Victor Omondi Ochola v Metropolitan National Sacco Society Limited [2021] KECPT 533 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.103 OF 2020

VICTOR OMONDI OCHOLA...................................CLAIMANT

VERSUS

METROPOLITAN NATIONAL

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

RULING

Vide the Application  dated 7. 7.2020, the Respondent has moved  this Tribunal  seeking  for the following Orders:

1. That  due  to the  urgency of this Application, service  thereof be dispensed  with, the same  be certified  urgent  and heard ex-parte  in the first instance;

2. That pending  interparties  hearing of this application, an order  be and is hereby  issued staying execution  by way of sale  of  the assets  of the Respondent/Applicant;

3. That  the interlocutory  judgment  entered as against  the Respondent for default of defence, together  with all consequential  orders be  and are hereby  set aside  and the Respondent/ Applicant  be allowed to file its Defence; and

4. That the costs of this Application  be  provided for.

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

a. Supporting  Affidavit    sworn by  David  Muhoro  on  7. 7.2020;and

b. Further  Affidavit  sworn by  the same  David Muhoro on 3. 8.2020.

The Claimant  has  opposed  the Application by filing a  Replying  Affidavit  sworn by himself on 27. 7.2020.

Vide  the  directions  given  on  6. 8.2020,  the Application  was canvassed  by way of  written submissions.  The Respondent   filed  its submissions  on  17. 8.2020.

In the proceedings  of 3. 11. 2020,  the Claimant  stated that  he was going  to Rely  on the Replying Affidavit  on record  and that he  was not going  to file  written  submissions.

Respondent’s Contention

In this  Application  the Respondent  seeks  for the  setting aside  of the default  judgment  entered  on  22. 6.2020 on  the ground that there was  inadvertent delay  on the part of the Respondent  to file  a Memorandum  of appearance  in the matter.  That  the delay was occasioned  by insufficient  instructions  to the Respondent’s  counsel  on record.  That the said  insufficiency  of instructions  is  attributed  to the onset of Covid- 19  pandemic. That the  Respondent  has a good Defence  with high chances  of success. That  the Claimant  did not follow  due process  while serving  his Notice of  withdrawal.

Claimant’s  Case

The Claimant  has opposed the Application  on grounds  that the Respondent  has not given  a valid  reason  as to why  it did not enter  Appearance  and file Defence  in good time. That Covid- 19 struck  in  March  2020 and cannot be used as an excuse  for not  entering  Appearance of filing  Defence.

That he served the Respondent with a resignation letter on 17. 11. 19. That the instant Application is merely meant to delay this matter.

Issues for determination

This Application has presented the following issues for determination:

a. Whether  the Respondent  has established   a proper  basis  to warrant  the setting  aside  of the default  judgment  entered  on  22. 6.2020;

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, an issue  arises  as to whether  the instant Application  has met the conditions  for settling  aside  a default  judgment.  We will  answer  this question  by looking  at the said  conditions  contextually  as follows:

Reason  for failure  to enter  Appearance

The Respondent has attributed  its failure to enter Appearance  or file a Defence  to  the onset  of Covid-19 pandemic. It acknowledges  having received  summons  to enter  Appearance  on  18. 3.2020 but  a few days  later, Covid-  19  broke out  thus leading  to several measures  being imposed by the Government  including  the locking down  of the Country. That these  events hampered   the process of  instructing  its advocates on record  to  take up  the matter and file  a Defence.

We take judicial  Notice  that indeed  Covid- 19 broke out  early March,  this year. We agree with  the Respondent  that the  subsequent measures  imposed by the Government may  have hampered  the process  of instructing  counsel  to take  up the matter  on its behalf. We  are thus satisfied  that this  is a good explanation  as to why the Respondent  did not enter Appearance  and file a Defence  in good time.

Draft Defence

A question  arises  as to whether  the Draft  Defence  raises triable  issues.  We have perused  the said Defence the Respondent’s  main line of Defence is  that  the Claimant  did not issue a 60 days’ Notice before withdrawing from it.  That the  Claimant  ought  to issue  the said Notice  so as to enable  the  Respondent  process  his withdrawal. That  further  and as per  the Respondents Annual General  Meeting  of  2019, it  was resolved  that members refunds  were  to be rescheduled  on a first come  first  serve  basis  and therefore the Claimant’s refunds  is scheduled to be paid  in January  2022.

With  this averment  alone,  we find that  the said Defence  does not raise  any triable  issue and  in the converse  it constitute  an admission that it owes  the Claimant  deposits  which  are due for refund  in January 2022. We  are  therefore delivering  this ruling  at a time when the Claimant’s  refunds  are due for processing.  We  thus  hold that the said  draft Defence  does not raise  any triable  issue.

Conclusion

The upshot  of the foregoing,  is that  we do not  find merit in the instant Application and dismiss  it with  no orders  as to costs.

Ruling signed, dated and delivered virtually this 7th day of January, 2021.

Hon. F. Terer                          Deputy Chairman      Signed       7. 1.2021

Mr. P. Gichuki                       Member                       Signed       7. 1.2021

Mr. B. Akusala                     Member                       Signed       7. 1.2021

In the presence  of  Mr. Mutemi holding brief  for  Mr. Thimba  for Respondent

Claimant  present

Court clerk         Maina

Hon. F. Terer                          Deputy Chairman      Signed       7. 1.2021

Mr. Mutemi – Pray  for stay of  execution

Tribunal-  21  days stay of execution

Hon. F. Terer                          Deputy Chairman      Signed       7. 1.2021

Tribunal- Further  Orders  mention  at Kisumu on  8. 2.2021.

Hon. F. Terer                          Deputy Chairman      Signed       7. 1.2021