Nazigi Sacco Society Limited v Rachel Waithera [2021] KECPT 565 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.752 OF 2017

NAZIGI SACCO  SOCIETY  LIMITED ........CLAIMANT

VERSUS

RACHEL WAITHERA ............................ RESPONDENT

RULING

Vide the Application  dated 27. 9.2020, the Judgment Debtor has moved  this Tribunal  seeking  for the followings Orders:

1. That  this Application  be certified  as urgent  and services be  dispensed  with in  the first instance;

2. That  an interim Order  be  granted  lifting  the arrest  warrant  issued  by the  Honourable  Tribunal  and  dated 28. 11. 2018 and release of the Respondent/Judgment Debtor  from police custody  pending  the hearing  and determination  of the Application herein;

3.  That this  Honourable  Tribunal  be pleased  to stay  the execution/prosecution  of the Decree  and Order  of the Tribunal  arising  from  and/or  consequential  to the Claimant’s  claim dated  the 18. 11. 2017 pending  the hearing  and  determination  of the Application herein;

4.  That this Honorable Tribunal  be pleased  and do hereby  stay the execution   and/or set aside  the decree  herein  subject  to any further  orders  of the Honourable  Tribunal  for the payment  of the Judgment Debtor  in installment and/or  in such manner  as may be agreed  by the parties  and/or  may be  determined  by the Honourable Tribunal ;

5.  That this Honourable  be pleased  to grant  leave  to the  Respondent/judgment debtor  to defend the claim herein;

6.  That this  Honourable  Tribunal  be pleased  to grant  any such orders as may deem fit in the  circumstances  to meet  the ends  of justice; and

7.   That  costs  of the  application  be provided for.

The Application is supported by the grounds on its face and the  following Affidavit.

a. Supporting  Affidavit  sworn by herself  (Rachel  Waithera Kimani) on 27. 9.2019; and

b. Further  Affidavit  sworn  by the herself on  2. 10. 2020.

The Decree Holder has  opposed  the Application vide  the  following Affidavits:

a. Replying Affidavit   sworn by Duncan  Mwangi on 24. 10. 2019; and

b. Supplementary  affidavit  sworn  by  Peter  Muturi Mwangi on 3. 3.2020.

Vide  the  directions  given  on  29. 7.2020,  the Application  was canvassed  by way of  written submissions.  The Judgment Debtor filed  her   written submissions  on  17. 11. 2020 while  the Decree Holder did so  on 17. 11. 2020.

Judgment  Debtor’s  Contention

The Judgment Debtor’s  Application  is premised  on grounds  that execution  has commenced  in the matter  yet  she was not  served  with the claim  as  well as  summons  to enter  appearance.  That  she is a member  of the Claimant with savings  amounting  to Kshs.650,000/= and two  motor vehicle  Registration  No. KBE  273G  and KBS 460Ejointly  registered  in their names.

That  she had  applied for  a loan  of Kshs.2,400,000/= with the Claimant  whose  repayment  period  was 36  months. That the  effective  and/or  commencement  period  for repayment  of the loan was January  2014. That the  alleged  default  commenced  in February  2019 and does not warrant  the drastic  action  the Claimant  has taken. That  she has  a good defence  with high  probability of success.

That  she is  willing  to enter into  an understanding  with the Claimant  as regards payment  of the sums due.

That she  propose,  to be  granted  leave  to commence  and complete repayment  of the sums  owing by  way of monthly  installments  of  Kshs.40,000/= effective  1. 10. 2019.

That she is the only bread  winner  of her family.

Claimant’s Contention

The Decree  Holder  has opposed  the Application  on the following  grounds:

That  as regards service  of summons  to enter appearance and attendant pleadings, the Judgment Debtor  was personally  served with the same. Mr.  Duncan  Mwangi,  the chairman of its credit  committee deponed  in the Replying  Affidavit  that he  was personally  present  when  the  Judgment Debtor  was served with the said  summons.

That  while  it is true that  the Judgment Debtor  offered  her deposits  and the mentioned  motor vehicle (KBE 237 G and KBS  460B) as security  for repayment  of the  loan,  she removed  the  said  motor vehicle  form the Decree Holders access  thus  making  it impossible  to recover  the said loan.

That  on account  of  the said default,  her deposits were  applied  towards  repayment  of the loan  leaving  a balance  of Kshs.1,829,113 as at  31. 8.2017.

That  after  subsequent  repossession  of  the said  motor vehicles and upon  valuation, they  returned  the following  results;

a. Motor vehicle  KBE  237 G- .......  sale value – Kshs.600,000/=

Market value     Kshs.700,000/=

b. Motor vehicle  KBS  460  E  - Market  value Kshs.460,000/=

...sale value       Kshs.400,000/=

That  the said motor vehicles  were eventually  sold.

That  even after  the sale  of the said motor vehicles,  the Judgment debtor  is  still indebted  to the Decree Holder.

That based   on the  foregoing,  the Judgment  Debtor  does not have  a Defence  worthy  of  admitting  to trial.

That the sums due  and owing  as at  29. 2.2020 was Kshs.1,045,170/=. That  in addition  the  Claimant  incurred  the following  additional  expenses  towards  recovery of the loan:

a. Towing  expenses  Kshs.70,000/=

b. Investigations    Kshs.110,580/=

c. Administrative  expenses Kshs.78,695/=

Issues  for determination

We have  framed  the following  issues  for determination

a. Whether  the judgment Debtor  has established  a proper basis to warrant  the setting  out of the default  judgment  entered  on  27. 6.2018;

b. If the  answer  in  (a)  above  is  in the negative, whether  the judgment Debtor  should  be allowed  to  settle the balance of Decretal  amount  by way  of installments  and if so,  at what  rate?

c. Who should  meet the  costs  of this 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.”

We consider  the foregoing  conditions  thematically  as follows:

Reason  for failure  to enter  Appearance  or file a Defence

The Judgment  Debtor  has advanced  the argument  that she  did not  enter  Appearance  or file a Defence  because  she was  not served with summons  to  enter  appearance. We  have perused  the Affidavit  of service  sworn by  Benedict Musyoka Nthenge on  30. 5.2018.  it is  apparent  that the  Judgment  Debtor  was served  with summons  to  enter  Appearance  and other  court  papers  on  9. 5.2018 at Makadara police  station.  The Judgment  Debtor  was served  in the presence  of the Decree  Holder’s  Treasurer and  Deponent  of the Replying  Affidavit  sworn  on 3. 3.2020 by Peter  Mwangi.

We thus find  that the  Judgment  Debtor  has not  given  a plausible  reason  why she  did not  enter  Appearance  or file  a Defence  in good time.

Whether  draft  Defence raises triable issues

We have perused  the annextures to the Supporting  Affidavit  sworn by  the Claimant  on  27. 9.2019. We cannot  lay sight  on a draft  Defence.   In  the absence  of the said  Defence, we  cannot  ascertain  whether  or  not  the Judgment  Debtor  has  a case worth trying. Needless to say that the Judgment Debtor has acknowledged  existence  of the debt  and even  goes  ahead  to  make proposals  on mode  of repayment.

Repayment  of Debt  by way  of installments

We have jurisdiction to make an order regarding settlement of a decree by way of installments by  dint  of  Order  21  Rule  12  of the  Civil  Procedure  Rules sub-Rule  (2)  provides  thus:

“ After  passing  of any such  decree,  the court  may,  on the Application  of the  judgment  debtor  and with  the consent  of  the Decree Holder  or without the consent  of  the decree holder for sufficient  cause  shown,  order that  he payment  of the amount  decreed  be postponed  or be made  by  installments  on such terms  as to the  payment  of interest, the attachment  of the property .....or  otherwise  as it thinks fit....”

Whether  or not  to allow  a party  to  settle  the decretal  amount  by way  of installments  is a matter  of  discretion. This  was the  holding  of the court  in the case  of  KTK Advocate –vs-  Baringo  County Government [2018]eKLR.

The question  begs  as  to whether  the judgment debtor  has laid  a proper basis  to warrant  us to exercise  our discretion  in her favour.  I is her case that  she is  financially  strapped  and that she  can only  afford to make  a monthly  repayment  of  Kshs.40,000/=.

We note that  the Judgment  Debtor  took  the  impugned  loan  on the security of her  deposits  and two  of her  motor vehicles KBE  273 G and KBS 460 E. The  deposit  and the  motor vehicles have  all been  applied  towards  repayment  of the loan. Out of  this,  the Decree Holder  has substantially recovered  the loan.

In lieu  of  this,  we are  constrained  to exercise  our discretion  towards  allowing  the judgment debtor  to settle  the balance  of the decretal amount  by way  of monthly installment.

Conclusion

The upshot  of the foregoing  is that we  determine the judgment  debtors  dated  29. 9.2019 as follows:

a. The Judgment  Debtor  is hereby  allowed  to  settle the balance  of the decretal  amount  by way of monthly installments  of Kshs.40,000/= effective  1. 10. 2019;

b. That  if the Judgment  Debtor  does not  settle  any installments  becoming due  and owing  at  every given  time,  then a warrant  of arrest  shall issue  automatically without  further  reference  to the Tribunal; and

c. The Judgment  Debtor  to meet  the costs  of the  Application.

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

Mr. Ongicho for Respondent

Hon. B. Kimemia                  Chairperson                 Signed       4. 3.2021