[2023] KEHC 26170 (KLR)

Mandera County Government v Jamarat Apartmemts Limited (Civil Suit E003 of 2020) [2023] KEHC 26170 (KLR) (4 December 2023) (Ruling)

Neutral citation: [2023] KEHC 26170 (KLR)

Republic of Kenya

In the High Court at Garissa

Civil Suit E003 of 2020

JN Onyiego, J

December 4, 2023

i. That the interlocutory judgment entered herein be and is hereby set aside on condition that the defendant/applicant within 30 days of delivery of this ruling deposits Kshs.15,000,000 in an interest earning account jointly held by the parties’ advocates. ii. That the defendant applicant shall pay throw away costs of kes. 100,000 to the plaintiff within 30 days from the date of this ruling. iii. That costs of this application is awarded to the plaintiff. defendant/applicant iv. The applicant’s undated draft statement of defence filed on 21. 06. 2023 is hereby considered duly filed upon fulfilling the conditions set herein above. v. The matter be settled down for hearing on a priority basis.

Between

Mandera County Government

Applicant

and

Jamarat Apartmemts Limited

Respondent

Ruling

1. Through a plaint dated 21st October 2020, the plaintiff/ applicant filed the suit herein against the defendant seeking inter alia; a sum of kshs. 46,915,000 plus interest for breach of contract. There being no appearance nor defence filed, the plaintiff/respondent filed a notice of motion dated 18th December 2020 seeking leave to enter judgment against the defendant/applicant. The application was allowed on 10th June 2021 and judgment entered accordingly. Thereafter, the plaintiff/respondent filed judicial review application No. E001 of 2022seeking an order for payment of kes58,069,920.

2. Consequently, the defendant/applicant, moved this court vide the application dated 05. 04. 2022 filed by the firm of Issa & Company Advocates seeking the following Orders:i.Spent.ii.That this Honourable Court be pleased to issue an order for stay of execution of the decree entered herein on 27. 07. 2021 pending the inter partes hearing and determination of this application.iii.That this Honourable Court be pleased to set aside the judgment entered for the plaintiff against the defendant on 10. 06. 2021 and certificate of costs dated 16. 12. 2021 pending the interpartes hearing and determination of this application and the defendant be guaranteed unconditional leave to defend the suit.iv.That this Honourable Court be pleased to issue stay of further proceedings in Judicial Review Application No. E001 of 2020 Republic v Mandera County Government & 2 Others pending hearing and determination of the application and suit herein.v.That this Honourable Court be pleased to grant leave to the defendant to file its defence out of time and defend the suit herein.vi.That costs of the application be in the cause.

3. The Application is brought under Sections 31A, 1B and 3A of the Civil Procedure Act and Order 10 Rule 11 of the Civil Procedure Rules. It is based on the grounds set out on the face of it and further by the Supporting Affidavit sworn on even date by Abdinur Maalim Hussein, the County Secretary of the defendant /applicant.

4. The crux of the matter is that the entry of interlocutory judgment was improper as there was no service of summons to enter appearance and file defence. The applicant deposed that the case by the plaintiff/respondent was premised on an alleged contract for delivery of food stuffs to the applicant which was not. That there was no proof of a binding contract for the supply of goods to the applicant. It was further averred that without proof of issuance of any Local Purchase Order for the supply of the said food, the applicant has a triable and good defence.

5. It was urged that the plaintiff/respondent misled this court to believe that the said agreement was a contract for the actual supply for relief foods and yet the same was only a pre-qualified contract awarded to successful suppliers and contractors.

6. The applicant stated that, there was an impending threat of execution by the plaintiff/respondent as it has since filed a Judicial Review Application No. E001 of 2020 Republic v Mandera County Government & 2 Others seeking an order of Mandamus to compel the defendant /applicant to satisfy the decree issued by this Honourable Court.

7. It was the applicant’s case that the Decree was for a substantial amount of Kes.58,069,920. 30. That the defendant /applicant has a constitutional duty to ensure public funds are used efficiently and effectively and the claim herein being fictitious would be an abuse of the duty to protect public funds. An undated draft statement of defence filed in court on 21. 06. 2023 was attached and a prayer that the same be considered and deemed as duly filed made.

8. It was his further case that the defendant /applicant would suffer substantial loss if the orders sought herein were not granted and therefore, urged this court to grant leave as prayed for the defendant /applicant to defend the suit herein.

9. The plaintiff/respondent filed a replying affidavit sworn on 14. 08. 2023 in which he stated that being the director of the respondent company, he is aware that Mr. Abdinur Maalim Hussein is not the County Secretary of the defendant /applicant and therefore, has no authority to swear the supporting affidavit. That despite the defendant /applicant being served with the pleadings herein, it failed to enter appearance nor file a statement of defence. It was deposed that the judgment entered against the defendant /applicant was lawful as this court was satisfied that indeed, the defendant /applicant were served with the pleadings.

10. It was further urged that the defendant /applicant was guilty of inordinate delay in filing this application having admitted that it became aware of these proceedings on 21. 02. 2023. The plaintiff/respondent urged that the defendant /applicant must present Abdinur Maalim Hussein for cross examination for this court to satisfy itself on his averments that he was not served by one Chacha Mutindi Barnabas. In the end, it was deposed that the application herein ought to be dismissed as the same is keen on denying the plaintiff/applicant the fruits of his judgment.

11. Parties having agreed to dispose the matter by way of written submissions, the defendant /applicant submitted in respect to two issues namely: whether the service of the plaint, the summons to enter appearance, the notice of motion of application and/or the hearing notice was proper and whether the defendant /applicant’s draft statement of defence raises triable issues.

12. The defendant /applicant urged that Order 10 Rule 11 gives the court a discretion to set aside or vary default judgment upon such terms as may be just. Reliance was placed inter alia on the case of Stephen Ndichu v Monty’s Wines and Spirits [2006] eKLR where the court held that the court’s discretion to set aside an ex parte judgment is free and the main concern of the court should be to do justice.

13. It was reiterated that the default judgment was irregular, a nullity and the same ought to be set aside. It was stated that the service in question was questionable as the same did not measure up to the provisions of Order 5 Rule 9 wherein the County Secretary in this case ought to have been served on behalf of the defendant /applicant. That the affidavit of service did not identify who Abdi Nur was and the role he played in the office of the County Secretary or whether he had the authority to receive the documents served on behalf of the defendant /applicant. It was submitted that, the defendant /applicant was not accorded an opportunity to be heard on merit.

14. On the issue that the defendant /applicant raised triable issues, reliance was placed on the Court of Appeal case of Patel v E.A. Cargo Handling Services Ltd [1974] EA 75 to urge that a triable issue is that which raises a prima facie defence which should go to trial for adjudication. That the defendant /applicant did not issue the plaintiff/respondent any Local Purchase Order for the supply of the said foodstuffs. That the agreement referred to was simply a pre-qualification contract awarded to successful suppliers and contractors to supply goods as and when the need arose upon issuance of a Local Purchase Order to the pre-qualified contractor.

15. That at no time did the defendant /applicant issue the plaintiff/applicant with a Local Purchase Order for the supply and delivery of food and relief worth Kes.58,056,920. 30. The defendant/ respondent is a custodian of public funds and must therefore ensure that the funds are utilized in a prudent and responsible manner as dictated under article 201 of the constitution. This court was therefore urged allow the application as prayed.

16. The plaintiff /respondent did not file submissions despite directions to that effect having been issued.

17. I have read through and considered the Notice of Motion Application dated 05. 04. 2022, the Replying Affidavit sworn on 14. 08. 2023 and the applicant’s written submissions dated 29. 09. 2023. The only issue for my determination is whether the applicant has satisfied the requirements for the grant of the Order of Stay of Execution and set aside default judgment.

18. The principles that relate to Stay of Execution Orders are well settled. Order 42 Rule 6 of the Civil Procedure Rules stipulates: -“1. No appeal or second appeal shall operate as a stay of execution or proceedings under a decree or order appealed from except in so far as the court appealed from may order but the court appealed from may for sufficient cause order stay of execution of such decree or order and whether the application for such stay shall have been granted or refused by the court appealed from the court to which such appeal is preferred shall be at liberty on application being made to consider such application and to make such order thereon as may to it seem just and any person aggrieved by an order of stay made by the court from whose decision the Appeal is preferred may apply to the appellate court to have such orders set aside.2. No order for stay of execution shall be made under sub rule 1 unless:a)The Court is satisfied that substantial loss may result to the applicant unless the order is made and that the application has been made without unreasonable delay; andb)Such security as the Court orders for the due performance of such decree or order as may ultimately be binding on him has been given by the Applicant”.

19. Thus under Order 42 Rule 6(2) of the Civil Procedure Rules, an Applicant should satisfy the court that:i.Substantial loss may result to him unless the order is made;ii.That the Application has been made without unreasonable delay; andiii.The applicant has given such security as the court orders for the due performance of such decree or order as may ultimately be binding on him.

20. 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.

21. 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. For avoidance of doubt it provides 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.”

22. A reading of the above provisions shows that a court has the discretion to set aside a default judgment. In the case of Kenya Commercial Bank Ltd v 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.”

23. The principle that emerges from the above is that the discretion of a court to set aside or vary ex-parte judgment entered in default of appearance or defence 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. [ See the case of Rayat Trading Co. Limited vs Bank of Baroda & Tetezi House Ltd [2018] eKLR].

24. In the case of Rahman v 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 court 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.

25. In the instant case, the defendants/applicants averred inter alia that service was not properly executed upon it. That the affidavit of service did not identify who Abdi Nur was and the role he played in the office of the County Secretary or whether he had the authority to receive the documents served on behalf of the defendant /applicant.

26. The court has independently perused the file herein and it is of the view that the issue of service as raised by the defendant /applicant was ably dealt with by this court although differently constituted. Aroni J. while considering the application for leave to enter judgment against the applicant/defendant noted that she was satisfied that service of the notice of motion was duly effected. The hon. Judge noted that she was convinced that since the defendant /applicant had neglected and/or failed to enter appearance and file defence, the court was left with no choice but to allow the prayers sought in the application dated 18. 12. 2020.

27. In any event, I do not expect a stranger to have made a stamp for the county secretary’s office for purposes of receiving court documents. Am convinced that service of summons to enter appearance was duly served and received in the county secretary’s office by an official of the county government.

28. From the chronology of events leading to the entry of the impugned interlocutory judgement, it is clear that it took the defendant/applicant at least almost one year and six months, from the date of service of the pleadings to file this application. The claim that the respondent came to learn of the suit when it was served with Judicial Review Application No. E001 of 2020 Republic v Mandera County Government & 2 Others seeking for an order of mandamus to compel them to satisfy the decree issued by this Honourable Court in the sum of Kes. 58,069,920. 30 cannot be true. It is My finding that the one year and six months’ delay in filing the present application is not only inordinate but has also not been explained by the defendant/applicant.

29. The above findings notwithstanding, this court is duty bound to exercise its discretion in such a manner that justifies the ends of justice. Despite finding that there was proper service, this court is obliged to look at the defence advanced and whether it raises any triable issues so as to grant the defendant/applicant a reprieve by granting it an opportunity to be heard more so considering the fact that the suit involves a claim for the sum of Kes. 58,069,920. 30 which in my view is a colossal amount.

30. Secondly, the draft defence has raised serious allegations touching on the validity of the contract leading to the supply of goods the subject of this suit. In doing so, the court is guided by the finding in the case of Rayat Trading Co. Limited v Bank of Baroda & Tetezi House Ltd [supra], 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.”

31. The existence of the debt herein has been challenged by the defendant/applicant while the plaintiff/respondent deposed that the defendant/applicant failed and/or refused to issue it with an LPO and further neglected to inspect and accept goods. That by doing so, the alleged contract between them was breached. It is my humble view therefore, that the said issues can only be adjudicated upon after hearing the suit.

32. I am further convinced that the defence raises triable issues that the court may need to interrogate after hearing the parties fully on the merits of their respective cases. Owing to the nature of the case, it is my conviction that the defendant /applicant be granted an opportunity to be heard and that the same be heard expeditiously so that justice can be seen to have been done.

33. Accordingly, the application is allowed as prayed on condition that the defendant/applicant within 30 days from the date of delivery of this ruling deposits Kes15,000,000 in an interest earning joint account held in the names of the parties’ advocates in default execution process to proceed. Further, the defendant/applicant shall pay throw away costs of Kes100,000. The draft defence herein shall be deemed as duly filed upon fulfilment of the set conditions. In making this conditional order, am guided by the holding in the case of National Transport Safety Authority vs Elisha Z. Ongoya and 2 others (2019) e KLR in which the court ordered the applicant National Transport safety a Authority to deposit full decretal amount as a condition to granting stay orders.

34. Similarly, in the case of Eusophia Nyaga Kanyifa & 2 others vs County Government of Mombasa & 4 others (2021) e KLR, the county government of Mombasa was ordered to deposit the full decretal sum as condition to granting stay. In balancing justice and considering that the plaintiff/respondent is equally entitled to enjoy the fruits of his judgment, the applicant though a government entity, is duty bound to demonstrate its seriousness in honouring the judgment just like any other ordinary litigant.

35. From the foregoing, the order that is commendable to me is that of setting aside the interlocutory orders issued on 10. 06. 2021 on the following conditions:i.That the interlocutory judgment entered herein be and is hereby set aside on condition that the defendant/applicant within 30 days of delivery of this ruling deposits Kshs.15,000,000 in an interest earning account jointly held by the parties’ advocates.ii.That the defendant applicant shall pay throw away costs of kes. 100,000 to the plaintiff within 30 days from the date of this ruling.iii.That costs of this application is awarded to the plaintiff. defendant/applicantiv.The applicant’s undated draft statement of defence filed on 21. 06. 2023 is hereby considered duly filed upon fulfilling the conditions set herein above.v.The matter be settled down for hearing on a priority basis.

DATED, SIGNED AND DELIVERED VIRTUALLY THIS 4TH DAY OF DECEMBER 2023. J.N. ONYIEGOJUDGE