[2022] KEHC 13532 (KLR)

Pasaiba Tourmaline Limited v Momanyi & another (Civil Appeal E078 of 2022) [2022] KEHC 13532 (KLR) (Commercial and Tax) (7 October 2022) (Judgment)

Neutral citation: [2022] KEHC 13532 (KLR)

Republic of Kenya

In the High Court at Nairobi (Milimani Commercial Courts Commercial and Tax Division)

Commercial and Tax

Civil Appeal E078 of 2022

DAS Majanja, J

October 7, 2022

Between

Pasaiba Tourmaline Limited

Appellant

and

Bernard Momanyi

1st Respondent

Energy Hub Corporation Limited

2nd Respondent

(Being an appeal from the Ruling and Order of Hon. L. B. Koech, PM dated 23rd May 2022 at the Magistrates Court at Nairobi, Milimani in Civil Case No. E1244 of 2021)

Judgment

1. This is an appeal against the subordinate court dismissing the appellant’s application dated November 30, 2021 seeking to set aside default judgment entered against it on November 16, 2021.

2. The basic facts of the suit are not in dispute. The suit was commenced by the plaint dated September 10, 2021. The respondents claimed against the appellant Kshs 2,150,000. 00 for the 1st respondent and Kshs 1,225,000. 00 for the 2nd respondent on account of a loan advanced to the appellant and agreed in a deed of settlement dated July 23, 2021 andKshs 250,000. 00 as legal fees agreed thereunder. The respondents served the summons to enter appearance with the plaint on the appellant on September 27, 2021. On October 13, 2021, the appellant’s advocates on record filed and served a notice of appointment on the respondents’ advocates. Before the appellant could file its statement of defence, the court entered default judgment on November 16, 2021.

3. In its application to set aside judgment and the supporting deposition, the appellant stated that when its advocate filed the notice of appointment on October 13, 2013, he informed the respondents’ advocate by email that he would serve the defence as soon as possible. However, he could not do so because the appellant’s director was bereaved hence he could not verify the facts and sign the witness statement. In the meantime, the advocate’s partner’s father died so he had to attend the funeral in Nyamira. When the advocate was able to file the defence, he discovered that default judgment had been entered despite the fact the notice of appointment had been filed. The appellant argued that it had a good defence and that judgment should be set aside as the respondents’ would not be prejudiced.

4. The respondent opposed the application on the ground that the appellant was duly served with the summons to enter appearance and that it had failed to enter appearance and file its defence within the time stipulated hence the judgment was regular. It contended that the appellant did not provide sufficient cause for setting aside the judgment. It added that the appellant’s defence contained mere denials and did not raise any triable issued.

5. After considering the application, depositions and submissions, the trial magistrate dismissed the application on the ground that while the judgment was regular, the reasons advanced for failing to file the defence on time were not supported by any evidence. She stated that there was no reason that the defence could not be filed on time as the other documents including witness statement which required the witness’ signatures could be filed later. The court also held that the statement of defence did not raise any triable issues.

6. It is the ruling that has precipitated this appeal whose grounds are set out in the memorandum of appeal dated June 17, 2021. The thrust of the appeal urged in the written submissions filed by both parties is whether the learned trial magistrate erred in the exercise of her discretion in refusing to set aside the default judgment.

7. In an appeal against the exercise of discretion by the trial court, the appellate court will not interfere with the decision of the trial court unless it is satisfied that the judge in exercising his discretion has misdirected himself in some matter and as a result has arrived at a wrong decision, or unless it is manifest from the case as a whole that the judge has been clearly wrong in the exercise of his discretion and that as a result there has been an injustice (see Mbogo v Shah [1968] EA 93 andUnited India InsuranceCoLtdand others v East African Underwriters (Kenya)Ltd NRB CA civil appeal No36 of 1983 [1985] eKLR).

8. The court has unfettered discretion under order 10 rule 11 of the Civil Procedure Rules to set aside default judgment. This discretion is intended to be exercised to do justice and to avoid injustice or hardship but not to assist a person guilty of deliberate conduct intended to obstruct or delay the course of justice (see Patel v E A Cargo Handling Services [1974] EA 75, Shah v Mbogo [1967] EA 116 andCMC HoldingsLtdv Nzioki [2004] 1 KLR). However, where there the judgment is irregular, the court does not have discretion to set aside the judgment, it must set it aside (see Mwala v Kenya Bureau of Standards EALR [2001] 1 EA 148).

9. In this case service of summons to enter appearance was not disputed. The appellant contends that the trial magistrate ignored the notice of appointment which was on record and which, for all intents and purposes, amounted to a memorandum of appearance. It relied on the decision in Paragon Electronic Limited v Bamburi Special ProductsLtd NRB HCCC No 314 of 2015 [2020] eKLR where Sergon J, held as follows:(14)… Instead of the aforesaid law firm filing a memorandum of appearance it filed a notice of appointment. The question is whether that is fatal. In my view, that is not fatal because the notice of appointment contains the physical address of the advocate appointed for purposes of service. The same also shows that the defendant is aware of the existence of the suit and in any case the defendant filed a defence soon thereafter. The plaintiff did not show what prejudice it suffered as a result.……………………………….(16)In a nutshell, I am convinced that the notice of appointment serves the same purpose since it relays the same information as a memorandum of appearance.

10. The appellant is correct to point out the trial magistrate did not consider the effect of filing a notice of appointment. Order 6 rule 2(1) of theCivil Procedure Rules requires the defendant to enter appearance upon service of summons to enter appearance in the format provided in form No 12. The purpose of the form is to give the full name of the defendant, the defendant’s advocate or recognized agent, the defendant’s address of service and the defendant’s physical address. All this information has been provided in the notice of appointment and I think it would be unfair to lock out the appellant from the seat of judgment on this account. In Patrick Thoithi Kanyuira v Kenya Airports Authority HC ELC No 98 of 2011 [2011] eKLR, Okwengu J, (as she then was) observed as follows on the same issue;(8)The question is, should the court strike out the notice of appointment because no appearance has been filed? I think not. This is because to do so, would be paying too much regard to procedural technicalities. The important thing is that the defendant has indicated his intention to challenge the plaintiff’s suit through the notice of appointment, and the notice clearly indicates his advocates for that purpose and his address for service. It is further noteworthy that the notice of appointment was filed just about 5 days from the date the defendant was served with summons to enter appearance. It would neither be fair nor just to shut out the defendant from the seat of justice. Indeed, I am obliged by article 159(1)(d) of the Constitution to administer justice without undue regard to procedural technicalities.

11. Likewise, in Michael Jessse Mkok v Roland De Mello MSA HCCC No 59 of 2019 [2020] eKLR, Otieno J, came to the same conclusion when he held as follows:(18)For the foregoing reasons it is my decision that the defendant’s decision to enter appearance by way of a notice of appointment instead of a memorandum of appearance was not fatal to his case. I hold the view that the entire purpose of an appearance is to provide an address of service and that a party has the liberty to ignore entry of an appearance and file a defence provided that in that defence the address be disclosed.

12. Finally, and considering a similar situation in Simba Commodities Limited v Kenya Ports Authority and another MSA HCCC No 33 of 2010 [2015] eKLR, Kasango J, expressed the view that:(11)Since those rules require that a defendant do provide address of service and bearing in mind that the 2nd defendant had filed a notice of appointment, which notice had the full address of the 2nd defendant’s advocate and bearing in mind the discretion afforded to a court considering an application to set aside ex parte judgment I do find that there is merit to grant the 2nd defendant’s prayer to set aside ex parte judgment.

13. It is therefore clear from the decisions I have cited, the trial magistrate failed to take into account the fact that the appellant had filed the notice of appointment and having done so, it cannot be said the appellant’s actions were intended to obstruct or delay the course of justice. Further, the reasons given by the appellant for failing to file the defence on time are not unreasonable or improbable given the fact that the reasons were supported by email and phone messages and there was no suggestion that the reasons were false.

14. In declining to set aside judgment, the trial magistrate considered whether the appellant’s defence raised triable issues and stated that, “I have looked at the draft defence vis a vis the plaint and it is my view that even if the court was to allow the defendant’s application on the grounds of bereavement, it is my considered view that the attached defense raised no triable issue.” There is nothing in the ruling to show that the trial magistrate considered the parties’ respective positions to come to a reasoned conclusion. She did not set out the nature of the respondents’ claim and the proposed defence and why she came to the conclusion that the defence did not raise any triable issue. A court must give reasons for its decision as was held by the Court of Appeal in Judicial Service Commission v Ndururi (civil appeal 650 of 2019) [2021] KECA 365 (KLR) (Civ) (5 March 2021) (Judgment). In short, the decision is bereft of grounds and reasons for the conclusion that the defence does not raise any triable issues leading this court to hold that the trial court did not exercise its discretion in accordance with established principles.

15. In conclusion I find and hold that this was a case where the failure to file the defence was neither deliberate nor intended to obstruct justice. It was a failure on the part of the advocate and any prejudice would have been assuaged by an award of costs. From the totality of facts and circumstances of the case, I find and hold that the trial magistrate erred in failing to set aside the judgment.

16. I allow the appeal on the following terms:a.The appellant’s notice of motion dated November 30, 2021 is allowed and the default judgment entered on November 16, 2021 is set aside.b.The appellant shall file and serve its statement of defence within 14 days from the date hereof.c.The appellant shall bear the costs of the application before the subordinate court while the respondents shall bear the costs of the appeal assessed at Kes 20,000. 00.

DATED AND DELIVERED AT NAIROBI THIS 7TH DAY OF OCTOBER, 2022. D. S. MAJANJAJUDGECourt Assistant: Mr M. Onyango.Mr Odhiambo instructed by Odhiambo and Associates Advocates for the Appellant.Ms Njoroge instructed by Waithaka and Associates Advocates for the Respondents.