James Kiarie Muchiri v Aberdare Sacco Society Limited [2021] KECPT 512 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO.82 OF 2020

JAMES  KIARIE  MUCHIRI.................................................................CLAIMANT

VERSUS

ABERDARE  SACCO SOCIETY LIMITED.................................. RESPONDENT

RULING

Vide the Application  dated 1. 9.2020, the Respondent has moved  this Tribunal  seeking  for the following Orders:

a. Spent;

b. That this  Honourable  Tribunal  be pleased  to set aside the interlocutory  judgment entered by this Honourable  Tribunal  on 30th  July  2020 and grant the Respondent unconditional  leave  to  defend  the claim and reinstate  the suit  for  hearing  and determination  interparties  on merit;

c. That this Honourable  Tribunal  be pleased  to Order  that the  reply  to claim  filed herein  on 18th  August  2020 be deemed to  be properly  on record; and

d. That the costs of this Application  be  in the cause.

The Application is supported by the grounds on its face and the  Affidavit  sworn by  Josphat  Kaniaru  Kireru  on even date    1. 9.2020. The Claimant  has  opposed  the Application vide the   Replying  Affidavit  sworn by him on 5. 10. 2020.

Vide  the  directions  given  on  13. 10. 2020,  the Application  was canvassed  by way of  written submissions.  The Respondent  filed  its written submissions  on  23. 10. 2020 while  the Claimant did so  on   2. 11. 2020.

Respondent’s  Case

Vide the instant Application  the Respondent  contend  that it  failed to file a Response  to the claim  within the  requisite  time  as a result  of inconveniences caused by  the  onset  of the Covid – 19  pandemic. That upon  receipt of summons  to enter appearance,  the Respondent  instructed  a firm of Advocates  to  defend it.  That on  13. 3.2020,  the firm of  Kibera  & Associates entered  appearance  on its  behalf, but  could not file a Defence  owing  to restriction  of  movement imposed by the Government. That  it was during the intervening  period  that the  Claimant  requested for default  judgment.

Claimant’s  Case

The Claimant  has opposed  the Application  on grounds  that the Respondent  has not given a good explanation  as to why it did  not file a Defence in good time. That  the courts  opened in  Mid-June, 2020  and in  early July, 2020  the Court’s  e-filing  system  was launched. That  instead of filing a Response  to the claim,  the Respondent  filed an Application  for security for costs.  That the Application  should therefore be dismissed  with costs.

Issues  for determination

This Application  has presented  the following  issues for determination:

a. Whether  the Respondent  has established  a proper basis  to warrant  the  setting  aside of the default  judgment  entered  on  30. 7.2020;

b. Who should  meet  the costs of the Application?

Setting aside of default  Judgment

We have  jurisdiction  to set aside a  default  judgment  by dint  of Order  10 Rule  11 of the Civil  Procedure  Rules. The Rule  provides  thus:

“ 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.”

In the case of  Patel – vs-  East  Africa Cargo  Service  Limited (1974)EA 75, the Court underscored this provision  in the following terms:

“ 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  to it  by the Rules.”

Before  we can exercise  our jurisdiction  under Order  10 Rule 11  above,  we firstly  have to ascertain  whether  the  default  judgment  is a regular  or irregular  one.  If the  Judgment  is an irregular  one,  then we will  set  it  aside  ex debito  justiciae.

This  was the holding  in the case of  K- Rep  Bank  Limited  -vs-  Segment  Distributors  Limited [2017] eKLR.

The court  in the  case of  Fidelity  Commercial Bank  Limited – vs-  Owen Amos  Ndungu  & Another, HCC.NO. 241/1998  gave  a distinction  between  a regular  and irregular judgment  as follows:

“ A distinction  is drawn  between  regular  and irregular  judgments.  Where summons  to  enter  Appearance  has  been served  and  there is  default  in entry  of Appearance  the ex parte  judgment  entered  in default is regular.  But where  the exparte judgment  sought  to be set  aside  is obtained  either because  there  was no proper  service  or any service  at all, of  the summons  to enter  Appearance, such  judgment  is  irregular  and  the affected Defendant  is entitled  to have  it set aside as of right”

Where  the  default  judgment  is  regular,  then  the Tribunal  has to  consider   if the draft  Defence filed with the Application raises triable issues. This was the holding in the case of James Kanyiita Nderitu & Another  - vs-  Marios  Philotas  Ghikes  & Another [2016]eKLR.  In  the pertinent  part,  the court  held thus:

“ In a regular  default  judgment,  the  Defendant  will have  been duly  served  with  summons  to enter  appearance,  but for one  reason  or another,  he failed  to enter appearance or to file  a Defence,  resulting  in default  judgment.  Such  a Defendant  is entitled  under Order  10 Rule  11  of the Civil  Procedure  Rules  to move to  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  the default judgment  and will  take into  account such  factors  as to the  reason  as for  the 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 whether  on the whole,  it is  in the  interests of  justice  to set  aside   the default judgment.”

A question  arises  thereof as to whether  the instant  Application  has met the  threshold  set forth in the foregoing  conditions. To answer  this questions, we will individually  look  at the said conditions as follows:

Reason  for failure  to file a Defence

The Respondent  has largely  attributed its  failure  to file  a Defence  in good time to the challenges posed  by the covid-19 pandemic. It avers that because  of restriction of  movements it advocate  on record did not obtain  adequate  instructions to file a Defence.

Whilst  if it is  the case that covid-19 pandemic  slowed  down  the  operations  of the Tribunal,  the same did not result  of in a complete shutdown of operations. Directions  were issued  on filing of documents  and pleadings  through  the Tribunal’s customer care gmail  account.  Further,  Tribunal  staff were on stand-by  to assist any of  the litigants  who needed  support.  It is  thus not therefore an  excuse that the  Respondent  did not  file a  Defence  as a result  of scaling  down  of court  operations.

On the  flipside,  we  agree with the Respondent  that the measures  put in place  by the Government  to  manage  the  spread of the Covid-19 pandemic  may have resulted  in limited  movement  thereby  impairing  remittance  of instructions.  To this extend  thereof,  we find that the reason  advanced by the Respondent  for not filing  a Defence  in good  time is  reasonable.

Draft  Defence

The other  factor  to consider  when determining  whether  or not  to set aside  a default  judgment  is whether  the draft Defence  raise triable  issues. We  have perused  the Defence  irregularly  filed by the Respondent  on  18. 8.2020. We note that  the Respondent  has opposed  the claim on account  of the Respondent took  a loan from  Co-operative  Bank of Kenya Limited under the  guarantorship of the Claimant. That  the Claimant’s resignation  from the  Respondent  does not invalidate  his obligations  under the  terms and conditions  of guarantee  for Co-operative  Bank.  From this  part of Defence,  a question  arises  as to  whether  the Claimant  can be discharged  from the Respondent if indeed he has  obligations  with the  Respondent  which  he is yet to fulfill. This is  an issue  which can only be determined  upon trial. It is thus  a triable  issues. We thus  find  that the said Defence  raises trial  issues.

Conclusion

When all  is said  and done,  we find  the Respondent’s Application  dated  1. 9.2020 meritorious and allow it  based on  the following  conditions:

a. That the  statement  of Defence  dated 18. 8.2020 and filed on  even  date is deemed  as duly  filed and served;

b. The Claimant  to file  and serve  a Reply  to Defence  and Supplementary  witness  statements  and documents  (if need be) within  14 days  herein;

c. Mention  for pre-trials  on 4. 3.2021; and

d. Costs  in the cause.

Ruling signed, dated and delivered virtually this 7th day of  January,  2021.

Hon. F. Terer    Deputy Chairman Signed  7. 1.2021

Mr. P. Gichuki   Member    Signed  7. 1.2021

Mr. B. Akusala    Member   Signed  7. 1.2021

In the presence  of  Mr. Gekonge  for Claimant

Respondent  absent

Court clerk  Maina

Hon. F. Terer    Deputy Chairman Signed  7. 1.2021

Mr. Gekonge- There  was another Application  by the Respondent seeking  security for  costs. I had  filed a Response.

Tribunal -  The Respondent’s Application  dated 18. 8.2020 to be canvassed  by way of written submissions. Respondent  to do so within  14 days  herein. Claimant  14 days  of service

Mention  for directions  on 4. 3.2021.

Hon. F. Terer    Deputy Chairman Signed  7. 1.2021