Rose Kanyua Mugambi v Urithi Housing Co-operative Society Limited [2020] KECPT 9 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.510 OF 2019

ROSE KANYUA MUGAMBI.........................................................CLAIMANT

VERSUS

URITHI HOUSING CO-OPERATIVE

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

RULING

What is before us for consideration and determination is the Respondent’s Application dated 26. 2.2020. It seeks, in the main the following Orders:

1. That this  Application be certified  urgent  and heard ex-parte in the first  instance;

2. That pending  hearing and determination  of this Application, this Honourable  Tribunal  be  pleased to stay  execution  of the judgment  and decree  irregularly entered  on 17th October, 2019;

3. That  this  Honourable Tribunal  be pleased  to set aside  the judgment  and decree  irregularly entered  on 17th October, 2019 and all consequential orders  ex debito  justiae;

4. That this Honourable  Tribunal  be pleased  to grant  leave  to the Respondent  to defend  this suit and  that the annexed  draft  defence  be deemed  as duly  filed and  served; and

5. That costs of this Application be in the cause.

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

a. Supporting  Affidavit  sworn by  Samuel  Ngundo  Maina on 26. 2.2020; and

b.Supplementary Affidavit sworn by the said Samuel Ngundo Maina on 21. 8.2020.

The Claimant has opposed the Application by filing an undated Replying Affidavit filed on 27. 7.2020.

Respondent’s Contention

Vide  the instant  Application, the  Respondent  seeks  to set  aside  the default  judgment  entered  on  24. 1.2020 on the  following grounds:

a. That summons  to enter  appearance  and  a statement of  claim were not  served upon it;

b. That  if the said  documents  were served ,  then the  said service  was improper and  defective  as it was  concealed; and

c. That  it has a defence  which  raises  triable  issues.

Claimant’s Contention

Vide  her Replying  Affidavit the Claimant  has opposed  the Application on the grounds  that summons  to enter  Appearance  was duly  served  upon  the Respondent.  That  as per  the Affidavit  of  service  sworn by  Amos  Mutambu on  30. 9.2019,  the said  summons  were duly  received  by way  of  stamping  of the counterpart  copy   by the Respondent  on 9. 9.2019.

That  upon receipt  of the  said summons,  the Respondent  failed to  enter Appearance or file a  Defence within  the time stipulated  by  law thus  prompting  her to request  for judgment.

That as a  consequence, the judgment  entered against  the Respondent is a regular  one and can only  be  set aside  if  the Tribunal  is satisfied  that the Defence  filed  raises triable issues. That  the Draft  Defence  annexed  to the Application  is not worthy  of consideration  by the Tribunal  for the following  reasons:

a. It consists  of mere denial  and patent  mistruths;

b. It is devoid  of merit;

c. It is a sham  merely canvassed  as a ploy to delay  her from  receiving  the funds  due and  owing  from the  Respondent.

That  contrary  to the contention  that the Respondent  did not  enter  into any agreement  with  herself, the five(5) Investment Agreement  annexed  to the Statement  of claim confirms  this fact.

That contrary  to the contention  that the  Respondent  did not receive  any monies  from her,  the payment  receipts  accompanying  the statement  of claim  speaks  otherwise.

That  contrary  to  the assertions that  the  investment plan  was  to  mature  after  a period  of five(5) years, the Investment  Agreements referred  to above  had a life  cycle  of  12 months and 4 months respectively.

Respondent’s  Supplementary  Affidavit  sworn on 21. 8.2020

Vide  this Affidavit, the  Respondent  reiterates that it was  not served  with  summons  to  enter Appearance. That  the matter  came  to its attention  on  17. 2.2020 when its  Receptionist  was served  with a Notice  of entry of Judgment.

Disposal  of the Application

Vide  the  directions  given  on  27. 7.2020,  the Application  was canvassed  by way  of  written  submissions. The Respondent filed its submissions on 26. 8.2020 while the Claimant did so on  21. 9.2020. We will consider the said submissions whilst determining the issues raised  by the Application  below.

Issues for determination

We have framed  the following  issues  for determination

a. Whether  the Respondent  has laid  a proper  basis  to warrant  the Tribunal  to set aside  the default   judgment  entered  on  24. 1. 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  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.”

From  the foregoing, it  follows  therefore that before  a regular  judgment  can be  set aside,  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.

We will  consider  the above  principles in the context  of the instant Application  as follows:

Reason for failure  to enter  Appearance

The Respondent  in the  present  Application  has denied  over being  served with  summons  to enter Appearance. We  have however,  perused the Affidavit  of  Service  sworn by  Amos  Mutambu  on  30. 9.2019. It  is manifest  that the  Respondent  was duly  served  with summons  to  enter Appearance  on 9. 9.2019. The Respondent  has duly  acknowledged receipt  of the same by  stamping  on the counterpart  copy of  the  summons dated  5. 9.2019. We  thus find  that the Respondent  was duly  and properly  served  with  summons  to enter Appearance.

Length  of time lapsed  since  entry  of judgment

The defaulted  judgment  was entered  on 24. 1.2020. The instant  Application  was filed  on 26. 2.2020. We thus find  that the  instant Application  has been  filed  timeously.

Whether  intended  Defence  raises  triable  issues.

We have  perused  the draft statement  of Defence  annexed  to  the Application and marked  as SNM-2. Vide  the said Defence, the Respondent  acknowledges  that the  Claimant  is one of its  members  and as such,  is bound  by  its  by-laws. That  the said by-laws  lays down  rules  and regulations  governing  investments by  the Respondent.

That  the Claimant  expressed  interest  in the Respondent’s  investments products  under Mavunoinvestment  plan whose  one of the requirements  was that  the investor  deposits  some money  to be entitled  to the annual  returns.

That  contrary  to  what is  alleged  by the Claimant, the  Respondent  did  not enter into  any Agreement  with the Claimant  and that the  Respondent  has not  received  any monies  from the Claimant  for purposes  of investment  into the  Mavuno  investment  plan product.

That without  prejudice  to the  foregoing (denial)  the Respondent  denies   the contents  of the averments  made  of  paragraph  14  of the  statement  of  claim  as follows:

a. That  the Claimant  terminated  the Agreement  before  the maturity  period  of five (5) years expired.

b. That Notice  of withdrawal  from  the society  ought  to have been issued  at least  60  days  in advances,

c. Society  by-laws  do not provide  for refund  of shares.

In  response  to the  above  contentions,  the Claimant  contends  that the Agreements  annexed  to the statement of claim  provided  for a maturity period  of 4 and  12 months and therefore  the  contention  that the plan  matured  after  5 years  is  false.

On the basis  of this  argument  alone,  a question  arises  as to the need  to ascertain  the exact  maturity  period  for the  investment  plan.  Whilst  the Respondent  contend  that the same  matured  after  5 years, the Claimant  contend   that the  longest  one matured after  12 months. Whilst  the Claimant  has made  reference  to the  documents  accompanying  the statement  of claim,  we find  that  we cannot  rely  on them  to ascertain  the maturity  period  at this stage  as they have  not been produced  the evidence.

The upshot  of the foregoing  is  that we  find that the  Draft  statement of Defence  raises  triable  issues  worthy  of consideration after  hearing  of the claim  on merits.

Conclusion

The upshot  of the foregoing  is  that  instant  Application  substantially  succeeds  and thus allow  it based on the following  terms:

a. That the  Draft  Defence to be  filed  and served  upon  the  Claimant  alongside  witness statements  and  list  and  bundle  of documents  within  21 days  herein;

b. The Claimant  to file  a Reply  to the Defence  as well as  supplementary  witness statements  and documents  within  21 days  of service;

c. The Respondent to pay  the Claimant  thrown away costs  of Kshs.10,000/= to be  paid  on or before  the next mention  date; and

d. Mention  for pre-trial  on  1. 3.2021.

RULING  SIGNED,  DATED  AND DELIVERED  VIRTUALLY  THIS 29TH  DAY  OF OCTOBER,  2020.

HON. B. KIMEMIA   CHAIRPERSON  SIGNED  29. 10. 2020

HON. F. TERER   DEPUTY CHAIRMAN  SIGNED  29. 10. 2020

MR. P.GICHUKI   MEMBER    SIGNED  29. 10. 2020

Miss Gitari  holding brief  for Mwangi  for Respondent

Mr. Muchiri for Claimant

Court Assistant    C. Maina

HON. F. TERER   DEPUTY CHAIRMAN  SIGNED 29. 10. 2020