendant's advocates, thesame would be illegal as it's purpose was to defeat the provisions of statute. Furthermore, such agreements can only be on a withoutprejudice basis and purely for negotiation purposes. Negotiationshaving failed due to insincerity on the part of the defendant, thelatter ought to have filed its defence before the expiry of thestipulated time.

After reading the application together with its supportingdocuments and the respondent's replying affidavit, and having heardthe rival submissions of Mr. Magan for the applicant and Mr. Odhochfor the respondent, this court is of the humble view that the successor otherwise of this application depends on whether the judgmentsought to be set aside was regular or irregular. If it was irregular, itought to be set aside ex debito justitiae, together with all theconsequential orders. But if it was regular, the court has a discretionto set it aside if the defendant has demonstrated that it has some justifiable cause for not having filed the defence in time and that ithas a reasonable defence to the action, which raises some triableissues.

The plaint by which the suit was commenced is dated 10thDecember, 2002 and was filed in court on the same date by M/s Mohammed & Muigai, advocates for the plaintiffs. By a memorandum of appearance dated and filed in court on 19th June, 2003, M/s Mohammed Madhani & Co., advocates, entered appearance for the defendants.  On 27th June, 2003, the consultant in the firm of advocates for the defendant, Mr. S.G. Magan, wrote to the plaintiff's advocates along the following lines-

"Dear Sirs,

MILIMANI HCCC 1237 OF 2002FURSYS (K)LIMITED v. SYSTEMS INTEGRATED LIMITED T/A SYMPHONY

We refer to the telephonic conversation the writer had with your Mr. Majanja.  We confirm that you agreed to extend time for filing defence herein by fifteen (15) days from the date of notification by you to us that the same be filed.

The purpose of this extension is to enable the parties to carry out without prejudice negotiations for an amicable settlement of this matter.

Yours faithfully,MOHAMED MADHANI & Co.

S.G. MAGAN."

M/s Mohammed & Muigai, advocates for the plaintiffs,responded by a letter dated 30th June, 2003 which was marked forthe attention of Mr. Magan and in which they said-

"Your letter dated 27th June, 2003 is acknowledged andcontents therein confirmed.

We now await your response to our letter of 23rd June, 2003

Yours faithfully,

MOHAMMED & MUIGAI

DAVID MAJANJA

"On the same date, M/s Mohamed Madhani & Co. wrote to Mohammed & Muigai acknowledging receipt of the latter's letter reference No. F006/004/L/2000M of 23rd June, 2003. They then said they would refer the said letter to their clients and would revert to the plaintiff's advocates as soon as they had instructions in the matter.

Pausing there for a moment, it is clear that as at that time, the plaintiff's advocates indulged the defendants' advocates to forego the filing of the latter's defence pending negotiations, on a without prejudice basis, for a settlement.  If the negotiations failed for whatever reason, the plaintiff's advocates were at liberty to requestthe defendant's advocates to file their defence within 15 days of adate to be specified.

On 23rd January, 2004 M/s Aloo & Company, advocates, filed anotice of change of advocates dated 19th January, 2004 by whichthey came on record as advocates for the plaintiffs in place of M/sMohammed & Muigai, advocates. From the bundle of documentsfiled in court, copies of this notice would seem to have been receivedby M/s Mohammed & Muigai on 5th February, 2004 and by M/s Mohamed Madhani & Co. on a date in February, 2004, which date isnot very clear.

Meanwhile, on 19th January, 2004, M/s Aloo & Co., theplaintiff's new advocates, signed a request for judgment whichrequest was filed in court on 3rd February, 2004. It is noteworthy thattheir Notice of change of advocates was also dated 19th January,2004. This means only one thing - that immediately they wereinstructed by the plaintiffs, the first act of the plaintiff's newadvocates was to draw a notice of change of advocatessimultaneously  with  a  request for judgment.  The  latter  was accordingly granted. The 15 days within which to file a defence afternotification went with the wind. In my view, the plaintiff was boundby the act of its erstwhile advocates, who were its agents, inagreeing to negotiate with the advocates for the defendants towardsan amicable settlement on a without prejudice basis. In thosecircumstances, it was neither fair nor proper for the new advocatesto ambush the defendant's advocates with a request for judgmentnot only without giving them 15 days notice within which to file theirdefence, but also without any warning at all. A court of equity, suchas this one, is bound to frown upon such conduct as it amounts tothe advocates for the plaintiff in effect leading those for thedefendant up the garden path.

Responding to this state of affairs, the plaintiff's managingdirector states in paragraph 12 of his replying affidavit that anagreement such as the one entered into between the formeradvocates for the plaintiff and those for the defendants is illegal as itspurpose was to defeat the provisions of statute. With profoundrespect, that is not the case. The matter at hand is governed by the Civil Procedure Rules, and it is well settled that rules are the handmaids of the law. O.XLIX r. 6 states-

"The time for delivering, amending or filingany pleading, answer or other document ofany kind whatsoever may be enlarged byconsent in writing of the parties or of theiradvocates without application to the court/'That is what the parties' advocates did in this case, and that is why the plaintiff was bound. This was not illegal as alleged or at all.

The application for judgment was therefore premature.  Purely obiter, if the negotiations had been successful, it is highly unlikely that the plaintiff would have claimed that the settlement was illegal as being contrary to statute.  This court therefore finds that the judgment obtained herein was irregular.

If the court is wrong in so finding, there is a preponderance of case law to the effect that in an application to set aside an ex parte judgment, there are no limits or restrictions on the judge's discretion.

That discretion is totally unfettered except that it should be exercised judicially, and that it should be based on such terms as may be just because the main concern of the court is to do justice to the parties.

In JESSE KIMANI v. MCCONNEL [19661 E.A. 547 it was held thatsome of the matters to be considered in such applications are thefacts and circumstances, both prior and subsequent and all therespective merits of the parties together with any other materialfactors which appear to have entered into the passing of thejudgment, which would not or might not have been present had thejudgment not been ex parte and whether or not it would be just andreasonable to set aside or vary the judgment upon terms to beimposed. And in JAMNADAS SODHA v. GORDANDAS HEMRAJ (1952)7 U.L.R. 11, the court was of the view that the nature of the actionshould be considered, the defence if one has been brought to thenotice of the court, however irregularly, should be considered... andfinally, it should be remembered that to deny the subject a hearingshould be the last resort of a court. These principles have beenupheld in subsequent cases including MAGUNGA GENERAL STORESv. PEPCO DISTRIBUTORS LTD. [1987] 2 KAR, and SHAH v. MBOGO[1967] E.A. 116 to which this court was referred.

Mr.  Odhoch  for  the  plaintiff/respondent  argued  that  theproposed defence is a sham.  However, a glance at paragraph 6 of that proposed defence shows that the same raises such triable issuesas did the plaintiff supply all the goods agreed upon? Were thegoods supplied defective and unfit for the purpose for which theywere ordered, or, put conversely, were the goods deliveredreasonably fit for their purpose? Did the plaintiff install the goods asprovided for in the contract? These issues arise in addition to thoseof a counterclaim and set off which are also pleaded.

Mr. Odhoch had some unkind words over Mr. Magan's affidavitsaying that the same was fatally defective as it was not dated, andthat it also contained very contentious issues. With due respect toMr. Odhoch, a close look at Mr. Magan's affidavit discloses that it isvery well guarded. He depones to matters which he himself did as acounsel for the defendant and which the defendant would not personally know about. With regard to the date, the affidavit isclearly undated. To that extent, it offends s.5 of the Oaths andStatutory Declarations Act. However, Mr. Magan showed the court acopy of the affidavit in his file which was duly dated. This, in myview, points to some inadvertence in the filing of the undated affidavits while retaining the dated one(s). It is, in my view, anirregularity which is curable under O.XVIII rule 7.

I therefore order that the affidavit in question be and is herebyreceived under the said order.

In total, being of the persuasion that the judgment which is thesubject matter of this application was obtained irregularly, the sameis hereby set aside ex debito justitiae together with all theconsequential orders thereon. Even if this view is mistaken and itturns out that the judgment was regular, there was justification fornon-filing of the defence on time, and the proposed defence raisestriable issues. The defendant is accordingly hereby granted leave todefend. In either event, the defendant is granted 15(fifteen) daysfrom today to file and serve its proposed defence.

While canvassing the application orally, Mr. Odhoch said thateven if the court allows the defendants to file the proposed defence,the plaintiffs will move for summary judgment. It was not clearwhether this was said by way of a threat or a promise. In eithercase, the plaintiff is at liberty to apply. In the meantime, seeing thatit was the plaintiff's premature request for judgment which has precipitated the irregular state of affairs, the plaintiffs will bear the costs of this application. It is so ordered.

Dated and delivered at Nairobi this 27th day of April 2004

L. NJAGI

JUDGE