Matu Wahome, Raphael Macharia Irungu & Christopher Isaac Nderitu v Fep Saving & Credit Society Limited [2020] KECPT 7 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.29 OF 2020

MATU WAHOME...................................................1ST CLAIMANT

RAPHAEL MACHARIA IRUNGU......................2ND CLAIMANT

CHRISTOPHER ISAAC NDERITU....................3RD CLAIMANT

VERSUS

FEP SAVING & CREDIT

SOCIETY LIMITED ..............................................RESPONDENT

RULING

What is before us for consideration and determination is the Respondent’s Application dated 19. 6.2020 It seeks, for the following Orders:

1.  Spent;

2.  That pending  hearing and determination  of this Application interparties  and  pending the hearing  of this  suit, there be  a temporary  stay  of the judgment  and decree issued  on 16th June, 2020 and all  Consequential  Orders  thereof;

3.  That  this  Honourable Court  be pleased  to set aside  the judgment  and decree  issued  on 16th June, 2020 against the Respondent/Applicant and the Respondent  be allowed  to defend  this suit;

4.  That the  statement of Defence  and Counter-Claim  dated the  18th  day of February,  2020 and filed on  the 19th  day of June, 2020 be deemed  as filed  and the Claimant  be granted  leave  to respond  to the same; and

5.  That costs be provided for.

The Application is supported by the grounds on its face and the following Affidavits:

a. Supporting  Affidavit  sworn by  Haggai Chimei on even date (19. 6.2020); and

b.Supplementary Affidavit sworn by the said Haggai Chimei on 8. 7.2020.

The Claimant has opposed the Application vide the Replying Affidavit sworn by the 1st  Claimant on 30. 6.2020. Vide the directions  issued  on  24. 8.2020,  the Application  was canvassed  by  way of written  submissions on  17. 7.20202 while  the Respondent  did so on  17. 9.2020.

Respondent’s Contention

Vide the instant Application,  the Respondent  seeks  to set aside  the  default  judgment  made on  4. 3.2020 on grounds  that it did  not file  a Defence  within  the time  limited by  law as  its Chief Executive  Officer  was taken  ill  hence  delaying  execution  of the pleadings.  That by  the  time  the Chief Executive Officer  recovered  and signed documents,  the Tribunal  was closed  and  that  no filing  of documents  was allowed  except  for matters filed under certificate  of Urgency. That on 18. 6.2020, it was served with a Notice of entry of judgment.  That it was upon receipt of the said Notice that it filed the instant Application. That it was a good Defence with triable issues.  That it also has a Counter-Claim against the Claimant. That it is on that basis that it seeks for judgment to be set aside.

Claimant’s Contention

The Claimant  has opposed  the instant  Application  on grounds that the issue of illness  of the Respondent’s Chief Executive Officer  is not reasonable  enough for  the Respondent  not  to fail  to file a Defence.  That there are other officials who would take up the matter on his behalf.  That further, no medical records were produced to proof illness.   That at no point in time did the Tribunal halt its operations. That  at any  given time,  there  was an officer  of court attending  to litigants and that there  was a Notice  directing  parties  on the mode of  filing  documents.  That the instant Application has not been originated in good faith and is only intended at defeating the claim.

Issues for determination

We have framed the following issues for determination:

a. Whether  the Respondent  has laid  a proper basis to warrant  the setting aside  of the default  judgment  entered  on  4. 3.2020;

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 exdebito 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:

“Adistinction 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.”

From  the foregoing, it  is apparent  that before  we exercise  jurisdiction  to set aside  a default  judgment, the following  conditions  must obtain:

a. Reason  for failure  to file  a memorandum  of Appearance  or Defence;

b. The length  of time  that has elapsed  since default  judgment  was entered;

c. Whether  the intended  Defence raises  triable  issues;

d. Prejudice  likely  to be suffered by each  of  the parties;  and

e. Whether on the whole, it is in the interests of justice to set aside the default judgment.

A question arise as to whether this instant Application has satisfied these principles. In response therefore we will consider the Principles thematically as follows:

Reasons for failure to file a Defence

The Respondent contend that it did not file a Defence in good time as its Chief Executive Officer was taken ill. As such, he was not available to approve pleadings.  In a rejoinder, the Claimant contends that apart from alleging so the Respondent did not provide medical records to prove illness.  Secondly, that the Chief Executive Officer is not the only official of the Respondent.  That there are other officials who would approve pleadings.

We have considered the reasons advanced by the Respondent and the opposition of the Claimant. We are of the view that the reasons advance by the Respondent for not filing a Defence in good time are justifiable. Whilst the Respondent  did not provide  medical  records to prove  illness of  its Chief Executive Officer, we give him  the benefit  of  doubt  and take  the view  that he was  indeed  ill.

As regards the issue  of the other officials approving  documents,  we agree  with the  Respondent  that the  Chief Executive  Officer  is the person  best  placed  to  make responses on behalf  of the Sacco.

Length of time taken to originate the Application

The default judgment was entered on 4. 3.2020 whilst the instant Application was filed on 19. 6.2020. We find that this   Application has been filed timeously considering the circumstances surrounding the period within which it was filed.

Whether Draft Defence raises triable issue

We have perused the statement of Response and Counter- Claim dated 18. 2.2020. We note that the Respondent has averred that the Claimant still owes the Respondent loan amounting to Kshs.158, 600. That several demands have been made but its Claimant has not been responsive. What  is discessible from  this  argument  therefore is  that the Tribunal  is called  upon to determine (at trials) whether  the Claimant  is still indebted  to the Respondent.  This is a triable issue.  With this  alone,  we find  that the Draft Statement of Defence  raises  triable  issues  worth  of determining  after hearing  of the main claim  on  merits.

Conclusion

The upshot  of the foregoing  is that we find  merit  in  the Respondent’s Application  dated 19. 6.2020 and hereby  allow  it  based  on the following  terms:

a. That the Statement of  Defence  and Counter- Claim   filed  on 23. 2.2020 is  hereby  deemed  as duly  filed and  served;

b. The Claimant  is granted  leave  for  14 days  to file and serve  a Reply to Defence and Defence to  Counter- Claim;

c. Parties  to comply  with Order  II within  30 days  herein;

d. Mention  for Pre-trials on  7. 1.2021; and

e. Costs in the cause.

Ruling signed, dated and delivered virtually this 3rdday of December, 2020.

Hon. B. Kimemia             Chairperson                             ...........................

Hon. F. Terer                    Deputy Chairman                    ............................

Mr. P. Gichuki                 Member                                   ..............................