Simon Nguguna Mburu v Orient Sacco Limited [2020] KECPT 141 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO. 296 OF 2019

REV. FR. DR. SIMON NGUGUNA MBURU…..………………….………….CLAIMANT

VERSUS

ORIENT SACCO LIMITED………………………………….…………..RESPONDENT

RULING

What is before us for consideration and determination is the Respondent’s Application dated 6th August, 2019. It seeks, in the main, the following Orders:

a. That the Judgment entered on 9th July, 2019 be set and aside and the Respondent be granted leave to Defend the Claim; and

b. Costs

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

a. Supporting Affidavit sworn by Simon Maina Ngonyoro on 6th August, 2019; and

b. Further Affidavit sworn by the said Simon Maina Ngonyoro on 17th September, 2019.

The Respondent has opposed the Application by filing a Replying Affidavit sworn by himself on 9th September, 2019.

Respondent’s case

It is the Respondent’s case that it’s lawyer was duly served with summons to enter appearance and statement of claim on 10th June, 2019 but failed to enter appearance on time resulting in entry of Judgment on 9th July, 2019. That the said firm of Advocates was going through internal reorganization and in the process, the summons to enter appearance got misplaced. Further, that the advocate in conduct of the matter also left employment during the time without informing the firm about service of the said summons.

That when they later learnt about the suit from counsel on record for the Claimant, they prepared the Memorandum of Appearance and Statement of Defence and when they came to the registry to file on 1/7/2019, they were informed that the file had been taken to chambers for entry of judgment.

That subsequently, parties agreed to settle the matter out of court and as a condition precedent, they agreed to halt further court action in the matter.  That negotiations did not bear fruit therefore prompting the instant Application.

That it has a valid Defence with triable issues and is therefore praying to be granted its day in court. It has annexed a draft Defence and mark as SM3. It has also annexed and marked as SM2 receipt of payments for filing the Memorandum of Appearance.

That the Claim relates to a 1/8-acre plot of land offered for sale to the Claimants by the Respondent. The cost of the plot was 1, 200,000. 00. That part of the agreement for purchase of the said plot was that the Respondent would set up a greenhouse and grow crops therein for purposes of export to foreign market through Malindi Airport. That in return, the Respondent would pay the Claimants a sum Kshs. 180,000. 00 twice a year.

That the Claimants made payments towards the purchase of the said plot on installments totaling to Kshs. 977,800. 00

That subsequently, there was a delay in installation of the greenhouses. That this prompted them to withdraw from the project. That subsequently, the Respondents undertook to refund the monies paid. That it is on this basis this basis of the admission that they want the Respondent’s statement of Defence to be struck off and Judgment entered for the sums claimed.

Respondent’s case

Vide his Replying Affidavit sworn on 5th September, 2019, the claimant contend that the instant Application is frivolous, vexatious and otherwise an abuse of the process of the Tribunal. That the Summons to enter Appearance and statement of claim were duly served upon the Respondent’s CEO on 10th June, 2019. That an Affidavit if service was filed to that effect. That on the same day, the CEO directed service of the said pleadings upon the Respondent’s Advocates. That the firm of the said Advocates acknowledged service by stamping on their counterpart copies.

That the Advocate who was served has not sworn an Affidavit to confirm the allegation raised against her. That upon service, the said advocate prepared a memorandum of appearance but failed to file it until 1/07/2019.

Written submissions

Vide the directions given on 30/09/2019, the Application was canvassed by way of written submissions. The Respondent filed his on 30/10/2019 while the Respondent did so on 15/11/2019. We will consider the same while determining the issues in controversy in the Application.

Issues for determination

We have framed the following issues for determination:

a.Whether the Respondent has laid a proper basis for setting aside the Judgment entered on 9th July, 2019:

b.Who should meet the costs of the Application?

Setting aside default Judgment

This Tribunal has 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.”

It thus follows therefore that the Jurisdiction of the court to set aside a judgment is a discretionary one and that the main concern when doing is to do justice to the parties.

The court underscored this position in the case of Patel-vs-East Africa Cargo Services Limited(1974) EA 75 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 the court exercises the above discretion, it is incumbent upon it to first ascertain if the Judgment sought to be set aside is a regular one for if it is not, then the court will be obliged to set it aside ex debito justiciae. This was the holding of the court 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 Ndungú & 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 the entry of appearance, the ex parte judgment entered in default is regular.  But where the ex parte 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.

The Court of Appeal affirmed the above position in the case of James Kanyiita Nderitu & Another-vs- Marios Philotas Ghikas & Another [2016] eKLR. It held thus:

“From the outset, it cannot be gainsaid that a distinction has 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 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 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 interest of justice to set aside the default judgment…”

From the foregoing, it is trite that a regular default judgment can be set aside based on the following grounds:

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 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 interest of justice to set aside the default judgment.

Looking at the above principles in light of the facts of the present Application, we find as follows:

a. That the Judgment entered on 9/07/2019 is regular as there is sufficient proof that the Respondent was duly served with Summons to enter appearance on 10/06/2019. The Claimant has conceded as much to this fact;

b. That the instant Application has been brought within one month after entry of the Judgment. It was filed on 8/08/2019 while the Judgment was entered on 9/07/2019.

c. That the reason advanced by the Respondent for not entering appearance is a fair one. We agree that internal disorganization of the Respondent’s advocates may have contributed to delay in filing the Memorandum of Appearance.

d. The draft statement of Defence raises triable issues. The Respondent has denied owing the Claimant the sum of Kshs. 1,000,000. 00.

e. No party will be prejudiced if the Judgment is set aside. The Claimant will be compensated by way of costs his claim succeeds.

Conclusion

The upshot of the foregoing is that we find merit in the Respondent’s Application dated 6th August, 2019 and hereby allow it in the following terms:

a. Respondent to pay Claimant thrown away costs assessed at Kshs. 10,000. 00; and

b. The draft  statement of Response is hereby  deemed  as duly filed  and served  upon  payment  of the requisite  fees  within 7 days.

c. The Claimant  is granted  leave  to file  and serve  their  Reply  to Response  within  14 days  herein.

d. Parties  to comply  by filing  witness statements  and documents  within  21 days herein. Mention  for Pre-trial  directions on 5/3/2020(Notice to issue)

Read and delivered in an open court this 23rdday of January 2020

In the presence of ;-

Claimant: Mrs.Njomo

Respondent: Absent

Court Assistant: C.Maina

Hon. B. Kimemia   -        ChairmanSigned

Hon. F. Terer  - Deputy ChairmanSigned

R. Mwambura      -         MemberSigned

P. Gichuki          -        MemberSigned