Terra Craft Limited v Waliubah & another [2022] KEHC 14968 (KLR)

Terra Craft Limited v Waliubah & another (Civil Appeal 126 of 2015) [2022] KEHC 14968 (KLR) (Civ) (4 November 2022) (Judgment)

Neutral citation: [2022] KEHC 14968 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Law Courts)

Civil

Civil Appeal 126 of 2015

CW Meoli, J

November 4, 2022

Between

Terra Craft Limited

Appellant

and

Ben Musundi Waliubah

1st Respondent

Benson Ifeza Anyumba

2nd Respondent

(Being an appeal from the ruling of Hon. Ole Keiwua, (PM) delivered on 27th February 2015 in Nairobi Milimani CMCC No. 4223 of 2017)

Judgment

1. This appeal emanates from the ruling delivered on February 27, 2015 in Nairobi Milimani CMCC No 4223 of 2011. On September 16, 2011 Ben Musundi Waliubah the Plaintiff in the lower court (hereafter the 1st Respondent) filed a suit against Benson Ifeza Anyumba the 1st Defendant in the lower court (hereafter the 2nd Respondent) and Terra Craft Limited the 2nd Defendant in the lower court (hereafter the Appellant) seeking damages as a result of a road traffic accident that occurred on or about the February 27, 2011. It was averred that the 1st Respondent was at all material times the registered owner of motor vehicle registration number KAU 172M while the Appellant was the registered owner of motor vehicle registration number of motor vehicle registration number KAJ 595W while the 2nd Respondent was the driver, servant and or agent of the Appellant. That the 1st Appellant’s motor vehicle was lawfully being driven along Spine Road - Kayole when the 2nd Respondent so negligently drove managed and or controlled motor vehicle registration number KAJ 595W that he caused it to violently collide into the right-hand side of the 1st Respondent’s motor vehicle causing extensive damage to the to the said motor vehicle and in the process causing serious injuries to the 1st Respondent.

2. The 1st Respondent obtained interlocutory judgment against the Appellant and 2nd Respondent on December 1, 2011 and April 26, 2012 respectively, for failure to enter appearance and or file a defence within the prescribed time despite having been duly served with summons. The matter subsequently proceeded for formal proof hearing on May 8, 2013 following which judgment was delivered on May 24, 2013 in favour of the 1st Respondent against the Appellant and 2nd Respondent jointly and severally for a total sum of Kshs 588,380/- with costs and interest. The Appellant thereafter moved the lower court vide a motion dated January 20, 2014 asking the court to review, vary, set-aside the interlocutory judgment and the subsequent decree issued therein against it and the 2nd Respondent; that the Appellant be granted leave to file defence; and that the draft defence annexed be deemed as filed and served upon payment of a requisite fee.

3. The grounds on the face of the motion were amplified in the supporting affidavit deposed by the Moses Gicharu Kimotho who swore that the 1st Respondent did not serve the Appellant with the summons, plaint and pleadings in relation to the suit in the lower court. That he was shocked when auctioneers served proclamation notices on the Appellant who was erroneously enjoined to the suit after having already transferred ownership of the of the motor vehicle KAJ 595W to the 2nd Respondent who was the driver at the time of the accident. The deponent had urged the lower court to intervene and allow the Appellant to have its day in court and case be heard on merit as such it is equitable to allow its motion.

4. The Appellant opposed the motion through a replying affidavit dated January 30, 2014. Parties thereafter canvassed the motion by way of written submissions. By a ruling delivered on February 27, 2015 the lower court allowed the Appellant’s motion dated 20. 01. 2014 on condition that it deposits the decretal sum in court within thirty (30) days, thus provoking the instant appeal which is based on the following grounds: -“1. That the learned magistrate erred in law by imposing a condition of deposit of the decretal amount as a condition for setting aside the judgment.2. That the learned magistrate erred in law and fact in failing to grant the Appellant unconditional leave to even after finding that they have a defence of having sold the motor vehicle at the time of the accident.3. That the learned magistrate erred in law and fact in refusing to set aside the judgment unconditionally and the same results in a legal absurdity.” (sic)

5. The appeal was canvassed by way of written submissions. Counsel condensed his grounds of appeal into three key issues for this court’s determination. Submitting on whether the learned magistrate erred on requiring deposit of decretal amount as the condition for setting aside the interlocutory judgment, counsel anchored his submissions on the decisions in James Kanyiita Nderitu & Another v Marios Philotas Ghikas & Another [2016] eKLR and CMC Holdings Ltd v Nzioki [2014] KLR 173 to assert that the Appellant’s failure to enter appearance and file a defence in time was occasioned by non-service of summons to enter appearance. Counsel further cited the provisions of Order 5 Rule 3 of the Civil Procedure Rules, the decision in Hussein dairy Limited v Michael Osinde [2018] eKLR, and others to contend that since there was no proper service of summons on the Appellant the trial court erred in imposing conditions for setting aside the interlocutory judgment that had been irregularly obtained.

6. Addressing the court on the Appellant’s statement of defence, counsel called to aid the decisions in Winnie Wambui Kibinge & 2 Others v Match Electricals Limited [2012] eKLR, Patel v EA Cargo Handling Services Ltd [1974] EA 75, Tree Shade Motors Ltd v DT Dobie & Anor[1995-1998] 1 EA 324, Sebei District Administration v Gasyali & Others [1968] EA 300 to contend that the trial court erred by granting conditional leave to defend despite making a finding that the Appellant had sold the suit motor vehicle at the time of the accident. That the question of ownership was a bona fide triable issue upon which the lower court ought to have exercised its discretion and set aside the exparte judgment without condition. In closing, counsel reiterated that that an irregular judgment ought to be set aside unconditionally and citingJoseph Oduor Anode v Kenya Red Cross Society [2012] eKLR counsel urged the court to allow the appeal.

7. On the part of the 1st Respondent, it was emphasized that the Appellant was properly served with summons, entered appearance through a firm of advocates but failed to file defence and elected not to participate in the formal proof hearing. That having entered appearance, the Appellant could not dispute service of summons. The 1st Respondent defended as regular the judgment entered in default. As to whether the Appellant’s statement of defence raised triable issues, counsel cited Thayu Kamau Mukigi v Francis Kibaru Karanja [2013] eKLR in contending that based on the Appellant’s affidavit material the suit motor vehicle was sold and transferred almost a year after the accident, hence no triable issue was raised in the draft defence of the Appellant. He asserted that that the judgment entered was regular and the Appellant had not complied with the condition for setting aside the said judgment. Moreover, that the Appellant was guilty of laches and should not be allowed to frustrate the 1st Respondent from realizing the fruits of his judgment. The 1st Respondent expressed the view that the Appellant’s denials that it had instructed counsel in the matter is evidence of the said Appellant’s bid to frustrate his claim. The court was urged to dismiss the appeal with costs.

8. The 2nd Respondent intimated support for the appeal save for costs, opting not to participate further in the proceedings.

9. The court has perused the record of appeal and considered the material canvassed in respect of the appeal. The duty of this court as a first appellate court is to re-evaluate the evidence adduced in the lower court and to draw its own conclusions, but always bearing in mind that it did not have opportunity to see or hear the witnesses testify. See Kenya Ports Authority v Kusthon (Kenya) Limited (2000) 2EA 212, Peters v Sunday Post Ltd(1958) EA 424; Selle and Anor v Associated Motor Boat Co Ltd and Others(1968) EA 123; William Diamonds Ltd v Brown [1970] EA 11 and Ephantus Mwangi and Another v Duncan Mwangi Wambugu (1982) – 88) 1 KAR 278.

10. The Court of Appeal stated in Abok James Odera t/a A J Odera & Associates v John Patrick Machira t/a Machira & Co Advocates [2013] eKLR that:“This being a first appeal, we are reminded of our primary role as a first appellate court namely, to re-evaluate, re-assess and reanalyze the extracts on the record and then determine whether the conclusions reached by the learned trial Judge are to stand or not and give reasons either way.

11. The Appellant’s motion in the lower court was expressed to be brought inter alia under Section 1A & 3A of the Civil Procedure Act and Orders 22 Rule 22 of the Civil Procedure Rules. The trial court allowed the Appellant’s motion by rendering itself inter alia that:“I have perused court records and found memorandum of appearance dated October 25, 2011 and filed in court. The same date by the law firm of Momanyi & Associates for the 2nd Defendant. The plaint dated August 29, 2011 shows Terra Craft Ltd as 2nd Defendant in this suit. I am therefore satisfied that the Terra Craft Ltd was served.As to the issue between the law firm of Momanyi & Associates versus Terra Craft Limited on instructions they are not formally before me. I take judicial notice that Momanyi & Associates are officers of this court and court acted properly to issue interlocutory judgment.However, for purposes of this court not to be seen as in being shut down the doors of justice to the application, I will allow the application and on condition that they deposit the decretal sum in court within 30 days of this order. The costs of the application are given to the Plaintiff” (sic)

12. Evidently, the Appellant had in its motion invoked the wrong provisions of the Civil Procedure Rules. Based on the prayers therein, the motion ought to have been anchored on the provisions of Order 10 Rule 11 which provides that: -“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.”

13. The grant or refusal of an application to set aside or vary such judgment or any consequential decree or order, is discretionary. The discretion is wide and unfettered. However, it must be emphasized that like all judicial discretion it must be exercised judicially. Therefore, in considering this appeal, the Court is guided by the principles enunciated by Court of Appeal in Mashreq Bank PSC v Kuguru Food Complex Limited [2018] eKLR stated:“This Court ought not to interfere with the exercise of a Judges’ discretion unless it is satisfied that the Judge misdirected himself in some matter and as a result arrived at a wrong decision, or that it is manifest from the case as a whole that the Judge was clearly wrong in the exercise of discretion and occasioned injustice. Conversely, a court exercising judicial discretion must be guided by law and facts and not ulterior considerations. This much was stated by the Court of Appeal in the case of Mbogo v Shah, (supra):“A court of appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising this discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and as a result there has been injustice”.See; United India Insurance Co Ltd v East African Underwriters (K) Ltd [1985] EA 898”.

14. The object of the discretion conferred by Order 10 Rule 11 was stated in the case of Shah –vs- Mbogo and Another [1967] EA 116:“The discretion to set aside an ex-part judgment is intended to be exercised to avoid injustice or hardship resulting from accident, inadvertence or excusable mistake or error but it is not designed to assist a person who has deliberately sought whether by evasion or otherwise to obstruct or delay the cause of justice.”

15. Platt JA (as he then was) in Bouchard International (Services) Ltd vs M'Mwereria [1987] KLR 193 as cited with approval in Miarage Co Ltd v Mwichuiri Co Ltd [2016] eKLR had this to say regarding the exercise of the discretion:“The basis of approach in Kenya to the exercise of the discretion to be employed or rejected ... is that if service of summons to enter appearance has not been effected, the lack of an initiating process will cause the steps taken to be set aside ex debito justitiae. If service of notice of hearing or summons to enter appearance has been served, then the court will have before it a regular judgment which may yet be set aside or varied on just terms. To exercise this discretion is a statutory duty and the exercise must be judicial. The court in doing so is duty bound to review the whole situation and see that justice is done. The discretion is intended so 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 has deliberately sought whether by evasion or otherwise to obstruct or delay the course of justice...A judge has to judge the matter in the light of all the facts and circumstances both prior and subsequent and of the respective merits of the parties before it would be just and reasonable to set aside or vary the judgment, if necessary, upon terms to be imposed. Hence the justice of the matter, the good sense of the matter, were certainly matters for the judge. It is an unconditional unfettered discretion, although it is to be used with reason, and so a regular judgment would not usually be set aside unless the court is satisfied that there is a defence on the merits, namely a prima facie defence which should go to trial or adjudication. The principle obviously is that, unless and until the court has pronounced a judgment upon the merits or by consent it is to have the power to revoke the expression of its coercive power, when that has been obtained only by a failure to follow any of the rules of procedure. …. It is then not a case of the judge arrogating to himself a superior position over a fellow judge, but being required to survey the whole situation to make sure that justice and common sense prevail... Indeed, there is no parallel with an appeal. The judge before whom the application for setting aside is presented will have a greater range of facts concerning the situation after an inter partes hearing, than the judge who acts ex parte... Although sufficient cause for non-appearance may not be shown, nevertheless in order that there be no injustice to the applicant the judgment would be set aside in the exercise of the court’s inherent jurisdiction”.

16. What falls to be determined on this appeal is whether the trial court properly exercised its discretion or misdirected itself and as a result arrived at a wrong decision. The key sticking point before the trial court touched upon the regularity of the judgment and whether it was liable for setting aside “ex debito justitiae” or otherwise. The Appellant had in its motion in the lower court strongly disputed service of summons while the 1st Respondent maintained that on the contrary, summons was duly served upon the Appellant which had entered appearance through a firm of M/s Momanyi & Associates but failed to file its defence or to participate in the formal proof hearing. This court has examined the record of appeal to establish whether the summons to enter appearance were duly served and whether the Appellant’s instructed counsel entered appearance on its behalf.

17. A perusal of the record of appeal reveals that the request for judgment against the Appellant was endorsed on December 1, 2011. The 1st Respondent’s request for judgment was supported by the return of service sworn by a process server, one Dominic Muinde concerning service of summons upon the Appellant and 2nd Respondent herein on October 13, 2011. In his affidavit of service, the process server deposed at paragraph 3 and 4 that: -“3. That on the same day while accompanied by the Plaintiff, I proceeded to Makadara Law Courts where the 2nd Defendant had a traffic case as per the Plaintiff’s instructions, and upon arrival at around 10. 13 am, the Plaintiff pointed out the 2nd Defendant to me and upon explaining the purpose of my visit, I tendered the above mentioned documents, that he accepted them but refused to sign and instead he referred me to his Advocate one. Mr. Muthoka who operates in Uganda House on the 5th Floor, that I made a copy and forwarded to the said Mr. Muthoka who also accepted the service but refused to sign and therefore I do hereby return to this honorable court the service as duly effected. 4. That afterwards at around 12. 30 a.m, I proceeded to Westlands at Waumini House on the 2nd Floor where the 1st Defendant has an office, that I found their Secretary who declined to identify herself and whom upon explaining the purpose of my visit, tendered the above mentioned documents that she accepted them but refused to sign saying that she has to seek advice from their advocates and I do hereby return to this court as duly served.”

18. An issue arising from the foregoing depositions is that in the plaint filed on September 16, 2011, the Appellant was sued as the 2nd Defendant while the 2nd Respondent herein was sued as the 1st Defendant. However, in the summons to enter appearance, the Appellant was listed as the 1st Defendant and the 2nd Respondent as the 2nd Defendant. Evidently it is unclear from the return of service as to which Defendant the process server was referring in his two depositions and from the contents of the said depositions, one could only surmise that reference therein to the 1st Defendant relates to the Appellant while reference to the 2nd Defendant is to the 2nd Respondent. Moreover, the return of service makes reference to service being effected upon the Appellant at 12. 30am on an unnamed “secretary” in the office of the Appellant. The time indicated could be a typographical error, but it is not clear whether the person served on behalf of the Appellant was a company secretary of the Appellant or a regular office secretary, and the latter appears more likely.

19. The procedure for effecting service of summons on a corporation is prescribed in Order 5 Rule 3 of the Civil Procedure Rules (CPR) while the format of affidavits of service is spelt out in Order 5 Rule 15 of the Civil Procedure Rules (CPR). Order 5 Rule 3 of the (CPR) provides that:-“Subject to any other written law, where the suit is against a corporation the summons may be served—(a)on the secretary, director or other principal officer of the corporation; or(b)if the process server is unable to find any of the officers of the corporation mentioned in rule 3(a)—(i)by leaving it at the registered office of the corporation;(ii)by sending it by prepaid registered post or by a licensed courier service provider approved by the court to the registered postal address of the corporation; or(iii)if there is no registered office and no registered office or physical address of the corporation, by leaving it at the place where the corporation carries on business; or(iv)by sending it by registered post to the last known postal address of the corporation.”

20. Order 5 Rule 15 provides that:-(1)The serving officer in all cases in which summons has been served under any of the foregoing rules of this Order shall swear and annex or cause to be annexed to the original summons an affidavit of service stating the time when and the manner in which summons was served and the name and address of the person (if any) identifying the person served and witnessing the delivery or tender of summons. The affidavit of service shall be in Form No 4 of Appendix A with such variations as circumstances may require.”(Emphasis added).

21. It was contended by the 1st Respondent that the Appellant upon being served had subsequently entered appearance through the firm of M/s Momanyi & Associates. The memorandum was said to be dated October 25, 2011. The said memorandum was not included in the record of appeal before the court and although the lower court file was by the Milimani Chief Magistrate’s Court letter dated February 26, 2017 sent to this court, the court file is not enclosed in the appeal file as is the usual practice. Thus, this court has not had the benefit of viewing the purported memorandum of appearance. Given the mix-up mix up as to the respective order of parties as sued in the plaint and as cited in the summons to enter appearance , which anomaly the trial court did not apparently notice, and the fact that it is unclear whether the person served on behalf of the Appellant was a principal officer of the Appellant, it is debatable whether the service on the Appellant was proper and a firm finding cannot be made on the regularity of the judgment.

22. In the absence of conclusive proof that the judgment was regularly obtained, the same ought to have been set aside without imposing the onerous condition for deposit of the decretal sum which condition in the ambiguous circumstances disclosed amounted to a fetter on the right to be heard. Moreso as the draft defence exhibited by the Appellant was not prima facie frivolous. The Court of Appeal in Daniel Lago Okomo v Safari Park Hotel Ltd & Another[2017] eKLR cited its decision inKenya Trade Combine Ltd v Shah, Civil Appeal No 193 of 1999, where it had stated:“In a matter of this nature, all a defendant is supposed to show is that a defence on record raises triable issues which ought to go for trial. We should hasten to add that in this respect a defence which raises triable issues does not mean a defence that must succeed.”

23. Had the lower court addressed its mind in more detail to the anomalies in the service upon the Appellant asserted by the 1st Respondent conjunctively with the apparent triable issues raised in the draft defence, it would have come to a similar conclusion. In the circumstances, the appeal is allowed, and the ruling of the lower court is hereby varied by setting aside the requirement that the Appellant deposits the decretal sum as condition for the setting aside of the exparte judgement and leave to defend. However, given the facts of this case, the Court will substitute therefor an order that the Appellant pays thrown away costs in the lower court including the costs of the motion giving rise to this appeal to the 1st Respondent within 21 days of assessment and to bear the costs of the appeal.

DELIVERED AND SIGNED ELECTRONICALLY AT NAIROBI ON THIS 4TH DAY OF NOVEMBER 2022C.MEOLIJUDGEIn the presence of:For the Appellant: Mr. Matanda h/b for Mr. GitongaFor the 1st Respondent: Mr. WageniC/A: Carol