[2024] KECPT 983 (KLR)

MNK Savings & Credit Society Limited v Kariuki (Tribunal Case E863 (822) of 2022) [2024] KECPT 983 (KLR) (30 May 2024) (Ruling)

Neutral citation: [2024] KECPT 983 (KLR)

Republic of Kenya

In the Cooperative Tribunal

Tribunal Case E863 (822) of 2022

J. Mwatsama, Vice Chair, B Sawe, F Lotuiya, P. Gichuki, M Chesikaw & PO Aol, Members

May 30, 2024

Between

MNK Savings & Credit Society Limited

Claimant

and

Joseph Mugwe Kariuki

Respondent

Ruling

1. This Ruling dispenses two Applications.

2. The first Application is the Notice of Preliminary Objection dated 27th March 2023, filed by the Respondent. According to the Respondents, there was a pending appeal on surcharge before this Honourable Tribunal under file No CTA E011 of 2022 Alphonzo Waweru & 26 others v Commissioner For Cooperatives and MNK Sacco Society Limited.

3. The second Application is the Respondent’s Notice of Motion Application dated 24th March 2023 supported by an Affidavit sworn by the Respondent, Joseph Mugwe Kariuki, and brought under Section 79(4) of the Co-operative Societies Act, Rule 11 and 17 of the Cooperative Tribunal (Practice and procedure) Rules, 2009 and all other enabling provisions of the Law. The Application seeks the following orders:1. That due to the urgency of this motion, the same be certified urgent, service of the same be dispensed with and the motion be heard ex-parte in the first instance.2. That the firm of Ndichu Kihanya Associates & Company Advocates be and is hereby granted leave to come on record for the Respondent.3. That this Honourable Tribunal be pleased to stay the execution of the interlocutory judgment and all Consequential Orders and Decrees issued by Hon. Janet Mwatsama, the Deputy Chairperson on 3rd February 2023 pending the hearing and determination of this Application.4. That this Honourable Tribunal be pleased to stay the execution of the interlocutory judgment and all consequential orders and decrees issued by Hon. Janet Mwatsama, the Deputy Chairperson on 3rd February 2023 pending the hearing and determination of this suit.5. That this Honourable Tribunal be pleased to review, quash, vary and set aside the ex-parte interlocutory judgment issued by Hon. Janet Mwatsama the Deputy chairperson on 3rd February, 2023 and all Consequential Orders therefrom pending hearing and determination of this Application.6. That this Honourable Tribunal be pleased to review, quash, vary and set aside the ex-parte interlocutory judgment issued by Hon. Janet Mwatsama the Deputy chairperson on 3rd February, 2023 and all consequential orders therefrom pending hearing and determination of this suit.7. That this Honourable Tribunal be pleased to grant leave for the Respondent to file his notice of change of advocates and statement of Defence.8. That the Claimant’s suit do proceed to hearing interparties.9. That costs of this Application be provided for.

4. We shall deal with the Notice of Motion Application first.

Notice of Motion Application Dated 24Th March 2023. 5. The Application is premised on the grounds on its face which are inter alia that: An interlocutory judgment was entered in favour of the Claimant against the Respondent on 3rd February 2023 for loan arrears of Kshs 152,670. 75/= and a surcharge of Kshs 303,750/-. The Applicants contend that the interlocutory judgment was issued sub-judice on account of a pending case CTA E011 of 2022. In his Supporting Affidavit, the Respondent avers that he had been duly served with notice to enter an appearance and that he instructed the firm of M.s Namada & Company Advocates to represent him in the suit. However, his advocate on record failed to enter an appearance and file a Statement of Defence, hence the interlocutory judgment. He avers that he has a meritorious Defence that raises triable issues and that he stands to suffer loss and damage if the Application is not heard and orders sought granted.

6. The Claimant/Respondent filed a response to the Application. In their response, dated 2nd June 2023, the Claimant deponed that since the Respondent was duly served, but his advocate failed to enter appearance, the solution is not to set aside the judgment but to sue the advocate for professional negligence. If this Tribunal were to set aside the matter, the Claimants pray for thrown away costs of Kshs 50,000/-

7. The Respondents/Applicants filed their submissions.

Issues For Determination 8. The Application has presented the following issues for determination;i.Whether the Applicant has satisfied the court to set aside the interlocutory judgment in default of appearance delivered on 3rd February 2023.

Analysis 9. It is not in dispute that the Respondent was duly served with the summons to enter appearance. However, his advocate only entered appearance but failed to file a Statement of Defence. Order 7 rule 1 of the Civil Procedure Rules provides that a Defendant shall file his Defence to a suit within fourteen days from the date of filing a Notice of Appearance. In the premises, the entry of the judgment in default by this Tribunal was regular, lawful and procedural. The question that follows, therefore, is whether failing to file the Defence was excusable. The Respondent/Applicant states that his advocate on record failed to file a Statement of Defence. No reason for such failure is given, and the Advocate who failed to file a defense for his client is no longer on record.

10. In Shah v Mbogo & another [1967]6. A U7, the Court of Appeal for Eastern Africa held that:-“Applying the principle that the court’s discretion to set aside an ex-parte judgment is intended to be exercised to avoid injustice or hardship resulting from accident, inadvertence, or excusable mistake or error, but not to assist a person who has deliberately sought whether by evasion or otherwise to obstruct or delay the cause of justice, the motion should be refused”

11. Further, in the case of Martha Wangari Karua v IEBC Nyeri Civil Appeal No 1 of 2017 the Court of Appeal held as follows:-“The Rules of Natural Justice require that the court must not necessarily drive any litigant from the seat of justice without a hearing, however weak his or her case may be….”

12. Therefore, the question that we ask ourselves, is whether to exercise our discretion and allow for the Application. The Claimant’s /Respondents has not indicated that it will suffer any irreparable loses if this Application is allowed, save for praying for thrown-away costs should we allow the Application. This court is inclined to give the Respondent the benefit of doubt that he believed that his advocate filed his Defence.

13. In the case of Kimani v MC Conmell (1966) EA 545 it was observed that where a regular judgment had been entered the court would not usually set aside the judgment unless it was satisfied that there was a triable issue. We have perused the Draft Statement of Defence filed together with the Application, and we find that it raises issues that require further interrogation through the evidence. The Respondent states that their savings were balanced with their outstanding loans. To figure this out, an interrogation of the Respondent’s loan statements will be required. We find this a triable issue.

Notice Of Preliminary Objection Dated 20Th March 2023 14. The Respondent brought a preliminary objection under Section 6 of the Civil Procedure Act on the basis that there is a pending appeal on the same matter, CTA E011 of 2022 in this Tribunal.

15. Section 6 of Civil Procedure Act defines sub-judice as follows;‘‘…….. No court shall proceed with the trial of any suit or proceedings in which the matter in issue is also directly and substantially in issue in a previously instituted suit or proceeding between the same parties or between parties under whom they or any of them claim litigating under the same title, where such suit or proceeding is pending in the same court or any other court having jurisdiction in Kenya to grant the relief claimed.’’

16. The rationale behind sub-judice rule is to prevent a situation of having conflicting orders emanating from two or more different courts over the same subject matter.

17. This court can confirm that CTA E011 of 2022 Alphonzo Waweru & 26 others v Commissioner for Cooperatives and MNK Sacco Society Limited is pending before it. The Appellants, who are the Respondents in this case are appealing the surcharge orders of the commissioner, which if allowed, will drastically affect the position of this matter. This is because part of the amount claimed in this matter resulted from the surcharge order being appealed against.The upshot of the foregoing is that;

18. We allow the Notice of Motion Application dated 24th March 2023, and make the following ordersa.The inter-locutory judgment entered on 3rd February 2023 is hereby set aside.b.The Applicant/Respondent to pay thrown-away costs of Kshs 20,000/- to the Claimants within 30 days of this ruling.c.The Applicant/Respondent to bear the costs of this Application.d.Orders to apply to E861/2022, E857/2022, and E855/2022.

19. We find the Respondent’s Notice of Preliminary Objection dated 27th March 2023 merited and make the following orders;a.This matter is hereby stayed under Section 6 of Civil Procedure Act, pending the determination of CTA E011 of 2022 Alphonzo Waweru & 26 others v Commissioner for Cooperatives and MNK Sacco Society Limited.b.Each party to bear their own costs for this applicationc.Orders to apply to E861/2022, E857/2022, and E855/2022.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY AT NAIROBI THIS 30TH DAY OF MAY, 2024. HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 5.2024HON. BEATRICE SAWE MEMBER SIGNED 30. 5.2024HON. FRIDAH LOTUIYA MEMBER SIGNED 30. 5.2024HON. PHILIP GICHUKI MEMBER SIGNED 30. 5.2024HON. MICHAEL CHESIKAW MEMBER SIGNED 30. 5.2024HON. PAUL AOL MEMBER SIGNED 30. 5.2024Tribunal Clerk JonahNo appearance by parties.Ruling delivered in absence of parties.HON. J. MWATSAMA DEPUTY CHAIRPERSON SIGNED 30. 5.2024