Wana-Anga Cooperative Savings & Credit Society Limited v Collins K. Cheruiyot [2021] KECPT 622 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.458 OF 2019

WANA-ANGA COOPERATIVE SAVINGS &

CREDIT SOCIETY LIMITED...........................................CLAIMANT

VERSUS

COLLINS K. CHERUIYOT..........................................RESPONDENT

RULING

Vide the Application dated 26. 8.2020, the Respondent has moved this Tribunal seeking for Orders inter alia:

a. That this Honourable Tribunal be pleased to certify this Application as urgent and heard ex-parte in the first instance;

b. That this Honourable Tribunal be pleased to order stay of execution of the judgment and decree against the defendant issued on the 16th January,2020 pending the hearing and determination of this Application and/or until further Orders of the Honourable Tribunal;

c. That the Honourable Tribunal be pleased to set aside the judgment and decree issued against the defendant on the 16th January, 2020 together with all its consequential Orders and the Defendant granted leave to defend the claim;

d. That the draft statement of defence annexed herewith be deemed duly filed upon payment of requisite filing fees; and

e. Costs of this Application be in the cause.

The Application is supported by the grounds on its face and the Affidavit sworn by the Respondent on even date (26. 8.2020). The Claimant has opposed the Application vide the Replying Affidavit sworn by Vincent Rota its Chief Executive Officer (hereinafter referred to us the “CEO”) on 7. 9.2020.

Vide the directions given on 27. 8.2020, the Application was canvassed by way of written submissions. The Respondent filed his initial set of submissions on 6. 10. 2020 and Supplementary ones on 24. 11. 2020. The Claimant filed its submissions on 14. 10. 2020.

Respondent’s Contention

Vide the instant Application, the Claimant seeks for Orders setting aside the default judgment entered on 25. 9.2019 on grounds  that he was never served with summons to enter Appearance. That the Affidavit of service sworn by Michael Mulei Masua as proof of service is defective on grounds that it did not disclose the name of the person who pointed out the Defendant for service.

That he has a good defence in that his shares worth Kshs.500,000/= and dividends worth Kshs.100,000/= had been deducted by the Claimant and it did not factor the same in the claim.

That the debt had been repaid by his guarantors. That the Tribunal has unfettered discretion to set aside the default judgment.

Claimant’s Contention

The Claimant has opposed the Application on grounds that the same is mischievous and an contemptuous attempt to embroil it in an illusory dispute created to frustrate its right to realize its security to recover sums advanced to the Respondent.

That the process server, Masua indeed travelled to Nakuru to effect service of summons upon the Respondent. That the CEO is the one who gave the process server directions of when to locate and effect service of summons upon the Respondent. That he knew where that the Respondents owned a business in Nakuru town called Lato Tech(CCTV) located in Utalii Arcade which has since closed. That the process servers poor choice of words in his Affidavit of Service dated 11. 9.2019 should not be construed to invalidate service of summons and other court papers upon the Respondent.

That the Respondent owes the Claimant Kshs.3,298,105. 44/= and that any dispute as to the amounts owing is not a ground for the grant of the prayers sought.

Issues for determination

The Respondent’s Application dated 26. 8.2020 has presented the following issues for determination:

a. Whether the Respondent has laid a proper basis to warrant the setting aside of the default judgment entered on 25. 9.2019;

b. What Orders are available in the circumstances.

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.”

Reasons for failure to file a memorandum of Appearance

In the present Application the Respondent has attributed his failure to enter Appearance in good time to non-service of summons to enter Appearance. He avers that he was not served with the same. He has disputed the averments made by the process server vide his Affidavit sworn on 11. 9.2019.

On its party, the Claimant contends that the Respondent was duly served with summons to enter Appearance as it knew and gave directions to the process server of the location where the Respondent carried on business. That the language used by the process server vide his Affidavit should not be construed to impute lack of service. That the Claimants CEO was the one who gave the process server directions of the Respondent’s place of business.

We have perused the Affidavit of service sworn byMichael Mulei Masua on 11. 9.2019. In the pertinent part, the deponent avers that he proceeded to Nakuru on the material day of service in the company of the Claimant to the Respondent’s place of business called Lato Tech (CCTV) Surveillance systems located at Utalii Arcade along Moi Road. That they found the Respondent in the said place of business whereupon he tendered service of the said documents. That the Respondent was not personally known to him prior to the date of service.

As the Respondent rightly observes the Claimant is a body Corporate and could thus not have been in a position to accompany the process server to Nakuru.

From the Replying Affidavit of the Claimant’s CEO, it is apparent that nobody accompanied the process server to Nakuru. The CEO states that he informed the process server about the location of the Respondent’s place/business in Nakuru. He did not state whether he accompanied the process server to Nakuru.

Further the CEO confirms that the said place of business has since been closed. This raises an issue regarding the period when the said business was closed. Could it be the case that it had in fact been closed prior to the date of service.

It is thus the inconsistency in the averments of the process server’s Affidavit and  the Replying Affidavit of the Claimant’s CEO that lends credence to the Respondent’s assertion that he was not served with summons to enter appearance. We are equally in doubt if in fact the said summons was personally served upon him. This being the case, and on the strength of the decision of the court in the case of Fidelity Commercial Bank - vs- Owen Amos Ndungu & Another (Supra), the default judgment entered on 26. 8.2019 is irregular.

Consequently, we find merit in the Respondent’s Application dated 26. 8.2020 and hereby determine it as follows:

a. The default judgment and its consequential Orders made on 25. 9.19 is hereby set aside;

b. The Respondent is granted leave of 14 days to file and serve a Response to the claim as well as list and bundle of documents and witness statements;

c. The Claimant to file and serve a Reply to the Response as well as Supplementary list and bundle of documents and witness statements within 14 days of service.

d. Mention for Pre-trial on 8. 4.21.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 28TH DAY OF JANUARY, 2021.

Hon. B. Kimemia  Chairperson Signed 28. 1.2021

Mr. B. Akusala  Member  Signed 28. 1.2021

Mr. R. Mwambura  Member  Signed 28. 1.2021

Miss. Musa for Claimant/Respondent : Present

Notice to issue.

Hon. B. Kimemia  Chairperson Signed 28. 1.2021