https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/6864

SH Trading DMCC v Bulk Cargo Logistics Ltd & 4 others (Civil Case E781 of 2024) [2026] KEHC 6864 (KLR) (Commercial and Tax) (7 May 2026) (Ruling) Neutral citation: [2026] KEHC 6864 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Civil Case E781 of 2024 F Gikonyo, J May 7, 2026 Between SH Trading DMCC Plaintiff and Bulk Cargo Logistics Ltd 1st Defendant Kerongwe And Sons General Traders Limited 2nd Defendant Chacha Wisandala Damian 3rd Defendant Edwin Hadad 4th Defendant John Kerongwe Mwita 5th Defendant Ruling 1.The 5th defendant/ applicant filed the notice of motion dated 20.8.2025 under section 80 of the Civil Procedure Act and Orders 45 and Order 9 Rule 9 of the Civil Procedure Rules, primarily seeking: -1.Leave for Danstan Omari & Associates Advocates to come on record for the 2nd and 5th defendants after interlocutory judgment.2.The review or setting aside of the interlocutory or default judgment of 13.3.2025, decree and taxation proceedings and all consequential orders.3.Leave to the 2nd and 5th defendants to file a defence out of time and that the suit be heard on merits.4.The draft defence be deemed duly filed and proper on record. 2.The application is supported by an affidavit sworn by the 5th defendant on 20.8.2025. 3.The major ground fronted by the applicant is that, was condemned unheard contrary to the rules of natural justice and Article 50 of the Constitution. 4.The plaintiff/ respondent opposed the application through a replying affidavit sworn by its Chief Executive Officer, Cord Kabus Dupree on 9.9.2025. Its core contention is that the applicant was properly served with all relevant court documents which he acknowledged through a message sent through his phone number. 5.The respondent also asserted that the annexed draft defence is a mere denial and does not raise any bona fide triable issues and is meant to prejudice the expeditious disposal of the suit. Submissions 6.The application was canvassed through written submissions dated 5.1.2026 and 30.1.2026 by the applicant and the respondent respectively. 7.The applicants urged the court to allow their application as it has been brought in good faith and their defence raises triable issues. They relied on Sebei District Administration v Gasyali & Others [1968] EA 300, Phillip Kiptoo Chemwolo & Mumias Sugar Co. Ltd v Augustine Kubende (1982-1988) KAR 1036 to argue that it would be unjust to shut out a party from being heard where a plausible defence exists. 8.The applicants also relied on Evans v Bartlam [1937] AC 473 and Shah v Mbogo & Another [1967] EA 116 to the effect that the court’s discretion is intended to avoid injustice or hardship. 9.The respondent asserted that the applicants have not demonstrated a satisfactory explanation for the delay in filing the application and failing to enter appearance and file a defence within the statutory timeframe. 10.The respondent contended that the applicants have not disclosed a triable defence with a real prospect of success. It relied on the corporate guarantee dated 6.5.2024 to assert that the 5th defendant was directly involved in the transaction. 11.The respondent also contended that the applicants have not rebutted the claim for the liquidated sum of USD 489,950 and that there is no credible challenge to the contractual documents. 12.The respondent submitted that equity aids the vigilant, not the indolent and that delay defeats equity. It relied on Clifford Otieno Obiero v Werna Severin & Another [2023] eKLR to assert that the right to fair hearing does not extend to resuscitating cases that have suffered the misfortune of litigant negligence. 13.The respondent further relied on Shah v Mbogo[1967] EA 116 to argue that discretion is meant to prevent injustice not perpetuate delay. 14.The respondent argued that setting aside the default judgment would cause it prejudice as it is a commercial entity and its operations have been affected. That its capital is unjustifiably tied up disrupting business operations and cashflow. 15.Thus, the respondent urged the court to dismiss the application with costs. Analysis and Determination 16.The court may review its own ruling or judgment for inter alia a sufficient reason. Section 80 of the Civil Procedure Act and Order 45 of the Civil Procedure Rules. 17.The specific relevant procedural law on setting aside interlocutory judgment is Order 10 Rule 11 of the Civil Procedure Rules which provides that: -“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.” 18.The courts power to set aside an interlocutory judgment is discretionary and ought to be exercised judicially based on the circumstances of the case. 19.A distinction is drawn between a regular and irregular default judgment. A regular default judgment is entered where the defendant was duly served with summons to enter appearance, but for one reason or another, he had failed to enter appearances or to file a defence, resulting in the default judgment. 20.An irregular default judgment is entered against a defendant who has not been served or properly served with summons to enter appearance and such would be set aside ex debito justitiae, as a matter of right, to uphold the dignity of the legal process. Frigoken Limited v Value Pak Food Limited [2011] KEHC 749 (KLR) 21.The court notes that the applicant does not claim that he was not served. The respondent asserted that he was served and that he acknowledged receipt of the court documents. The affidavit of service sworn by Cosmas Oyoo Laja on 14.1.2025 confirms the position. 22.Therefore, this is a regular default judgment. The factors that the court may consider in determining whether to set aside a default judgment include: -“…the reason 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 interest of justice to set aside the default judgment, among others.” James Kanyiita Nderitu & another v Marios Philotas Ghikas & another [2016] KECA 470 (KLR) Delay 23.The impugned default judgment was entered on 13.3.2025. The applicant first filed an application dated 22.7.2025 seeking leave to put in a defence out of time. 24.In that application, the applicant did not pray for a review or setting aside of the default judgment. 25.The present application is dated 20.8.2025. This is about 5 months after the default judgment was entered. 26.I find the delay to be inordinate. There is no explanation for the delay There is also no satisfactory explanation for the failure to enter appearance and file a defence within the prescribed timelines. 27.However, the court must balance the procedural lapse with the nature of the defence filed to see whether refusal to set aside the interlocutory judgment would effectively be denial of right to equal protection and benefit of the law. Art.27 of the Constitution Triable issues 28.Through the plaint dated 23.12.2024, the respondent sought that: -a.the 2nd and 5th defendants refund it USD 489,950 with interest to date pursuant to the corporate and personal guarantee issued on 6.5.2024;b.that the defendants jointly and severally refund the plaintiff USD 489,950 with interest to date;c.that the defendants jointly and severally pay the plaintiff damages for breach and loss of business in respect of the purchase agreement for CIF Sale of Gold Bars signed on 6.5.2024.d.costs 29.The plaintiffs’ claim against the 2nd and 5th defendants was that it was referred to them through the Ministry of Mining and that they availed gold bars weighing about 720Kg at their offices based on which the parties signed a contract for the supply of 700Kg of gold at USD 489,950. 30.The plaintiff contended that it was the 5th defendant that brought in the 1st 3rd and 4th defendants into the transaction and issued an undertaking in terms of personal and corporate guarantee promising to indemnify it. 31.The applicants deny that there was an introduction by the Ministry of Mining to the plaintiff. They also denied involvement in the alleged contractual arrangement and denied knowledge of the contract of 6.5.2024. They denied that their license was used for exploration. 32.They disowned the corporate guarantee dated 6.5.2024 as it was neither drawn by them or their agents. They highlighted that the corporate guarantee bears no corporate seal, stamp or their signatures. 33.They further denied receipt of the funds of USD 489,950. They challenged the documents relied on as they show no nexus between the alleged payments and the purported transaction. 34.The applicants have denied the existence of the contract, receipt of any monies, and have alleged fraud. These issues call for strict proof and cannot be resolved without a full hearing. 35.The 5th defendant disclosed that he advanced a loan of USD 20,000 to the plaintiff’s principal. He claimed that the plaintiff’s principal, Dr. Attaul Bhatti, who swore a verifying affidavit and witness statement is known to be involved in multi-million-dollar fraud litigation in the United States and is prone to making false misrepresentations. 36.The court has perused the corporate guarantee relied upon by the respondent. It is neither signed nor executed by the alleged guarantors. Hence, the enforceability of the said guarantee is prima facie triable issue. This raises a further substantive issue as to whether any binding obligation can be imposed on the applicants on the basis thereof. Withdrawal of unliquidated claim 37.The record shows that the respondent filed a notice of withdrawal of part of the claim pursuant to Order 25 Rule 1 of the Civil Procedure Rules. This notice is dated 22.4.2025. The plaintiff sought to withdraw prayer (c) of the plaint which was set down for formal hearing. 38.The applicants contended that the withdrawal of a part of the claim for unliquidated damages for breach and loss of business was a calculated move to avoid the riguors of a formal proof hearing. The timing of the withdrawal of the prayer (c) is said to raise questions regarding the respondent’s motive. 39.Of importance however, and in the circumstances, the court has already found that the defence raises triable issues which is the primary consideration for determining the present application. 40.The court finds that the applicants have met the threshold for the court to set aside the default judgment. 41.The court notes that in prayer (b) was entered against all the defendants. However, the application to set aside was only filed by the 2nd and 5th defendants. 42.Be that as it may, the respondent’s claim arises from a single alleged transaction relating to the supply of gold. The defence filed challenges the very existence of that transaction and alleges fraud. These issues go to the root of the entire claim and are not severable as between the defendants. 43.In the circumstances, the trial should be conducted in a holistic manner rather than in piecemeals to avoid inconsistent findings or outcomes. 44.On leave to come on record post judgment; there is no lawful reason to prevent the advocate from coming on record. Disposal 45.The 2nd and 5th defendant’s application dated 20.8.2025 is allowed in the following terms: -1.Leave is granted to Danstan Omari & Associates Advocates to come on record for the 2nd and 5th defendants after interlocutory judgment.2.The interlocutory or default judgment of 13.3.2025, decree and taxation proceedings and all consequential orders are set aside.3.Leave is granted to the 2nd and 5th defendants to file a defence out of time for the suit be heard on merits.4.The draft defence is deemed to be duly filed subject to payment of court fee, if any.5.The defence be served immediately and subsequent pleadings to abide by the applicable rules of procedure. DATED, SIGNED AND DELIVERED THROUGH MICROSOFT TEAMS ONLINE APPLICATION THIS 7TH DAY OF MAY, 2026-----------------F. GIKONYO MJUDGEIn the presence of: -Ms. Mwangi for ApplicantMs. Matina for 2nd and 5th defendantsCA-Ivan/Aggrey