[2021] KECPT 263 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL

AT NAIROBI

TRIBUNAL CASE NO.154 OF 2020

JOHN WERU KIRURI.............................................................1ST CLAIMANT

MARY WAIRIMU WERU.......................................................2ND CLAIMANT

VERSUS

URITHI HOUSING CO-OPERATIVE

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

RULING

The matter for determination is the Respondent’s Notice of Motion Application dated 14. 12. 2020 filed on 18. 12. 2020 seeking the following prayers:

1. Spent

2. Spent

3. That this Honourable Tribunal be pleased to set aside the judgment entered on 6th July 2020 and all the Consequential Orders.

4. That this Honourable tribunal be pleased to grant leave to the Respondent to defend this suit and that the annexed draft defence be deemed as duly filed and served.

5. That costs of this Application be provided for.

The Application is based on the grounds on the face of the Application and supported by the Affidavit of Samuel Ngundo Mainadeponed on 14. 12. 2020.

The Application is opposed vide the Grounds of Opposition dated 2. 2.2021 and filed on 5. 2.2021and the Replying Affidavit of John Weru Kiruri deponed on 29. 3.2021. The Respondent filed a Supporting Affidavit on 23. 4.2021.

The Application was ordered to be disposed of by way of written submissions. The Respondents filed their written submissions on 29. 4.2021, and the Claimant filed theirs on 7. 5.2021. The Respondent filed Supplementary written submissions on 7. 5.2021.

1. The gist of the Respondent’s Application is that:

(a) The Claimants obtained an ex-parte judgment without serving the Respondent with the summons and Statement of Claim, or that the service was improper, defective and concealed.

(b) That judgment was entered without affording an opportunity to be heard contrary to the provisions of Article 50 Constitution. That therefore the judgment entered on 6. 7.2020 was irregular and should be set aside.

(c) That the Respondent has a strong valid defence which raises triable issues and it is only fair and just that they be granted an opportunity to defend the suit.

(d) That the Application was made timeously without inordinate delay.

2. The Claimants opposed the Application vide the Grounds of Opposition and their Replying Affidavit. The Claimant submitted that:

(a) The Respondent was correctly served with the Summons and Statement of Claim on 27. 5.2020, when the documents were delivered physically to the Respondent’s offices at Mountain Mall Branch and an officer of the Respondent stamped and signed acknowledging receipt. That the denial of service is frivolous, spurious and totally unjustified.

(b) That the Respondent was not denied the right to be heard but intentionally refused and ignored and neglected filing an appearance and Defence. Hence the ex-parte judgment was entered on 6. 7.2020.

(c) That the defence filed is vexatious and intended to delay the payment of refund to the Claimants, therefore the defence has not raised triable issues.

(d) That the Tribunal should not exercise discretion in the favour of the Respondents who have been indolent in filing their defence and whose defence lacks merits.

WHETHER THE DEFAULT JUDGMENT WAS REGULAR OR IRREGULAR

3. 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 file a defence resulting to default judgment.

Such a defendant is entitled under Order 10 Rule 11 Civil Procedure Rules, to move the 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:

(i) The reason for the failure of the defendant to enter appearance or file the Defence.

(ii) The length of time that has elapsed since the default judgment was entered.

(iii) Whether the intended defence raises triable issues

(iv) The respective prejudice each party is likely to suffer.

(v) Whether its in the interest of justice to set aside the default judgment.

This Principles are well established in Mbogo & Another -vs- Shah [1968] EA 63 & Patel -vs – EA Cargo Handling Services Limited [1979] EA 75

4. For an irregular default judgment, on the other hand, it will have been entered against a defendant who has not been served or properly served with summons. In such a case the default judgment is set aside ex debito justiciae (as a matter of right) and not as a matter of discretion 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. This was held in Onyango Oloo vs Attorney General [1986-1989] EA 456.

Issues for determination

(i) Whether the Respondents were served

(ii) Whether there was inordinate delay to file this Application

(iii) Whether the draft defence raises triable issues

(iv) Whether it is in the interest of justice to set aside the default judgment (prejudice to the respective parties.)

(v) Costs.

1. Whether the Respondents were served

5. The Respondent in their written submissions submitted in paragraph 5 that “ Respondent has its main office in Thika and several other branches including one in Mountain Mall where the Claimants claimed to have served the Summons. The Respondents’ legal office is based in Thika offices, which is in charge of taking note of the matters and instructing Advocates to enter appearance on its behalf. The Summons was received in Thika legal office on 14. 12. 2020 and upon perusal of the court file, the Advocate on record realized that already an interlocutory judgment had already been entered against the Respondent thereby necessitating the instant Application. “

6. The Respondent further submitted that they had the intention to defend the matter, but due to an “ inadvertent error,” they were not able to enter appearance in good time. They prayed for the Tribunal to exercise its unfettered discretion and set aside the judgment.

7. The Claimants submitted that the summons and Statement of Claim were effected upon the Respondent by hand delivery to the Respondent’s office at Mountain Mall on 27. 5.2020. That the agent of the Respondent duly received the Summons, acknowledged service by affixing the corporate stamp of the Respondent upon the Summons and a copy of Statement of Claim and signing against the stamp. That the person who signed was Evans Mwangi. That its not disputed that he had authority to receive/accept the Summons on behalf of the Respondent.

8. That the Request for judgment dated 19. 6.2020 was filed and the Tribunal after satisfying itself that the service of Summons had been validly effected, as per the Affidavit of Service, entered the default judgment on 6. 7.2020 for prayer (a) and ordered for prayer (b) be set down for formal proof.

9. That the judgment entered thereof was a regular default judgment and the Respondent is not entitled to setting aside ex debito justiciae but that the Tribunal has the discretion to set aside as held in James Kanyiita Nderitu – vs- Marios Phitolas Ghikas [2016] eKLR.

10. That the Respondent does not deserve the exercise of the Tribunal’s discretion in their favour because there was no justified reasons given.

11. We have carefully considered the submissions and find that the Respondent have admitted service of Summons as cited earlier in this Ruling ( that is, paragraph 5 of Respondents written submissions). This therefore shows that the default judgment on the liquidated claim (prayer a) and interlocutory judgment (prayer b) was a regular default judgment.This therefore brings about the setting aside of the default judgment to the discretion of the Tribunal.

(ii) Whether there was inordinate delay in filing the Application

12. We note that the Claimant filed the Request for Judgment on 19. 6.2020. On 6. 7.2020, summary judgment was entered for Kshs.6,500,000/= plus costs and interest at court rates (for prayer a) and interlocutory judgment was entered for prayer (b) which was to be fixed for formal proof.

On 18. 12. 2020, the Respondent filed their Notice of Motion under Certificate of Urgency dated 14. 12. 2020. There is no reasonable explanation given by the Respondent to show that they were diligent in speed to file this Application 7 months after entry of default judgment.

The Respondent only stated that there was an “inadvertent error” which has not been disclosed. We find that there was inordinate delay in filing the instant Application.

(iii) Whether the draft defence raises triable issues

13. The Respondent submitted that they brought this Application pursuant to the right of hearing and being afforded an equal opportunity to canvass their case before a determination is made. They cited Fredrick Chege Kamenwa – vs- Aron K. Kandie (2001) eKLR and Winnie Wambui Kibunge & 2 others - vs- Match Electricals Limited (2012) eKLR.

14. That they have a Defence which has merit. That their model invites members to make a booking of plots in the bulk land purchased by paying monies for deposit and eventually the plots are transferred upon completion of payment of purchase price and conveyancing fees. That the Claimants made no deposits towards the plots. That in the event that money was paid, it was sunk in the project and the option for the Claimants would be to transfer to other projects if they are dissatisfied.

15. The Claimant submitted that the Respondent have not been denied the right to be heard but rather they deliberately and intentionally refused and ignored and neglected filing of appearance and defence. That the sole intention of the Respondent is to delay payment and refund.

16. That the Claimant paid the price, deposit and conveyancing fees as per the vouchers, receipts and bank slips totaling to Kshs.6. 5 Million to the Respondent.

17. That the sale of land was in terms of the Agreement of Sale dated 16. 9.2017 and the land parcels were clearly identified and the Respondents held themselves out as the beneficial owners to Plot Number 3 and 13 on Nyeri Municipality LRQ384/4and not on any other parcel of land as per the terms of the Agreement.

18. That therefore the Respondent cannot purport to have “sunk” all the money on the purchase of the bulk land since they were the beneficial owners as per the Sale Agreement.

19. That the Respondent has not offered a refund of the money; despite earlier demands.

20. We have carefully considered the submissions of both parties.

As discussed earlier, the default judgment is regular hence the Tribunal has the unfettered discretion on the issue of setting aside a regular default judgment as held in the Mbogo – vs- Shah case (Supra).

21. We have noted the contents of the draft Defence and the nature of the matter, we believe that it would be fair to allow the parties to have their day in court and argue out the matter. We note also that the matter arises out of an Agreement between the parties, and the prayers sought would be better determined by way of evidence and hence find that the defence has raised triable issues.

(iv) Whether it is in the interest of justice to set aside the default judgment (prejudice to the respective parties)

22. This matter arises out of an Agreement between the parties. The Claimant filed the suit for a liquidated amount of Kshs.6. 5.Millionand a summary judgment was entered. The Claimants submitted that they invested their hard earned money on the project and paid all that was required for completion of the Agreement. That they made their last payment in August 2018 and the Sale Agreement dated 16. 9.2017.

23. We have found that the default judgment was entered regularly and the discretion to set aside the default judgment lies with the Tribunal. We note that the reason put forward for failure to enter appearance and file a Defence was indicated by the Respondent as an inadvertent error. The said “ inadvertent error” was not disclosed. Thereafter, there was inordinate delay in filing the Application that is, 7 months after entry of default judgment.

The parties are bound by the terms of their Agreements and it seems that the Claimant was not satisfied with the delivery of the terms of the Agreement.

24. The Respondents submitted that they brought the Application under Order 10 Rule II Civil Procedure Rules and not under Order 42 Rule 6 Civil Procedure Rules.

The Claimants submitted that they have suffered at the hands of the Respondents, who have perpetuated delay in the determination of the matter.

They prayed for the amount be deposited in the Tribunal or in an interest earning account within 15 days and thereafter, then the judgment may be set aside and the Respondent be allowed to file their defence in the matter.

25. Order 10 Rule II Civil Procedure Rules provides that :

“ Where judgment has been entered under this order, the court may set aside or vary such judgment and any consequential orders upon such terms as are just.”

We note that a regular default judgment was entered in terms of prayer (a) Summary Judgment for the liquidated claim plus costs and interest thereof and Interlocutory Judgment for prayer (b) as per the Statement of Claim filed on 14. 5.2020.

Rule 3 Cooperative Tribunal ( Practice and Procedure) Rules 2009 provides that:

“ Nothing contained in these Rules SHALL limit or otherwise effect the inherent power of the Tribunal to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Tribunal.“

Rule 4

“ The Tribunal SHALL have power and discretion to decide all matters before it with due speed and dispatch without undue regard to technicalities of procedure.”

26. In the light of these provisions, nothing prevents the Tribunal from issuing such orders as may be just. We note that the status of the Respondent (as a Co-operative Society) which has been experiencing many issues in regard to liquidity. The judgment entered herein was as a result of the Respondent having failed to exercise due diligence in entering appearance and filing a Defence. The Claimants have obtained a regular default judgment and the Respondents did not expedite the Application for setting aside earlier. We noted earlier that 7 months was inordinate delay.

27. However, in the interest of justice, and in the exercise of the inherent power and discretion, we make the following Orders in the interest of justice as enumerated in Order 10 Rule II Civil Procedure Rule, and Rule 3 and 4 Cooperative Tribunal ( Practice and Procedure ) Rules 2009.

1. That the judgment entered on 6. 7.2020 and all the Consequential Orders are herein set aside on condition that;

a. That the Respondent herein do deposit the liquidated sum as per the default summary judgment, amount of Kshs. 6. 5.Million in an interest earning account in the joint names of the Advocates of the parties within 15 days of this Ruling.

b. That leave is granted to the Respondent to file and serve their Response to the Claim, Witness Statement and Documents within 7 days herein.

c. Corresponding leave is granted to the Claimant to file and serve their Reply to the Response, any other documents and Witness Statements within 7 days of service.

2. In default, Order 1 shall be deemed to be vacated ( that is, Summary judgment shall stand) and the matter to be fixed for Formal Proof for prayer (b).

3. The Respondent to pay the thrown away costs of this Application assessed at Kshs.15,000/=.

4. Mention on 9. 8.2021 for directions.

Ruling signed, dated and delivered virtually at Nairobi this 15thday of July, 2021.

Hon. B. Kimemia Chairperson Signed 15. 7.2021

Hon. J. Mwatsama Deputy Chairperson Signed 15. 7.2021

Mr. G. Kamiti Member Signed 15. 7.2021

Tribunal Clerk C. Maina

Kamaara for the Claimant/Respondent

Gitau for the Respondent

Hon. J. Mwatsama Deputy Chairperson Signed 15. 7.2021