Safa Agencies Limited & 2 others v International Air Transport Association & another [2022] KEHC 10792 (KLR)

Safa Agencies Limited & 2 others v International Air Transport Association & another (Civil Case E336 of 2019) [2022] KEHC 10792 (KLR) (Commercial and Tax) (2 June 2022) (Ruling)

Neutral citation: [2022] KEHC 10792 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Case E336 of 2019

WA Okwany, J

June 2, 2022

Between

Safa Agencies Limited

1st Applicant

Taquidin Hassan Affey

2nd Applicant

Muktar Billowsalat

3rd Applicant

and

International Air Transport Association

1st Respondent

Saham Assurance Co. Kenya Ltd

2nd Respondent

Ruling

1. The plaintiffs instituted this suit against the defendants through the plaint dated September 30, 2019 seeking judgment for: -a.Kshs 647,577. 98 and USD 210,324. 95 together with interest thereon at court rates until payment in full.b.Costs of the suit on Advocate- Client basis and interest thereon until payment in full.

2. The defendants did not enter appearance or file a defence thereby precipitating the entry of default judgment against the 1st, 2nd and 3rd defendants jointly for Kshs. 647,577 and USD 210,324 together with interest.

3. The defendants filed the application dated July 9, 2021 applicant seeking the following orders;-1. Spent.2. Spent.3. Upon the substantive hearing of this Application, this Honourable Court be pleased to set aside the default judgment entered on October 6, 2020 together with the notices to show cause issued on 15th April, 2021 and June 3, 2021. 4.Upon the substantive hearing of this Application, this Honourable Court be pleased to grant leave to the Defendants/Applicants to file their defence against the Plaint.5. The Honourable Court be pleased to issue any other and such Order as it may deem just and convenient to grant.6. Costs of this Application be provided for.

4. The application is supported by the affidavit of Mr. Taquidin Hassan Affey and is based on the following grounds;-1. This Honourable Court entered judgment in default of appearance against the Defendants/Applicants on October 6, 2020 and a decree on October 19, 2020 for the decretal amount of Kshs. 647,577. 98 and USD 210,324. 95 together with interest and costs.2. On July 9, 2021, the Plaintiffs/Respondents served the Defendants/Applicants with a notice to show cause why the 3rd Defendant’s/Applicant’s salary should not be attached in execution of the decree.3. The said notice to show cause is dated 3rd June, 2021 and slated for hearing on July 12, 2021. 4.In addition, the Plaintiffs/Respondents also served the Defendants/Applicants via email with a Statutory Demand in Nairobi Insolvency Cause No. E023 of 2021-Re: Bankruptcy Proceedings Against Taquidin Hassan Affey t/a Safa Agencies Limited, in which he is required to pay the decretal amount within 21 days from June 10, 2021, failure upon which the Plaintiffs/Respondents shall file for a bankruptcy order against the 2nd Defendant/Applicant.5. Upon perusal of the court file, it was also established that on April 15, 2021, this Honourable Court had issued a notice to show cause why warrants of arrests should not issue against the Defendants/Applicants, which notice is still in force.6. The Defendants/Applicants were not aware of the existence of this suit until on July 9, 2021 when they were served with the notice to show cause and the statutory demand.7. The Defendants/Applicants did not have an opportunity to read the Daily Nation of February 26, 2020 in which the summons had been served upon them.8. Had the Defendants/Applicants been aware of this suit, they would definitely have entered defence and participated in these proceedings, more so given the colossal sums of money being claimed.9. The Defendants/Applicants were equally never served with any notice of delivery of judgment as required under Order 22 rule 6 of the Civil Procedure Rules.10. The Defendants/Applicants have an arguable defence and it is in the interest of justice that they should not be condemned unheard.11. It is therefore in the interest of justice that this court hears the motion herein and grants the prayers sought to avert a miscarriage of justice.

5. The respondents opposed the application through the replying affidavit of the 2nd plaintiff’s Deputy Manager Ms Sarah Weru who states that the defendants were duly served with Summons to Enter Appearance and Plaint but did not enter appearance or file a defence. The plaintiff’s case is that regular judgment was entered against the defendants on March 16, 2021. They contend that the draft defence does not raise any triable issues.

6. I have considered the application, the plaintiffs’ response together with the parties’ submissions. The main issue for determination is whether the applicants have made out a case for the setting aside of the default judgment.

7. Order 10 Rule 4 (1) and (2) of the Civil Procedure Rules, 2010 provides as follows: -4(1) Where the plaint makes a liquidated demand only and the defendant fails to appear on or before the day fixed in the summons or all the defendants fail so to appear, the court shall, on request in Form No. 13 of Appendix A, enter judgment against the defendant or defendants for any sum not exceeding the liquidated demand together with interest thereon from the filing of the suit, at such rate as the court thinks reasonable, to the date of the judgment, and costs.(2)Where the plaint makes a liquidated demand together with some other claim, and the defendant fails, or all the defendants fail, to appear as aforesaid, the Court shall, on request in Form No. 13 of Appendix A, enter judgment for the liquidated demand and interest thereon as provided by sub-rule (1) but the award of costs shall await judgment upon such other claim.

8. The defendants’ case is that they were not aware of the existence of the suit until July 9, 2021 when the plaintiffs served them with the Notice to Show Cause and the Statutory Demand. The defendants urged the court to exercise its discretion and allow the application as the plaintiffs would not suffer prejudice that cannot be remedied by costs.

9. The plaintiffs opposed the application while stating that regular judgment entered against the defendants after proper service with the pleadings in accordance with the provisions of the Civil Procedure Rules.

10. Order 10, rule 11 of the Civil Procedure Rules, it reads as follows:-“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.”

11. In Patel v EA Cargo Handling Services Ltd [1974] EA 75, the Court held that:-“There are no limits or restrictions on the judge’s discretion except that if he does vary the judgment, he does so on such terms as may be just. The main concern of the court is to do justice to the parties and the court will not impose condition on itself or fetter wide discretion given to it by the rules, the principle obviously is that unless and until the count has pronounced judgment upon merits or by consent, it is to have power to revoke the expression of its coercive power where that has obtained only by a failure to follow any rule of procedure.”

12. Similarly, in James Kanyiita Nderitu & another v Marios Philotas Ghikas & another, Civil Appeal No 6 of 2015 [2016] eKLR, the court of Appeal held;-“We shall first address the ground of appeal that faults the learned judge for setting aside the default judgment and consequential orders in the circumstances of the case. 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 defendant will have been duly served with summons to enter appearance, but for one reason or another, he had failed to enter appearance or to file defence, resulting in default judgment. Such a defendant 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 or not to set aside the default judgment, and will take into account such factors as the reason 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 interest of justice to set aside the default judgment, among other. See Mbogo & another v Shah (supra), Patel v EA Cargo Handling Services Ltd [1975] EA 75, Chemwolo & Another v. Kubende [1986/ KLR 492 and CMC Holdings v. Nzioki [2004/ 1 KLR 173).

13. The principles that emerge from the above-cited cases is that the elements to consider in setting aside default judgment are reasons given by the defendant for failure to file the defence, the time that has elapsed since the default judgment was entered and any prejudice the plaintiffs are likely to suffer should the judgment be set aside. The defendants conceded that they did not enter appearance, as they did not see the newspaper advertisement comprising the substituted service.

14. I note that there was no delay in the filing of the application as the instant application was filed is July 2021 and the Notice to show cause issued in April and June 2021. I have also perused the draft defence, and I am of the view that it raises triable issues. I find that in the circumstances of this case, it will be in the interest of justice to allow the application so that the parties can be heard on the merits of their respective cases.

15. In the upshot, I exercise my discretion and set aside the interlocutory judgment entered on October 6, 2020 on the following terms: -i.The Defendants statement of defence shall be deemed as properly filed and served upon payment of the requisite Court filing fees;ii.The Applicant shall serve the said statement of defence and counter claim within 14 days from the date of this order;iii.In default of compliance with order given in (i) and (ii) then the order vacating the interlocutory judgment shall automatically lapse without further reference to the Court;iv.The costs of the application shall abide the outcome of the suit.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 2ND DAY OF JUNE 2022. W. A. OKWANYJUDGEIn the presence of: -Ms Mutua for Khaemba for Defendant.Ms Leah Muhia for Plaintiffs/Respondents.Court Assistant- Sylvia