[2022] KEHC 2965 (KLR)

Ndungu v Real People Kenya Limited & another (Civil Appeal E023 of 2021) [2022] KEHC 2965 (KLR) (9 June 2022) (Judgment)

Neutral citation: [2022] KEHC 2965 (KLR)

Republic of Kenya

In the High Court at Nakuru

Civil Appeal E023 of 2021

HK Chemitei, J

June 9, 2022

Between

Nicholas Kariuki Ndungu

Appellant

and

Real People Kenya Limited

1st Respondent

Philip M. Kamunya t/a Crater View Auctioneers limited

2nd Respondent

(Being an appeal from the ruling of Hon. B Moraro (PM) in Nakuru CMCC No. 1142 of 2018 dated 15th July 2020)

Judgment

1. This appeal arises from the ruling delivered by the learned trial magistrate in Nakuru CMCC No. 1142 of 2018. The genesis of the dispute between the parties herein is that the 1st respondent offered the appellant a loan facility of Kshs. 1,500,000 /= which he was to repay within 18 months and the plaintiff therefore charged his motor vehicle registration number KBX 511Y HINO lorry with the 1st respondent as security.

2. The appellant felt into arrears and in attempt to recover the loan the 1st respondent proclaimed the said lorry and eventually sold the same through m/s Cleverline auctioneers after issuing the relevant notices. The appellant however disputed the said notices and thus he contended that no demand notice or proclamation was ever served on him in respect of attachment of the said motor vehicle. That despite the appellant issuing notice to the 1st respondent to release the subject motor vehicle, it refused and or failed to release it and sold it by public auction and as a result the appellant filed the lower court suit. The said suit sought the orders that;a)A declaration that the sale of motor vehicle registration number KBX 511Y HINO truck lorry by 2nd defendant at the instructions of the 1st defendant was unlawful.b)An order of restoration of the subject motor vehicle to the plaintiff.c)Cost of the suit.d)An order of compensation for loss of earning at Kshs. 12 000. 00/ = per day from the date of attachment of the subject motor vehicle to the date of restoration of the same to the plaintiff and for damages suffered by the plaintiff for loss of building sand that was offloaded from the subject motor vehicle at Kshs. 30,000/=.e)Any other or better relief which this honourable court may deem fit to grant.

3. The respondents entered appearance by filing an amended defence and counter-claim dated 31st December 2018. The 1st respondent further on 6th May 2019 filed a request for judgment against the appellant for failure to file a defence to counter-claim within the prescribed period despite being served.

4. The appellant being dissatisfied filed an application dated 19th August 2019 seeking that the said interlocutory judgment on the counter-claim be set aside and he be granted leave to defend the counter- claim among other orders. However, the said application was dismissed vide the ruling date 15th July 2020.

5. In the said ruling which is the subject of this appeal, the trial magistrate found that the amended plaint was filed by previous advocates on 23rd November 2019 and amended defence /counterclaim filed on 9th January 2019. That the said advocates filed and served their Notice to cease acting on 23rd January 2019 and that the same must have been within the knowledge of the plaintiff/applicant. The magistrate therefore held that he was not convinced that the applicant was kept in the dark.

6. He went on to find that the delay was inordinate as it was filed three months after the appointment. In addition to this, the trial court found that the appellant had not been condemned unheard and that the appellant had admitted to having defaulted in making his monthly instalments despite being issued with two notices. The trial magistrate stated that the appellant had made an offer which he failed to honour and as a result the subject motor vehicle was proclaimed, attached, advertised and sold via public auction. That the appellant only moved to court after the said sell took place. He went ahead to dismiss the appellant’s application with costs as the same lacked merit.

7. Aggrieved by that ruling, the appellant filed this appeal vide memorandum of appeal dated 14th September, 2020, setting out the following grounds of appeal:a)That the learned Principal Magistrate erred in law and facts in dismissing the appellant’s application dated 19” August, 2019. b)That the learned Principal Magistrate erred in law and facts in holding that the appellant was accorded an opportunity to be heard yet his application to file a defence to counterclaim was dismissed.c)That the learned Principal Magistrate erred in law and facts in holding that the appellant motor vehicle was sold lawfully in a public auction yet the required procedure was not followed.d)That the learned Principal Magistrate erred in law and facts in holding that the amendment to the plaint would not add any value to the appellant’s case.e)That the learned Principal Magistrate erred in law and facts in holding that the appellant’s application dated 19th August, 2019 was filed after an inordinate delay.f)That the learned Principal Magistrate erred in law and facts in holding that the 1st respondent would be highly prejudiced if the interlocutory judgement is not set aside.g)That the learned Principal Magistrate erred in law and facts in holding that the intended third party would be highly prejudiced if the appellant’s application is allowed by being denied right to enjoy property bought in public auction.h)That the learned Principal Magistrate erred in law and facts in holding that the appellant’s former counsel was not at fault yet he failed to keep the appellant update on the progress in the matter.i)That the learned Principal Magistrate erred in law and facts in holding that the appellant’s former counsel had no instructions to respond to the defence and counterclaim.j)That the learned Principal Magistrate erred in law and facts in holding that the appellant's application dated 19th August, 2019 was filed after an inordinate delay.k)That the learned Principal Magistrate erred in law and facts in giving undue regard to procedural technicalities and/or mistake by advocate at the expense of substantive justice to litigants.l)That the Learned Trial Magistrate misdirected himself in failing to make a finding in favour of the appellants.

8. The appellant prayed that the decisions made on 15th July, 2020 be set aside and costs of this appeal be awarded in his favour.

9. Parties were directed to canvass the appeal by way of written submissions.

Appellant’s Written Submissions 10. The appellant submitted that on 23rd November 2018 his advocate filed the amended plaint and thereafter the respondent filed an amended defence and counterclaim on 9th January 2019 and served his advocates via registered post. That he appointed the current advocates on 19th June, 2019 and it was the said advocates who discovered that an interlocutory judgement on the counterclaim had been entered against him. That further, the discovery took time as his current advocate had to study the documents availed and also peruse the court file.

11. He submitted further that it was an error for the honourable magistrate to fault his current advocate for taking about 3 months to study the file, make discovery about an interlocutory judgement, then filing an application to set aside and amend in about 3 months. That he was ready and willing to defend the counterclaim to its logical conclusion and he filed a meritorious defence to the counterclaim.

12. He went on to submit that the mistake of his previous advocates should not be visited upon the innocent litigant by denying him a chance to be heard and that it was in the interests of justice to allow the prayer to set aside the interlocutory judgement on counterclaim. He urged the court that he be granted leave to file a defence to counterclaim and to further amend the plaint considering that the subject motor vehicle had been extremely undervalued and sold to a third party.

13. He concluded by submitting that it would only be fair if the determination is overturned and parties be given an opportunity to ventilate their issues in a hearing. He urged the court that his appeal and the application dated 19th August 2019 be allowed together with costs and interest of the appeal.

Respondent’s Submissions 14. The respondents in their submissions identified the following issues for determination namely; whether interlocutory judgment entered against the appellant and in favour of the 1st respondent ought to be set aside and the plaintiff be granted leave to defend the counter- claim. They submitted that the same ought not be set aside as the said judgment was regularly entered, the appellant’s application made in bad faith and that further his draft for the further amended plaint and defence to counterclaim does not raise triable issues. He draws the court attention to the case of K-Rep Bank Ltd v Segment Distributors Ltd [2017] eKLR where the court held that where summons and plaint were duly served and it followed that default judgment was regularly entered the court should be slow in setting the same aside.

15. On the second issue whether the appellant ought to be granted leave to amend his plaint in terms of the draft further amended plaint they submitted that the same had been brought in bad faith and the same was a devious tactic crafted with the aim of repossessing the suit motor vehicle. That the appellant was merely reacting to circumstances that had already occurred to try and retrieve its case which was something he had done twice vide applications which he withdrew when he realized that the orders sought therein were untenable.

16. On the third issue, whether the appellant ought to be granted leave to enjoin the 3rd defendant, the respondents submitted that it was of no use to include the said Peter Ngethe Kamau as a 3rd defendant in the instant matter as due process of the law had been followed and he had emerged as the highest bidder in the public auction hence he had purchased the subject motor vehicle at the prevailing market price as at 13th August 2018. They placed reliance in the case of Kamulu Academy Limited & Another v British American Insurance (K) Limited & 2 others [2018] eKLR, where the court held that the equity of redemption is extinguished at the fall of the hammer.

17. On the last issue, whether the appellant ought to be granted leave to file a second further list of documents further lists of witnesses and a supplementary statement the respondents urged the court to disregard the said prayer by the appellant as the same was an afterthought argument tactfully brought with the aim of misleading this court that there are triable issues that need its attention.

18. They concluded that due process of the law had been adhered to prior to the sale of the suit motor vehicle to one Peter Ngethe Kamau. That the appellant’s application dated 19th August 2019 was merely an afterthought brought with the aim of defeating the ends of justice and was meant to prevent the 1st respondent from enjoying the fruits of a regularly obtained judgment. They urged the court to dismiss the instant appeal with costs in their favour.

Analysis and Determination 19. Having considered the trial court record, the grounds of appeal and submissions for and against this appeal and cited cases, the main issue for determination is Whether the trial court was right in dismissing the appellant’s application dated 19th August 2019 after entry of Interlocutory Judgment.

20. In evaluating and assessing the evidence before the trial Court, this Court is enjoined to apply the principles laid down in Shah v Mbogo & Another [1968] EA 93 on circumstances under which an appellate Court may interfere with a decision of the trial Court as was held that:“I think it is well settled that this Court will not interfere with the exercise of discretion by the inferior Court unless it is satisfied that the decision is clearly wrong because it has misdirected itself or because it has acted on matters on which it should not have acted or because it has failed to take into consideration matters which it should have taken into account and consideration and in doing so, arrived at a wrong conclusion.”

21. The principles applicable in application for setting aside of exparte Judgment are now well settled as shown in the case of Kimani Kigano & Co. Advocates Vs Jimba Credit Corporation Limited [1991] KLR 503 where the court as follows;“The power to set aside exparte judgment in default is discretionary. The discretion is unfettered provided it is properly exercised. That discretion is a judicial one and therefore it must be exercised on the basis of evidence and sound legal principles.The Court has power under the provisions of Order 1XA Rule 10 of the (old) Civil Procedure Rules on terms as are just. The Court is obliged to look at the defence that the applicant defendant may have to the claim; and if a party establishes that he has a reasonable defence and which appears on the face of the pleadings to contain considerable merit, the Court ought to be inclined toward setting aside.”

22. In Richard Ncharpi Leiyagu v Independent Electoral Boundaries Commission & 2 others[2013] eKLR the Court of Appeal expressed itself thus; -“We agree with the noble principles which go further to establish that the Court’s discretion to set aside an exparte Judgment or order for that matter, is intended to avoid injustice or hardship resulting from an accident, inadvertence, or excusable mistake or error but not to assist a person who deliberately seeks to obstruct the course of justice.”

23. In the instant case, this court is faced with the question of whether the failure by the appellant to file defence to the counter-claim within the stipulated statutory period which resulted in exparte Interlocutory Judgment being entered on 9th May 2019 constituted an excusable mistake or was it meant to deliberately delay the course of justice.

24. The appellant argued that he appointed the current advocates on 19th June, 2019 and it was the said advocates who discovered that an interlocutory judgement on the counterclaim had been entered against him. That further, the discovery took time as his current advocate had to study the documents availed and also peruse the court file.

25. The respondents argued that there was inordinate delay in bringing the application for amendment considering the fact that the appellant’s current advocates came on record in June, 2019 only to file the application seeking leave to amend the pleadings in September, 2019 which amounted to 3 months down the line. That the same was an afterthought and brought with the aim of unnecessarily prolonging this matter in court. The respondents argued further that the appellant was merely reacting to circumstances that had already occurred to try and retrieve its case which was something he had already done not one but twice vide application which he withdrew when he realized that the orders sought therein were untenable.

26. Having examined the Lower Court record, the submissions by parties in the Lower Court and before this Court, I agree with the learned trial magistrate that the delay was inordinate considering that the interlocutory Judgment was entered on 9th May 2019 and the application in question was file on 11th September 2019 which is approximately 4 months later. In my view, the reasons given by the appellant for the said delay are neither here nor there and the same is therefore inexcusable. Further, the appellant may well be properly termed as a person who is deliberately seeking either by evasion or otherwise to obstruct or delay the cause of justice.

27. The said counsel on record did not demonstrate his inability to seek to peruse the court records within a reasonable time. As a matter of fact, by the time he took instructions he must have been well seized of the matter. At any rate he has not sworn any affidavit or produce any evidence demonstrating his difficulty in accessing the file or any other plausible reason for the delay.

28. In addition, the trial magistrate in his ruling dismissing the application for setting aside the interlocutory judgment, correctly exercised his discretion by properly applying his mind to the settled principles for setting aside of exparte judgment as laid down in the case of Shah v Mbogo (supra).

29. The issue of undervaluing security can be argued elsewhere and not necessarily within the matter. All in all, the delay in filing the defence was inordinate and inexcusable.

30. The appeal is otherwise dismissed with costs to the respondents.

DATED SIGNED AND DELIVERED VIA VIDEO LINK AT NAKURU THIS 9TH DAY OF JUNE 2022. H K CHEMITEIJUDGE.