[2021] KECPT 512 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO.82 OF 2020

JAMES KIARIE MUCHIRI.................................................................CLAIMANT

VERSUS

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

RULING

Vide the Application dated 1. 9.2020, the Respondent has moved this Tribunal seeking for the following Orders:

a. Spent;

b. That this Honourable Tribunal be pleased to set aside the interlocutory judgment entered by this Honourable Tribunal on 30th July 2020 and grant the Respondent unconditional leave to defend the claim and reinstate the suit for hearing and determination interparties on merit;

c. That this Honourable Tribunal be pleased to Order that the reply to claim filed herein on 18th August 2020 be deemed to be properly on record; and

d. That the costs of this Application be in the cause.

The Application is supported by the grounds on its face and the Affidavit sworn by Josphat Kaniaru Kireru on even date 1. 9.2020. The Claimant has opposed the Application vide the Replying Affidavit sworn by him on 5. 10. 2020.

Vide the directions given on 13. 10. 2020, the Application was canvassed by way of written submissions. The Respondent filed its written submissions on 23. 10. 2020 while the Claimant did so on 2. 11. 2020.

Respondent’s Case

Vide the instant Application the Respondent contend that it failed to file a Response to the claim within the requisite time as a result of inconveniences caused by the onset of the Covid – 19 pandemic. That upon receipt of summons to enter appearance, the Respondent instructed a firm of Advocates to defend it. That on 13. 3.2020, the firm of Kibera & Associates entered appearance on its behalf, but could not file a Defence owing to restriction of movement imposed by the Government. That it was during the intervening period that the Claimant requested for default judgment.

Claimant’s Case

The Claimant has opposed the Application on grounds that the Respondent has not given a good explanation as to why it did not file a Defence in good time. That the courts opened in Mid-June, 2020 and in early July, 2020 the Court’s e-filing system was launched. That instead of filing a Response to the claim, the Respondent filed an Application for security for costs. That the Application should therefore be dismissed with costs.

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 30. 7.2020;

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.”

A question arises thereof as to whether the instant Application has met the threshold set forth in the foregoing conditions. To answer this questions, we will individually look at the said conditions as follows:

Reason for failure to file a Defence

The Respondent has largely attributed its failure to file a Defence in good time to the challenges posed by the covid-19 pandemic. It avers that because of restriction of movements it advocate on record did not obtain adequate instructions to file a Defence.

Whilst if it is the case that covid-19 pandemic slowed down the operations of the Tribunal, the same did not result of in a complete shutdown of operations. Directions were issued on filing of documents and pleadings through the Tribunal’s customer care gmail account. Further, Tribunal staff were on stand-by to assist any of the litigants who needed support. It is thus not therefore an excuse that the Respondent did not file a Defence as a result of scaling down of court operations.

On the flipside, we agree with the Respondent that the measures put in place by the Government to manage the spread of the Covid-19 pandemic may have resulted in limited movement thereby impairing remittance of instructions. To this extend thereof, we find that the reason advanced by the Respondent for not filing a Defence in good time is reasonable.

Draft Defence

The other factor to consider when determining whether or not to set aside a default judgment is whether the draft Defence raise triable issues. We have perused the Defence irregularly filed by the Respondent on 18. 8.2020. We note that the Respondent has opposed the claim on account of the Respondent took a loan from Co-operative Bank of Kenya Limited under the guarantorship of the Claimant. That the Claimant’s resignation from the Respondent does not invalidate his obligations under the terms and conditions of guarantee for Co-operative Bank. From this part of Defence, a question arises as to whether the Claimant can be discharged from the Respondent if indeed he has obligations with the Respondent which he is yet to fulfill. This is an issue which can only be determined upon trial. It is thus a triable issues. We thus find that the said Defence raises trial issues.

Conclusion

When all is said and done, we find the Respondent’s Application dated 1. 9.2020 meritorious and allow it based on the following conditions:

a. That the statement of Defence dated 18. 8.2020 and filed on even date is deemed as duly filed and served;

b. The Claimant to file and serve a Reply to Defence and Supplementary witness statements and documents (if need be) within 14 days herein;

c. Mention for pre-trials on 4. 3.2021; and

d. Costs in the cause.

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. Gekonge for Claimant

Respondent absent

Court clerk Maina

Hon. F. Terer Deputy Chairman Signed 7. 1.2021

Mr. Gekonge- There was another Application by the Respondent seeking security for costs. I had filed a Response.

Tribunal - The Respondent’s Application dated 18. 8.2020 to be canvassed by way of written submissions. Respondent to do so within 14 days herein. Claimant 14 days of service

Mention for directions on 4. 3.2021.

Hon. F. Terer Deputy Chairman Signed 7. 1.2021