Murata Sacco Limited v Ernest Maina Nyingi [2021] KECPT 567 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.742 OF 2016

MURATA  SACCO  LIMITED .......................CLAIMANT

VERSUS

ERNEST  MAINA  NYINGI  .......................RESPONDENT

RULING

Vide the  undated Application  filed  on 1. 10. 2019, the Respondent  has moved  this Tribunal  seeking  for Orders inter alia:

1.  Spent

2.  That there be  a temporary  stay of  execution  of the ex-parte  judgment  and the consequential  Decree  pending  the hearing  and determination  of the  application  and the suit;

3.  That  the ex-parte  Judgment  and the  consequential decree  be set aside.

4.  That  the Applicant  be ordered   to give  a  proper  account  of the loan  and furnish  the Respondent  with  a full  statement  of his  account.

The Application  is supported  by the grounds  on its face  and the affidavit  sworn by  Respondent  Ernest  Maina  Nyingi on  1. 10. 2019. The Claimant  has opposed  the Application  vide the  Replying  Affidavit  sworn  by its  Credit  Manager Pius  Mr. Hiira  on 17. 10. 2019.

Vide the directions  given  on  22. 7.2020,the Application  was canvassed  by way  of  written  submissions.  The Respondent  filed his  on  5. 6.2020 while  the Claimant  did so  on  28. 10. 2020.

Respondent’s  case

It is  the Respondent’s case  that  prior  to the entry  of  the default  judgment  on 10. 4.2019,  he  was not served  with  summons  to enter  appearance. That  he only  came to  learn  about  the existence  of the claim  when he  was served  with the Notice to Show Cause  dated  30. 8.2019.

That  in July,  2007, he applied  and  was granted  a loan  of  Kshs.205, 000/= . That  the same  was  repayable  for  48 months. That  the Claimant  recovered  the said  loan  by way  of monthly  deduction  of Kshs.4,502/=.  That this  happened  until  he was  dismissed  from  work  on  5. 9.2009.  That the total  amount  deducted  from his salary  was Kshs.108,048/=.   That on  14. 1.2011 he paid  Kshs.76,723. 00 vide  a  standing order.

That later, the  Claimant recovered  Kshs.39,999. 23 from  his guarantors.

Claimant’s  case

The Claimant  has opposed  the Application  on the following  grounds.  That summons  to enter  appearance  was  duly served  upon  the Respondent. That the  Respondent  did not  repay   the loan  on terms agreed  thus occasioning  accumulation of interest. They  apart  from  stating  that  he repaid the loan,  the Respondent  has not  led evidence  to demonstrate  how he  repaid  the same.

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  10. 4.19.

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.”

Reasons  for failure  to  file  memorandum  of Appearance  or Defence

The Respondent  has attributed  failure  to enter Appearance  to her fact that  he was not  served  with  summons  to enter Appearance. We  have however,  perused  the Affidavit  of  service  sworn  by  Jonathan  Ngumo Mbogo on 4. 4.2019. We note that the Respondent  was  personally  served  with summons  to enter  Appearance  at his  home  on  9. 7.2017. We  are therefore satisfied  that he was  duly served  with the said  summons.

Intended  Defence

We have  perused  the draft  defence  annexed  to the Application. The  Respondent  contend  that he  had repaid  the entire  loan through  loan recovery, Standing  Order  and  deduction from  his guarantors.  The Respondent  has broken down  the said  repayment vide  his supporting  Affidavit  as follows:

a. Loan recovered  through  monthly  deductions  from his  salary                                         Kshs.108,048/=.

b. Standing  Order –       Kshs.76,723. 05/=; and

c. Guarantors                   Kshs.39,991. 23.

Total Kshs. 224, 762/=

We have  perused  the loan  statements annexed  to the Replying  Affidavit  of Pius  M. Hiira. It shows  that the  outstanding  loan balance  as at  31. 3.2018 was Kshs.173,683. 31/=. Upon  close  scrutiny,  we cannot  properly  and/or  accurately  ascertain  the exact  amounts due  and owing  as  at the  time  the claim  was  instituted. We note  that the amount  borrowed  is Kshs.205,000/-. From  the statement,  it appears  there was  a lump sum  deposit  of Kshs.178,346. 00/= on 12. 9.2017. The principal  amount  in the decree dated 17. 6. 2019 is Kshs. 220, 692. 77/=.  It is not clear  if the  claimant  gave credit  to any  payments made  by the Claimant. Whilst  the Claimant  has dismissed  the Respondent’s assertions or repayment, we  note that  if  it is true  that he has repaid the sums  he claims  he has then   he  will  be seriously  prejudiced  if he is  not granted  an opportunity  to do so.  In simple  terms,  we are  saying that  the draft Defence  raises  triable  issues  worthy  of  determination  after hearing  of the claim  on merits.

Conclusion

The upshot  of the foregoing  is that  we find  merit  in the Respondent’s  Application  filed on  1. 10. 2019 and  allow it  as follows:

a. That the  default judgment  entered  on 10. 4.2019 is hereby  set aside;

b. The  Respondent  is granted leave  of  21 days  to file and  serve  a Defence/Response  to the claim  as well as  witness  statements  and list  and bundle  of documents;

c. The Claimant is  granted  corresponding  leave  of 14 days  to file  and serve  a Reply  to the Response  as well  as supplementary  witness  statements  and list  and bundle  of documents.

d. Mention  to confirm  compliance  and fixing  a hearing date on 26. 5.2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 4TH DAY OF MARCH, 2021.

Hon. B. Kimemia         Chairperson                          Signed       4. 3.2021

Mr. P. Gichuki              Member                                Signed       4. 3.2021

Mr. B. Akusala             Member                                Signed       4. 3.2021

Getange  advocate  for Respondent  present

Notice  to issue.

Hon. B. Kimemia         Chairperson                          Signed       4. 3.2021