[2020] KECPT 7 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.29 OF 2020

MATU WAHOME...................................................1ST CLAIMANT

RAPHAEL MACHARIA IRUNGU......................2ND CLAIMANT

CHRISTOPHER ISAAC NDERITU....................3RD CLAIMANT

VERSUS

FEP SAVING & CREDIT

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

RULING

What is before us for consideration and determination is the Respondent’s Application dated 19. 6.2020 It seeks, for the following Orders:

1. Spent;

2. That pending hearing and determination of this Application interparties and pending the hearing of this suit, there be a temporary stay of the judgment and decree issued on 16th June, 2020 and all Consequential Orders thereof;

3. That this Honourable Court be pleased to set aside the judgment and decree issued on 16th June, 2020 against the Respondent/Applicant and the Respondent be allowed to defend this suit;

4. That the statement of Defence and Counter-Claim dated the 18th day of February, 2020 and filed on the 19th day of June, 2020 be deemed as filed and the Claimant be granted leave to respond to the same; and

5. That costs be provided for.

The Application is supported by the grounds on its face and the following Affidavits:

a. Supporting Affidavit sworn by Haggai Chimei on even date (19. 6.2020); and

b.Supplementary Affidavit sworn by the said Haggai Chimei on 8. 7.2020.

The Claimant has opposed the Application vide the Replying Affidavit sworn by the 1st Claimant on 30. 6.2020. Vide the directions issued on 24. 8.2020, the Application was canvassed by way of written submissions on 17. 7.20202 while the Respondent did so on 17. 9.2020.

Respondent’s Contention

Vide the instant Application, the Respondent seeks to set aside the default judgment made on 4. 3.2020 on grounds that it did not file a Defence within the time limited by law as its Chief Executive Officer was taken ill hence delaying execution of the pleadings. That by the time the Chief Executive Officer recovered and signed documents, the Tribunal was closed and that no filing of documents was allowed except for matters filed under certificate of Urgency. That on 18. 6.2020, it was served with a Notice of entry of judgment. That it was upon receipt of the said Notice that it filed the instant Application. That it was a good Defence with triable issues. That it also has a Counter-Claim against the Claimant. That it is on that basis that it seeks for judgment to be set aside.

Claimant’s Contention

The Claimant has opposed the instant Application on grounds that the issue of illness of the Respondent’s Chief Executive Officer is not reasonable enough for the Respondent not to fail to file a Defence. That there are other officials who would take up the matter on his behalf. That further, no medical records were produced to proof illness. That at no point in time did the Tribunal halt its operations. That at any given time, there was an officer of court attending to litigants and that there was a Notice directing parties on the mode of filing documents. That the instant Application has not been originated in good faith and is only intended at defeating the claim.

Issues for determination

We have framed the following issues for determination:

a. Whether the Respondent has laid a proper basis to warrant the setting aside of the default judgment entered on 4. 3.2020;

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 exdebito 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:

“Adistinction 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.”

From the foregoing, it is apparent that before we exercise jurisdiction to set aside a default judgment, the following conditions must obtain:

a. Reason for failure to file a memorandum of Appearance or Defence;

b. The length of time that has elapsed since default judgment was entered;

c. Whether the intended Defence raises triable issues;

d. Prejudice likely to be suffered by each of the parties; and

e. Whether on the whole, it is in the interests of justice to set aside the default judgment.

A question arise as to whether this instant Application has satisfied these principles. In response therefore we will consider the Principles thematically as follows:

Reasons for failure to file a Defence

The Respondent contend that it did not file a Defence in good time as its Chief Executive Officer was taken ill. As such, he was not available to approve pleadings. In a rejoinder, the Claimant contends that apart from alleging so the Respondent did not provide medical records to prove illness. Secondly, that the Chief Executive Officer is not the only official of the Respondent. That there are other officials who would approve pleadings.

We have considered the reasons advanced by the Respondent and the opposition of the Claimant. We are of the view that the reasons advance by the Respondent for not filing a Defence in good time are justifiable. Whilst the Respondent did not provide medical records to prove illness of its Chief Executive Officer, we give him the benefit of doubt and take the view that he was indeed ill.

As regards the issue of the other officials approving documents, we agree with the Respondent that the Chief Executive Officer is the person best placed to make responses on behalf of the Sacco.

Length of time taken to originate the Application

The default judgment was entered on 4. 3.2020 whilst the instant Application was filed on 19. 6.2020. We find that this Application has been filed timeously considering the circumstances surrounding the period within which it was filed.

Whether Draft Defence raises triable issue

We have perused the statement of Response and Counter- Claim dated 18. 2.2020. We note that the Respondent has averred that the Claimant still owes the Respondent loan amounting to Kshs.158, 600. That several demands have been made but its Claimant has not been responsive. What is discessible from this argument therefore is that the Tribunal is called upon to determine (at trials) whether the Claimant is still indebted to the Respondent. This is a triable issue. With this alone, we find that the Draft Statement of Defence raises triable issues worth of determining after hearing of the main claim on merits.

Conclusion

The upshot of the foregoing is that we find merit in the Respondent’s Application dated 19. 6.2020 and hereby allow it based on the following terms:

a. That the Statement of Defence and Counter- Claim filed on 23. 2.2020 is hereby deemed as duly filed and served;

b. The Claimant is granted leave for 14 days to file and serve a Reply to Defence and Defence to Counter- Claim;

c. Parties to comply with Order II within 30 days herein;

d. Mention for Pre-trials on 7. 1.2021; and

e. Costs in the cause.

Ruling signed, dated and delivered virtually this 3rdday of December, 2020.

Hon. B. Kimemia Chairperson ...........................

Hon. F. Terer Deputy Chairman ............................

Mr. P. Gichuki Member ..............................