https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/7224

Makhuyi v Molyn Credit Limited (Civil Appeal E1173 of 2024) [2026] KEHC 7224 (KLR) (Civ) (28 May 2026) (Judgment) Neutral citation: [2026] KEHC 7224 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Law Courts) Civil Civil Appeal E1173 of 2024 BW Murunga, J May 28, 2026 Between Kizito Musakala Makhuyi Appellant and Molyn Credit Limited Respondent (Being an appeal against the Ruling of Hon. A. N. Ogonda (PM) delivered on 13th September 2024 in Milimani CMCC No. 3244 of 2014) Judgment 1.This appeal arises from the ruling of the Honourable A. N. Ogonda, Principal Magistrate, delivered on 13th September 2024 in Milimani Commercial Court Civil Case No. 3244 of 2014 (Molyn Credit Limited v Kizito Musakala Makhuyi). 2.The Respondent, Molyn Credit Limited, a credit and financial advisory services company, extended a loan facility of Kshs. 273,100 to the Appellant on 6th September 2013, while the Appellant was employed as Head of Internal Audit at the Kenya ICT Board, then stationed at Teleposta Towers, Nairobi. 3.The loan was repayable in twelve monthly instalments of Kshs. 33,042, deducted from the Appellant’s salary via payroll check-off. The loan agreement incorporated an employer-guarantee arrangement whereby the Kenya ICT Board undertook that in the event of the Appellant’s employment being terminated before the loan was fully repaid, it would offset the outstanding balance from his terminal dues. Two deductions were effected in September and October 2013. 4.On 10th November 2013 the Appellant’s fixed-term contract expired and was not renewed. The Kenya ICT Board subsequently remitted a lump sum of Kshs. 180,836 to the Respondent on 7th March 2014, purportedly in discharge of the remaining principal pursuant to the guarantee. The Respondent, unsatisfied, commenced suit against the Appellant in the Magistrate’s Court in 2014, seeking payment of the outstanding balance together with accrued interest and penalties. 5.A process server, one Margaret N. Kariri, swore an affidavit of service stating that on 17th July 2014 she proceeded to the 12th Floor, Teleposta Towers, the offices of the Kenya ICT Board, and there personally served the Appellant, who accepted the documents but declined to sign her copy in acknowledgement. 6.On the strength of that affidavit, the trial court was satisfied that service had been effected, and interlocutory judgment was entered against the Appellant on 9th February 2015 for a principal sum of Kshs. 317,721 together with interest at 6.25%. 7.The Appellant maintains that he was never served, having vacated the Kenya ICT Board’s premises upon the expiry of his contract on 10th November 2013. 8.He avers that the first time he became aware of any court proceedings was in February 2020, when he was arrested pursuant to a warrant of arrest issued by the trial court. He was arraigned before a magistrate on 13th February 2020 and, facing the prospect of detention over a weekend, undertook to pay Kshs. 93,000 as a condition for his release. He was thereafter released. The COVID-19 pandemic erupted almost immediately thereafter. 9.On 21st November 2023 the trial court reissued fresh warrants of arrest, prompting the Appellant to instruct counsel and file an application on 20th March 2024 seeking to set aside the judgment and decree and for leave to file a defence out of time. 10.The learned trial magistrate dismissed the Appellant’s application by ruling dated 13th September 2024. The magistrate held that the default judgment was a regular one, that the process server’s affidavit attracted the presumption of regularity which had not been displaced by cross-examination, and that the proposed defence raised no triable issue deserving consideration. 11.The magistrate further found that the Appellant had been aware of the suit since February 2020 when he appeared before the court upon arrest, yet took no steps to challenge the judgment for over three years, moving court only when execution was recommenced in 2023. The magistrate characterised that conduct as a deliberate attempt to obstruct the course of justice and dismissed the application with costs. Aggrieved, the Appellant filed this appeal. Appellant’s Submissions 12.The Appellant, through Khavagali & Kadima Law Advocates, filed written submissions dated 24th September 2025. On the validity of service, the Appellant submits that the affidavit of service sworn by Margaret N. Kariri is materially defective and should not have been accepted as proof of valid service. He produces a recommendation letter dated 14th June 2018 from the Principal Secretary’s Office of the Ministry of ICT, confirming that his employment at the Kenya ICT Board ran from 11th November 2011 to 10th November 2013, and a termination letter from the ICT Authority dated 24th January 2014 confirming the non-renewal of his contract. 13.He submits it was factually impossible for the process server to have personally encountered him at Teleposta Towers on 17th July 2014, eight months after he had departed those premises. He further submits that the affidavit contravenes the mandatory requirements of Order 5 Rule 15 of the Civil Procedure Rules 2010, in that it fails to name the specific individual from the Respondent corporation who allegedly accompanied the process server, thus precluding any verification of the alleged personal service. 14.On the merits of the proposed defence, the Appellant submits that the trial magistrate erred fundamentally by wholly omitting to consider the draft defence and counterclaim annexed to his application. The defence discloses substantive triable issues: first, that the principal loan was fully discharged through salary deductions and the subsequent employer guarantee payment; second, that the interest calculations are exorbitant and violate the duplum rule, which prohibits interest from exceeding the principal; third, that the Respondent suppressed the employer-guarantee arrangement from the trial court when obtaining judgment; and fourth, that any post-guarantee charges were impermissible as a matter of banking practice and contract. The Appellant submits that the magistrate’s complete silence on those issues constituted a breach of the constitutional right to a fair hearing under Article 50 of the Constitution of Kenya 2010. 15.On the question of delay, the Appellant acknowledges that a period of approximately four years elapsed between his first awareness of the suit in February 2020 and the filing of his application in March 2024. He submits, however, that the COVID-19 pandemic, which commenced almost immediately after his arrest and arraignment in February 2020, caused widespread disruption to court operations, access to legal services, and normal commercial life. 16.He further submits that the circumstances of his February 2020 court appearance, arrested without prior knowledge of any proceedings, arraigned on a Friday afternoon, and compelled to undertake payment as the sole condition of release from imminent civil detention, meant that he did not, at that stage, have the benefit of legal advice or any proper understanding of his right to challenge the judgment. He urges the Court to consider these cumulative circumstances as sufficient explanation for the delay. 17.The Appellant relies on the principles governing setting aside of default judgments drawn from Patel v EA Cargo Handling Services Ltd [1974] EA 75, Shah v Mbogo [1969] EA 116, and Sebei District Administration v Gasyali [1968] EA 300, submitting that courts should lean in favour of hearing disputes on the merits and that denial of a hearing should be the court’s last resort. 18.He relies additionally on Attorney General v Small Wonder Ltd [2015] KECA 122 (KLR) for the principle that where service of a hearing notice is not proved, the resulting default judgment is irregular and must be set aside as a matter of judicial duty, without any discretionary inquiry into the merits or the promptness of the application. He prays that the appeal be allowed, the impugned ruling set aside, the interlocutory judgment and all consequential orders vacated, and leave granted to file his defence and counterclaim. 19.On the duty of this Court as a first appellate court, the Appellant relies on Selle v Associated Motor Boat Co [1968] EA 123 for the proposition that this Court must reconsider the evidence, evaluate it itself, and draw its own conclusions, and that it is not bound to follow the trial court's findings of fact where the trial court clearly failed to take account of particular circumstances or probabilities materially relevant to estimating the evidence. Respondent’s Submissions 20.The Respondent, through Mutundu Wallace Advocates, filed written submissions dated 3rd November 2025. The Respondent submits that the Appellant was properly served and has been economical with the truth throughout these proceedings. It contends that the Appellant was served with a Notice to Show Cause on 14th November 2019, slated for hearing on 5th February 2020. The Appellant failed to attend on that date, warrants of arrest were issued, and he was arrested and arraigned on 13th February 2020. 21.The trial court on that occasion ordered the Appellant to pay Kshs. 93,000 within one month and to engage the Respondent on payment of the balance. The Appellant neither paid the Kshs. 93,000 nor engaged the Respondent thereafter. The Respondent submits that those orders remain in force and have never been challenged, reviewed, or appealed, and that the Appellant is accordingly in contempt of court. 22.The Respondent submits that the Appellant cannot seek equitable relief while flouting subsisting court orders and invokes the clean hands doctrine, relying on Keystone Driller Co v General Excavator Co 290 U.S. 240 (1933). It further relies on Republic v County Government of Kitui Ex Parte Fairplan Systems Limited [2022] eKLR for the principle that compliance with court orders is a matter of fundamental public concern and that courts cannot be seen to make orders in vain. The Respondent submits that a litigant who has ignored court orders for over four years cannot be granted equitable relief from the same court without first purging his contempt. 23.On the delay, the Respondent submits that four years elapsed between the Appellant’s first court appearance in February 2020 and the filing of the application in March 2024. It submits that the COVID-19 pandemic cannot account for the entire period of delay, courts having resumed full operations well before 2024. 24.It relies on Shah v Mbogo [1967] EA 116 for the principle that the discretion to set aside a default judgment is not designed to assist a person who has deliberately sought to obstruct or delay the course of justice. The Respondent contends that the Appellant’s conduct of ignoring the 2020 court orders, failing to engage the Respondent, and moving court only when fresh warrants were issued exemplifies precisely that deliberate obstruction. It submits that the four-year delay was inordinate and inexcusable. 25.On the regularity of the judgment, the Respondent relies on James Kanyiita Nderitu & Another v Marios Philotas Ghikas & Another [2016] eKLR and Shadrack Arap Baiywo v Bodi Bach [1987] eKLR for the proposition that an affidavit of service carries a presumption of regularity and that, where service is denied, the proper course is to cross-examine the process server. The Respondent submits that since the Appellant abandoned the prayer to cross-examine the process server at the trial court, he cannot now impugn the affidavit on appeal. The judgment is, on the Respondent’s case, a regular default judgment properly entered after valid service. 26.In conclusion, the Respondent prays that this Court find the appeal unmeritorious, uphold the trial magistrate’s ruling, and dismiss the appeal with costs, submitting that the Respondent has been prejudiced by years of non- satisfaction of a lawfully obtained decree and that further indulgence to the Appellant would compound that injustice. Issues For Determination 27.Having considered the pleadings, the record below, and the rival submissions, this Court identifies the following issues for determination:i.Whether service of summons to enter appearance was validly effected upon the Appellant, and whether the resulting default judgment is regular or irregular;ii.Whether the learned trial magistrate properly exercised her discretion in declining to set aside the interlocutory judgment, having regard to the totality of the circumstances. Analysis And Determination 28.This Court begins by reminding itself of its duty on a first appeal. In Selle v Associated Motor Boat Co [1968] EA 123, the Court of Appeal stated that an appeal is by way of retrial and this Court must reconsider the evidence, evaluate it itself, and draw its own conclusions. It is not bound necessarily to follow the trial court’s findings of fact if the trial court clearly failed on some point to take account of particular circumstances or probabilities materially relevant to estimating the evidence. 29.The starting point is the fundamental distinction between a regular and an irregular default judgment. The Court of Appeal in James Kanyiita Nderitu & Another v Marios Philotas Ghikas & Another [2016] eKLR stated the distinction as:“From the outset, it cannot be gain said that a distinction has always existed between a default judgment that is regularly entered and one, which is irregularly entered. In a regular default judgment, the defendant will have been duly served with summons to enter appearance, but for one reason or another, he had failed to enter appearance or to file a defence, resulting in default judgment. In such a scenario, the court has unfettered discretion in determining whether or not to set aside the default judgment … 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.” 30.The consequence is critical. Where the judgment is irregular, the defendant is entitled to have it set aside as of right, without any inquiry into the merits of the proposed defence, the reason for non-appearance, or the promptness of the application. 31.As Omolo J (as he then was) stated in Kisumu HC Civil Case No. 191 of 1990, Harun Miruka v Jared Otieno Abok & Another: “in a civil suit an initiating process is the service of summons upon a defendant; if there is no service then ex debito justitiae the judgment must be set aside.” Where the judgment is regular, the court exercises a true discretion guided by the three classical factors. The entire architecture of the analysis therefore turns on the threshold question: was service validly effected? 32.The Respondent’s process server swore that she served the Appellant personally on 17th July 2014 at the 12th Floor, Teleposta Towers, the offices of the Kenya ICT Board. The Appellant contests this on the basis of documentary evidence showing that his contract of employment at the Kenya ICT Board had expired on 10th November 2013, some eight months before the alleged date of service. 33.He produced two documents in support: a recommendation letter dated 14th June 2018 from the Principal Secretary’s Office, Ministry of ICT, confirming that the Appellant served at the ICT Authority from 11th November 2011 to 10th November 2013; and a letter from the acting Chief Executive Officer of the ICT Authority dated 24th January 2014 confirming that the Appellant’s contract expired on 10th November 2013 and was not renewed. Both documents were placed before the trial court. 34.The Respondent did not, either before the trial court or before this Court, produce any evidence contradicting the contents of those documents or showing that the Appellant had any continuing presence at Teleposta Towers after 10th November 2013. The factual premise of the affidavit of service, that the Appellant was found at his place of work at those premises in July 2014, is directly contradicted by uncontroverted official documentation. 35.The Respondent argues that since the Appellant did not pursue the prayer to cross-examine the process server at the trial court, he is precluded from challenging service, relying on Shadrack Arap Baiywo v Bodi Bach [1987] eKLR, where the Court of Appeal held that there is a presumption of service as stated in the process server’s report and that, if service is denied, it is desirable that the process server be cross-examined. 36.This Court reads that authority with care. The decision in Baiywo was made in a context where service was denied by a bare, unsupported assertion. The Court of Appeal did not hold that cross-examination is a precondition to challenging service; it held that cross-examination is desirable because, absent contrary evidence, the affidavit of service would normally constitute sufficient evidence of regularity. The critical qualification is the phrase absent contrary evidence. 37.Where a party adduces affirmative documentary evidence demonstrating that the factual premise of the affidavit of service is impossible, the presumption of regularity is rebutted. The presumption of regularity is not a rule of irrebuttable evidence; it is a presumption designed to fill an evidential void. There is no void here. The Appellant’s challenge to service is not a bare denial, it is a denial corroborated by official documentation that the Respondent chose not to contest. 38.This Court further notes an independent infirmity in the affidavit of service. Order 5 Rule 15 of the Civil Procedure Rules 2010 mandates the affidavit of service must state the name and address of that person as the individual identifying the person served and witnessing delivery. 39.The affidavit states that the process server was accompanied by the plaintiff, a body corporate, without naming the specific natural person from Molyn Credit Limited who allegedly witnessed the service. The name and address of the identifying witness is a mandatory requirement of an affidavit of service. This omission is not a technical irregularity that can be cured by inference. It deprives the Appellant of any means to identify and challenge the corporate representative who supposedly observed the alleged service and it prevents the court from assessing the credibility of the service account in any meaningful way. 40.Taken alongside the documentary evidence that the Appellant had vacated the premises eight months earlier, the affidavit of service falls materially short of the standard required to discharge the Respondent’s burden of proving valid service. 41.This Court accordingly finds, on the evidence, that the Respondent has failed to demonstrate on a balance of probabilities that valid service of summons to enter appearance was effected upon the Appellant. The default judgment entered on 9th February 2015 is therefore an irregular judgment. 42.Therefore, where a default judgment is regular, the court exercises an unfettered discretion under Order 10 Rule 11 of the Civil Procedure Rules 2010 to set it aside upon such terms as are just. The principles applicable in determining whether to set aside an exparte judgment were laid out by the Court of Appeal in the case of Pithon Waweru Maina v Thuka Mugiria [1983]eKLR as follows:“a)a) Firstly, 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 conditions on itself to fetter the wide discretion given it by the rules. Patel v EA Cargo Handling Services Ltd [1974] EA 75 at 76C and E b). Secondly, this discretion is intended so to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but is not designed to assist the person who has deliberately sought, whether by evasion otherwise, to obstruct or delay the course of justice. Shah v Mbogo [1967]EA 116at 123B, Shabir Din v Ram Parkash Anand (1955) 22 EACA 48.c). Thirdly the Court of Appeal should not interfere with the exercise of the discretion of a judge unless it is satisfied that the judge in exercising his discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result there has been misjustice. Mbogo v Shah [1968]EA 93.” 43.The court weighs the nature of the defence and whether it discloses triable issues; the reason for the defendant’s default and non-appearance; whether the plaintiff can be compensated in costs for any prejudice caused by delay; and the overarching consideration that to deny a party a hearing should be the court’s last resort. 44.Further, the Court of Appeal in Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR held that an appellate court may interfere with the exercise of judicial discretion where the trial court failed to take into account considerations it should have taken into account, or where the decision is otherwise plainly wrong. This Court examines each factor in turn, beginning with the most problematic one for the Appellant. 45.On promptness, this Court is bound to state what the trial magistrate correctly identified: the delay of over four years between the Appellant’s first awareness of the judgment in February 2020 and the filing of his application in March 2024 is, by any standard, inordinate. Courts have consistently held that an application to set aside a default judgment must be brought promptly upon the defendant becoming aware of the judgment. 46.An unexplained delay in bringing court applications is a weighty factor that can, standing alone, justify the refusal of relief. This Court acknowledges that COVID-19, which emerged in March 2020 virtually immediately after the Appellant’s arrest, provides a reasonable explanation for inaction during the period of acute disruption broadly, the first half of 2020 through to perhaps mid-2021. However, courts had substantially resumed normal operations by late 2021. On any fair computation, the Appellant’s delay after that point is unexplained by COVID-19 alone and amounts to at least two additional years of inaction. The delay from mid-2021 to March 2024 finds no adequate explanation on the record before this Court. 47.The Respondent is further correct that the Appellant made a commitment before the trial court on 13th February 2020 to pay Kshs. 93,000 within one month and to engage the Respondent on the balance, an undertaking he wholly disregarded. Those orders remain in force and unchallenged. The principle that a party who approaches the court with clean hands is a foundational equitable requirement. This Court does not dismiss the Respondent’s reliance on it. A litigant who ignores court orders, makes no effort to comply or seek their variation, and moves court only when execution is reinstituted to escape the consequences of that inaction, exposes himself to the accusation that his application is tactical rather than principled. 48.This Court notes, however, that the 2020 undertaking was given without legal advice, in circumstances of acute coercion, the Appellant was arrested on a Friday afternoon and faced the immediate prospect of a weekend in civil detention. While the court’s order on that occasion is valid and must ordinarily be complied with, the circumstances of its making are a relevant consideration in assessing whether the subsequent non-compliance reflects wilful contempt or the predicament of an unrepresented person overwhelmed by a process he did not understand. The Court finds the position on promptness and clean hands finely balanced, and on the assumption of a regular judgment would have found it extremely difficult to exercise discretion in the Appellant’s favour on these grounds alone. 49.On the triable issues disclosed in the proposed defence, the picture changes materially in the Appellant’s favour. The proposed defence and counterclaim, which the trial magistrate entirely failed to consider, not mentioning it once in her ruling, raises the following issues that this Court regards as genuinely triable. First, the defence avers that the loan principal was fully discharged through the combination of salary deductions and the employer’s guarantee payment of Kshs. 180,836, and exhibits the loan statement from the Respondent itself showing that payment. Second, it raises the duplum rule, the principle that a creditor cannot charge interest in excess of the outstanding principal, citing the loan statement as demonstrating that the Respondent’s charges exceeded the principal. Third, it alleges that the Respondent suppressed from the trial court the employer-guarantee arrangement, which was a precondition to the loan and which the Respondent’s own loan agreement form acknowledges. Fourth, it pleads that post-guarantee interest charges were impermissible as the Respondent had constructively agreed that the principal would be settled by the guarantor. 50.Each of the above are substantive issues going to the root of the Respondent’s entitlement to the judgment debt. The trial magistrate’s failure to engage with any of them is a material misdirection. Ainley J in the case of Jamnadas V. Sodha Vs Gordhandas Hemraj [1952], 7 U.L.R. at page11 observed that:“Though I have the greatest sympathy with a busy magistrate who no doubt has a great deal to put up with in the way of belated applications and requests for adjournments, though two views can no doubt be taken of this matter, I yet think that insufficient attention was paid by the lower court to the fact that the appellant had a defence to put forward, and to the fact that no great hardship would have been likely to result to the respondent if an appropriate order for costs have been made. I may be doing the learned magistrate an injustice, but from a reading of his ruling … it seems to me he has concentrated solely upon the poverty of the appellant’s excuse. In my view that is not the sole matter which must be considered in cases of this kind. 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 it should always be remembered that to deny the subject a hearing should be the last resort of a court.” 51.This Court pauses to address an important tension in the analysis. On the promptness factor, this Court has found that the delay is largely inexcusable and weighs heavily against the Appellant. Were promptness the only consideration, or were the defence plainly lacking merit, this Court would have been inclined to uphold the trial magistrate’s decision even on a regular- judgment analysis. But promptness is only one of three considerations, and it does not operate as an absolute bar in isolation. 52.Where the proposed defence raises genuinely triable issues, as this one does, the scales are more evenly balanced, because the risk of injustice from refusing the application is higher: the court would be permanently shutting out a party from ventilating what may be a legitimate defence, including a serious allegation of concealment of material facts by the Respondent. Courts should lean in favour of the substantive determination of disputes on their merits, and that the overriding consideration of justice may justify indulgence even to a dilatory applicant where the proposed defence is meritorious. 53.This Court accordingly finds that even on a regular-judgment analysis, the strength of the triable issues and the paramount principle that denial of a hearing should be the court’s last resort would have required this Court to set aside the judgment, though on conditions designed to compensate the Respondent for the inordinate delay and to signal that the Appellant's dilatoriness is not condoned. The promptness factor would properly be reflected in the terms and conditions attached to any order setting aside the judgment, including a substantial costs order. 54.Returning to the primary finding on the first issue, this Court has held that the judgment is irregular due to invalid service, and that on that basis the Appellant is entitled to have it set aside as of right. Even on the discretionary analysis applicable to regular judgments, this Court has found that the strength of the proposed defence and the overriding interests of justice would have justified setting aside the judgment, albeit on stringent conditions. 55.The trial magistrate therefore erred in multiple respects: in treating the process server’s affidavit as reliable in the face of uncontroverted official documentation displacing its factual premise; in misapplying the Baiywo principle by treating the absence of cross-examination as determinative when documentary evidence, not a bare denial, was the basis of challenge; in wholly failing to consider the merits of the proposed defence. Orders 56.In the premises, and for the foregoing reasons, this Court makes the following orders:i.The appeal is hereby allowed.ii.The Ruling of the Honourable A. N. Ogonda (PM) delivered on 13th September 2024 in Milimani CMCC No. 3244 of 2014 is hereby SET ASIDE.iii.The interlocutory judgment entered on 9th February 2015, the decree extracted thereon, the Certificate of Costs, and all warrants of arrest issued pursuant thereto are hereby set aside and vacated.iv.Within thirty (30) days of the date of this Judgment, the Appellant shall pay to the Respondent the sum of Kshs. 75,000 as costs thrown away in respect of all proceedings conducted before the trial court since the entry of judgment.v.The matter shall be listed for hearing on merit in the trial court before a different magistrate other than Hon. A. N. Ogondavi.The costs of this appeal shall be in the cause, to be determined by the trial court upon the final resolution of the matter on the merits. JUDGMENT DATED, SIGNED AND DELIVERED AT NAIROBI THIS 28TH DAY OF MAY 2026.......................................................MURUNGA JSIGNED BY/FOR: