[2021] KECPT 565 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.752 OF 2017

NAZIGI SACCO SOCIETY LIMITED ........CLAIMANT

VERSUS

RACHEL WAITHERA ............................ RESPONDENT

RULING

Vide the Application dated 27. 9.2020, the Judgment Debtor has moved this Tribunal seeking for the followings Orders:

1. That this Application be certified as urgent and services be dispensed with in the first instance;

2. That an interim Order be granted lifting the arrest warrant issued by the Honourable Tribunal and dated 28. 11. 2018 and release of the Respondent/Judgment Debtor from police custody pending the hearing and determination of the Application herein;

3. That this Honourable Tribunal be pleased to stay the execution/prosecution of the Decree and Order of the Tribunal arising from and/or consequential to the Claimant’s claim dated the 18. 11. 2017 pending the hearing and determination of the Application herein;

4. That this Honorable Tribunal be pleased and do hereby stay the execution and/or set aside the decree herein subject to any further orders of the Honourable Tribunal for the payment of the Judgment Debtor in installment and/or in such manner as may be agreed by the parties and/or may be determined by the Honourable Tribunal ;

5. That this Honourable be pleased to grant leave to the Respondent/judgment debtor to defend the claim herein;

6. That this Honourable Tribunal be pleased to grant any such orders as may deem fit in the circumstances to meet the ends of justice; and

7. That costs of the application be provided for.

The Application is supported by the grounds on its face and the following Affidavit.

a. Supporting Affidavit sworn by herself (Rachel Waithera Kimani) on 27. 9.2019; and

b. Further Affidavit sworn by the herself on 2. 10. 2020.

The Decree Holder has opposed the Application vide the following Affidavits:

a. Replying Affidavit sworn by Duncan Mwangi on 24. 10. 2019; and

b. Supplementary affidavit sworn by Peter Muturi Mwangi on 3. 3.2020.

Vide the directions given on 29. 7.2020, the Application was canvassed by way of written submissions. The Judgment Debtor filed her written submissions on 17. 11. 2020 while the Decree Holder did so on 17. 11. 2020.

Judgment Debtor’s Contention

The Judgment Debtor’s Application is premised on grounds that execution has commenced in the matter yet she was not served with the claim as well as summons to enter appearance. That she is a member of the Claimant with savings amounting to Kshs.650,000/= and two motor vehicle Registration No. KBE 273G and KBS 460Ejointly registered in their names.

That she had applied for a loan of Kshs.2,400,000/= with the Claimant whose repayment period was 36 months. That the effective and/or commencement period for repayment of the loan was January 2014. That the alleged default commenced in February 2019 and does not warrant the drastic action the Claimant has taken. That she has a good defence with high probability of success.

That she is willing to enter into an understanding with the Claimant as regards payment of the sums due.

That she propose, to be granted leave to commence and complete repayment of the sums owing by way of monthly installments of Kshs.40,000/= effective 1. 10. 2019.

That she is the only bread winner of her family.

Claimant’s Contention

The Decree Holder has opposed the Application on the following grounds:

That as regards service of summons to enter appearance and attendant pleadings, the Judgment Debtor was personally served with the same. Mr. Duncan Mwangi, the chairman of its credit committee deponed in the Replying Affidavit that he was personally present when the Judgment Debtor was served with the said summons.

That while it is true that the Judgment Debtor offered her deposits and the mentioned motor vehicle (KBE 237 G and KBS 460B) as security for repayment of the loan, she removed the said motor vehicle form the Decree Holders access thus making it impossible to recover the said loan.

That on account of the said default, her deposits were applied towards repayment of the loan leaving a balance of Kshs.1,829,113 as at 31. 8.2017.

That after subsequent repossession of the said motor vehicles and upon valuation, they returned the following results;

a. Motor vehicle KBE 237 G- ....... sale value – Kshs.600,000/=

Market value Kshs.700,000/=

b. Motor vehicle KBS 460 E - Market value Kshs.460,000/=

...sale value Kshs.400,000/=

That the said motor vehicles were eventually sold.

That even after the sale of the said motor vehicles, the Judgment debtor is still indebted to the Decree Holder.

That based on the foregoing, the Judgment Debtor does not have a Defence worthy of admitting to trial.

That the sums due and owing as at 29. 2.2020 was Kshs.1,045,170/=. That in addition the Claimant incurred the following additional expenses towards recovery of the loan:

a. Towing expenses Kshs.70,000/=

b. Investigations Kshs.110,580/=

c. Administrative expenses Kshs.78,695/=

Issues for determination

We have framed the following issues for determination

a. Whether the judgment Debtor has established a proper basis to warrant the setting out of the default judgment entered on 27. 6.2018;

b. If the answer in (a) above is in the negative, whether the judgment Debtor should be allowed to settle the balance of Decretal amount by way of installments and if so, at what rate?

c. Who should meet the costs of this 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.”

We consider the foregoing conditions thematically as follows:

Reason for failure to enter Appearance or file a Defence

The Judgment Debtor has advanced the argument that she did not enter Appearance or file a Defence because she was not served with summons to enter appearance. We have perused the Affidavit of service sworn by Benedict Musyoka Nthenge on 30. 5.2018. it is apparent that the Judgment Debtor was served with summons to enter Appearance and other court papers on 9. 5.2018 at Makadara police station. The Judgment Debtor was served in the presence of the Decree Holder’s Treasurer and Deponent of the Replying Affidavit sworn on 3. 3.2020 by Peter Mwangi.

We thus find that the Judgment Debtor has not given a plausible reason why she did not enter Appearance or file a Defence in good time.

Whether draft Defence raises triable issues

We have perused the annextures to the Supporting Affidavit sworn by the Claimant on 27. 9.2019. We cannot lay sight on a draft Defence. In the absence of the said Defence, we cannot ascertain whether or not the Judgment Debtor has a case worth trying. Needless to say that the Judgment Debtor has acknowledged existence of the debt and even goes ahead to make proposals on mode of repayment.

Repayment of Debt by way of installments

We have jurisdiction to make an order regarding settlement of a decree by way of installments by dint of Order 21 Rule 12 of the Civil Procedure Rules sub-Rule (2) provides thus:

“ After passing of any such decree, the court may, on the Application of the judgment debtor and with the consent of the Decree Holder or without the consent of the decree holder for sufficient cause shown, order that he payment of the amount decreed be postponed or be made by installments on such terms as to the payment of interest, the attachment of the property .....or otherwise as it thinks fit....”

Whether or not to allow a party to settle the decretal amount by way of installments is a matter of discretion. This was the holding of the court in the case of KTK Advocate –vs- Baringo County Government [2018]eKLR.

The question begs as to whether the judgment debtor has laid a proper basis to warrant us to exercise our discretion in her favour. I is her case that she is financially strapped and that she can only afford to make a monthly repayment of Kshs.40,000/=.

We note that the Judgment Debtor took the impugned loan on the security of her deposits and two of her motor vehicles KBE 273 G and KBS 460 E. The deposit and the motor vehicles have all been applied towards repayment of the loan. Out of this, the Decree Holder has substantially recovered the loan.

In lieu of this, we are constrained to exercise our discretion towards allowing the judgment debtor to settle the balance of the decretal amount by way of monthly installment.

Conclusion

The upshot of the foregoing is that we determine the judgment debtors dated 29. 9.2019 as follows:

a. The Judgment Debtor is hereby allowed to settle the balance of the decretal amount by way of monthly installments of Kshs.40,000/= effective 1. 10. 2019;

b. That if the Judgment Debtor does not settle any installments becoming due and owing at every given time, then a warrant of arrest shall issue automatically without further reference to the Tribunal; and

c. The Judgment Debtor to meet the costs of the Application.

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

Mr. Ongicho for Respondent

Hon. B. Kimemia Chairperson Signed 4. 3.2021