[2019] KECA 782 (KLR)

IN THE COURT OF APPEAL

AT MOMBASA

(CORAM: VISRAM, KARANJA & KOOME, JJ.A)

CIVIL APPEAL NO. 137 OF 2018

BETWEEN

BABS SECURITY SERVICES LTD. ……………………...…...…. APPELLANT

AND

MWARUA YAWA NZAO AND 19 OTHERS ……....………….. RESPONDENT

(An appeal from the Judgment of the Employment and Labour Relations Court at Mombasa (Ndolo, J.) dated 31stMay, 2018

in

E.L.R. Cause No. 657 of 2016)

***************

JUDGMENT OF THE COURT

1. The appeal herein revolves around a single issue, that is, whether the learned Judge (Ndolo, J.) exercised her discretion properly in declining to set aside an expartejudgment entered against the appellant on 2nd March, 2018 in Cause No. 657 of 2016 (the suit). As such, our role as an appellate Court is as succinctly set out in Coffee Board of Kenya vs Thika Coffee Mills Limited & 2 Others [2014] eKLR.

2. Basically, we ought not to interfere with the exercise of the discretion in question unless we are satisfied that the learned Judge misdirected herself in some matter and as a result arrived at a wrong decision, or that it be manifest from the case as a whole that the learned Judge was clearly wrong in the exercise of her discretion and occasioned injustice. However, before delving into the merits of the appeal a summary of the pertinent facts will place the issue in dispute in context.

3. The respondents herein claim to have been employed by the appellant on diverse dates as guards within Mombasa region; without any colour of right the appellant unlawfully terminated their services on 14th January, 2016 provoking them to institute the suit in the Employment and Labour Relations Court (ELRC). They sought payment of what they deemed as the terminal dues payable by the appellant amongst other orders.

4. It would appear that the summons to enter appearance was issued on 14th September, 2016 and served upon the appellant on 28th September, 2016, at least as per the respondents. From the record it is clear that when the matter first came up for hearing on 12th January, 2017 the appellant had neither entered appearance nor filed its statement of defence. As a result, the respondents’ counsel applied that the matter do proceed for formal proof which request was acceded to by the trial court. The matter proceeded for formal proof on 27th September, 2017 in the absence of the appellant and subsequently, an exparte judgment was entered in favour of the respondents.

5. Apparently, before the exparte judgment was delivered the appellant filed an application under a certificate of urgency on 7th February, 2018 and soughtinter alia,the setting aside of the said judgment and leave to file its defence. The application was based on the grounds that firstly, sometime in December, 2017 Samuel Mureithi Ngari, a director of the appellant company, came across a letter dated 23rd November, 2017 from the respondents’ advocates informing the appellant that the judgment had been scheduled for delivery. It is at that point that the director became aware of the suit.

6. After making further enquiries, the said director discovered that the pleadings and summons in respect of the said suit had been served upon the receptionist who failed to bring the same to the attention of the appellant’s directors.

Thereafter, the appellant engaged counsel and filed the application in question. Secondly, the mode of service of the summons which was adopted by the respondents was contrary to the law.

7. Thirdly, the appellant’s argued that their defence raised triable issues to wit, that the appellant was awarded a 2 years contract by Kenya National Highways Authority to offer security services for sites wherein the Authority was carrying out works within Mombasa region commencing in November, 2013. It was on the basis of the aforementioned contract that the appellant engaged guards within Mombasa hence any claim by the respondents that they were engaged before the said contract was false. During the duration of the said contracts some of the respondents left the appellant’s employment while others failed to carry out their duties leading to the contract in question not being extended. Besides, a number of the respondents had never been in the appellant’s employment.

8. Fourthly, it was in the interest of justice for the appellant to be given an opportunity to present its case. Besides, the respondents would not suffer any prejudice.

9. The application was strenuously resisted by the respondents who through the 1st respondent deposed that the appellant was at all material times aware of the suit. Prior to filing the suit, the respondents’ counsel had written a demand letter dated 27th June, 2016 to the appellant which was dispatched by registered mail. The appellant replied to the said demand vide a letter dated 10th October, 2017. Subsequently, the respondents’ counsel by a letter dated 23rd November, 2017 notified the appellant that the suit had proceeded for formal proof and was pending delivery of judgment. Be that as it may, the appellant was served with the summons to enter appearance at its registered office in Nairobi.

10. Upon weighing the rival arguments put forth by the parties the learned Judge in a ruling dated 31st May, 2018 expressed herself as follows:-

“In the case now before me, the Respondent admits that service was effected at its offices. Further, from the documents placed before the Court, it is evident that the Respondent was aware of the Claimants’ claim right from the time a demand letter was issued up to the time the matter was heard.

The Respondent submits that failure to respond to the claim in time was only a procedural lapse. It cannot be. Delay of justice is a substantive issue that the Court must not encourage. In light of this the Court finds no reason to exercise its discretion in favour of the Respondent. The application dated 30thJanuary 2018 is therefore declined with costs to the Claimants.”

11. Aggrieved with the aforementioned decision, the appellant has filed this appeal premised on 5 grounds of appeal all of which fault the exercise of the learned Judge’s discretion as we have intimated in the opening paragraph of this judgment.

12. At the plenary hearing, the appellant was represented by Mr. Aboubakar while there was no appearance for the respondents despite the hearing date having being taken with the consent of the parties’ counsel at the case management conference. Mr. Aboubakar opted to rely entirely on the written submissions on record without making any oral highlights. We also note that there were no written submissions filed on behalf of the respondents. Nonetheless, we will proceed to consider the appeal within the parameters of the law.

13. Buttressing the argument that the service of the summons to enter appearance was irregular, it was the appellant’s contention that pursuant to Rule 12 of the Industrial (Procedure) Rules (the current Employment and Labour Relations Court (Procedure) Rules, 2016), the respondents should have attempted to serve the appellant’s principal officers in the order set out thereunder before leaving the summons with the receptionist. The failure to do so rendered the service in question defective thus, in the appellant’s view, the learned Judge should have set aside the exparte judgment as a matter of right. In that regard, reference was made to the persuasive decision of the High Court in Remco Ltd. vs Mistry Javda Parbat & Co. & 2 Others [2002] 1 EA 233.

14. As far as the appellant was concerned, the irregular service of the summons is what occasioned the delay in entering appearance as well as filing of its defence within the stipulated time frame. As such, the appellant had demonstrated that the delay was not deliberated or calculated to defeat the interests of justice.

15. In addition, the learned Judge was criticized for failing to consider whether or not the draft defence annexed to the application raised triable issues, which to the appellant was an integral factor in the exercise of her discretion. Elaborating further, it was submitted that the draft defence raised fundamental questions which require to be interrogated by the court. For instance, the appellant claimed that some of the respondents were never its employees; and/or that they were not entitled to the terminal dues they sought.

16. The consequence of the said omission was that not only was the appellant denied its right to be heard on the dispute but the learned Judge also failed to give effect to the main objective of a court, that is, to do justice to the parties. To support that line of argument, the case of Sebei District Administration vs Gasyali & Others [1968] EA 300was cited.

17. It was urged that the respondents would not suffer any prejudice if the appellant was given an opportunity to defend the suit. Rather it was in the interest of justice for the exparte judgment to be set aside and the appellant be granted leave to ventilate its case. In conclusion, the appellant called upon us to interfere with the learned Judge’s discretion and allow the appellant’s appeal.

18. We have considered the record, submissions by counsel as well as the law. The rationale behind service of summons to enter appearance to any party to a suit is to ensure that such a party is given notice of the existence of the suit in question. It is for that reason that service of summons to enter appearance is integral in any proceedings as it goes to the root of a person’s right to be heard before an adverse decision is made against him/her. This much was appreciated by the Supreme Court of India in Sangram Singh vs ElectionTribunal, Koteh, AIR 1955 SC 664, at 711 in the following manner:

“[T]here must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them.”

19. In the matter before us, we understood the appellant’s argument to be that the service of the summons were not properly effected upon it. It is not in dispute that the summons were served upon the appellant’s receptionist. Was this irregular? Under Rule 12 of the ELRC Rules service of summons or court processes on a corporate body, such as the appellant, is prescribed as follows:

“(1) Service on a corporate body may be effected-

(a) on the secretary, director or any other principal officer of the corporate body;

(b) where the process server is unable to find any of the officers of the corporate body mentioned in subparagraph (a), by-

i. leaving the pleadings at a conspicuous place at the registered office of the corporate body;

ii. sending the pleadings by registered courier service to the registered office of the corporate body;

iii. leaving the pleadings at a conspicuous place where the corporate body carries out business; or

iv. sending the pleadings by registered post to the last known postal address of the corporate body if it does not have a registered office or postal address.

(2) Notwithstanding anything contained in this Rule, a party may, with the leave of the Court, effect service of process by any other method.”

20. Our reading of the above provision reveals that service upon the appellant should have been first attempted upon its principal officers as per Rule 12 (1)

(a)and where it proved difficult service could be through the other means stipulated under Rule 12 (1) (b). Did the respondents establish that serviceupon the appellant’s principal officers was impossible before serving the receptionist? The answer to that question was aptly set out in Total Kenya Limited vs Supa Haulier Limited [2003] eKLRwherein Ondeyo, J. stated thus:

“How is the court to know that attempts were made in vain by the process server, to effect service of summons on the officers of a Corporation? It must be deponed in the affidavit of service to justify the mode of service opted for.”

21. There was no evidence of any attempt to serve the summons on the appellant’s principal officers from a process server or from the respondents. It follows that the service of the summons on the receptionist was contrary to the prescribed procedure and irregular. What is the consequence thereof?

22. This Court in James Kanyiita Nderitu & Another vs Marios Philotas Ghikas & Another [2016] eKLRdrew a distinction between a default judgment entered regularly and irregularly. The distinction being that a regular default judgment is where service of summons to enter appearance was properly effected while it defined an irregular default judgment and the effect thereof in the following terms;

“In an irregular default judgment, on the other hand, judgment will have been entered against a defendant who has not been served or properly served with summons to enter appearance. In such a situation, the default judgment is set aside ex debito justitiae, as a matter of right. The court does not even have to be moved by a party once it comes to its notice that the judgment is irregular; it can set aside the default judgment on its own motion. In addition, the court will not venture into considerations of whether the intended defence raises triable issue or whether there has been inordinate delay in applying to set aside the irregular judgment. The reason why such judgment is set aside as of right, and not as a matter of discretion, is because the party against whom it is entered has been condemned without notice of the allegations against him or an opportunity to be heard in response to those allegations.[Emphasis added]

Consequently, the learned Judge ought to have set aside the exparte judgment which was irregularly entered as a matter of right and allowed the appellant to file its defence.

23. The upshot of the foregoing is that we find that the appeal has merit and we allow the same. We hereby set aside the exparte judgment dated 2nd March, 2018 in its entirety and grant the appellant leave to file its statement of defence within 7 days of this judgment. The appellant shall have costs of both this appeal and the application filed in the ELRC on 7th February, 2018.

Dated and delivered at Mombasa this 9thday of May, 2019.

ALNASHIR VISRAM

…………...…………….

JUDGE OF APPEAL

W. KARANJA

…………....…………….

JUDGE OF APPEAL

M. K. KOOME

…………......……………

JUDGE OF APPEAL

I certify that this is a true copy of the original

DEPUTY REGISTRAR