Richard Mwangi Mwaniki & James Wambugu Mwangi v Jason Muita Thangari [2022] KEHC 2585 (KLR)

REPUBLIC OF KENYA

IN THE HIGH COURT OF KENYA AT NYAHURURU

CIVIL APPEAL NO. 01 OF 2018

RICHARD MWANGI MWANIKI................................................1ST APPELLANT

JAMES WAMBUGU MWANGI..................................................2ND APPELLANT

VERSUS

JASON MUITA THANGARI.........................................................RESPONDENT

JUDGMENT

1. By a plaint dated 15th October, 2014, the Appellant sought payment of Kshs.714,174/- being principal claim plus interest at 20% per month from 16th June, 2014 till payment in full Kshs.37,250/- as per acknowledgment of 16th June, 2014 costs and interests.

2. The claim arose from advances of above claimed amount made by Appellant to Respondent on security of L.R. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) in default of payment the Respondent above parcel of land was to be transferred to the Appellant.

3. The Respondent is said to have refused to pay the amount as agreed despite demands.

4. Attempt to transfer land to the Appellant was obstructed by the Respondent’s wife via a caution she lodged thus attracting the suit subject of the instant appeal.

5. The Respondent is said to have been served with summons but failed to defend suit thus judgment was entered, execution process ensued and suit land was sold via auction and transferred to a third party.  The Respondent sought to challenge exparte judgment sale and transfer of suit land which challenge was successful thus attracting instant appeal in which 6 grounds were set out:

i.  That the learned trial Magistrate erred in law and in fact in allowing the Respondent’s application dated 23rd June, 2016.

ii. That the learned trial Magistrate erred in law and in fact in failing to find that the application dated 23rd June, 2016 was filed after the exparte judgment had fully been executed by way of sale and transfer of the Respondent’s L.R. No. Laikipia/Mutitu Nguro Block 4/223 (Manguo) and the delay was inordinate.

iii.       That the learned trial Magistrate erred in law and in fact in failing to make a finding on who was to refund the amounts paid by the 2nd Respondent in purchase of L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) in a public auction.

iv. That the learned trial Magistrate erred in law and in fact in failing to find that the 1st Respondent incurred auctioneer charges and legal fees totaling to Kshs.260,000/- in execution and sale of the Respondent’s L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) whereas no irregularities or fraud were noted in the ruling.

v.  That the learned trial Magistrate erred in law and in fact in ordering the cancellation of sale of L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo).

vi. That the learned trial Magistrate erred in law and in fact for disregarding the Respondents’ replying affidavits and submissions while considering the application dated 23rd June, 2016.

6. The parties agreed to canvass appeal via submissions which they filed and exchanged.

APPELLANTS’ CASE:

7. The appeal herein is a result of a ruling delivered on the 13th December, 2017 by Hon. Ocharo Momanyi which ruling was filed vide a supplementary record of appeal dated 28th September, 2021.

8. The ruling allowed an application dated 23rd June, 2016 seeking to set aside a judgment entered on the 19th November, 2014.

9. The application is found in page 39 of the record of appeal whereas a judgment is in page 169.

10. The Respondent also sought for unconditional leave to file a defence and for the sale ofL.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) to be set aside on grounds of irregularity and fraud.

11. The application was opposed by the 1st Appellant vide a replying affidavit sworn on the 28th June, 2016 and the 2nd Respondent through a replying affidavit sworn on the 8th September, 2016.  (see pages 58 and 75 of the Record of Appeal)

12. The Respondent was the Appellant in Nyahururu CMCC No. 216 of 2014 whereas the 2nd Respondent was a purchaser for value having purchased L.R. No. Laikipia/Mutitu Ngoru Block 4 (Manguo)/223.

13. In its ruling read on the 13th December, 2017, the Court allowed the application in its entirety and set aside the sale of L.R. Laikipia/Mutitu Ngoru Block 4/223 (Manguo).

14. The suit was initiated vide a plaint dated 15th October, 2014 where the 1st Respondent sought for the following reliefs against the Respondent herein:

(a) Kshs.714,174/- being the principal sum plus interest at 20% per month from 16th June, 2014 until payment in full.

(b) A further Kshs.37,250/- as per an acknowledgment dated 16th June, 2014.

(c) Costs of the suit plus interest.

(d) Any other or further reliefs that the court may deem fit and just to grant. (see page 4 of the Record of Appeal)

15. The Respondent was duly served with summons to enter appearance, the plaint and other pleadings and an affidavit of service was sworn on 12th November, 2014 by Herman G. Mwangi and filed in court on the 17th November, 2014 (see page 20 of the Record of Appeal).

16. The Respondent signed at the reverse of the copy of the summons to enter appearance found in page 21 of the record of appeal and dated the 23rd October, 2014.

17. In a ruling delivered by Hon. Aloyce Peter Ndege as found in pages 135 – 143 of the record of appeal, the court had this to say:

“The signature on the summons herein appears to be consistent with his other signatures on the other documents filed herein including the acknowledgement and the KNEC papers.”

18. The said learned Magistrate further proceeded to order that the process server be summoned for cross – examination on the issue of service.  This was despite the parties having informed the court on the 22nd November, 2017 that the process server could not be found and they sought for the application to be canvassed by way of submissions. see page No. 190 of the Record of Appeal).

19. The Respondent did not enter an appearance or file a defence in the matter and the Appellants’ claim being a liquidated claim is provided for under Order 10 Rule 4(1) of the Civil Procedure Rules 2010,the court proceeded to enter judgment against the Respondent as per the plaint on the 19th November, 2014. (see page 169 lines 11 – 15 of the Record of Appeal)

20. The Respondent was consequently served with a notice of motion dated 28th July, 2015 for review of the decree dated 28th December, 2014 and there is an affidavit of service filed in court on 13th August, 2015. (see page 176 lines 14 – 24 and page 177 lines 1 – 5 of the Record of Appeal)

21. The Respondent was further served with a notice of entry of judgment dated 20th November, 2014 on the 21st November, 2014 and an affidavit of service sworn on the 10th December, 2014 was filed in court in proof of service. (see pages 24 and 25 of the Record of Appeal)

22. The Appellant sought for execution of the decree and certificate of costs dated 20th August, 2015 by way of attachment of the Respondent’s L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) and the matter was set down for settlement of terms of sale on the 21st January, 2016 and the Respondent was duly served with the Notice but he failed to attend court and the terms were set. (see pages 177 and 178 of the Record of Appeal)

23. The said parcel of land was advertised for sale by way of a public auction by M/s Tango Auctioneers as per the newspaper cutting found in pages 68 and 78 of the Record of Appeal and sale was to be conducted on the 18th March, 2016 outside Nyahururu KCB Bank commencing the 10. 30am.

24. The sale was conducted as scheduled and the 2nd Respondent James Wambugu Mwangi was declared the highest bidder and he bought the parcel of land at Kshs.1,200,000/- which amount was paid to the auctioneers as per the clearance certificate and receipt both dated 29th March 2016 found in pages 80 and 81 of the Record of Appeal.

25. The transfer documents were signed by the court’s executive officer on 28th April, 2016 but before transfer could be effected, the Respondent filed an application dated 23rd June, 2016 where he sought for the following reliefs:

(a) That pending the hearing and determination of this application interparties there be stay of transfer of L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) in favour of James Wambugu Mwangi.

(b) That the exparte judgment entered against the Respondent/Applicant herein together with all consequential orders made pursuant thereto be set aside.

(c) That the Respondent/Applicant be granted unconditional leave to file his defence out of time.

(d) That the sale of L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) be set aside on grounds of irregularity and fraud in conducting the sale.

(e) That the cost of the application be provided for. (see page 156 of the Record of Appeal)

26. The application was opposed by the Respondents herein vide replying affidavits sworn on the 28th July, 2016 and 8th September, 2016. (see pages 58 and 75 of the Record of Appeal)

27. Vide a ruling dated 13th December, 2017, the application was allowed in its entirety provoking the present appeal.

RESPONDENT SUBMISSIONS

28. It is submitted that the instant case, there was no doubt that the Respondent was not only served once but four times in the matter but he took no action until the decree was executed by way of sale of his parcel of land.

29. In the application dated 23rd June, 2016, he claimed that he got knowledge of the suit upon conducting a search on the parcel of land when he discovered that there was a prohibitory order registered. The reasons for conducting a search were not advanced.

30. The application set aside the judgment entered on 19th November, 2014 was filed on 23rd June, 2016.  The delay of close to 2 years was not explained or at all.

31. It is contended that in the draft defence annexed to the application the Respondent admitted owing a sum of Kshs. 264,587/- to the 1st Appellant.

32. In the replying affidavit sworn by the 1st Appellant on the 28th July, 2016 opposing the application, he deponed in paragraph 13 that out of the sale price of Kshs.1,200,000/- he only received a sum of Kshs.940,000/- and where Kshs.260,000/- was utilized towards paying the auctioneers, advertisement charges and advocate’s fees in the matter.

33. The 2nd Respondent on his part, in his replying affidavit sworn on the 8th September, 2016 deponed that he paid Kshs.1,200,000/- after buying the parcel of land through a public auction after following the due process of the law.

34. Although the Respondent had in prayer No. 4 of his application dated 23rd June, 2016 sought for setting aside of the sale on grounds of irregularities and fraud, the court in the ruling dated 13th December, 2017 did not make a finding to the effect that there were irregularities or fraud in the sale but it proceeded to set aside the sale.

35. The issue of the sale having occurred and the purchase price paid in full was not addressed by the learned trial Magistrate despite the buyer being enjoined as an interested party in the application and having responded to the application.

36. It is submitted that the court ought not to have allowed the application to set aside noting that the decree had already been executed to its fullest.

37. The admission of a sum of Kshs.264,587/- was not addressed by the learned trial Magistrate in the ruling.

38. The sum of Kshs.260,000/- paid by the 1st Appellant from the Kshs.1,200,000/- received for sale of the parcel of land was not addressed.

39. If the court had found merits in the application, it ought to have compelled the Respondent to refund the said amount to the 1st Appellant to enable him refund the entire Kshs.1,200,000/- to the 2nd Appellant in the matter.

40. The fate of the 2nd Appellant who had innocently paid Kshs.1,200,000/- in purchase of the parcel of land through a public auction was not addressed in the ruling.

41. Reliance is made on the case of James Kanyiita Nderitu & Another v Marions Philotas Ghikas & Another Civil Appeal No. 6 of 2015 eKLR (supra) as quoted in the case of William Macharia Maina & Another v Francis Barchuno & 3 Others.

RESPONDENT’S CASE AND SUBMISSIONS:

42. The Respondent herein is entitled to be heard and to deny him that opportunity should be only be done as a last resort.

43. The court’s ruling was proper as it was premised on the established legal principles on setting aside an interlocutory judgment.

44. The issues which form the basis of this case are dire considering the subject matter is land.

45. The land in question whose registered proprietor is the Respondent herein was sold as a result of the interlocutory judgment entered against the Respondent by way of public auction thereby depriving him his property.

46. Due to improper service the Respondent was also denied the opportunity to be heard,

47. The Respondent had a good defence case and it is mete and just that he be allowed to present his defence in court determination.

48. In his application, the Respondent also sought an order to set aside the sale by public auction of the subject land known asL.R. Laikipia/Mutitu Ngoru Block 4/223 (Manguo).

49. The Respondent contends that the public auction was not only irregular but also fraudulent since the property was sold below the reserved price.

50. In addition, the Respondent who was the registered owner was never served with the notice of sale.

51. Furthermore, the time frame between when the notification of sale was issued and the actual sale was thirty (30) days which is less than the prescribed time period in sale by public auction.

52. Although the Honorable Court in its ruling did not address the issue of irregularity of the public auction process, it is quite clear that the same was marred with irregularities and was aimed at deliberately depriving the Respondent his property without granting him the opportunity to redeem himself.

53. The provision under Order 22 Rule 75 of the Civil Procedure Rulesstipulates that the court may set aside the sale of immovable property on the ground of material irregularity or fraud in publishing or conducting it.

54. It is therefore paramount the court’s ruling be upheld on this basis.

55. While it is indeed true that Respondent instituted his application after the judgment had already been executed, the process under which the judgment was executed, in this case the sale by public auction, was improper and ought to have been set aside.

56. Based on the above provision, the law has allowed reprieve to parties who are deprived off their properties fraudulently.

57. Therefore, it is not correct to opine that since the judgment has already been executed by selling the subject land, the same cannot be set aside.

58. Rather, the same ought to be set aside due to the fraudulent and irregular means under which it was undertaken.

59. In the case of Manso Enterprises Ltd v Kenya Commercial Bank Ltd & Another [1989] KLR 584 where the court held that:

“where there are irregularities in publishing the sale the court is entitled to set it aside if the Applicant has sustained injury as a result of the irregularities.”

60. Similarly, the Respondent herein proceeded with the sale of the subject land without regard to the prescribed procedures and thus he is not entitled to continue benefiting from such a fraudulent and irregular process.

61. In addition, the Respondent suffered substantial loss without the opportunity to redeem himself.

ISSUES, ANALYSIS AND DETERMINATION

62. After going through the record and the submissions filed, I find the issues are whether there was proper service upon respondent with summons? If above in negative, what are the appropriate orders in the circumstances of the case? What is the orders as to costs?

63. The Code of Civil Procedure has illuminated the grounds for setting aside an ex parte decree and what constitutes sufficient cause for setting aside an ex parte judgement/decree.  Essentially, setting aside an ex parte judgement is a matter of the discretion of the court. In the case of Esther Wamaitha Njihia & two others vs. Safaricom Ltd the court citing relevant cases on the issue held inter alia:

“the discretion is free and the main concern of the courts is to do justice to the parties before it (see Patel vs E.A. Cargo Handling Services Ltd. [4]) the discretion is intended to be exercised to avoid injustice or hardship resulting from accident, inadvertence or excusable mistake or error but is not designed to assist a person who deliberately sought, whether by evasion or otherwise, to obstruct or delay the cause of justice (see Shah vs. Mbogo [5]). The nature of the action should be considered, the defence if any should also be considered; and so should the question as to whether the Appellant can reasonably be compensated by costs for any delay bearing in mind that to deny a litigant a hearing should be the last resort of a court. (See Sebei District Administration vs Gasyali [6]) It also goes without saying that the reason for failure to attend should be considered.”

64. See the case of Shah v Mbogo, and also relevant is the case of Ongom v Owota where the court held inter alia that the court must be satisfied about one of the two things namely:

a. either that the Respondent was not properly served with summons;

b. or that the Respondent failed to appear in court at the hearing due to sufficient cause.

65. It's important for me to mention that in the above case, the court defined what constitutes sufficient cause and in this respect the following paragraph is highly relevant to the issues before me:

“Once the Respondent satisfies the court on either, the court is under duty to grant the application and make the order setting aside the ex parte decree, subject to any conditions the court may deem fit. However, what constitutes 'sufficient cause' to prevent a Respondent from appearing in Court, and what would be 'fit conditions' for the court to impose when granting such an order, necessarily depend on the circumstances of each case.”

66. The appeal herein is a result of a ruling delivered on the 13th December, 2017 by Hon. Ocharo Momanyi which ruling was filed vide a supplementary record of appeal dated 28th September, 2021.

67. The ruling allowed an application dated 23rd June, 2016 seeking to set aside a judgment entered on the 19th November, 2014.

68. The Respondent also sought for unconditional leave to file a defence and for the sale of L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) to be set aside on grounds of irregularity and fraud.

69. The application was opposed by the 1st Respondent vide a replying affidavit sworn on the 28th June, 2016 and the 2nd Respondent through a replying affidavit sworn on the 8th September, 2016.

70. The Respondent was the Applicant in Nyahururu CMCC No. 216 of 2014 whereas the 2nd Appellant was a purchaser for value having purchased L.R. No. Laikipia/Mutitu Ngoru Block 4 (Manguo)/223.

71. In its ruling read on the 13th December, 2017, the Court allowed the application in its entirety and set aside the sale of L.R. Laikipia/Mutitu Ngoru Block 4/223 (Manguo).

72. The suit was initiated vide a plaint dated 15th October, 2014 where the 1st Appellant sought for the following reliefs against the Respondent herein sought;

Ø Kshs.714,174/- being the principal sum plus interest at 20% per month from 16th June, 2014 until payment in full.

Ø A further Kshs.37,250/- as per an acknowledgment dated 16th June, 2014.

Ø Costs of the suit plus interest.

Ø Any other or further reliefs that the court may deem fit and just to grant.

73. The Appellant insists that the Respondent was duly served with summons to enter appearance, the plaint and other pleadings and an affidavit of service was sworn on 12th November, 2014 by Herman G. Mwangi and filed in court on the 17th November, 2014 (see page 20 of the Record of Appeal).

74. And that it was evident that, the Respondent signed at the reverse of the copy of the summons to enter appearance found in page 21 of the record of appeal and dated the 23rd October, 2014.

75. The trial court through the ruling delivered by Hon. Aloyce Peter Ndege and notes that, the court had this to say:

“The signature on the summons herein appears to be consistent with his other signatures on the other documents filed herein including the acknowledgement and the KNEC papers.”

76. The said Magistrate further proceeded to order that the process server be summoned for cross – examination on the issue of service.  This was despite the parties having informed the court on the 22nd November, 2017 that the process server could not be found and they sought for the application to be canvassed by way of submissions.

77. After going through the record and the summons in issue, I make a finding that the above ruling of Hon Ndege on balance of probabilities proved service was effected and it was sufficient for the court to uphold service. The respondent did not claim the signature was a forgery nor move court for expert to examine it.

78. Thus Respondent did not enter an appearance or file a defence in the matter and the Appellants’ claim being a liquidated claim as provided for under Order 10 Rule 4(1) of the Civil Procedure Rules 2010, the court was justified in proceeding to enter judgment against the Respondent as per the plaint on the 19th November, 2014.

79. The Respondent was consequently served with a notice of motion dated 28th July, 2015 for review of the decree dated 28th December, 2014 and there is an affidavit of service filed in court on 13th August, 2015.

80. The Respondent does not rebut that he was further served with a notice of entry of judgment dated 20th November, 2014 on the 21st November, 2014 and an affidavit of service sworn on the 10th December, 2014 was filed in court in proof of service.

81. The Appellant sought for execution of the decree and certificate of costs dated 20th August, 2015 by way of attachment of the Respondent’s L.R. No. Laikipia/Mutitu Ngoru Block 4/223 (Manguo) and the matter was set down for settlement of terms of sale on the 21st January, 2016 and the Respondent was duly served with the Notice but he failed to attend court and the terms were set.

82. The said parcel of land was advertised for sale by way of a public auction by M/s Tango Auctioneers was advertised in the newspaper and sale followed thereafter.

83. The highest bidder bought the parcel of land at Kshs. 1,200,000/- which amount was paid to the auctioneers as per the clearance certificate and receipt both dated 29th March 2016.

84. The transfer documents were signed by the court’s executive officer on 28th April, 2016 but before transfer could be effected, the Respondent obstructed same via an application subject of the instant appeal.

85. The court observed that, the application to set aside the judgment entered on 19th November, 2014 was filed on 23rd June, 2016.  The delay of close to 2 years was not explained or at all.

86. In the draft defence the Respondent admitted owing a sum of Kshs.264,587/- to the 1st Appellant.

87. The Respondent had in prayer No. 4 of his application dated 23rd June, 2016 sought for setting aside of the sale on grounds of irregularities and fraud, the lower court in the ruling dated 13th December, 2017 did not make a finding to the effect that there were irregularities or fraud in the sale but it proceeded to set aside the sale.

88. The issue of the sale having occurred and the purchase price paid in full was not addressed by the learned trial Magistrate despite the buyer being enjoined as an interested party in the application and having responded to the application.

89. The admission of a sum of Kshs.264,587/- was not addressed by the trial Magistrate in the ruling.

90. The sum of Kshs.260,000/- paid by the 2nd Appellant from the Kshs.1,200,000/- received for sale of the parcel of land was not addressed.

91. The fate of the 2nd Appellant who had innocently paid Kshs.1,200,000/- in purchase of the parcel of land through a public auction was not addressed in the ruling.

92. There many issues that were left unaddressed in the ruling dated 13th July, 2017.

93. In the case of James Kanyiita Nderitu & Another v Marions Philotas Ghikas & Another Civil Appeal No. 6 of 2015 eKLR (supra) as quoted in the case of William Macharia Maina & Another v Francis Barchuno & 3 Others, the court held that:

“……………From the outset, it cannot be gainsaid that a distinction has always existed between a default judgment that is regularly entered and one, which is irregularly entered.  In a regular default judgment, the Respondent will have been duly served with summons to enter appearance, but for one reason or another, he has failed to enter appearance or to file defence, resulting in default judgment.  Such a Respondent is entitled, under Order 10 Rule 11 of the Civil Procedure Rules, to move the 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 the or not to set aside the default judgment, and will take into account such factor as the reason for the failure of the Respondent 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 trial issues; the respective prejudice each party is likely to suffer; whether on the whole it is in the interest of justice to set aside the default judgment, among other.  See Mbogo & Another v Shah (supra), Patel v E.A Cargo Handling Service Ltd [1975] EA 75, Chemwolo & Another v Kubende [1986] KLR 492 and CMC Holdings v Nzioki [2004] 1 KLR 173. ”

94. In this case the court finds that service was proper and respondent did not have sufficient cause to justify failure to enter appearance and file defence.

95. However, taking to account the circumstances of the instant case I will endeavor to do justice to all parties by granting a conditional setting aside of exparte judgement and ordering fresh hearing of the matter. Thus the court makes the orders;

i.  The exparte judgment entered on 19th November, 2014 and all sub sequential orders are set aside including the sale of land in issue on condition that Kshs.1,200,000/- is deposited in court or interest earning account in parties advocates joint names within 30 days.

ii.  In default, the orders herein will automatically stand vacated and transfer of land in issue will be effected to the buyer’s name.

iii.  If condition above is complied with, the lower court suit shall be heard afresh.

iv.   Respondent to pay to the appellant Kshs.30,000/- costs of this appeal.

DATED AND SIGNED AT NYAHURURU THIS 3RD DAY OF FEBRUARY, 2022.

………………………………..

CHARLES KARIUKI

JUDGE