Lainisha Sacco Society Ltd v Muthee [2025] KECPT 374 (KLR)

Lainisha Sacco Society Ltd v Muthee (Tribunal Case 656A of 2019) [2025] KECPT 374 (KLR) (10 July 2025) (Ruling)

Neutral citation: [2025] KECPT 374 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case 656A of 2019

Janet Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

July 10, 2025

Between

Lainisha Sacco Society Ltd

Claimant

and

Ann Wanjiru Muthee

Respondent

Ruling

1. This Ruling is in relation to a Notice of Motion Application dated 19th July, 2024 which was filed by the Judgement Debtor/Applicant under a Certificate of Urgency dated the same day.The Application seeks the following orders;i.Spentii.That the Tribunal grant a stay of execution of the judgement entered on 8th March, 2021 and the Notice to Show Cause.iii.That the Tribunal grant a Temporary Injunction to restrain the Decree-holder, their servants, agents, assignees and any other person claiming to act for them from executing the decree.iv.That the Tribunal be pleased to set aside or vary the judgement delivered on 8th March, 2021 together with the consequential orders.v.That the Tribunal to order that the suit be heard ‘de novo’ and the Judgement debtor/ Applicant be allowed to defend the suit.vi.That the Tribunal to order for any other relief that the Tribunal may deem fit and just.vii.That the cost of the Application be in the course.

2. In her Supporting Affidavit dated 19/9/2024, the Judgement debtor averred under paragraph 5 that, “I have never been served by the Respondent with any document in relation to this matter hence not able to defend myself.”She went on to state that it was until she received a Notice to Show Cause that she learnt that there was a Suit filed against her in this Tribunal. More specifically, she stated under Paragraph 2 of her Supporting Affidavit that, “On 28th June, 2024, I received a hearing notice for an Application to notice to show cause why I should not be arrested and committed to Civil jail in execution of a Decree.

3. On a scheduled hearing of the show-cause notice held on 18th July, 2024 counsels for the Judgement Debtor told the Tribunal that they had filed an Application dated 15th July, 2024 seeking to set aside the Judgement.When the Tribunal checked in the file and the portal, there was no such an Application.

The Claimant’s Case. 4. On 23rd October, 2019, the Claimant/ Decree Holder filed a Statement of Claim seeking for orders to compel the Respondent to pay for a Loan Balance and interest amounting to Kshs. 116,361/= and in the alternative to order for attachment and sale of Paddy rice growing in the Respondent’s rice field, moveable or immoveable property until full recovery is made.

5. In the Tribunal’s file records, there is an Affidavit of Service Application dated 28/11/2019 filed by one Justus Njagi Rwangima to the effect that he served the Statement of Claim, the claimant’s List of Documents and the Summons to enter appearance upon the Respondent at her business place in Ngurubani Town Mwea Within Kirinyaga County.

6. When the Respondent failed to enter appearance and failed to file a Defence as detailed in the summons dated 25th October, 2019, the Claimants filed an Application dated 02/03/2021 and the Tribunal to enter judgement against the Respondent.

7. It is on the basis of this request for judgement that the Tribunal entered ex-parte judgement on 8/3/2021 by stating as follows:“Having considered the request for judgement Application dated 2/3/2021 and the Affidavit of Service of Justus Njagi Rwagima dated 28/11/2019, I’m satisfied that service was effected upon the Respondent and in the absence of Memorandum of Appearance and Statement of Defence, Judgement is hereby entered in favour of the Claimant against the Respondent.”A decree dated 4th July 2022 was extracted which was followed by an Application for the execution of the decree.

8. An Affidavit of Service for the Decree and the Notice to show cause was said to have been served by sliding the documents into her rental room at Kirongi’s building in Ngurubani town through an opening at the door on 27/10/2022.

9. At a scheduled mention dated 16/12/2024, the parties consented to have the matter canvassed by way of Written Submissions of which the Claimant filed a Replying Affidavit dated 25/9/2024 to the Notice of Motion Application, while the Respondent filed her Written Submissions dated 3rd March, 2025.

10. Having read through the Claimant’s Statement of Claim, the annexures and the Replying Affidavit together with the Respondent’s grounds in support of her Notice of Motion Application and her Witness Statement, we have isolated three issues for our determination;i.Whether the ex-parte judgement dated 8th March, 2021 can be set aside?ii.Whether the Tribunal can grant leave to the Judgement debtor/ Applicant to file her Defence out of time and to defend the suit.iii.Who should bear the cost of the Application.

Analysis and Determination Issue one. Whether the ex-parte judgement dated 8th March, 2021 can be set aside. 11. We have analyzed the pleadings filed by both the Decree Holder/ Respondent and that of the Judgement Debtor/ Applicant and do not find any Statement of Defence which was filed by the Judgement Debtor/ Applicant to deny she was not granted a loan or she has repaid in full.

12. On a balance of probability, the lack of Defence makes any by-stander to believe that the loan was Kshs. 120,000/= in 2017 by the Decree Holder/ Respondent.

13. Having denied that she was not served with the Summons and the Claimant’s Statement of Claim, it is noted that the Judgement Debtor/ Applicant was spurred into action when she discovered that judgment had been entered against her and execution was eminent when she was served with a hearing notice to show cause on 28th June, 2024.

14. However, the decree holder/ Respondent filed an Affidavit of service dated 28th November, 2019 in which the process server Mr. Justus Njagi Rwagima averred under paragraph 4 of the Affidavit that;“At the time of this service, I was not known to the Respondent but I was directed to his place of residence by Antony the Loan Recovery Officer at the Claimant’s office”First, we find this statement to be very confusing in the sense that the process server admits that the respondent did not know him or he did not know her but even then, he was directed to her place of Residence.The question that needs to be answered is; when he arrived in her place of residence, who pointed out to him the particular house of the Respondent and who identified her for him?

15. In the Affidavit of Service relating to the Decree and the Notice to show cause, the same Court Process Server stated that he put the documents inside her room through an opening at the door on 27/10/2022. On this one, the same question of who identified the room for the Process Server to push the documents through the opening? How did he know that the Judgement Debtor/ Applicant was living in that room? The most fatal mistake in the instant service is that the Process Server did not know or knew that Service of Court documents are supposed to be served on an individual personally and not to be pushed through door openings.

16. In both instances, we doubt whether service was effected on the Judgement debtor/ Applicant. Given that service of Summons to enter appearance and pleadings play a very important role inviting the other party to state his or her case in line with the principle of Natural justice, it is absolutely necessary that a party be served within the direction of order 5 of the Civil Procedure Rules which provide:Anything short of this is a miscarriage of justice.

17. Even though the judgement debtor/ Applicant did not file a Statement of Defence to consider whether it raises arguable Defence or not, we are of the opinion that in the interest of justice, the judgement debtor/Applicant should be granted an opportunity to be heard on merit.Consequently, the Tribunal invokes the provision of Order 10 Rule 11 of the Civil Procedure Rules 2010 which provide that:“Where judgement has been entered under this order, the Court may set aside or vary such judgement and any consequential decree or order upon such terms as are just.”

18. We therefore give the Judgement Debtor/Applicant a benefit of doubt and hereby set aside the ex-parte judgement dated 8th March, 2021 in the interest of justice together with all the Consequential Orders pending the hearing and determination of this suit. We direct that the claim should proceed to full trial to ascertain the merits of the case.

Issue Two. Whether the Tribunal can grant leave to the Judgement debtor/Applicant to file her Defence out of time and to defend this suit. 19. The Court has pronounced itself in several cases as in Sebei District Administration v. Gasyali & others [1968] E.A 300 that denying a Defendant/Applicant a hearing should be a last resort that a Court can order.At the same time, the Court in the case of Patel v. E.E Cargo handling Services Limited stated that the Court’s primary concern is to render justice to the parties and went ahead to highlight the key principles when a Defendant/Applicant seeks to file a Defence out of tile to wit:i.The Court will consider the explanation of the delay.ii.The potential prejudice that may be occasioned to either of the parties.

20. Acknowledging that there is a high probability that the Judgement Debtor/Applicant was not properly served and he fact that when she received the Notice to show cause on 28th June, 2024 she promptly filed a Notice of Motion Application dated 19th July, 2024 a period less than one (1) month.This delay in our view is not inordinate and the Judgement Debtor/Applicant should be granted leave to file Defence in order to establish whether she has any triable issues or not. A triable issue in the words of Sheridan J. in the cited case of Patel V. E.A Cargo handling service Ltd. (supra) defined it as “an issue which raises a Prima Facie Defence and which should go to trial for adjudication”.

21. We further note that the Decree holder/Respondent has proposed an alternative in their Replying Affidavit that if the Court is inclined to allow the Notice of Motion Application then the Judgement Debtor/Applicant should pay Kshs. 20,000/= as a throw away cost or to deposit the entire decretal amount of Kshs. 248,496. 86/=.In our view, we consider the proposal to mean that the Decree holder/Respondent is acknowledging that they will not suffer any harm or be prejudiced if we allow the Application.

22. On 13/9/2023, the counsel for the Judgement Debtor/Applicant suggested that they be allowed to compromise the Application by paying Kshs. 10,000/= as throw away costs which was opposed by the counsel of the Decree Holder.On this, while balancing between depositing the entire amount of Kshs. 248,469. 86 yet we have not sighted a Defence and paying Kshs. 20,000/= throw away cost, we choose to go with the later and order that the judgement debtor/Applicant to pay Kshs. 20,000/= to the decree holder/Respondent as throw away cost before the next mention date.

23. In conclusion, we hereby find that the Notice of Motion Application dated 19th July, 2024 is mentioned and is hereby allowed in the following terms:i.Prayer 1-spentii.The ex-parte judgement entered by the Tribunal on 8/3/2021 and all consequential orders and decree against the Defendant are hereby set aside.iii.Having set aside the ex-parte judgement, we find it unnecessary to issue an order for stay of execution and restriction orders since there is no ex-parte judgement or consequential orders to stay.iv.That the Judgement Debtor/Applicant is ordered to file and serve her Defence within 14 days from the date of the Ruling.v.That the Respondent to pay the Claimant throw away costs if Kshs. 20,000/= within the next thirty (30) days from the date of Ruling.vi.Failure to comply with this Honourable Tribunal’s orders No. (ii) and (iv) above within the period specified, the said orders shall lapse and the ex-parte judgement entered on 8/3/2021 together with its consequential orders shall stand reinstated.Pretrial Directions on 6/10/2025It is so ordered.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 10TH DAY OF JULY, 2025. HON. J. MWATSAMA - DEPUTY CHAIRPERSON SIGNED 10. 7.2025HON. BEATRICE SAWE - MEMBER SIGNED 10. 7.2025HON. FRIDAH LOTUIYA - MEMBER SIGNED 10. 7.2025HON. PHILIP GICHUKI - MEMBER SIGNED 10. 7.2025HON. MICHAEL CHESIKAW - MEMBER SIGNED 10. 7.2025HON. P. AOL - MEMBER SIGNED 10. 7.2025Tribunal Clerk KokiKamau advocate for the ApplicantGitau Kahinga advocate for Respondent- No appearanceHON. J. MWATSAMA - DEPUTY CHAIRPERSON SIGNED 10. 7.2025