[2021] KECPT 567 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.742 OF 2016

MURATA SACCO LIMITED .......................CLAIMANT

VERSUS

ERNEST MAINA NYINGI .......................RESPONDENT

RULING

Vide the undated Application filed on 1. 10. 2019, the Respondent has moved this Tribunal seeking for Orders inter alia:

1. Spent

2. That there be a temporary stay of execution of the ex-parte judgment and the consequential Decree pending the hearing and determination of the application and the suit;

3. That the ex-parte Judgment and the consequential decree be set aside.

4. That the Applicant be ordered to give a proper account of the loan and furnish the Respondent with a full statement of his account.

The Application is supported by the grounds on its face and the affidavit sworn by Respondent Ernest Maina Nyingi on 1. 10. 2019. The Claimant has opposed the Application vide the Replying Affidavit sworn by its Credit Manager Pius Mr. Hiira on 17. 10. 2019.

Vide the directions given on 22. 7.2020,the Application was canvassed by way of written submissions. The Respondent filed his on 5. 6.2020 while the Claimant did so on 28. 10. 2020.

Respondent’s case

It is the Respondent’s case that prior to the entry of the default judgment on 10. 4.2019, he was not served with summons to enter appearance. That he only came to learn about the existence of the claim when he was served with the Notice to Show Cause dated 30. 8.2019.

That in July, 2007, he applied and was granted a loan of Kshs.205, 000/= . That the same was repayable for 48 months. That the Claimant recovered the said loan by way of monthly deduction of Kshs.4,502/=. That this happened until he was dismissed from work on 5. 9.2009. That the total amount deducted from his salary was Kshs.108,048/=. That on 14. 1.2011 he paid Kshs.76,723. 00 vide a standing order.

That later, the Claimant recovered Kshs.39,999. 23 from his guarantors.

Claimant’s case

The Claimant has opposed the Application on the following grounds. That summons to enter appearance was duly served upon the Respondent. That the Respondent did not repay the loan on terms agreed thus occasioning accumulation of interest. They apart from stating that he repaid the loan, the Respondent has not led evidence to demonstrate how he repaid the same.

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 10. 4.19.

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 ex debito 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:

“ A distinction 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.”

Reasons for failure to file memorandum of Appearance or Defence

The Respondent has attributed failure to enter Appearance to her fact that he was not served with summons to enter Appearance. We have however, perused the Affidavit of service sworn by Jonathan Ngumo Mbogo on 4. 4.2019. We note that the Respondent was personally served with summons to enter Appearance at his home on 9. 7.2017. We are therefore satisfied that he was duly served with the said summons.

Intended Defence

We have perused the draft defence annexed to the Application. The Respondent contend that he had repaid the entire loan through loan recovery, Standing Order and deduction from his guarantors. The Respondent has broken down the said repayment vide his supporting Affidavit as follows:

a. Loan recovered through monthly deductions from his salary Kshs.108,048/=.

b. Standing Order – Kshs.76,723. 05/=; and

c. Guarantors Kshs.39,991. 23.

Total Kshs. 224, 762/=

We have perused the loan statements annexed to the Replying Affidavit of Pius M. Hiira. It shows that the outstanding loan balance as at 31. 3.2018 was Kshs.173,683. 31/=. Upon close scrutiny, we cannot properly and/or accurately ascertain the exact amounts due and owing as at the time the claim was instituted. We note that the amount borrowed is Kshs.205,000/-. From the statement, it appears there was a lump sum deposit of Kshs.178,346. 00/= on 12. 9.2017. The principal amount in the decree dated 17. 6. 2019 is Kshs. 220, 692. 77/=. It is not clear if the claimant gave credit to any payments made by the Claimant. Whilst the Claimant has dismissed the Respondent’s assertions or repayment, we note that if it is true that he has repaid the sums he claims he has then he will be seriously prejudiced if he is not granted an opportunity to do so. In simple terms, we are saying that the draft Defence raises triable issues worthy of determination after hearing of the claim on merits.

Conclusion

The upshot of the foregoing is that we find merit in the Respondent’s Application filed on 1. 10. 2019 and allow it as follows:

a. That the default judgment entered on 10. 4.2019 is hereby set aside;

b. The Respondent is granted leave of 21 days to file and serve a Defence/Response to the claim as well as witness statements and list and bundle of documents;

c. The Claimant is granted corresponding leave of 14 days to file and serve a Reply to the Response as well as supplementary witness statements and list and bundle of documents.

d. Mention to confirm compliance and fixing a hearing date on 26. 5.2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 4TH DAY OF MARCH, 2021.

Hon. B. Kimemia Chairperson Signed 4. 3.2021

Mr. P. Gichuki Member Signed 4. 3.2021

Mr. B. Akusala Member Signed 4. 3.2021

Getange advocate for Respondent present

Notice to issue.

Hon. B. Kimemia Chairperson Signed 4. 3.2021