[2022] KEHC 200 (KLR)

International Air Transport Association & another v Roskar Travel Limited & 3 others (Civil Case E457 of 2020) [2022] KEHC 200 (KLR) (Commercial and Tax) (17 March 2022) (Ruling)

Neutral citation: [2022] KEHC 200 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Civil Case E457 of 2020

WA Okwany, J

March 17, 2022

Between

International Air Transport Association

1st Plaintiff

Saham Assurance Company Kenya Limited

2nd Plaintiff

and

Roskar Travel Limited

1st Defendant

Rose Wanjugu Kariithi alias Rose Wanjugu Wanjohi

2nd Defendant

Anne Nyambura Kariithi

3rd Defendant

Monicah Wanjiru Kariithi alias Monicah Wanjiru Kareithi

4th Defendant

Ruling

1. This ruling is in respect to the Defendants/Applicants’ application dated 16th June 2021 wherein they seek orders that: -a.Spent.b.The Honourable Court be pleased to Set Aside the Interlocutory Injunction Judgement entered on 5th May 2021 against the Defendants/Applicants and other consequential orders made thereto in the matter.c.The Honourable Court must be pleased to grant Temporary Injunction restraining the Plaintiffs/Respondents from applying for the Decree pending the hearing and determination of this application.d.Leave be granted to the Defendant/Applicant to be allowed to defend this suit on merit,e.The Honourable Court be pleased to make and/or issue such orders as it may deem fit to grant.f.The costs of this application be provided for.

2. The application is supported by the 2nd applicant’s affidavit and is based on the grounds that: -a)THAT on 9th December 2020 when the Defendants/Applicants were served with the suit pleadings they instructed the Law Firm of Odhiambo, Talam & Co. Advocates to represent them and file the necessary Pleadings in defence but unfortunately the said Law Firm neglected to act as instructed despite adequately and properly instructed hence the entry of Interlocutory Judgment on 5th May 2020. b)THAT the Defendants/Applicants were dismayed and distressed upon being informed of the entry of the Interlocutory Judgement on 16th June 2021 when they instructed the Law Firm of Owang & Associates Advocates who learnt of the Said Interlocutory Judgement upon perusal of the Court file on e-portal.c)THAT immediately on learning of the entry of the Interlocutory Judgement the Defendants/Applicants instructed their new Advocates herein to proceed and file an Application to Set Aside the Interlocutory Judgement and Stay of Execution.d)THAT the mistake of Counsel should not be visited upon the Defendants/Applicants.e)THAT the Defendants/Applicants have a merited Defence to the Plaintiffs'/Respondents' suit with Triable Issues.f)THAT it is a Trite Law that a party should not be Condemned unheard and it is in the interest of justice that the Interlocutory Judgment irregularly entered on 5th May 2021 be set aside and the matter be heard on its merits.g)THAT the Plaintiffs/Respondents have embarked to apply for the Decree for execution and unless they are restrained, the Defendants/Applicants shall be condemned unheard and will suffer immensely for no fault of their own.h)THAT the Constitution of Kenya, 2010 guarantees one to be subjected to fair trial and be subjected to fair administration of justice.i)THAT the irregular Interlocutory Judgment entered in thePlaintiffs'/Respondents' favour involves a very substantial amount of USD 500,000 (Kes. 50,000,000/=) and the same cannot proceed undefended.j)THAT it is in the wider interest of Justice that the orders sought herein are granted on priority otherwise the Defendants/Applicants are apprehensive that the Plaintiffs/Respondents would proceed to execute against them and consequently they shall be condemned unheard and suffer substantial financial loss for no fault of their own.

3. The respondent opposed the application through the replying affidavit of the 2nd respondent’s Deputy Manager, Legal Affairs Ms Sarah Weru who states that the applicants have not given any reasonable excuse for failing to enter appearance and file a defence on time. She avers that the application is a knee-jerk reaction to the notice of entry of judgment and that the intended defence raises no triable issues as the defendants admitted their indebtedness in related proceedings filed prior to the filing of this suit.

4. Parties canvassed the application by way of written submissions which I have considered. The main issue for determination is whether the applicants have made out a case for the setting aside of the ex-parte interlocutory judgement.

5. The applicants submitted that the Court's discretion to set aside interlocutory judgment is wide and that there are no limits or restrictions on the Court's discretion as long as it is exercised on such terms as may be just. For this argument, the applicants cited the decision in the oft cited case of Mbogo & Another vs Shah (1968) 1 EA 93, where the Court stated;“Applying the principle that the Courts discretion to set aside an ex-parte judgement is intended to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but not to assist a person who has deliberately sought (whether by evasion or otherwise) to obstruct or delay the cause of justice, the motion should be refused."

6. They further submitted that they have all along been keen on defending the suit and that the delay or failure to file the Defence was not intentional but was attributable to an oversight and inadvertent mistake on the part of the previous Advocates M/s Odhiambo, Talam & Co. Advocates who did not act on their instructions within the statutory timelines.

7. The respondents, on the other hand, submitted that default judgment entered by the court is regular as the Defendants failed to enter appearance within the stipulated timelines. They also contended that the defence does not raise triable issues as they had set out the various admissions made by the Defendants in related pleadings filed before the lower court. For this argument, the respondents cited the decision in Ecobank Kenya Limited vs Minolta Limited & 2 others [2018] eKLR, where the High Court dismissed an application to set aside judgment entered in default of appearance and defence, on amongst other grounds, that the debt had been admitted and the court rendered itself as follows:-“A careful consideration of the grounds set out in the Notice of Motion and its Supporting Affidavit does show that, quite apart from the fact that no explanation has been given for the failure by the Defendants to enter appearance, no draft Defence was exhibited to give the Court an inkling as to the nature of their defence, in the light of the clear admissions of their indebtedness as per the email communication at pages 23-25 of the Plaintiff's List and Bundle of Documents."

8. On the defendant’s claim that its previous advocates failed to enter appearance and file the defence on time, the respondents submitted that the defendants did not adduce any evidence to show that they instructed the said advocates. They further submitted that it is trite law that a case belongs to the litigant and not the advocate and that it is the duty of the party to follow up on the progress of the suit. Reference was made to the decision in Neeta Gohil vs Fidelity Commercial Bank Limited [20191 eKLR where it was held as follows: -“However, it is not in every case that a mistake committed by an Advocate would be a ground for setting aside orders of the Court. In Savings and Loans Limited v Susan Wanjiru Muritu Nairobi (Milimani) HCCS No. 397 of 2002 Kimaru, J expressed himself as follows: -"Whereas it would constitute a valid excuse for the Defendant to claim that she had been let down by her former Advocates failure to attend Court on the date the application was fixed for hearing, it is trite that a case belongs to a litigant and not to her advocate. A litigant has a duty to pursue the prosecution of his or her case. The court cannot set aside dismissal of a suit on the sole ground of a mistake by counsel of the litigant on account of such advocate's failure to attend court. It is the duty of the litigant to constantly check with her advocate the progress of her case. In the present case, it is apparent that if the defendant had been a diligent litigant, she would have been aware of the dismissal of her previous application for want of prosecution soon after the said dismissal. For the defendant to be prompted to action by the plaintiff’s determination to execute the decree issued in its favour is an indictment on the defendant. She had been indolent and takin into account her last conduct in the prosecution of the application to set aside the default judgment that was dismissed by the court, it would be a travesty of justice for the court to exercise its discretion in favour of such a litigant. (emphasis added)I hold similar view that it is not enough for a party to simply blame an advocate for a mistake but the party must show tangible steps taken by him in following up his matter. It is evident from the court record that the application to set aside the interlocutory judgement was brought 5 months after judgement had been given which is in my view an inordinate delay.”

9. Order 10 Rule 4 (1) and (2) of the Civil Procedure Rules stipulates as follows: -4(1)Where the plaint makes a liquidated demand only and the defendant fails to appear on or before the day fixed in the summons or all the defendants fail so to appear, the court shall, on request in Form No. 13 of Appendix A, enter judgment against the defendant or defendants for any sum not exceeding the liquidated demand together with interest thereon from the filing of the suit, at such rate as the court thinks reasonable, to the date of the judgment, and costs.(2)Where the plaint makes a liquidated demand together with some other claim, and the defendant fails, or all the defendants fail, to appear as aforesaid, the Court shall, on request in Form No. 13 of Appendix A, enter judgment for the liquidated demand and interest thereon as provided by sub-rule (1) but the award of costs shall await judgment upon such other claim.

10. Order 10, rule 11 of the Civil Procedure Rules, on the other hand provides that ex-parte interlocutory judgment in default of appearance or defence may be set aside, it states as follows: -“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.”

11. A simple reading of the above provisions shows that a court has the discretion to set aside a default judgment. In the case of Patel vs EA Cargo Handling Services Ltd (1974) EA 75, the Court held that:“There are no limits or restrictions on the judge’s discretion except that if he does vary the judgment, he does so on such terms as may be just. The main concern of the court is to do justice to the parties and the court will not impose condition on itself or fetter wide discretion given to it by the rules, the principle obviously is that unless and until the count has pronounced judgment upon merits or by consent, it is to have power to revoke the expression of its coercive power where that has obtained only by a failure to follow any rule of procedure.”

12. In Kenya Commercial Bank Ltd vs Nyantange &Another (1990) KLR 443 Bosire J, (as he then was) held that: -“Order IXA rule 10 of the Civil Procedure Rules donates a discretionary power to the court to set aside or vary an ex-parte judgment entered in default of appearance or defence and any consequential decree or order upon such terms as are just.”

13. The principle that emerges from the above cited cases is that the discretion of a court to set aside or vary ex-parte judgment entered in default of appearance or defence is a free one and is intended to be exercised to avoid injustice or hardship but not to assist a person guilty of deliberate conduct intended to obstruct or delay the course of justice. This was the position that was adopted in Rayat Trading Co. Limited vs Bank of Baroda & Tetezi House Ltd [2018] eKLR where the court listed the matters to be considered in the exercise of this discretion as follows: -i.the defendant has a real prospect of successfully defending the claim; orii.it appears to the court that there is some other good reason why;iii.the judgment should be set aside or varied; oriv.the defendant should be allowed to defend the claim

14. Similarly, in the case of, Thorn PLC vs Macdonald [1999] CPLR 660, the Court of Appeal highlighted the following guiding principles: -i.while the length of any delay by the defendant must be taken into account, any pre-action delay is irrelevant;ii.any failure by the defendant to provide a good explanation for the delay is a factor to be taken into account, but is not always a reason to refuse to set aside;iii.the primary considerations are whether there is a defence with a real prospect of success, and that justice should be done; andiv.prejudice (or the absence of it) to the claimant also has to be taken into account.

15. In the case of Rahman vs Rahman (1999) LTL 26/11/9, the court considered the nature of the discretion to set aside a default judgment and concluded that the elements the judge had to consider were: the nature of the defence, the period of delay (i.e., why the application to set aside had not been made before), any prejudice the claimant was likely to suffer if the default judgment was set aside, and the overriding objective.

16. In Philip Kiptoo Chemwolo and Mumias Sugar Company Ltd vs Augustine Kubede (1982-1988) KAR, the Court of Appeal held that: -“The court has unlimited discretion to set aside or vary a judgment entered in default of appearance upon such terms as are just in the light of all facts and circumstances both prior and subsequent and of the respective merits of the parties. Kimani -v- MC Conmell (1966) EA 545 where a regular judgment had been entered the court would not usually set aside the judgment unless it was satisfied that there is a triable issue.”

17. One of the key factors to consider when setting aside an ex-parte judgment is whether the defendant has a defence on merit. In Sebei District Administration vs Gasyali & others (1968) EA 300 Sheridan J. observed that: -“The nature of the action should be considered. The defence if one has been brought to the notice of the court, however irregularly, should be considered, the question as to whether the plaintiff can reasonably be compensated by costs for any delay occasioned should be considered and finally, I think, it should always be remembered that to deny the subject a hearing should be the last resort of the court”

18. In the case of, Tree Shade Motor Limited vs DT Dobie Co Ltd CA 38/98, the Court held that even when ex-parte judgment was lawfully entered, the court should look at the draft defence to see if it contains a valid or reasonable defence.

19. In the present case, it was not disputed that the defendants/applicants were duly served with the plaint and summons to Enter Appearance on 9th December 2020. It was also not disputed that the defendants did not enter appearance or file a defence within the stipulated period thereby precipitating the respondents’ request for default judgment on 25th February 2021 which judgment was entered on 5th May 2021. From the chronology of the events leading to the entry of the impugned interlocutory judgement, it is clear that it took the applicants at least 6 months, from the date of service with the pleadings, to file the instant application. My finding is that the 6 months’ delay in filing the present application is not only inordinate but has also not been explained by the applicants. The applicants blamed the law firm of Odhiambo, Talam & Company Advocates for the failure/delay in filing the defence and alleged that the said law firm did not act on their instructions on time or at all. I however note that the applicants did present any material to show that they had instructed the said law firm to act for them in the matter. The applicants did not also demonstrate that they took any concrete steps to pay the said advocates for the brief or follow up on the position of their case for the entire 6 months that the case was in court prior to the filing of the instant application.

20. I am not persuaded that the applicants have made out a case for the granting of the discretionary orders to set aside the interlocutory entered herein. My considered opinion is that the reasons advanced by the applicants for the delay are not plausible and have no merit in view of the fact that they have not tendered any documentary proof that they ever instructed the law firm of Odhiambo, Talam & Co. Advocates to represent them in the matter. In Rayat Trading Co. Limited v Bank of Baroda & Tetezi House Ltd [2018] eKLR, the Court stated as follows on the subject of delay: -“It’s an old adage that, justice delayed is justice denied and that justice is weighed on a scale that must balance. Therefore, as much as the Court is obligated to promote the provisions of Article 159(2)(d) of the Constitution of Kenya, 2010 and uphold substantive justice against technicalities, the law must protect both the Applicant and the Judgment Creditor for justice to be seen to be done. Even then a mistake by a Counsel is not a technicality. In the same vein the provisions of Section 1A and 1B of the Civil Procedure Act obligates the parties to assist the Court in the expeditious disposal of cases.”

21. My above findings notwithstanding, this court is still minded to exercise its discretion so as to grant the applicants a reprieve by granting them a chance to be heard more so considering the fact that the suit involves a claim for the sum of USD 50,000 which is quite a substantial amount of money. This reprieve will however not be granted without any conditions on the part of the applicants who have clearly been indolent in their handling of the case. My line of thinking is bolstered by the decision in Rayat Trading Co. Limited vs Bank of Baroda & Tetezi House Ltd [2018] eKLR where the Court held that: -“If the court sets aside a default judgment, it may do so on terms. In most cases the defaulting defendant will be ordered to pay the claimant’s costs thrown away. In addition, the Court may consider imposing a condition that the defendant must pay a specified sum of money into court to await the final disposal of the claim.”

22. Regarding the respondents’ argument that the debt was admitted by the applicants in previous related proceedings, I note that the draft defence does not contain an unequivocal admission of debt but raises issues that the court can only adjudicate upon after hearing the main suit. My view is that the defence raises triable issues that the court may need interrogate after hearing the parties fully on the merits of their respective cases. Owing to the nature of the case, which appears to be a straightforward claim of monies owed, I direct that the matter be heard expeditiously so that justice can be seen to have been done.

23. Having regard to the findings and observations that I have made in this ruling, I issue the following final orders: -i)That the interlocutory judgment entered on 5th May 2021 is hereby set aside on the following conditions: -a)That the defendants shall within 30 days from the date of this ruling, deposit the sum of USD 25,000 (Kshs. 25,000,000) in Court to await the final determination of the case.b)The applicants shall file and serve the said statement of defence within 7 days from the date of this ruling.ii)In default of compliance with order given in (i) (a) and (b) hereinabove, the order vacating the interlocutory judgment shall automatically lapse without further reference to the to Court.iii)The matter be set down for case management conference on priority basis.iv)I grant thrown away costs to the respondents.

DATED, SIGNED AND DELIVERED VIRTUALLY AT NAIROBI THIS 17TH DAY OF MARCH 2022. W. A. OKWANYJUDGEIn the presence of: -Ms Leah Muhia for plaintiffs/respondents.No appearance for defendants/applicants.Court Assistant: Sylvia