[2020] KECPT 9 (KLR)

REPUBLIC OF KENYA

IN THE CO-OPERATIVE TRIBUNAL AT NAIROBI

TRIBUNAL CASE NO.510 OF 2019

ROSE KANYUA MUGAMBI.........................................................CLAIMANT

VERSUS

URITHI HOUSING CO-OPERATIVE

SOCIETY LIMITED..................................................................RESPONDENT

RULING

What is before us for consideration and determination is the Respondent’s Application dated 26. 2.2020. It seeks, in the main the following Orders:

1. That this Application be certified urgent and heard ex-parte in the first instance;

2. That pending hearing and determination of this Application, this Honourable Tribunal be pleased to stay execution of the judgment and decree irregularly entered on 17th October, 2019;

3. That this Honourable Tribunal be pleased to set aside the judgment and decree irregularly entered on 17th October, 2019 and all consequential orders ex debito justiae;

4. That this Honourable Tribunal be pleased to grant leave to the Respondent to defend this suit and that the annexed draft defence be deemed as duly filed and served; and

5. That costs of this Application be in the cause.

The Application is supported by the grounds on its face and the following Affidavits:

a. Supporting Affidavit sworn by Samuel Ngundo Maina on 26. 2.2020; and

b.Supplementary Affidavit sworn by the said Samuel Ngundo Maina on 21. 8.2020.

The Claimant has opposed the Application by filing an undated Replying Affidavit filed on 27. 7.2020.

Respondent’s Contention

Vide the instant Application, the Respondent seeks to set aside the default judgment entered on 24. 1.2020 on the following grounds:

a. That summons to enter appearance and a statement of claim were not served upon it;

b. That if the said documents were served , then the said service was improper and defective as it was concealed; and

c. That it has a defence which raises triable issues.

Claimant’s Contention

Vide her Replying Affidavit the Claimant has opposed the Application on the grounds that summons to enter Appearance was duly served upon the Respondent. That as per the Affidavit of service sworn by Amos Mutambu on 30. 9.2019, the said summons were duly received by way of stamping of the counterpart copy by the Respondent on 9. 9.2019.

That upon receipt of the said summons, the Respondent failed to enter Appearance or file a Defence within the time stipulated by law thus prompting her to request for judgment.

That as a consequence, the judgment entered against the Respondent is a regular one and can only be set aside if the Tribunal is satisfied that the Defence filed raises triable issues. That the Draft Defence annexed to the Application is not worthy of consideration by the Tribunal for the following reasons:

a. It consists of mere denial and patent mistruths;

b. It is devoid of merit;

c. It is a sham merely canvassed as a ploy to delay her from receiving the funds due and owing from the Respondent.

That contrary to the contention that the Respondent did not enter into any agreement with herself, the five(5) Investment Agreement annexed to the Statement of claim confirms this fact.

That contrary to the contention that the Respondent did not receive any monies from her, the payment receipts accompanying the statement of claim speaks otherwise.

That contrary to the assertions that the investment plan was to mature after a period of five(5) years, the Investment Agreements referred to above had a life cycle of 12 months and 4 months respectively.

Respondent’s Supplementary Affidavit sworn on 21. 8.2020

Vide this Affidavit, the Respondent reiterates that it was not served with summons to enter Appearance. That the matter came to its attention on 17. 2.2020 when its Receptionist was served with a Notice of entry of Judgment.

Disposal of the Application

Vide the directions given on 27. 7.2020, the Application was canvassed by way of written submissions. The Respondent filed its submissions on 26. 8.2020 while the Claimant did so on 21. 9.2020. We will consider the said submissions whilst determining the issues raised by the Application below.

Issues for determination

We have framed the following issues for determination

a. Whether the Respondent has laid a proper basis to warrant the Tribunal to set aside the default judgment entered on 24. 1. 2020.

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.”

From the foregoing, it follows therefore that before a regular judgment can be set aside, the following conditions must obtain:

a. Reason for failure to file a memorandum of Appearance or Defence;

b. The length of time that has elapsed since default judgment was entered;

c. Whether the intended Defence raises triable issues;

d. Prejudice likely to be suffered by each of the parties; and

e. Whether on the whole, it is in the interests of justice to set aside the default judgment.

We will consider the above principles in the context of the instant Application as follows:

Reason for failure to enter Appearance

The Respondent in the present Application has denied over being served with summons to enter Appearance. We have however, perused the Affidavit of Service sworn by Amos Mutambu on 30. 9.2019. It is manifest that the Respondent was duly served with summons to enter Appearance on 9. 9.2019. The Respondent has duly acknowledged receipt of the same by stamping on the counterpart copy of the summons dated 5. 9.2019. We thus find that the Respondent was duly and properly served with summons to enter Appearance.

Length of time lapsed since entry of judgment

The defaulted judgment was entered on 24. 1.2020. The instant Application was filed on 26. 2.2020. We thus find that the instant Application has been filed timeously.

Whether intended Defence raises triable issues.

We have perused the draft statement of Defence annexed to the Application and marked as SNM-2. Vide the said Defence, the Respondent acknowledges that the Claimant is one of its members and as such, is bound by its by-laws. That the said by-laws lays down rules and regulations governing investments by the Respondent.

That the Claimant expressed interest in the Respondent’s investments products under Mavunoinvestment plan whose one of the requirements was that the investor deposits some money to be entitled to the annual returns.

That contrary to what is alleged by the Claimant, the Respondent did not enter into any Agreement with the Claimant and that the Respondent has not received any monies from the Claimant for purposes of investment into the Mavuno investment plan product.

That without prejudice to the foregoing (denial) the Respondent denies the contents of the averments made of paragraph 14 of the statement of claim as follows:

a. That the Claimant terminated the Agreement before the maturity period of five (5) years expired.

b. That Notice of withdrawal from the society ought to have been issued at least 60 days in advances,

c. Society by-laws do not provide for refund of shares.

In response to the above contentions, the Claimant contends that the Agreements annexed to the statement of claim provided for a maturity period of 4 and 12 months and therefore the contention that the plan matured after 5 years is false.

On the basis of this argument alone, a question arises as to the need to ascertain the exact maturity period for the investment plan. Whilst the Respondent contend that the same matured after 5 years, the Claimant contend that the longest one matured after 12 months. Whilst the Claimant has made reference to the documents accompanying the statement of claim, we find that we cannot rely on them to ascertain the maturity period at this stage as they have not been produced the evidence.

The upshot of the foregoing is that we find that the Draft statement of Defence raises triable issues worthy of consideration after hearing of the claim on merits.

Conclusion

The upshot of the foregoing is that instant Application substantially succeeds and thus allow it based on the following terms:

a. That the Draft Defence to be filed and served upon the Claimant alongside witness statements and list and bundle of documents within 21 days herein;

b. The Claimant to file a Reply to the Defence as well as supplementary witness statements and documents within 21 days of service;

c. The Respondent to pay the Claimant thrown away costs of Kshs.10,000/= to be paid on or before the next mention date; and

d. Mention for pre-trial on 1. 3.2021.

RULING SIGNED, DATED AND DELIVERED VIRTUALLY THIS 29TH DAY OF OCTOBER, 2020.

HON. B. KIMEMIA CHAIRPERSON SIGNED 29. 10. 2020

HON. F. TERER DEPUTY CHAIRMAN SIGNED 29. 10. 2020

MR. P.GICHUKI MEMBER SIGNED 29. 10. 2020

Miss Gitari holding brief for Mwangi for Respondent

Mr. Muchiri for Claimant

Court Assistant C. Maina

HON. F. TERER DEPUTY CHAIRMAN SIGNED 29. 10. 2020